13 ms·

SEC awards $22M to Monsanto whistleblower

285 points by rch 10y ago

curiousgal 10y ago
Excuse my language but holy shit! This is more than enticing!
kiba 10y ago
So the shareholders in that company got screwed, along with the whistle-blower getting part of that settlement? Doesn't that create bad incentive for whistleblowers not to do anything until it's too late?
- cloudjacker 10y ago
  > So the shareholders in that company got screwed But did they? The company already had rainy day money set aside, so it was adequately priced in to the share price by now. Did the executive wait till after the regulatory filing came out with the misstatement just so they could rat to the SEC? Maybe, there's no consequence in doing things that way. In other more detailed cases, an employee tries to raise an issue internally and gets ignored or stonewalled by higher ups, and then eventually gets to the SEC. These things take time, so it would be equally as difficult to define 'bad incentive, too late', let alone being legally inconsequential from the government's perspective to the whistleblower
- NTDF9 10y ago
  The incentive is clear. Whistleblow and you get a reward. The whistleblowers are humans who can't really wait until later and later. It risks being found out or losing the window of whistleblowing. Also, most people are not this analytical. If they have the balls to whistleblow, they will, usually right away (after some due diligence)
  - bagacrap 10y ago
    It seems like the incentive is to become an accountant and seek employment at the shadiest big company you can find in hopes of hitting a whistleblower jackpot.
    - NTDF9 10y ago
      That's a shitty bet to take in life, considering that the likelihood is as good as winning the lottery. At least the lottery ticket costs just $10 and not a few years of life.
- S_Daedalus 10y ago
  Are you really claiming that a $22M loss is a "screwing" for Monsanto?
  - Alex63 10y ago
    Monsanto's punishment was an $80M settlement. The $22M was just the reward to the whistleblower.
    - gingerrr 10y ago
      Monsanto posted a gross profit in 2015 of $8 billion [1]. I doubt losing 1% of their earnings for a single year qualifies as being "screwed". -- [1]: http://www.monsanto.com/investors/documents/2015/2015.10.06_mon_q4f15_earnings.pdf http://www.monsanto.com/investors/documents/2015/2015.10.06_... - "Gross Profits: $8,182 M" edit: accidentally a word
      - staticvar 10y ago
        God. Put it in those terms and it feels like the punishment for corporate tax fraud is a parking ticket.
        S_Daedalus 10y ago
        Even worse, it's just written off as a cost of doing business.
      - rtpg 10y ago
        It's for accounting improprieties, not a drug hustle. The fine is proportional to the crime. Even if we charged $800 million for this, would we charge $800 million for them not having a handicapped parking space at one of their offices? Comparing to overall profits is counterproductive and dishonest. The punishment should fit the crime.
        TheCoelacanth 10y ago
- danudey 10y ago
  Only if you're the only person who knows. If it's more well known than that it's a race to be the first person to whistle blow.
- deleted 10y ago
  [deleted]
- compiler-guy 10y ago
  The shareholders, by the act of buying and holding the shares, expose themselves to all risks of owning a piece of the company. That the company may engage in accounting fraud is one of those risks. The shareholders also benefited from the overstated earnings.
- OliverJones 10y ago
  In the 1970s the newly established EPA offered bounties to environmental whistleblowers, who dropped a dime on polluters and helped it make the case against them. It was an expedient way of detecting violators and enforcing the law, because it takes both knowledge of facts and expertise in science to do that enforcement. Engaging with whistleblowers helped the new EPA overcome their understaffing and inexperience. For example, fact: "that pipe coming out of that factory puts polychlorinated biphenyls into the Housatonic River at night." science: PCBs concentrate in fish. They mess up the immune systems of mammals, including people, who catch and eat those fish. The proceeds of these bounties early in the life of the Clean Water Act founded some long-lasting watchdog orgs, such as the Hudson Riverkeepers. It is good for the government to create incentives for people with facts and expertise to help them prosecute financial crimes, for the same reasons. Hopefully some of these big bounties will go to establishing long-lived watchdog organizations to keep would-be fraudsters honest.
josho 10y ago
A corporate whistleblower gets a payday (a good thing). While whistleblowers like Snowden that reveal illegal government programs risk the death penalty if they ever sit foot in US soil again. This is progress, but we've got farther to go.
- S_Daedalus 10y ago
  The state is never going to learn to forgive insults against itself; you have to legislate a state of affairs which constrains them.
  - deleted 10y ago
    [deleted]
- BinaryIdiot 10y ago
  There is a huge difference you're ignoring. The act of whistleblowing on Monsanto was unlikely to be illegal (at least I do not know what laws that could be used against the whistileblower, ignoring any whistleblower protections). Snowden, however, violated numerous amounts of laws in his act of whistleblowing. Now I'm not saying what Snowden did was right or wrong but these two are not equatable. Government protections for whistleblowers are important but protecting someone who had to break the law in order to whistleblow versus someone who did not are two very different things and I think mixing the topics may take away from the importance of one versus the other (protection from retaliation through a corporation versus being locked up due to the government) or worse simply conflate them and their associated arguments.
  - leereeves 10y ago
    If Monsanto wrote the law, blowing the whistle on Monsanto would also be illegal. That's not a difference of kind, but of power.
  - CaptSpify 10y ago
    Snowden did however try to run it up the chain of command, and was told to sit down and shut up. Once all legal means have been exhausted, going illegal is generally acceptable, IMO
atjoslin 10y ago
