AML Talk Show Hosted by Martin Woods
... That's really, really nice. Yeah.
When Tom said that, he's pointing a recording device, as well as my tie. That's all. So, ladies and gents, well to the financial crime conversation. I'm in London. I'm in the office of Constantine Cannon with the bestselling author, Tom Mueller. And before I can start, please allow me to thank Constantine Cannon, one of the world's leading whistleblower law firms, and consequently, good friends at a global level of the whistleblowing community. As for Tom Mueller, well, he's a committed professional. He's spent the past seven years, Tom, of his life talking to and writing about whistleblowers, and his latest book, a Crisis of Conscience: Whistleblowers in an Age of Fraud, is a must read for members of the anti-money laundering and global anti-financial crime community.
… That’s really, really nice. Yeah.
When Tom said that, he’s pointing a recording device, as well as my tie. That’s all. So, ladies and gents, well to the financial crime conversation. I’m in London. I’m in the office of Constantine Cannon with the bestselling author, Tom Mueller. And before I can start, please allow me to thank Constantine Cannon, one of the world’s leading whistleblower law firms, and consequently, good friends at a global level of the whistleblowing community. As for Tom Mueller, well, he’s a committed professional. He’s spent the past seven years, Tom, of his life talking to and writing about whistleblowers, and his latest book, a Crisis of Conscience: Whistleblowers in an Age of Fraud, is a must read for members of the anti-money laundering and global anti-financial crime community.
So, welcome and thank you very much for giving me your time. So, what have you learned the last seven years?
Well, thank you, Martin, and it’s really, really good to have a conversation with someone who’s actually blown the whistle. I don’t have the courage to do that, but I have spent the better part of seven years speaking with people like yourself and 200 others, roughly, who have done what they quite often said was just doing their job, but was viewed by the outside world and eventually by the legal profession as whistleblowing. We can have a conversation about whether they were just doing their job as many of you have told me, or whether a special status is required.
But I started in a very small corner of the whistleblowing area, False Claims Act, which in fact is where I met Mary Inman at Constantine Cannon, and it’s an American law passed during the Civil War in 1863 against corporate fraud that damages the US government, in other words, steals tax dollars. And it’s a very successful law that’s brought back something like $63 billion to the US Treasury in the last, well, since 1986. But I thought I was going to be writing an article about that. I thought it was very interesting, a little article, and then it gradually grew and I began to realise, wait, the same kinds of attitudes in whistleblowers, the same sorts of group dynamics that they run into, the same sorts of retaliation that happened in False Claims Act also happened in CFTC and tax fraud and then in the government through the looking glass into public service, exactly the same dynamics happened in government offices, in intelligence, and I began to realise, no, I really have to write a much broader book about whistleblowing. And then I realised the ultimate question, why is this the age of whistleblowing? Why are there so many whistleblowers?
Is it the age? You are very well researched in this book. You go all the way back to Greek philosophers, and we’ll talk about that later on. You researched on the law. Has whistleblowing increased so much more, and is that down to the internet? What changed?
I think, yes. I think there’s a range of different things. We are more aware of whistleblowers because of the internet and because of the media that’s stressing their stories, but there are far more whistleblower laws than there ever have been in the past. There’s a great deal more, let’s say, public support, at least on the mediatic level, on the film level. There are many, many, many films. Just think of the number of films that have been made in the last 10 years alone about whistleblowers. It’s dozens and dozens. And I think until the 1960s, as I chronicle in my book, whistleblowers on every level had an uncertain… They were mistrusted, let’s say. And a series of whistleblowers, very famous whistleblowers, Daniel Ellsberg and the Pentagon Papers, Serpico and the New York Police, and several others. Karen Silkwood, the nuclear whistleblower. A series of other whistleblowers blew the whistle at a critical moment, and then of course Deep Throat helped to oust the very, very corrupt criminal, President of the United States. So whistleblowing all of a sudden became a major… It got a whole new level of popular support and popular recognition.
When we met last week at a different event, and you told a great story about the corporate officer who championed and was very complimentary of whistleblowers until they were in his world, and at which point, and by all means my editor can bleep this out, they were &$%£*0l3!.
And it’s the I… I’ve written a piece, several pieces; I actually think the public don’t like whistleblowers?
Yes. They like, I think, whistleblowing in the abstract and on the silver screen. They now accept the fact that a whistleblower can save a country, can save a company, can overthrow a corrupt government, et cetera. But in their actual lives, what this corporate director was saying to me was, “I don’t recognise whistleblowers in my own sphere because they are simply challenging my authority.” He didn’t recognise how absurd that statement really is because whistleblowers by definition question what’s going on. They question authority. They question their peers. And they say, “Wait, maybe this is not the right way to do things.” So they’re not the team player that is ultimately the ideal person to get you to execute wrongdoing.
And last week you were asked in The New Yorker a question about the difference between a leak and a whistleblower. Let me take it differently. Two of our greatest innovations came from people who challenged the norm, and to me it’s a correlation between a whistleblower and somebody who’s actually suggesting we can do this a better way. So how do we actually make people understand that it’s not necessarily whistleblowing, but it’s perhaps identifying an improved process? More efficiency, reduced losses, et cetera?
I think there’s absolutely no question that freedom of expression, which is sanctified in many legal systems and in the American Constitution, freedom of speech, freedom of expression is one of the fundamental ways you get better. People start sharing information. They are not inhibited or worried about what people are going to say when they speak up. And as you well know, in the corporate sphere that’s the best way to prevent bad things from happening and to create better things. As you say, come up with a better way to do things.
The problem is that people in groups are so focused on my way or the highway, my ideas, and people take sides, and they get very, very personal about the way… In a corporate environment, or in a government environment, any bureaucratic environment, you have winners and losers and everyone’s watching each other. And so, it becomes not a free sharing of information, but who’s going to come out on top. And that’s when the whistleblower becomes a threat because he or she starts to point out, “Well, actually, what you’re doing there, it’s not only wrong, but it’s illegal.”
