Nation’s First 1-800 Whistleblower Hotline Part Of Early Warning System To Prevent Corporate Crime in California

Santa Monica — — Legislation to establish an early warning system to protect against corporate fraud passed the California Assembly today and heads to the Senate for concurrence before reaching the Governor’s desk for final approval. The two bills create new protections for workers who blow the whistle on corporate fraud and punish companies that stay silent about financial deceptions. The proposals also establish the nation’s first 1-800 Whistleblower Hotline to give employees confidential access to the Attorney General.

SB 777 and SB 523, authored by State Senator Martha Escutia (D-Whittier), create the nation’s toughest corporate accountability standard by requiring companies to come forward with evidence of financial fraud and other corporate abuses said the measures’ sponsor, the Foundation for Taxpayer and Consumer Rights (FTCR). The two bills were one proposal until this week, when they were split for technical reasons, and for this reason return to the Senate for concurrence before going to the Governor.

“These bills give California workers the protection they need to blow the whistle on corporate crime without fear of reprisal,” said FTCR consumer advocate Carmen Balber. “The honest employees inside corporations are our best line of defense against the rise and fall of the next Enron. This legislation proves to those employees that California wants them to come forward with vital information to protect the public, and punishes those corporations which fail to bring that information to light.”

FTCR sponsored similar legislation (SB 783) in 2002 that passed through the California Legislature but was vetoed by Governor Davis. The Governor indicated that he would support the proposal with slight modifications which were incorporated into the legislation this year.

“A year after Congress passed legislation to crack down on corporate fraud, the number of companies caught in the act hasn’t even slowed down. These proposals will stop financial fraud early, rather than wait until the damage is done. While saving investors’ money and workers’ jobs, these bills will also protect the state against further fiscal meltdown,” said Balber.

SB 777 and SB 523 will:

• Provide new protections to employees who refuse to participate in illegal activity or blow the whistle on illegalities at their company or organization.
• Make it easier for whistleblowers to avoid retribution and to fight retaliatory actions by employers.
• Establish a Whistleblower Hotline to provide employees with confidential access to law enforcement authorities and require employers to post this number, and notice of whistleblower rights, in the workplace.
• Impose up to $1 million fine on corporations that withhold information about financial fraud.