When Daniel Sheard blew the whistle on a scandal that rocked the Swiss fund manager GAM, he was prepared for it to be a tough experience.
In 2017, Sheard began warning the company that he was worried about investments being overseen by his boss, the star fund manager Tim Haywood, into bonds created and sold by Australian financier Lex Greensill’s company. When Sheard felt that his concerns were not being taken seriously enough, he took them to the Financial Conduct Authority, the UK regulator, the following year.
“Your life goes on hold,” he remembers. “For two years, it was the first thing I thought about in the morning and the last thing I thought about at night. It was also challenging for the people around me, who didn’t understand what was going on.”
In 2021, the FCA fined GAM £9.1mn for failing to manage conflicts of interest and Haywood £230,037 personally. But Sheard, for all that he would eventually be proved right, was not treated like a hero — far from it.
GAM laid him off, along with many of his colleagues, in the crisis that followed the revelations. Feeling that he was a pariah, he then struggled to find another job, eventually spending several years out of work. And he was left with legal bills of more than £36,000.
“Whistleblowing has been a disaster,” he says. “[And] many whistleblowers are in a far worse position than I am.”
Corporate whistleblowers in the UK sometimes find themselves in an invidious position. On the one hand, they are actively encouraged to go to the authorities if they see evidence of wrongdoing; the FCA urges reports to be made in confidence, as do agencies including the Serious Fraud Office (SFO) and the Competition and Markets Authority (CMA).
On the other, anyone who blows the whistle in the UK takes on considerable risk — ranging from the fear of losing their job and being blacklisted to the stress of hiring lawyers and going up against corporate giants with deep pockets.
Despite numerous examples of the financial and emotional damage that can occur, regulators have long been resistant to offering whistleblowers financial rewards.
This is in stark contrast to jurisdictions such as the US, where for more than a decade it has been standard practice to offer whistleblowers money if a case is brought successfully. These amounts can run to many millions of dollars. Other countries, including Canada, South Korea, and Nigeria also offer whistleblowers financial incentives.
Such schemes can be effective, according to a report published by the Royal United Services Institute think-tank in December. Its research found that whistleblowers in places such as the US were encouraged to speak out not just because of money, but because they felt better protected by designated and properly managed whistleblower schemes. An effective programme could help reduce white-collar offences, it concluded.
Now, in the wake of high-profile cases like the collapse of the outsourcing giant Carillion in 2018 and the long-running Post Office Horizon IT scandal, change finally seems to be on the way.
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The SFO recently submitted a paper to the UK government outlining how a scheme could work, and on Thursday announced that it intends to offer more deferred prosecution agreements (DPAs) to companies that report the discovery of wrongdoing promptly and co-operate with an investigation. It hopes the two actions could lead to more success in cracking down on corporate crime.
In parliament, a private members’ bill calling for an independent Office of the Whistleblower to be set up is currently being scrutinised. And this week, the Home Office announced that, as part of a review of UK fraud offences, the barrister Jonathan Fisher KC will look at incentives for whistleblowers.
Adding pressure is the changing political environment in the US, especially when it comes to sanctions for corporate crime. In February, Donald Trump issued an executive order suspending enforcement of the Foreign Corrupt Practices Act (FCPA), impacting laws the US has used to hold some of the world’s biggest companies to account.
“The UK right now has a chance to leapfrog the US,” says Mary Inman, a US lawyer who specialises in whistleblower cases. “There are going to be a lot of very unhappy whistleblowers in the US looking for other jurisdictions.”
The long-standing British reluctance to offer whistleblowers financial incentives is partly institutional. Many in government and law enforcement make a moral case: whistleblowers have a responsibility to do the right thing, and that should be enough.
But there are practical concerns too. One is that this might create a mercenary culture similar to the US, where a large proportion of litigation ends in settlement and law firms have built an industry that relies on such work. Another is that, just as juries are often suspicious of informants, they might be less likely to trust the word of someone seen to be incentivised by money.
