Article by John Peterson, Managing Attorney, FBR.
You probably don’t think too much about those small TVs in the back of the seats on airplanes beyond checking out your entertainment options. Maybe, on a long enough flight, you have found yourself wondering who makes those in-flight TVs. It may be Panasonic Avionics, a company that just paid an enormous fine to settle bribery-related charges with the U.S. government. If you’re looking for in-flight entertainment, how about the story of the whistleblower who picked up a mouth-watering $28 million whistleblower reward 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 of the whistleblower who missed the mark but got a $28 million award 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 surprisingly, 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.
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. 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
In order for the whistleblower to get the reward, the fine itself had to be substantial. 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 the whistleblower reward story gets good. Just last week there was another twist in the saga of the whistleblower. Illinois-based lawyers Christopher Connors and Andy Rickman shared that they had represented the whistleblower who started the whole investigation and who obtained a $28 million whistleblower award. It turns out the investigation had an unexpected start. They revealed 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 distributes the whistleblower rewards) 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 who missed the mark get a $28 million award with information that didn’t reveal the scheme? It all comes down to a quirk of the whistleblower program rules.
The Reward
The U.S. operates a whistleblower award 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, it is still possible to obtain a reward if the information leads to a fine. That begs the question: How can incorrect information lead to whistleblower rewards? 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 it did open an investigation, and during the investigation of the whistleblower’s tip, the U.S. authorities independently uncovered the scheme in the Middle East (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). Getting a $28 million award is definitely a great consolation prize!
The Upshot
This is good news for whistleblowers, as it highlights some key benefits of the U.S. whistleblower rewards 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 in-flight entertainment isn’t working, or better yet, take our online whistleblower evaluation to see if you might be the next whistleblower award recipient. Working with attorneys comes with a plethora of benefits, as the whistleblower who missed the mark but still got a $28 million award can attest. The U.S. authorities receive tens of thousands of tips every year; experienced lawyers can ensure your information is submitted successfully, as well as protect you from retaliation. Get a free, anonymous consultation to talk with an attorney about whistleblower rewards.