Cool, he got paid and all, but keep in mind that's $22M of yours and my tax money. EDIT: Nevermind, I did not read the article before commenting. My mistake.
- yalogin 10y ago
  Isn't it from the settlement money?
  - atjoslin 10y ago
    Yep. I'm already sour against the IRS from just doing some tax calculations, saw the article title, and didn't even read the article before commenting! Edited my comment.
  - randyrand 10y ago
    Interestingly the settlement money still does a bit affect our taxes still. Monsanto makes $80 million less in revenue this year due to the settlement. ~$80 mill less profit ~= $20 mill fewer taxes.
    - chipperyman573 10y ago
      Correct me if I'm wrong, but they don't make $80M less, they just lose $80M from the amount they have made in the past (already taxed)
      - randyrand 10y ago
        This would be counted as a loss for this years tax purposes. So they will pay fewer taxes this year.
        sokoloff 10y ago
        Settlements that are classified as penalties are generally not tax deductible. Settlements that are classified as remedial/restorative generally are. This was no doubt a topic of discussion and planning before the settlement was entered into. The article repeatedly refers to it as a "penalty", but it's unclear if that's colloquial or specifically informed language.
randyrand 10y ago
I have nothing against Monsanto and think they are a great company, but I'm glad to hear this. Whistleblower programs are important.
- Rondom 10y ago
  Can you elaborate what makes you think that Monsanto is a "great company"? I am genuinely interested.
  - deleted 10y ago
    [deleted]
  - CobrastanJorji 10y ago
    For one, their executives are known to report accounting improprieties that they encounter to the SEC :)
    - tanderson92 10y ago
      That executive is somewhat less likely to report future accounting improprieties ;)
      - hiddenkrypt 10y ago
        True, but imagine if you were one of the remaining executives. You just saw that guy rat you all out and run off with 22M$. I think that they're going to have to be on their toes, because now the rest of them know exactly what will happen if there's any malfeasance.
  - randyrand 10y ago
    I'm a big proponent of GMOs and Monsanto has been making very good progress there. The controversy over them suing innocent farmers is exaggerated, IMO. Overall I think they are an undoubtedly hugely beneficial company to society.
    - 10y ago
MereKatMoves 10y ago
"The SEC had said that Monsanto lacked sufficient internal controls to account for millions of dollars in rebates that it offered to retailers and distributors. It ultimately booked a sizeable amount of revenue, but then failed to recognize the costs of the rebate programs on its books." This is what happens when you take glyphosate and multiply the cost/production price by well over 50x and package it as some miracle product. If your marketing strategy is to mislead every single purchaser then it is no surprise that you lose sight of how many strands of bullshit marketing you are running. Roundup is a great example of one of those products that are cash cows for companies that market themselves as "the best solution" Every.Single.One of the roundup products is glyphosate, and that stuff will kill anything and is very very cheap. Dear readers be aware - glyphosate is a chemical that is present in all weedkillers (except the really shitty ones) so buying the brand name is a total waste of your money, and the amazing people at Roundup HQ know it. Buy the no-name, unbranded stuff. I can understand Coca Cola etc selling sugar water for huge margins, but I pull my hair out when it comes to something like glyphosate. That's how I get my roots under control.
- rmason 10y ago
  You're incorrect. Glysophate is part of a lot of tank mix combos marketed to farmers but no where near all.
  - MereKatMoves 10y ago
    yes that's true. What I was pointing out was that the consumer base is being totally ripped off Thanks for clarifying. It remains the case that glyphosate is what kills things most effectively. Anything else is just flavor
    - rmason 10y ago
      If you're looking for a contact weed killer, you're interested in only killing some perennials and if your seed has been genetically engineered to be Roundup resistant then it's a top choice. That's virtually all soybeans but still a minority of corn and no wheat or alfalfa. I'm old enough to have been running a fertilizer plant here in Michigan when Roundup was first introduced back in the seventies. The cost was 4x what it is now and it was mainly used as a quackgrass killer back then.
tempodox 10y ago
... as opposed to Obama, who just wants to put them in jail.
- ryporter 10y ago
  Obama has not put any corporate whistleblowers in jail. We can debate the merits of prosecuting those who leak government secrets, but that is a separate issue from this one.
  - tempodox 10y ago
    Yes, he did. The NSA is as much a part of Corporate America as anything.
pjc50 10y ago
Don't worry, I'm sure a company that misstates its earnings will be completely honest about any possible negative side effects of GMO organisms.
ccvannorman 10y ago
>A former Monsanto Co (MON.N) executive who tipped the U.S. Securities and Exchange Commission to accounting improprieties involving the company's top-selling Roundup product has been awarded more than $22 million from the agency's whistleblower program, the executive's lawyer said on Tuesday. Yes, please -- Let this be the default way it works at the high executive levels of big corporations. The corp should be terrified of committing fraud because they should know that a whistleblower has every incentive to rat them out and walk away a millionaire.
arca_vorago 10y ago
I worked in bigag for a while, quit on principle when I understood what Monsanto really was. They are super shady, and honestly they are very damage-control aggressive, so I'm surprised this actually happened, but it's a start. Now can we get SCOTUS to force Thomas to recuse himself from Monsanto cases? Can we also get the FDA to purge it's ranks of Monsanto formers that are subverting the FDA's mandate? How about we use some anti-trust laws to take care of the backdoor deals between them and Dupont? Don't beleive for one second any of the people claiming Monsanto is a force for good in the world.