But even then, coming back to the idea of expression of good ideas, I, when I interview people or subsequently employed and I ask, “What is the best thing you did at your previous employer in our discipline of anti-corruption, of anti-money laundering,” and I think, “Wow, that’s a really good idea.” And I then take those people into the room with the rest of the team. It’s like, “Okay, Julie’s joined us today. Julie tell them what it is that you think is great at your firm.” And I said, “Did you all hear that? How is smart is that? I’m going to do that tomorrow,” but Julie got a credit, and it also encouraged other people to come forward with great ideas.
The flip side was is it… “Julie, what was the most stupid thing you did at your previous employer?” And if I was doing that, yeah, I’d still hands up say, “Okay, embarrassingly, I’d be more humbling because Julie just showed me where that’s got a flaw and we’re going to change.” Constantly, I’m encouraging great ideas. And I’m no super brain, but that’s why I encourage great ideas.
That’s what you get people to start sharing. Once you break down the mistrust and the competition, and you start saying, “Well, we’re all in this together. We’re all sitting around the room. We’re going to really share.” And that’s, I think, again, what you said earlier, whistleblowers get… if they’re heard properly, they are trying to bring to the attention of the group things that they may be blinded to. They may just simply not be seeing and that they need to see. And the best way for an organisation to move forward, one of the best ways, is to capture those and understand those complaints and those observations and those criticisms as a way of building, of getting better, of taking care of these problems before they become massive.
When you say massive, in your book, I’ve only read a couple chapters. It’s 500 pages, seven years of work, immediately I’m struck by how important, how powerful it is. But to you, before you started this, you had a vision of the world, and then you’ve seen big organisations causing death, misery, suffering, disruption. Wish it were the better place before you started this book, or-
Definitely. Whistleblowers have helped me to see the things more clearly that I was missing, and it doesn’t necessarily make for light reading sometimes. It doesn’t necessarily make you happy, but it’s important to know. If we’re going to make it really get better, we have to face the facts, and the facts are that large organisations can go horribly wrong, and as they become more and more politically powerful, they can bend the law to suit those purposes. It’s perfectly clear. We’ve known this. This has been true since Roman times, Greek times. This has been true forever, but… Citizens United, for instance, in the United States, in allowing the corporate community to funnel unlimited amount of funds into politics, what’s going to happen, do you think? They’re going to change the laws, of course. So the notion of having a greater good, a sense of the common good be paramount, it sounds naïve nowadays, but it shouldn’t. This is the way we should operate.
You said political funding and political influence. We’re asking to potentially make changes we can’t make, or it’s not been possible to make so far. I had the great privilege, pleasure, and all that as a police officer to work sometime with Robert Morgenthau in New York, the unopposed elected District Attorney of New York, and he was once asked why he never went for the highest public office, i.e. President of the United States of America, and his answer was, “I don’t ask for favours, and therefore I don’t do favours.” He’s saying that you can only become the President if you secured the funding and do favours. Why money may change that if Michael Bloomberg, because he has enough money, doesn’t need to ask anybody any favours, right?
Well, we’ve had billionaires for presidents, and it doesn’t work out very well. They really need to be people who represent the people, and billionaires live in a different world, in a different… They’re oligarchs. They don’t know what life is like on the street, and I don’t trust that. There is such a thing as divine kingship and occasionally they got it right, but usually… The ideal world scenario is someone who really understands how life works on all levels, and I don’t trust billionaires to do that. But at least, yes. Potentially they wouldn’t be beholden. But there’s such a thing as cultural capture where you’re not actually taking cash, but you just go to the same clubs, you play golf with the same people, you see the world the same way, and you really don’t spend time under bridges seeing where people sleep.
Well, welcome to Britain.
And the United States. Thank you very much. Yes.
Some of your book resonates for me in so many ways as a whistleblower. And one of the things I’ve always heard about, a really good whistleblowing program actually is a prevention. If people have anxiety that one amongst us may report this, then it stops. In your book you reference that maybe the False Claims Act saved a trillion dollars of fraud?
Where does that come from and how is that figure generated?
Well, if the False Claims Act creates a situation in which anyone sitting in a room of a certain level could potentially become a whistleblower and report wrongdoing and cause the company up to several billion dollars… GlaxoSmithKline, as you know, the $4 billion range, Johnson & Johnson, $2.2 billion, large, large settlements, then a company will think twice and a C-suite will think twice before going down that path. I think it’s healthy. I think it doesn’t necessarily lead to the rectification of the problems because these settlements, and they’re always legal settlements, they almost never go to trial, become the cost of doing the business, but it’s certainly better than nothing. And yes, I think the estimate has been that something like a trillion dollars in fraud has been prevented or dissuaded, discouraged, because people know that anyone in the room could potentially become a whistleblower.
That is a phenomenal amount of money that the government can use for good.
That is. Indeed.
But in terms of the accountability and the $2.3 billion fines, the $3 billion fines, thus far, and after so many, nobody’s gone to prison. Does anybody ever go to prison?
No. The answer is no. The ultimate proof of that fact is that in 2008 the Wall Street banks at the end of a long series, a long campaign of widespread mortgage fraud, crashed the economy and no one went to jail. No senior banker was even indicted. And that is a travesty. In fact, we bailed them out for trillions of dollars. So, at that point, in fact, a senior Wall Street person told me after the fact, he said, “We were waiting for them to come along with the handcuffs, and when no one showed up, we doubled down.”
Sure. Because I think that’s the point. Your book references, they were incentivized.
When we talk about regulation in the UK and law enforcement, I’m a former police officer, and the same applies in the US, in the criminal system, justice must be done and be seen to be done.