“The UK has historically been culturally resistant to rewarding whistleblowers,” says Judith Seddon, a lawyer at the UK firm Ashurst, arguing that authorities have been “dismissive of calls that doing so would increase the number and quality of disclosures”.
In the wake of the 2008-09 financial crisis and the Libor scandal, the government asked financial regulators to look at whether Britain should start paying whistleblowers. In 2014, after a review, the watchdogs rejected the idea. In an interview with Bloomberg four years later, the then-director of the SFO, David Green, summed up the view of many when he said that it “just isn’t British”.
But critics say that the results of this approach tell their own story. Since 2012, more than 700 UK-based whistleblowers, taking advantage of the fact that the issues they want to report on have links to the US, have taken their concerns to American enforcement agencies, according to Green’s successor, Nick Ephgrave.
If something similar were happening in counterterrorism or organised crime, there would be action, Ephgrave argues. “If we had this kind of leakage going to other jurisdictions [in those areas], there’d be an outcry,” he says.
Since taking over at the SFO in 2023, Ephgrave has been pushing for the UK to change its ways. A former police officer, he points out that the police regularly pay informants of violent crime. Between 2015 and 2023, London’s Metropolitan Police paid out £7.5mn to informants. And he is sceptical of the argument that juries might react badly — not least, he says, because it is unlikely that a whistleblower would end up in front of one.
Ephgrave says he thinks of whistleblowers as “key holders”. “They are the people inside an organisation that know where the skeletons are [for us to find].”
The UK does have some limited payment schemes for economic crime. The CMA and HM Revenue & Customs both offer payments for information on cartels and tax fraud respectively. But the programmes are little publicised and the rewards are comparatively small, especially if a whistleblower risks being exiled from an industry where they have worked for their entire career. The CMA now pays out a maximum of £250,000 for information, while the total amount that HMRC paid out to whistleblowers in the 2023-24 tax year was less than £1mn.
By comparison, since 2011 the US Securities and Exchange Commission has offered substantial rewards to whistleblowers whose information leads to a sanction. Under the programme, which pays a rate of between 10 and 30 per cent of penalties above $1mn, it has handed out more than $2bn. The agency’s largest ever reward stands at $279mn.
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The UK is already shifting its position on tax. In March HMRC announced plans to overhaul the compensation scheme for reports of serious tax fraud, taking inspiration from models in the US and Canada.
Even the FCA — which has always been concerned that offering financial incentives would conflict with its regulatory duties — appears more open to the idea. Nikhil Rathi, the regulator’s chief executive, told the FT last year he was “not in principle opposed”, even though he believed it would be “highly countercultural” for the UK to go as far as the US.
Another person who can speak from experience about why British authorities might want to start paying whistleblowers is George Patellis.
Patellis had worked in the finance industry for the best part of 25 years when he discovered in 2011 that some directors of the loan company he headed, Tiuta, were misappropriating client funds.
Within days, Patellis had gone to the FCA. He provided a map of the fraud he had uncovered and evidence of admissions of certain directors who had participated. But the FCA never took action, allowing investor losses to balloon to more than £100mn, according to Patellis.
Now aged 60, he has not worked in finance at the same level since. “Everything that I worked hard for . . . I wanted to be able to help my kids buy a house . . . I wanted to give my daughter the wedding of her dreams. I couldn’t,” he says.
He adds: “If you’re going to blow the whistle it’s going to be traumatic, but it’ll sure as shit soften the blow if you’ve been compensated for what you’ve gone through, right?”
After filing a complaint over his treatment, Patellis received a public apology from the FCA — something he says was “a joke” because it did not mention either his name or that of the company in question. Eventually the FCA was forced to issue a fresh apology nine years after the events took place.