285 points by rch 10y ago

Excuse my language but holy shit! This is more than enticing!

kiba 10y ago

So the shareholders in that company got screwed, along with the whistle-blower getting part of that settlement? Doesn't that create bad incentive for whistleblowers not to do anything until it's too late?

cloudjacker 10y ago
> So the shareholders in that company got screwed But did they? The company already had rainy day money set aside, so it was adequately priced in to the share price by now. Did the executive wait till after the regulatory filing came out with the misstatement just so they could rat to the SEC? Maybe, there's no consequence in doing things that way. In other more detailed cases, an employee tries to raise an issue internally and gets ignored or stonewalled by higher ups, and then eventually gets to the SEC. These things take time, so it would be equally as difficult to define 'bad incentive, too late', let alone being legally inconsequential from the government's perspective to the whistleblower
NTDF9 10y ago
The incentive is clear. Whistleblow and you get a reward. The whistleblowers are humans who can't really wait until later and later. It risks being found out or losing the window of whistleblowing. Also, most people are not this analytical. If they have the balls to whistleblow, they will, usually right away (after some due diligence)
- bagacrap 10y ago
  It seems like the incentive is to become an accountant and seek employment at the shadiest big company you can find in hopes of hitting a whistleblower jackpot.
  - NTDF9 10y ago
    That's a shitty bet to take in life, considering that the likelihood is as good as winning the lottery. At least the lottery ticket costs just $10 and not a few years of life.
S_Daedalus 10y ago
Are you really claiming that a $22M loss is a "screwing" for Monsanto?
- Alex63 10y ago
  Monsanto's punishment was an $80M settlement. The $22M was just the reward to the whistleblower.
  - gingerrr 10y ago
    Monsanto posted a gross profit in 2015 of $8 billion [1]. I doubt losing 1% of their earnings for a single year qualifies as being "screwed". -- [1]: http://www.monsanto.com/investors/documents/2015/2015.10.06_mon_q4f15_earnings.pdf http://www.monsanto.com/investors/documents/2015/2015.10.06_... - "Gross Profits: $8,182 M" edit: accidentally a word
    - staticvar 10y ago
      God. Put it in those terms and it feels like the punishment for corporate tax fraud is a parking ticket.
      - S_Daedalus 10y ago
        Even worse, it's just written off as a cost of doing business.
    - rtpg 10y ago
      It's for accounting improprieties, not a drug hustle. The fine is proportional to the crime. Even if we charged $800 million for this, would we charge $800 million for them not having a handicapped parking space at one of their offices? Comparing to overall profits is counterproductive and dishonest. The punishment should fit the crime.
      - TheCoelacanth 10y ago
danudey 10y ago
Only if you're the only person who knows. If it's more well known than that it's a race to be the first person to whistle blow.
deleted 10y ago
[deleted]
compiler-guy 10y ago
The shareholders, by the act of buying and holding the shares, expose themselves to all risks of owning a piece of the company. That the company may engage in accounting fraud is one of those risks. The shareholders also benefited from the overstated earnings.
OliverJones 10y ago