In UK financial regulation, justice isn’t done and you’re not going to speak to the media, so people don’t realize and don’t see that it’s not done. There’s a Cosa Nostra in the financial service industry-
… that actually is against whistleblowing because you can’t tell the truth about what’s going on here.
It’s completely ridiculous that individuals we all know, it’s widespread knowledge, that if you don’t put individuals in jail, you will not have accountability. Why? Because say I, Tom Mueller, I am the architect of a massive fraud scheme like Alex Gorsky at Johnson & Johnson in the first chapter of my book. He was the architect of the Risperdal scandal. The company ended up paying $2.2 billion in national settlements. How much did he personally pay? Zero. How much time did he spend in jail? Zero. Was he ever indicted? No. Is he the CEI of this company now? He most certainly is. In fact, he was elected CEO, main CEO, after the settlements. What kind of a signal is that from Johnson & Johnson to the US prosecutors and to the American people? You can’t do that on a podcast, but that is the signal that you get, is, “We don’t care about your stupid laws. We’re going to do things our way.”
Jamie Diamond at JP Morgan. He has presided over the London Whale and a massive series of incredibly… criminal indictments.
You’ve got a hybrid there. It’s Jamie Dimon at JP Morgan, not Diamond.
It’s obvious, but just a hybrid.
That’s right. That’s right.
Which is an interesting individual, but I understand that. But coming back to health care, Marc Gerstein had in his book Flirting with Disaster, “I’m a financial services guy but it struck me the biggest whistleblowing tragedies and the biggest whistleblowing impacts are in Big Pharma.”
We’re talking about dead bodies here, aren’t we?
We really are. It’s alarming to see. And almost in every industry, when you talk about financial fraud, it sounds like, “Oh well, someone is just getting a little bit richer.” Well, no. That’s coming out of someone’s pension. That’s coming out of the national budget for schooling, for health care, and so on. But in health care you have massive fraud and it’s coming out of our pockets, but also, people who are being overprescribed dangerous medications, it causes massive human harm. And yeah, it’s extremely-
But there are some successes in this race. So, some municipal cities and states in America are suing Big Pharma successfully for overprescribing opiate drugs causing incredible rates of death by drug overdose.
In 2016, there were far more people dying in America from a drug overdose than from gunshots.
Yes. Which is saying something in America.
It’s horrendous. And also, there are success stories from municipals against Big Pharma. This week, the OCC, the most important banking regulator in America has imposed significant financial penalties against John Stumpf, the former CEO of Wells Fargo, over $17 million. Now, that probably still means he’s got many millions left, but most important as well, I like to think his reputation is totally trashed. I’ve seen some directors and they’ve been barred from ever being a director of a bank again. So some regulations in some parts are becoming more aggressive, aren’t they?
I’m sure, yes. There are some success stories, and I think you’ve named some of them. I, unfortunately, have a pretty cynical view about reputation. If you look at recidivist fraud in pharma, if you look at recidivist fraud in banking, if you look at recidivist fraud in defense contracting, there every single major player has done multiple major, multibillion-dollar, multimillion-dollar fraud schemes, and they continue to get business.
Bob Mazur says this from… his presentations. He’s the guy who as an undercover officer laundered money for the Colombian cartels. Because people had to go to prison, they’re incentivized. I wrote a piece recently, last year, called Carry On Laundering.
Carry On Laundering. That’s right.
Because largely, you should be laundering money because you’ve going to get a bonus, you’re going to get commission, et cetera, which is totally wrong for what I’m saying in my podcast.
That’s the outcome, and is it-
It’s a cynical view, yeah, but it’s accurate.
But is it a cynical view when you say it’s accurate? Is it actually government policy in the UK and the US that banks make commission to launder this money?
I think by default, yes. If you don’t take action to prosecute, and this comes from, in America, the Department of Justice. This is a decision, and you can see how it works. Settlements are safer. They’re also better for your CV, so when you’re a government prosecutor and you’re going to be revolving through the revolving door to the defense counsel and defending these people, this is how the game went. It works.
But it’s safer for them. It’s not safer for society because-
No, by no means. It’s disastrous for society. As a well-known Texas prosecutor once told me, “If you don’t start fitting people up with orange jumpsuits, the fraud’s going to continue.” And that’s absolutely right. If you don’t put individuals in jail, and then if you do, if you put one person, one Martin Woods in jail-
… one very senior person, an Alex Gorsky, a Jamie Dimon, if you put one of them in jail, everyone else will sit up and take notice. They’ll think, “Oh, well, maybe not.”
I’m wondering if 2020 is that interesting year. My previous… But this is January the 29th of this month I released a podcast interview with Bill Browder. He’s convinced bankers going to jail. He’s helping other with 13, 14 criminal money laundering investigations around the world at the moment, not here in the UK, I hasten to add. And also there is-
Probably not in the US either.
… There’s more civil litigation. I think he’s been successful in the US because the DOJ and the kleptocrat unit with the FBI, so looking at foreign-made political figures too, you’ll find I think they may be getting some success there.
I hope so because that’s critical.
Law enforcement in America and regulations as somebody said it’s competitive and there’s this account and there’s money to be made at the end of it. In other areas, it’s not. But there may be some good stuff coming from that.
And also the former CEO and the former Chair of Danske Bank are being sued along with the Bank. If they end up homeless because they… Why should they have a nice pension when other pensioners are impacted by that, alleged, or what you call it, alleged misrepresentations in their annual reports. And back on about in your reports, you talk about, you quote him in your book who says, “The more you see the word ethics, the more you see the word governance in a company’s annual report, then they would have had more penalties and more fines.”
It’s a very interesting thing. It’s compensational psychology. People who do bad things tend to do a lot of philanthropy, and it’s conscious to say, “I’m going to launder my reputation in public and everyone’s going to see that this wonderful hospital has my name on it,” but it’s also unconscious. I think people want to feel they’re good, and they sort of know that this is really wrong what they’re doing, so they throw their money around, their stolen money, on good things. But it’s a very, very… It’s one of the key red flags of wrongful behaviour is a huge amount of philanthropy.
