With an influx of overseas whistleblowers participating in a US government program that offers rewards for uncovering legal violations, it’s not uncommon for attorney Erika Kelton to get international calls from people “who are extremely uncomfortable with the business practices that exist internationally.”

“For whistleblowers who aren't in the United States, the risks can be beyond losing your job and being blackballed,” said Kelton, an attorney with Phillips and Cohen – a firm that exclusively represents whistleblowers.

“It’s a massive amount of risk.”

More than 400 participants in the Securities and Exchange Commission’s Office of the Whistleblower program were operating overseas, according to its latest annual report. The overseas whistleblowers made up 11.8 per cent of all participants in the program’s “historic” 2013 fiscal year, which saw a total of $14 million paid to whistleblowers as rewards for their contributions to anti-fraud enforcement.

Overseas Whistleblowers Denied Certain Protection

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Dozens of participants in the program came from the UK, Canada, China, India and Russia. But observers warn of a chilling period for overseas participants after a US court ruled that a former compliance officer with a Chinese-subsidiary of Siemens was not entitled to the same anti-retaliation provisions that American whistleblowers are afforded in the Dodd-Frank Act.

While overseas and American whistleblowers receive the same monetary rewards – 10 to 30 per cent of sanctions collected – Kelton says it’s not uncommon for someone outside the US to back out of a whistleblower submission at the last minute.

“When it comes up, I always say, ‘This is your decision, you have to be comfortable with the risks',” she said, adding that her clients have been threatened by former employers or been spooked by “strange cars following them or taps on their windows in the middle of the night.”

“We’ve had a number of very strong cases where we’ve worked with an individual for a while to prepare a submission. Then at the very end that individual just doesn’t feel comfortable,” Kelton said.

Kevin LaCroix, attorney and frequent author on the subject, was encouraged by increases in out-of-country whistleblowers, writing that the increased international participation could “lead to increased revelation of [Foreign Corrupt Practices Act] violations.”

But after the decision to deny anti-retaliation protection to the Siemens whistleblower in October 2013, LaCroix warned that it “could put a damper on overseas whistleblowing.

“Without the protection of the anti-retaliation provisions, prospective overseas whistleblowers could be deterred from submitting reports to the SEC,” he wrote in a post on the D&O Diary. (LaCroix posted a copy of the judge's decision in the Siemens decision here.)

For her part, Kelton says any chilling period for out-of-country whistleblowers in the wake of the Siemens decision should only be "momentary." Case law on the Dodd-Frank anti-retaliation provision for overseas whistleblowers remains “underdeveloped,” she says, and each new challenge will be based on the specific facts of the case – which could vary dramatically from the Siemens decision. In that case, the judge noted that the only connection the US was "the fact that Siemens has ADRs traded on an American exhange."

"Such an intrusion into the employment law of a foreign nation could disrupt the 'delicate field of international relations,'" District Judge William Pauley wrote.

In slightly different circumstances, with a stronger US connection, the decision could be different, Kelton says.

Though Dodd-Frank provisions allow whistleblowers a level of anonymity, Kelton expects that some will soon allow their stories to be publicized – inspiring others by exposing the level of “extreme securities fraud” they helped to eradicate and handsome rewards they received in return.

“It’s heartening because I think that the program really promotes transparency,” she said.

Whistleblower Tips, By Country

The top 12 sources of foreign whistleblower tips in 2013:

1.  U.K. - 68
2.  Canada - 62
3. China - 52
4. Russia - 20
5. India - 18
6. Ireland - 18
7. Australia - 15
8. Germany - 11
9. New Zealand - 10
10. Italy - 8
11. Switzerland - 8
12. Turkey - 8

– US Securities and Exchange Commission, Office of the Whistleblower