In the 1970s the newly established EPA offered bounties to environmental whistleblowers, who dropped a dime on polluters and helped it make the case against them. It was an expedient way of detecting violators and enforcing the law, because it takes both knowledge of facts and expertise in science to do that enforcement. Engaging with whistleblowers helped the new EPA overcome their understaffing and inexperience. For example, fact: "that pipe coming out of that factory puts polychlorinated biphenyls into the Housatonic River at night." science: PCBs concentrate in fish. They mess up the immune systems of mammals, including people, who catch and eat those fish. The proceeds of these bounties early in the life of the Clean Water Act founded some long-lasting watchdog orgs, such as the Hudson Riverkeepers. It is good for the government to create incentives for people with facts and expertise to help them prosecute financial crimes, for the same reasons. Hopefully some of these big bounties will go to establishing long-lived watchdog organizations to keep would-be fraudsters honest.

josho 10y ago

A corporate whistleblower gets a payday (a good thing). While whistleblowers like Snowden that reveal illegal government programs risk the death penalty if they ever sit foot in US soil again. This is progress, but we've got farther to go.

S_Daedalus 10y ago
The state is never going to learn to forgive insults against itself; you have to legislate a state of affairs which constrains them.
- deleted 10y ago
  [deleted]
BinaryIdiot 10y ago
There is a huge difference you're ignoring. The act of whistleblowing on Monsanto was unlikely to be illegal (at least I do not know what laws that could be used against the whistileblower, ignoring any whistleblower protections). Snowden, however, violated numerous amounts of laws in his act of whistleblowing. Now I'm not saying what Snowden did was right or wrong but these two are not equatable. Government protections for whistleblowers are important but protecting someone who had to break the law in order to whistleblow versus someone who did not are two very different things and I think mixing the topics may take away from the importance of one versus the other (protection from retaliation through a corporation versus being locked up due to the government) or worse simply conflate them and their associated arguments.
- leereeves 10y ago
  If Monsanto wrote the law, blowing the whistle on Monsanto would also be illegal. That's not a difference of kind, but of power.
- CaptSpify 10y ago
  Snowden did however try to run it up the chain of command, and was told to sit down and shut up. Once all legal means have been exhausted, going illegal is generally acceptable, IMO

atjoslin 10y ago

Cool, he got paid and all, but keep in mind that's $22M of yours and my tax money. EDIT: Nevermind, I did not read the article before commenting. My mistake.

yalogin 10y ago
Isn't it from the settlement money?
- atjoslin 10y ago
  Yep. I'm already sour against the IRS from just doing some tax calculations, saw the article title, and didn't even read the article before commenting! Edited my comment.
- randyrand 10y ago
  Interestingly the settlement money still does a bit affect our taxes still. Monsanto makes $80 million less in revenue this year due to the settlement. ~$80 mill less profit ~= $20 mill fewer taxes.
  - chipperyman573 10y ago
    Correct me if I'm wrong, but they don't make $80M less, they just lose $80M from the amount they have made in the past (already taxed)
    - randyrand 10y ago
      This would be counted as a loss for this years tax purposes. So they will pay fewer taxes this year.
      - sokoloff 10y ago
        Settlements that are classified as penalties are generally not tax deductible. Settlements that are classified as remedial/restorative generally are. This was no doubt a topic of discussion and planning before the settlement was entered into. The article repeatedly refers to it as a "penalty", but it's unclear if that's colloquial or specifically informed language.

randyrand 10y ago

I have nothing against Monsanto and think they are a great company, but I'm glad to hear this. Whistleblower programs are important.