And the same thing with language in financial reports and annual reports and so on. If they’re talking on and on and on about how ethical they are… Enron is a classic example. They had a magnificent compliance manual and all kinds of ethical language, and gold standard this and that, and they were a fraud vehicle. And that is… Sometimes words can really paper over and also reassure people within the company that they hear the word ethical and we’re doing the ethical thing and we must be ethical. And so, they can slide along a little farther down the slippery slope of fraud.
And if I look at Elin Baklid-Kunz and her story at the hospital in Florida, you’re looking at all these college-educated doctors and senior people. They all go against her. It’s a common story. It’s not –
Yes. And you know about that yourself.
What you’ve said about… I do, but they surprise me… I even surprise myself, so I still, I get everything she said that she thought other people would be on her side, and they all go against. Is it because we are… most of society is hostage to their lifestyle, their income and the lifestyle that supports, be it private education, private health, two hires and a boat and a car, and they’re not going to sacrifice that irrespective of mistreatment of patients, operations that don’t need to be administered? It’s suggested in the book one person never walked again. Said an operation performed that didn’t need to be performed and they never walked again. It’s horrendous, really, but other people turn a blind eye to it.
It is. That’s right. There’s range of different phenomena here. One is simply cynical. “I’m going to keep my paycheck. I’m going to keep my good lifestyle.” One is, “We’re a great hospital. We do a lot of good. Let’s not ruin the reputation of the hospital by talking about the few bad apples.” The famous few bad apples. Right? So, the Catholic Church and child abuse, that’s a classic example. “Let’s not sully the reputation of Holy Mother Church by talking about this dreadful stuff that’s been going on for decades.” But it’s also human psychology. People tend to think that what they and their team are doing is basically okay. And especially in a place in America where entrepreneurs and money, making money is celebrated really above anything else. Being a good person, that’s great. Being rich is greater. That’s the way the American-
And that’s Socrates’ statement about a city that celebrates wealth and wealthy, it will not celebrate virtuous and good people?
Exactly. Yeah. It’s just guaranteed. And again, the psychology on this is well understood. But the financial benefits are enormous. In America, it’s taken to the point where there is a legal theory, and shareholder value plays into this, but since Milton Friedman on, Nobel prize winning economist, there’s an argument that says that a corporation is not only discouraged from, but not allowed to do anything but make money. Focus on profits. They’re not allowed to be good citizens. They’re not allowed to be nice. They’re not allowed to worry about the environment. They are only allowed to make money. And of course if you want to make money, that’s-
Is that still the case in America, because-
Well, okay, so we’re told there’s different forms of capitalism. There’s British capitalism. There’s American capitalism. And then we talk about now these companies only exist… So go back to GlaxoSmithKline, for example. I think as their CEO said about paying taxes in the UK, he needs an educated workforce, he needs a healthy workforce, and taxes pay for that. So he’s caught in this conundrum. To optimise my profit and pay no tax, but then I have no people to work for me because they’re not educated and they’re not healthy. But-
Right. That’s a long-term view, and I totally agree with the theory on that. I don’t know how his practice worked out. We’re getting preached to by Alex Gorsky from Johnson & Johnson, thank you very much. He is the head of a major roundtable which includes Jamie Dimon and various others, who is now talking about social responsibility in business. This person. This person, who in my book, again and again is a poster child for corporate wrongdoing, is now preaching to us about how we need to be ethical.
And you referenced this last week, the hypocrisy of it. And you’re coming forward and you see emotionally it’s really an orgy, isn’t it?
It drives me crazy. You hear this, and I hear whistleblowers who, again, like yourself, again and again say, “I was just doing my job. I was hired to prevent money laundering, and I went and I found money laundering, and I called it out. And what did I get? Two tons of bricks on my head.” That is broken and it makes me crazy when I hear this, and it makes me crazy when I hear whistleblowers whose lives have been turned inside out and upside down, who are half convinced that they’re crazy because it’s really Orwellian. It’s really Orwellian when you have the good people who are surrounded by people saying, “Why are you doing this? Why, are you crazy? Why are you burning your career?” And so on and so forth, so much that they think they’re crazy. It’s white is black and up is down. It’s Orwell.
I get that, and actually you talk about insane. I actually do think I’m mad. I think all whistleblowers are mad. But it stands, MAD, making a difference.
Making a difference.
Solid ethics. You understand that wrongdoing is not just on paper. It has human results. And you once told me, “Don’t forget that the money launderer has his finger on the trigger right next to the cartel member.” That stuck with me. This is not about shuffling papers. This is about facilitating massive fraud schemes and horribly murderous individuals.
Some people don’t want to hear it, but that’s another movie, isn’t it, The Big Short. They treat you like poetry. People don’t like poetry, but the truth is money laundering is a parasite crime. It’s very much a parasite crime and it feeds off the suffering, devastation, and loss of life, of course, of many, many people.
Let’s come back to child abuse, only because I do think it’s so relevant in this area of whistleblowing. I’m a child of the 1970s where I was taught not to talk back to my elders, show respect, and if I made an allegation, let’s say to a priest, which I didn’t, I’d be told not to be ridiculous because it’s a priest and also because of the shame of it. Inadvertently, our parents made this very fertile environment for paedophiles, more so celebrity paedophiles. Now, credit these victims; they never gave in. They kept going. They became adults and they retained their voice. You talk about lobbying groups including the Catholic Church seeking to impose a statute of limitations to stop children’s words becoming adults’ words and shutting it all down. And it was Marlan Wilbanks-
– Marlan Wilbanks. Very good.
– that fought that and actually,
… he ran one of these charities. He called it very well child abuse, children without voices, and whistleblowing. Because we took their voice away, so-
… and that’s what a corporation tries to do to whistleblowers. They try to take their voice away and attack the credibility. It’s constantly about attacking the messenger.
