The big money to be made in finance now is from turning in your own firm
BRADLEY BIRKENFELD (pictured) was conspicuously absent from a press conference on September 11th to announce his award of $104m from the Internal Revenue Service (IRS) for exposing schemes used by UBS, his former employer, to help Americans avoid taxes. That’s because Mr Birkenfeld’s road to riches has been anything but smooth. He is under house arrest until November, having been released from prison only recently for his role in helping a property developer dodge the taxman.
Mr Birkenfeld came forward in 2007 with information on how UBS helped clients hide taxable income. Some revelations were routine, others anything but: Mr Birkenfeld himself stuffed a customer’s undeclared diamonds into a toothpaste tube to move them across borders. Related charges were settled by UBS in 2009; the bank paid a fine of $780m, from which Mr Birkenfeld will get his award.
Encouraging whistleblowing is a good thing. But the size of Mr Birkenfeld’s award may have perverse results. Employees now have a big incentive to report crimes to the government rather than to their employers. That may not be the best way to stop wrongdoing.