Enlisting Whistleblowers to Combat Crime in the Fossil Fuel and Industrial Logging Industries

from NWC's Executive Director, John Kostyack

Published on December 09, 2019

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Enlisting Whistleblowers to Combat Crime in the Fossil Fuel and Industrial Logging Industries

Today the National Whistleblower Center launches its Climate Corruption Campaign. I would like to share why I believe this campaign and the whistleblowers who will be at the heart of it are so badly needed.

For those fossil fuel and industrial logging company executives who may be reading this and be familiar with the corruption I describe: I encourage you to contact the National Whistleblower Center on our secure intake form and engage with us in a conversation about becoming a confidential whistleblower!

Climate Emergency

Last month, 11,000 scientists from around the world came together to issue a clarion call: “planet Earth is facing a climate emergency.” They predicted that “untold suffering” would ensue without an “immense increase” in effort to address the climate crisis.

I have always believed we are an intelligent species, quite capable of rescuing our civilization from the miseries of runaway climate change. The impressive gains in renewable energy and energy efficiency in the past few decades have only reinforced this belief. We now have the technology we need to get us most of the way to solving the climate puzzle and we have the ingenuity to take us the rest of the way.

Yet just last week, the Global Carbon Project released a report finding that in 2019, despite impressive progress with clean energy, global fossil fuel emissions had increased for the third straight year. Meanwhile, a blizzard of studies strengthened the links between rising carbon emissions from fossil fuels, deforestation, and other sources and the intensification of fires, floods, and other extreme weather events as well as rapid ice melt on the world’s glaciers.

The urgent need for action is clear. We must not only bear down on proven strategies like rapidly deploying wind and solar energy. We also must finally come to grips with what is happening inside the companies producing fossil fuels. (I will write at a later date about coming to grips with the illegal timber trade.)

Finding out the truth about fossil fuel companies

When fossil fuel companies pledge to reduce the pollution driving climate change, does this mean that a meaningful transition to a carbon-constrained future is truly underway inside the companies? The announcement last week by Spanish energy giant Repsol is encouraging.

With a remarkable degree of specificity, Repsol committed to achieving net-zero carbon emissions by 2050 – the first major fossil fuel company to align itself with the target in the Paris Agreement of staying within a 2°C global temperature increase above preindustrial levels. This commitment was backed up by a US$5.3B write-down in the value of its oil and gas assets, suggesting that Repsol is truly adjusting to the new reality.

With respect to the rest of the major fossil fuel companies, the picture is far murkier. Are they working in good faith on a pathway toward aligning themselves with Paris targets? Or are they planning to continue pollution-as-usual without disclosing the risks? If large-scale, legally-actionable fraud is indeed taking place inside of companies, what can be done about it?

Enlisting Whistleblowers

This is where whistleblowers come in. A host of laws enacted by the U.S. Congress and the states in the past few decades encourage whistleblowers to report illegal corporate fraud to authorities. The best of these laws, such as state and federal False Claims Acts and the federal laws on tax, securities and commodities fraud, allow whistleblowers to report crimes without revealing their identities. They also provide financial rewards to whistleblowers for contributing to successful prosecutions, with the size of the reward linked to the amount of the monetary sanctions recovered and importance of the whistleblower’s evidence to the case. These rewards are available to whistleblowers regardless of U.S. citizenship and apply to prosecutions against U.S. companies as well as foreign companies doing business in the U.S.

The Climate Corruption Campaign will be the first sustained effort to educate potential whistleblowers in fossil fuel companies about their rights under these reward laws – especially those laws focused on fraud – and to help them secure qualified attorneys, participate in prosecutions and win financial rewards if those prosecutions are successful.

One potentially actionable fraud is in connection with fossil fuel companies’ dissemination of inaccurate information regarding the risks of climate change. Top officials in the oil and gas and coal industries have known since at least the 1980s that their products are irreparably damaging the world’s climate.Yet leading companies financed, and continue to finance to this day, a multi-decade disinformation campaign aimed at creating confusion about climate change and slowing policy action. NWC Chief Counsel Sharon Eubanks recently gave Congressional testimony on the links between this campaign and the similar one waged by the tobacco industry to confuse the public about harms caused by its product.

Another potentially actionable fraud relates to how fossil fuel companies have addressed stranded assets – assets that lose value due to regulatory, economic and physical shocks linked to climate change. Despite making various statements in support of the Paris Agreement, many companies continue to hatch infrastructure development plans that would guarantee large emissions increases over the coming decades. Are companies recognizing the reality of a carbon-constrained world in valuing these assets?

Numerous financial analyses suggest that climate change-related risks may not be properly accounted for. For example, in September 2019 the investment advisory firm Carbon Tracker released a report showing that in 2018 oil and gas companies sanctioned over US$50B worth of new projects. Many of these projects would not be viable if world leaders were to follow through on the Paris Agreement’s pledges to stay within the limit of 2°C global temperature increase.

Similarly, earlier this year the Rocky Mountain Institute concluded that by 2035, over 90 percent of proposed combined-cycle natural gas power plants in the United States, if built, would be uneconomic to run compared to the cost of building a new clean energy portfolio. The authors found that plant owners could face “tens of billions of dollars in book value … without a clear source of future revenues given competition from clean energy.” They made similar findings with respect to natural gas pipelines.

Only company insiders would know the extent to which the impact of climate change-related risks on financial assets have been illegally concealed from shareholders, the IRS and the public. The Climate Corruption Campaign will help these insiders secure confidential whistleblower status so that the facts can safely be delivered to law enforcement authorities.

Of course, securing and delivering evidence of crimes is not enough. Winning cases with meaningful sanctions – sanctions that truly bring corrupt actions to a halt – is also critical. Our campaign will work closely with both whistleblowers and prosecutors to bring about case outcomes that are truly meaningful.

Thanks to the whistleblowers who join this campaign, our society will be far better positioned to rein in illegal behavior in the industries that currently hold so much sway over our planet’s future.

Report Fraud Now