That’s right. You can’t deal with the facts. Yes.
When you look at this, so Westpac are now accused… Westpac Bank in Australia accused of funding pedophiles. And that, again, they’re doing lots of philanthropic work now around sex abuse.
Which is welcome. But can we see corporations say that, actually if you allow this, the one thing feeds into the other? You’re allowing a society that actually encourages and permits child sex abuse because actually you’re encouraging a society that permits people to break rules and laws and shuts up the messenger. You shut up the child. You shut up the whistleblower. Right? It’s the same thing.
Absolutely. Silencing the voice that cries out, that cries out for justice. It sounds like some sort of a rabble-rousing poem, but it’s absolutely true. We really need to be able to speak freely, and we’re talking about freedom of speech earlier. Speak freely and about things that are going wrong in order to make them better. And the notion that we should have this omertà, this sort of silence, and the fact is if you don’t speak up, you become… you’re colluding.
But it’s worth though speaking up against. And we’ve seen this play out in the UK. So even, only this month in January, it was another report about child sex abuse in Northern towns in England failed by the police, by social services, going back over years and years and years.
When I blew the whistle upon Wachovia Bank, I always sensed I was also blowing the whistle on regulatory failure, and the regulator didn’t like me for that one little bit.
Absolutely. Yeah. That’s the same sort of thing you see again and again in my book, Crisis of Conscience. The industry is doing the wrongdoing, but the regulator’s asleep at the switch or actually colluding in the wrongdoing again and again and again. It’s an enormous, enormous problem. But to come back to your question about child abuse, corporations had to look longer term, and I think the statement of the GlaxoSmithKline CEO, however it actually worked out, I don’t know. The statement that we need to think about society in which we’re working and longer-term benefits, not just quarterly income. And that’s the fixation right now driven by Wall Street and the city and so on. Fixation is quarterly income and that needs to be in an upward spike. And if it’s not, then everything else goes out the window.
But long-term good, that’s no way to live. That’s no way for our society to prosper. And we have to think about how our children are being raised, how they’re being educated, and this is expensive stuff. Why is it that the first thing that gets cut is education? And the last thing to get cut is the military budget which is destabilizing our world? I don’t know.
It is all about short-term thinking, isn’t it?
And greed, because that three-month quarterly result is how much money am I going to make and what’s return to investors?
Yes. What’s my bonus going to be? Yes.
Have you ever come across any investors who have a long-term view on social good?
I do. I have. And there are a lot of the silent majority. Well, I don’t know about majority. I know a lot of people who look at the current situation in the world and in America and say, “It’s insane that the Federal Reserve is funding the repo market to the tune of many trillions of dollars.” This is funny money. The stock market is going through the roof. It’s a bubble. It’s waiting for the next pop. But unfortunately, short term they’re saying, “What happened the last time? Well, the banks crashed. We bailed them out. The stock market crashed. We bailed it out. I’m going to keep my money on Wall Street.”
We’re just pumping that bubble, aren’t we?
Because which of those companies are truly worth the value of the shares? It’s not based upon that. It’s purely speculative, on-
Completely. They’re buying their own shares. Trump gave a $1.3 billion… $1 trillion, excuse me, dollar tax break to corporations to build investment. Well, they invested in their own stock, thank you very much. That’s not R&D. That’s not hiring. That’s not anything that actually produces better widgets or better people or… That’s simply speculation that’s building the stock market. So of course the stock market went through the roof. But it’s actually detrimental to, diametrically opposed to healthy development of business.
So, my podcast, I try to generate positive moods, positive outcomes, and your book is a great book. And actually, I want to talk about Chapter One, Allen Jones aka Chuck Norris. And let me tell you how I view Chapter One of your book, which is the making of a whistleblower. I view it as a hybrid of Erin Brockovich, great film, basically a true story, and The Fugitive. No Tommy Lee Jones-
… Harrison Ford’s there and his wife has not been murdered, albeit there are probably dead bodies here-
There are dead bodies.
… and actually the hero of the story is Chuck Norris, right?
Allen Jones. And Allen Jones was this… He lives in a log cabin, is a committed professional, and at no point did he even realise he would be in line for a financial reward for as you say, doing his job.
Doing the right thing.
He is a classic hero. And I do hope… somebody at Netflix is reading your book and saying, “There’s a great-
It’s a great story, yes.
“There’s a great series here of wonderful stories that talk about the real hero is your Allen Jones.”
But to that point, and that was partly promoting the book, what are the characteristics that you saw of common whistleblowers?
Academics will immediately say, “Well, there is no whistleblower type.” And several whistleblowers have said, “Well, if I had learned what I learned 10 years earlier or 10 years later in my career, I might not have blown the whistle.” But I did run into a number of things in the 200-odd interviews that I did. One is a really non-negotiable sense of right and wrong. There’s no gray area. There’s no, “Well, if they’re doing it, I can do it too.” It’s, “This is right, and this is wrong.” So kind of old school, black and white about ethics. And a real independence and ability to disagree with the people in the room and disagree with their bosses, and say, “No. I am a professional. I’ve done my homework. This is wrong. I don’t care what you say.” And at the same time, there’s a certain willingness to be contrarian, not the team player, not the good soldier that’s going to go over the line. They may not be the life of the party because they are independent. They’re stepping back two steps and saying, “I think this group is actually toxic. I don’t want to be a part of this.”