The FCA’s record on whistleblowers has not improved greatly since. The agency’s chair, Ashley Alder, came under fire last year for failing to follow the watchdog’s own rules on whistleblowing. While Alder was ultimately cleared of wrongdoing by an independent review, he was found to have broken the FCA’s policies.
The FCA insists that “we rely on whistleblowing: it is a crucial source of intelligence in identifying and disrupting harm”, adding that “we are continuously developing and improving our approach”.
The watchdog adds that it regularly receives more than 1,000 reports of alleged wrongdoing per year, and takes action on over half.
Some whistleblowers based in Europe say that, while they too feel uncomfortable about the size of US-style rewards, most agree that a level of compensation should be provided.
Nicolas Forissier, who blew the whistle on a vast tax evasion scheme for wealthy French clients at UBS, for which the bank was convicted in 2019, says that whistleblowers should be offered compensation for costs and any losses they have suffered “once they have been fully vindicated”.
After more than 15 years of legal battles, in March Forissier won a partial victory against UBS, which was found guilty by a Paris court of harassing him and another whistleblower. But it came at a heavy price, he says, not least in terms of lawyers’ fees: “I had to sell my home to cover the costs.” UBS declined to comment.
“It’s a huge amount to put on the line,” says Ephgrave of the SFO. “Twenty years, 30 years of work, your family’s welfare, your children, your partner, your lifestyle, your pension . . . You’ve got to live in the real world.”
Advocates of change in the UK say that the US is just one of many models for a scheme. In 2024, South Korea paid out 5.2bn won (£2.8mn) for information across 392 cases under its whistleblower programmes, according to the country’s Anti-Corruption & Civil Rights Commission.
Not all awards in South Korea are conditional on a penalty being issued against an offending company; some are paid out if the report leads to an increase in government revenues. In an attempt to encourage more people to come forward, last year the country removed its 3bn won ceiling on the amount of money that can be awarded.
In Nigeria, whistleblowers can receive between 2.5 per cent and 5 per cent of the value of stolen or concealed public funds or assets, for information that leads to their return.
The model proposed by Britain’s SFO is a scheme it calls “payment by results”, similar to the US — one where rewards are only paid out after a conviction or once a sanction has been given.
Any scheme would be run by a new Office of the Whistleblower, either set up internally at the agency or as a centralised body. The private members’ bill calls for a government-run organisation, while also proposing penalties against organisations and individuals for mistreatment of whistleblowers. But it does not call for financial rewards to be made available.
“The reward system is only one of the reasons that [the US] attracts UK whistleblowers,” says Georgina Halford-Hall, CEO of the lobby group Whistleblowers UK, which is backing the bill. “But there are other things. [The US] protect whistleblowers against backlash. They [have] lots of attorneys that are providing conditional fee agreements . . . They’re really, really experienced in it. We don’t have that in the UK because there’s been no money in it.”
One person who believes that change in the UK is long overdue is Inman, the US lawyer, who has represented some of the world’s most high-profile whistleblowers: Tyler Shultz, who raised the alarm over the Theranos scandal; Frances Haugen, who blew the whistle on Facebook; and Mark MacGann, who exposed bad practices at Uber.
Inman is now planning to move back to the UK. On a scouting mission in March, she sat down with Ephgrave and other stakeholders, and says there was a marked shift from the last time she lived in Britain from 2017 to 2020. “I feel like there’s a bit of a perfect storm starting — in a good way,” she says.
Even former SFO director Green’s view is evolving. “Contexts change,” he says. “Given the current pause in FCPA enforcement in the US . . . the idea of rewarding whistleblowers may have found its time here.”
“I think that if bodies such as the FCA are actively encouraging people to put themselves in harm’s way, they must have some kind of responsibility for minimising such harm,” says Sheard, who blew the whistle on GAM.
He adds: “If you are going to do the right thing, should you bear the cost? Most people would agree that you shouldn’t.”
Additional reporting by Emma Agyemang in Copenhagen