Article by John Joy, Managing Attorney, FTI Law.
If you’ve ever been on a flight and wondered who makes those small TVs in the back of the seat, it may be Panasonic Avionics, a company that just paid an enormous fine to settle bribery-related charges with the U.S. government. But if you’re looking for in-flight entertainment, how about the story of the whistleblower who picked up a mouth-watering $28 million for starting the investigation, even though they didn’t work at the company and missed the mark on the details of the bribery.
The Bribery Backstory
The story starts back in the late 2000’s when Panasonic was selling in-flight entertainment systems in the Middle East. Panasonic was negotiating a $100 million deal with a Middle-Eastern airline, a significant amount by any standard and likely an important deal for the company. So important in fact, that during the negotiations with the airline, Panasonic secretly offered a side-deal to the airline employee who they were dealing with in the negotiations: a “consulting” job worth almost $1 million. Not surprinsgly, the airline employee took the consulting job and Panasonic got the $100 million deal, with both parties making sure the airline didn’t find out about the side-deal. Was the consulting job legitimate? Almost certainly not.
Documents filed by the Department of Justice show that the employee who got offered the side-deal had influence over who got the $100 million contract and he had lobbied for Panasonic while he was negotiating his new “consulting” job with them. Shortly after Panasonic got the $100 million deal, they hired him as a consultant and he proceeded to do “minimal” consulting work for 6 years. When an internal auditor at Panasonic got suspicious and tried to find out what “consulting” he was doing, they couldn’t find a single task that he had been assigned in a twelve month period.
The Fine
While Panasonic never admitted they bribed the employee with the consultancy job to get the $100 million deal, this was heavily implied by the Department of Justice filings which politely called it a “scheme” to retain consultants for “improper purposes.” After a lengthy investigation by the U.S. authorities, Panasonic settled the charges for $280 million, admitting they had “willfully falsified” records and retained consultants for “improper purposes.”
The Whistleblower
Now this is where it gets good. Just last week there was another twist in the saga when Illinois-based lawyers Christopher Connors and Andy Rickman revealed that they had represented the whistleblower who started the whole investigation and who obtained a $28 million whistleblower award. However, it turns out that the whistleblower was not an employee of Panasonic and didn’t provide any of the details of the scheme in the Middle East. In fact, the Office of the Whistleblower (who distribute the whistleblower awards) even admitted that the charges against Panasonic were not based on assistance provided by the whistleblower nor did they have a “strong nexus” with what the whistleblower reported. So why did the whistleblower get $28 million for apparently getting it wrong? It all comes down to a quirk of the whistleblower reward rules.
The Reward
The U.S. operates a whistleblower reward program where if you provide information that leads to a fine, you can recover 10-30% of the fine. (If you think you have information, take our online whistleblower evaluation). It’s important to note that 10% is the minimum that can be awarded, so even if your information is wrong, you can still take home a payout if the information leads to a fine. That begs the question: How can incorrect information lead to a fine? The Panasonic case answers that question.
The whistleblower reported conduct in Europe and Asia that didn’t lead the authorities to bring any charges, but, during the investigation of the whistleblowers tip, the U.S. authorities independently uncovered the scheme in the Middle East because Panasonic reported it. The whistleblower didn’t provide any information on the scheme in the Middle East but his information started the investigation in the first place, meaning that the whistleblower was entitled to a reward. Because the whistleblower didn’t provide any information on the scheme in the Middle East they got the minimum recovery, but this still amounted to a whopping $28 million payout (10% of the $280 million fine that Panasonic paid).
The Upshot
This is good news for whistleblowers, as it highlights some key benefits of the U.S. whistleblower program:
- You don’t have to work at a company to report misconduct at that company
- Your information doesn’t have to be correct to get an award
- Even if you only get the minimum (10%), that can still amount to a multi-million dollar payout.
That’s something to think about next time the inflight entertainment isn’t working, or better yet, take our online whistleblower evaluation to see if you might be the next whistleblower award recipient.
