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The Landscape of Whistleblowing: A Personal and Professional Perspective
Timothy Hediger CFE, CIA, CCSA, ACDA, DoD IASO
Owner and Consultant
Polaris Risk Services, LLC
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The Landscape of Whistleblowing Overview
Our conversations today: 1. My Whistleblower Story
2. Your Environment
3. Whistleblower Program Problems
4. Solving Those Problems
5. Concluding Thoughts
6. Questions
Poll
• I work for: • State, Provincial, or Local Government
• Federal Government
• Non-Profit Organization
• Large Enterprise
• Accounting/Consulting Firm
• Other
Poll
– I am a chief audit executive or the lead investigator in
my department: • Yes
• No
My Whistleblower Story An Introduction
Director of Internal Audit U.S. Dept. of Defense Contractor
Helping wounded warriors and disabled populations
Locations throughout United States
Fifteen years of COSO, CoBIT, and ACFE
experience
Deloitte and Touche alum
My Whistleblower Story An Introduction
Source: www.nish.org/
My Whistleblower Story It all started with an audit...
Auditing a mission-critical ratio: •The 75 percent disabled direct labor ratio is a statutory requirement of
the Javits Wagner O’Day (JWOD) Act.
•A minimum of 75 percent of the agency-wide direct labor hours must
be performed by people with severe disabilities.
•The agency-wide disabled direct labor ratio is measured in labor
hours.
•This ratio must be maintained for the entire time an NPA participates
in the AbilityOne Program.
Source: www.nish.org/
My Whistleblower Story It all started with an audit...
Auditing a mission-critical ratio: •Employees must have a bona-fide “severe disability”
•Severe disability must be validated and documented
every year
57 percent, not 75 percent…
Something’s not right!
My Whistleblower Story It all started with an audit...
My Whistleblower Story Reporting to Management
2 Compliance False Claims NISH Ratios
Truth in Negotiations Act (TINA)
3 Financial False Claims Kickbacks
False labor record-keeping
False billing
5 Total False Claims
My Whistleblower Story Reporting to Management
Seventeen written observations to
management @ #4: Denied promotion
@ #9: Fired internal informant
@ #12: Forced to cancel all audits
@ #13: Demoted
@ #17: Reported issues to external auditor (SAS 99) and
corporate counsel
Three weeks later, position was eliminated
My Whistleblower Story Federal Government Investigation
After observation #4, reported findings to Congressman
Silvestre Reyes (TX-16)
Investigated by FBI, Army CID, and DCIS
Wore a recording device (wire)
Interviewed informants and employees
Discovered additional false claims
My Whistleblower Story Settlement and Quotes
“Providing jobs for disabled workers is a critical purpose of the AbilityOne
Program,” said Tony West, Assistant Attorney General for the Civil Division.
“This resolution demonstrates that the Department will vigorously pursue
government contractors who overcharge on their contracts, as well as misstate
the number of non-disabled workers they actually employ.”(1)
“Ensuring the integrity of federal contracting programs is one of the objectives
of the Affirmative Civil Enforcement Unit in the U.S. Attorney’s Office,” said
Benjamin B. Wagner, U.S. Attorney for the Eastern District of
California. “Results like these help accomplish that objective.”(1)
“Today’s announcement is a testament to our solid and continued partnership
with the Department of Justice and other law enforcement agencies in the fight
against fraud,” said James Podolak, Director of the Army Criminal Investigation
Command’s Major Procurement Fraud Unit. “This clearly demonstrates our
continued commitment to rooting out fraud ... in the Department of the Army
and that our commitment is stronger than ever.”(1)
(1) www.justice.gov/opa/pr/2011/July/11-civ-902.html
My Whistleblower Story Family Struggles...
12.5 percent unemployment(1)
Both breadwinners out of work
Start new businesses
Foreclosure
Asset sale
Depleted savings
Moving to North Carolina
Second car sold
(1) http://data.bls.gov/timeseries/LASST06000003
Your Environment Would you be a whistleblower?
78 percent of respondents would report
wrongdoing in the workplace if it could: Be done anonymously
Be done without retaliation
Result in a monetary award
That’s a lot of ifs!
Your Environment What does it take to be a whistleblower?
5 variables to a person blowing the whistle Severity of harm
Certainty of the harm
Degree of involvement
Cost of acting
Certainty of the situation
Your Environment Is your enterprise friendly to tips? REALLY?
We know that: Tips are the number one means by which fraud is
detected.(1)
Whistleblowing is an inherently risky endeavor.
Whistleblowers put forethought into their actions.
Investigators must vet whistleblowers thoroughly.
(1) www.acfe.com/rttn/
Your Environment What federal laws protect whistleblowers?
SUMMARY OF LAWS
Occupational Safety and Health Act (OSHA)
Surface Transportation Assistance Act (STAA)
Asbestos Hazard Emergency Response Act International
Safe Container Act
Safe Drinking Water Act
Federal Water Pollution Control Act
Toxic Substances Control Act
Solid Waste Disposal Act
Clean Air Act
Comprehensive Environmental Response, Compensation,
and Liability Act (SUPERFUND)
Energy Reorganization Act
AIR21 Act
Sarbanes Oxley Act
Pipeline Safety Improvement Act
Federal Railroad Safety Act
National Transit Systems Security Act
Consumer Product Safety Improvement Act
Dodd-Frank Act
Seaman’s Protection Act
Affordable Care Act
FDA Food Safety Modernization Act
SUMMARY OF REGULATIONS 29 CFR Part 1977
29 CFR Part 1978
29 CFR Part 1979
29 CFR Part 1980
29 CFR Part 1981
29 CFR Part 1982
29 CFR Part 1983
29 CFR Part 24
Source: http://www.whistleblowers.gov/
QUESTIONS?
Timothy Hediger CFE, CIA, CCSA, ACDA, DoD IASO
Twitter: @trhediger
Email: [email protected]
Telephone: 919-397-3254
The Landscape of Whistleblowing A Personal and Professional Perspective
January 26, 2012 Thank you
Timothy Hediger The Landscape of Whistleblowing—A Personal and Professional Perspective
Organization
919-397-3254
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