And finally, one of the things that again and again, I would always at the end of the interview, usually hearing some pretty dramatic things that happened in their lives, I would say, “Would you do it again?” And there’s be a long pause, and typically… a long… breath out and look off into the horizon, and then they’d say, “Yeah, I’d do it again because I couldn’t live with myself if I hadn’t done what I did. I couldn’t look at myself in the mirror. I couldn’t put my kids to bed. It wouldn’t be me.” And there’s the word integrity. One of the whistleblowers in the middle of the book, Lynn Stout, a law professor. She looked at the origin of the word integrity, which is from integer, from one, from not doubling, from no hypocrisy. What you think is what you do. They’re just one. You can’t lie, you can’t pretend, and you can’t go along with this institutional hypocrisy which says, “We’re saving the world and we’re making the world’s best drugs while we’re systematically pushing dangerous pharmaceuticals to vulnerable people.” So that integrity, that sense of, “This is who I am, and ultimately, I need to look at myself in the mirror.” That’s the common denominator.
And that’s what you went through. You went through hell in your-
Well, no. Honestly, other people did, and actually, I’m a different outcome.
It must be law enforcement.
I met many whistleblowers… Yeah, but I’ve met many whistleblowers who haven’t had a good outcome. I’m very fortunate. I do think ultimately, I made my whistleblowing an asset, and I’d open on this and transparent, so anybody in the future, you’re thinking of engaging me, listen to this. I would do it again, because that’s the way I’m wired and I can’t change. And actually, one of the things I often say to myself, had I not blown the whistle, I would have become one of them.
Right. You’re complicit.
And in truth, I despise them for what they were and what they did because they didn’t give a damn about 100,000 dead Mexican people at that time. Obviously, it’s grown a lot bigger since then. And they didn’t connect the trigger, the killer’s gun, to the money.
To the actual… Yeah, what they were doing.
They didn’t want to connect it. They didn’t connect [crosstalk]
Basically, it inconvenienced them, right? A whistleblower is often inconvenient.
That’s a great point.
… let me ask you a standard question. I think, and this is not meant to cause nightmares. Just my analysis. I think women are more prone to be whistleblowers than men. What do you think?
Well, I think again, in a fairly advanced and fairly high-level… bureaucratic situation where there’s a government office or a corporation, there will be fewer women and they will by definition feel a little bit less like one of the guys because they’re not one of the guys. I think there is just less support-
I don’t think there are more mothers that are […]. I look around. Said, “I would not want… ” Just take bullying as an example. Sexual harassment. I wouldn’t want that to happen to my son or my daughter, and I’ll stand up for other people’s kids, right?
In a way that… like, “Oh, that’s part of the growing up… “
Yeah, that’s right. Yeah, that’s true. And it’s also true that one of the things, one of the common denominators that I left out is an awareness of the actual physical harm being done to people. And I think women have by and large, and generalizing grossly, a greater ability to say, “What if that were my child? What if that were my spouse? What if that were… ?” And men are more like, “Well, let’s stick it to them. Let’s score one for the team.”
That, by the way, for the record, that was not me hitting anybody.
That was me hitting myself, which happens on a regular basis.
But at that point, Roger Steare is aka corporate philosopher. He references the fact that one of the factors that gave rise to the global financial crisis is because the boardrooms are male, pale, and stale.
Male, pale, and stale.
And actually, there’s a need. It’s not just a case of being-
Fair or nice.
… equal [crosstalk]. It’s because there’s real value in having women in the boardroom.
That’s right. Yeah. It works better. Yes. Yes. Absolutely. It makes a better group.
People have heard me say on these podcasts before, I would like to see better decisions generating better outcomes, and I think more women involved into that decision-making process would lead to that.
And it would make longer-term decision-making possible too.
Not this short-term score it, bank my bonus, and move on, which I think is the death of real social responsibility.
And so, with that then and everybody’s chasing the money, you talk in here about how money’s this destabilising influence and how professors have studied the influence of money on the brain or a money society not working. That’s why it’s right then, isn’t it, to reward whistleblowers with money? Because fighting fire with fire, why don’t we fight money with money?
Yeah. And I think, first of all, it’s absurd to say, to accuse a whistleblower of having financial motivation when everyone around them, of course everyone who’s perpetrating the fraud, is only doing it for the money. They’re not doing it for the fun. They’re doing it for the money. So to turn all right and say, “Well, this person is a money grubber because they’re doing it for… ” That’s absurd.
But more to the point, the vast majority of whistleblowers that I interviewed, their career ended when they blew the whistle and they went public. They no longer were employed or employable in their chosen field. That is a huge financial loss and an enormous risk, and an enormous difficulty to put you and your family above all in. And the notion of… It’s not a bounty. It’s a compensation for a lost career. That’s how I’ve come to look at whistleblower rewards.
And actually Gerstein again references the notion of if you were to blow a whistle as a caveman and you were thrown out of the tribe, how would you survive? Same thing applies.
But in fact, to change more whistleblowing and actually the good people you’ve interviewed, the good outcomes you’ve identified, because a trillion dollars of non-fraud, has any corporation ever said to you, “Tom, will you please present to my Board?”
I have to say I’ve been very pleasantly surprised how certain groups, for instance, compliance, the compliance world, who in my book I’m not too kind to. I tend to say, at least in the cases that I look at, that it’s window dressing and papering over-
But that’s your experience. [crosstalk]
That’s my experience, and I’ve only dealt with… I have a sampling error problem because I’m only looking at the cases that went nuclear, that became whistleblowers and lawsuits and so on.
Let me assure you, there are people on this call who are wired the same I’m wired, and they do want to make a difference, and that’s not to say everybody in compliance is the same-
And they’re doing it, and that’s why we don’t hear about-
… or like a cross section of society. We’re not… There’s good policemen. There’s bad policemen. There’s good priests. There’s bad priests.
Likewise compliance officers. But there’s a whole [crosstalk]
I’ve been very heartened and very encouraged and very impressed by how many people from the compliance world have reached out and said, “Come and tell us about your experiences. What’s the lower message?” And so on and so forth. And I’m surprised by that, I have to say. I haven’t had any major corporations yet do that, but overall, I have to say, this is a collection of worst-case scenarios. And real life, I tried to get the other side. I tried to get corporations to tell me how they were able internally to recognise, capture, and fix a problem, and no one wanted to tell me their stories, because of course, no one wants to air their dirty laundry. So they’d say, “Right, go to Legal,” and Legal would say, “There’s the door. Goodbye.” And I don’t blame them really, but it would have been good.