Rondom 10y ago
Can you elaborate what makes you think that Monsanto is a "great company"? I am genuinely interested.
- deleted 10y ago
  [deleted]
- CobrastanJorji 10y ago
  For one, their executives are known to report accounting improprieties that they encounter to the SEC :)
  - tanderson92 10y ago
    That executive is somewhat less likely to report future accounting improprieties ;)
    - hiddenkrypt 10y ago
      True, but imagine if you were one of the remaining executives. You just saw that guy rat you all out and run off with 22M$. I think that they're going to have to be on their toes, because now the rest of them know exactly what will happen if there's any malfeasance.
- randyrand 10y ago
  I'm a big proponent of GMOs and Monsanto has been making very good progress there. The controversy over them suing innocent farmers is exaggerated, IMO. Overall I think they are an undoubtedly hugely beneficial company to society.
  - 10y ago

MereKatMoves 10y ago

"The SEC had said that Monsanto lacked sufficient internal controls to account for millions of dollars in rebates that it offered to retailers and distributors. It ultimately booked a sizeable amount of revenue, but then failed to recognize the costs of the rebate programs on its books." This is what happens when you take glyphosate and multiply the cost/production price by well over 50x and package it as some miracle product. If your marketing strategy is to mislead every single purchaser then it is no surprise that you lose sight of how many strands of bullshit marketing you are running. Roundup is a great example of one of those products that are cash cows for companies that market themselves as "the best solution" Every.Single.One of the roundup products is glyphosate, and that stuff will kill anything and is very very cheap. Dear readers be aware - glyphosate is a chemical that is present in all weedkillers (except the really shitty ones) so buying the brand name is a total waste of your money, and the amazing people at Roundup HQ know it. Buy the no-name, unbranded stuff. I can understand Coca Cola etc selling sugar water for huge margins, but I pull my hair out when it comes to something like glyphosate. That's how I get my roots under control.

rmason 10y ago
You're incorrect. Glysophate is part of a lot of tank mix combos marketed to farmers but no where near all.
- MereKatMoves 10y ago
  yes that's true. What I was pointing out was that the consumer base is being totally ripped off Thanks for clarifying. It remains the case that glyphosate is what kills things most effectively. Anything else is just flavor
  - rmason 10y ago
    If you're looking for a contact weed killer, you're interested in only killing some perennials and if your seed has been genetically engineered to be Roundup resistant then it's a top choice. That's virtually all soybeans but still a minority of corn and no wheat or alfalfa. I'm old enough to have been running a fertilizer plant here in Michigan when Roundup was first introduced back in the seventies. The cost was 4x what it is now and it was mainly used as a quackgrass killer back then.

tempodox 10y ago

... as opposed to Obama, who just wants to put them in jail.

ryporter 10y ago
Obama has not put any corporate whistleblowers in jail. We can debate the merits of prosecuting those who leak government secrets, but that is a separate issue from this one.
- tempodox 10y ago
  Yes, he did. The NSA is as much a part of Corporate America as anything.

pjc50 10y ago

Don't worry, I'm sure a company that misstates its earnings will be completely honest about any possible negative side effects of GMO organisms.

ccvannorman 10y ago

>A former Monsanto Co (MON.N) executive who tipped the U.S. Securities and Exchange Commission to accounting improprieties involving the company's top-selling Roundup product has been awarded more than $22 million from the agency's whistleblower program, the executive's lawyer said on Tuesday. Yes, please -- Let this be the default way it works at the high executive levels of big corporations. The corp should be terrified of committing fraud because they should know that a whistleblower has every incentive to rat them out and walk away a millionaire.

arca_vorago 10y ago

I worked in bigag for a while, quit on principle when I understood what Monsanto really was. They are super shady, and honestly they are very damage-control aggressive, so I'm surprised this actually happened, but it's a start. Now can we get SCOTUS to force Thomas to recuse himself from Monsanto cases? Can we also get the FDA to purge it's ranks of Monsanto formers that are subverting the FDA's mandate? How about we use some anti-trust laws to take care of the backdoor deals between them and Dupont? Don't beleive for one second any of the people claiming Monsanto is a force for good in the world.