There was a guy in the city, he was doing a fabulous job of his whistleblowing office in a major financial institution, and he told great stories. One was of the executive assistant who blew the whistle on her boss for expenses fraud. And they said, “Well, you say it’s an expense fraud that he claims that his taxi fares going home at night. He’s entitled to pay for a taxi so why do you say it’s fraud?” She said, “Well, I leave at half past five every night, the same time as him, and I go to the car park and get in my car and he goes to the car park and gets in his car. I don’t pay for a taxi. He does.” Right? And it turns out the taxi firm he was billing was his wife’s taxi firm, and it was paying his previous employer.
Oh, fancy that. He’s double dipping.
It’s a great story, a great income, and I always say to people as well, when we talk about Enron and WorldCom and other major frauds, and the reason I’m here to present training to you is so that you don’t let your firm become the next Enron or WorldCom.
Look at the photo on your desk.
[crosstalk] But look at the photo on your mobile telephone of your wife and kids or your husband and kids. That’s why you come to work. If you want to sustain that, if the guy next to you’s committing fraud, then your report of expense is wrong. Cut to a piece of advice, never leave your handbag lying around because that’s an opportunity he or she might take advantage of.
And actually, when the company boat goes bust, think about what you could have done to stop it then. And if you don’t fiddle your expenses, why would you tolerate somebody else fiddling theirs?
Exactly. And I think at the end of the day, this comes back to most of us really want to do good. We’re put in situations and put in environments in which we’re pushed the other direction, but most of us really feel better and are better able to sleep and better able to look at ourselves in the mirror if we do the right thing. And that’s what whistleblowers remind us of. That’s why sometimes they’re attacked so viciously because a lot of people have a guilty conscience around them. They know what’s been going on, but the whistleblower stands up and says, “Actually, this is fraud.” And everyone’s, “Oh boy. I could have done that. I should have done that. I would have done that if I hadn’t had et cetera, et cetera, et cetera.”
So, people really do want to do the right thing, and I think making whistleblowing more mainstream, less an extreme case of someone standing up and torching their career in order to do the right thing, but to make it really literally what many of whistleblowers have told me, “I was just doing my job. Part of my job is challenging authority and challenging groups that go astray. That’s part of… not being the good soldier, not always agreeing and kowtowing to it, but standing up.” And of course that’s easier said than done. But that’s where we need to be in order to make this… everybody’s whistleblowing, and then all of a sudden, whistleblowers don’t have to take this huge risk.
But, part of that goes back to when we were growing up, I got kids, I’ve got a daughter, you might meet some of my children tonight when they come to your book launch. And we were told, “Don’t tell tales,” and we told our kids, “Don’t tell tales.” And that is because we had anxieties or our parents had anxieties about social isolation. And inadvertently, we were teaching them don’t like whistleblowers.
That’s right. Don’t be a snitch. Don’t be a spy. Don’t be a tattletale. That’s right. That’s right.
It’s something we need to work on, I’m sure. But another thing that a whistleblower always wants, and you reference in your book, they want to see action, and your book is a piece of action. I’ve got to commend you for your book because actually, if I look at Allen Jones and other whistleblowers in that book, what you did and what you’ve continued to validate what the whistleblower did. You’ve given them the sense that they did something right because you’ve referenced it in print, and I know you have to almost like the Cosa Nostra, you’re not supposed to talk about certain industries and it will be against you. I’m against that because actually the reason you need to tell people what’s going on is because irrespective of what industry we work in, the industry’s part of a community we work in.
It’s a community our children grow up in, other children grow up in, and we actually represent that community. What kind of community do we want?
We’re all in this together.
If we want this actually… Yeah. I’ve actually fed upon lies and deceit and cheating, and it was, again, Marlan Wilbanks.
He talked about, and it was, he said something along the lines of… “The incentive is not to do the right thing, isn’t it? The incentive is-
That’s right. It’s stacked in such a way that you’re really pushed-
“There’s little incentive to be honest.” That’s what he says.
It’s horrendous really.
It’s horrendous, but that’s unfortunately the way that the playing field is tilted. And we need to re-tilt it, and we really do need… We can do better. And I think what’s happened with endless foreign wars, and what’s happened with the financial collapse, and which happened with really the social instability and political disintegration and disintegration of communities, this comes from something. This is not meteorite strikes or things coming from outer space. This is coming from the policies and the attitudes that we have. And one of them is, who cares about doing the right thing? Just bank as much cash as you can and move on. And that ultimately is toxic for society. Big picture questions that we really need to face.
On the right big picture, did you find, personally, I looked at me and I think, why was I always scruffy? I’m a big picture player. I think I see little things and put them together and say, [crosstalk] Just play out too. Did you get that impression of whistleblowers? That they see big pictures?
Absolutely. And that’s almost a quote from Allen Jones saying, “I’m a good investigator because I try to look at the details and then put them into the larger context, and say, ‘Why is this happening? Who’s doing this in the bigger picture?’” That’s what we need to do with whistleblowing. We need to say, “Why are so many people standing up in the middle of their organisation saying, “Help! Help! Help!” It’s a cry for help really.
Oh, I’ve said, and so, you have a picture of a whistle on the front of your book. I’m a former policeman. When the police was formed in London in 1839, there were no standing telephones let alone mobile telephones. There were no radios. And when I was a police officer in uniform, one of my official appointments I had to carry by the rules was a whistle. And actually, the reason you carried the whistle in 1839 was when you needed help, you blew the whistle. And I’ve always said that whistleblowers are blowing the whistle for help.
Allen Jones did not blow the whistle for money.
Allen Jones blew the whistle… My own personal position is I didn’t blow the whistle for money. I didn’t blow the whistle for a Purple Heart. I didn’t blow the whistle actually for the way I was treated as well at some point. I blew the whistle to make a difference because it was wrong. I don’t… in lotteries, I don’t want to win the money. So I didn’t want the reward. I didn’t want the treatment afterwards whereby I feel as though the industry I worked in to some extent threw me aside. It’s like broken their omertà. And the perverse thing about it is the most honest guy in banking isn’t trusted to work in a bank.
That’s absolutely right.
And that’s the perverse thing.
Because they’re not loyal enough. And obviously, we’re putting loyalty to individuals over a higher loyalty to the corporation or to society. And at that point, bad things can happen and probably will.
Before I end, I’ve got a question from my love, question about your previous book, actually I was going to say about Olive Oil. Is there such a thing as pure virgin olive oil?
There is indeed, and that’s part of the irony of it is that the best olive oils, or good, really good olive oils, are one of the finest foods in the world. And both from a flavour and aroma point of view, and also from a health point of view, they’re the keystone of the Mediterranean diet. The rotten stuff which purports to be extra virgin, which is sold under the same label, which undercuts those good, and drives those people out of business, is just industrial fat. It’s no good for you.
What am I buying in the supermarket?
Industrial fat, almost certainly. I can’t say it because sadly, the labels can’t be trusted and you might crack open a $4.99 bottle of Sainsbury’s special and be wonderful. I don’t know. But the reality is to make really good oil would cost you 15 pounds a litre delivered here in Britain, and not too many people are charging that. And buy cheap, sell dear, that’s the way you make a lot of money if no one’s watching.
So, in that book, is it mafia run? Is it corporate? [crosstalk]
A little bit of everything. In Southern Italy, it’s certainly… and in certain parts of the Mediterranean, the industry is controlled by the mafia, but they’re not… It’s as one Italian prosecutor said, “This is not organised crime, but they are organised criminals.” These are people who bring tankers of 2,200 tons of bad olive oil or other industrial fats like seed oils, and magically turn them as they sail across the waves into low-grade olive oil and then sell it as such. It’s a shame.
If crime is crime, and that includes falsely representing and selling faking mortgage or mis-selling mortgages and you’re doing it in an organised fashion, is that not organised crime?
I believe so. I believe that bankers and pharmaceutical executives and so on have killed far more people than Cosa Nostra.
That’s a really profound statement. So, that brings me almost to the end. Your journey, where’s it taking you and where are heading next time in your research and in the world of whistleblowers?
Well, this is seven years of speaking with folks like you have really gotten my nervous system attuned to whistleblowing and to all of its different forms, to the complexities, to the difficulties, but I really believe in this as a cause and I’m going to do everything I can to help those who are blowing the whistle, those who are making better laws for whistleblowing, those who are representing whistleblowers as everywhere I can. At the same time, one of the chapters of my book, which mercifully got cut out because it’s already too big, it was about a particularly ugly corner of health-care fraud, and that’s my next book. So, yeah, health care in America is almost an oxymoron.
And so, you kind of touched upon it, but incentivise my listeners. Sell whistleblowing, not necessarily that they do whistleblow, but they have good policies, the investors look for good whistleblowing policies, because in the long turn surely, it’s better for everybody. If John Stumpf had been more compliant, he would die with a much better reputation. And actually, when he dies, the money’s not going to go with him. Right? In many years’ time, his grandchildren may Google him. What are they going to find out about him?
That’s right. No, it’s absolutely true. This is better for the corporation and for individual groups. It’s so easy to take it personally, to jump on the individual who questions, and to subject them to the typical whistleblower treatment, but it’s really bad business as well as unjust. And in the longer term, I think the tide of history is turning and we have seen how really unbridled greed can bring us to the brink of some pretty ugly areas. And these people that I write about, it’s dramatic stories, real-life stories, that have really important social impact and social messages for people who want to run a better business. And at the end of the day, there’s good research that shows healthy whistleblower hotlines and healthy whistleblower reporting frameworks are an indication of a healthy organisation. If people feel they can use that, that means they’re letting off steam and they’re raising questions that they know will be dealt with. They don’t then go to the press. They don’t then go to prosecutors.
But it is part of what enhances the evolution of developments in business in an efficient and effective way from a corporate commercial way because they feel as though they can come forward, make suggestions, proposals without that being seen as undermining their manager or proposing that the system was wrong and therefore somebody made a mistake. It’s healthy to have new ideas.
They’re trying to make their company better.
Tom, it’s been fabulous talking to you. Thank you very, very much for your time. Your book, Crisis Conscience: Whistleblowing in an Age of Fraud is a must read for me really. It’s a great read, as I say, with brilliant stories, incredible people, the lawyers representing the whistleblowers, real victims, incredible numbers, and fabulous heroes such as Elin, who’ll be here tonight, Elin Baklid-Kunz, and Allen Jones, aka Chuck Norris. And I recommend it to everybody because actually, I don’t necessarily think it makes the world… I think we know is this corporate fraud, but what will make you feel better I think, I’m a whistleblower after all, is there are some people out there who are making a difference, trying harder, and you might read this book and say, “You know what? I might be a whistleblower, but I’m never going to shun a whistleblower.” And if you do know a whistleblower, to my listeners, go and give them a hug or give them a good word, because there’s nothing like that to say to them, “I believe in you and you still have some friends here,” because it is a very isolating experience.
I think you’ve raised a critical point, and that is that one of the great predictors of whether someone will blow the whistle is whether they know about whistleblowing, whether they’ve read about or heard about the scenario that says, “Wait, I can object to this.” And I think celebrating people who do that and helping them is one of the most concrete ways we can make a better organisation or a better world.
And a better world for your kids.
Tom, it’s been great talking to you. Thanks very much for your time.
Thank you very much, Martin. It’s been a pleasure.