What are the implications of an entity not responding to allegations, which come to its attention through a whistleblower? In the FCPA world, such corporate behavior can lead to significant legal and financial consequences. The Man From FCPA was therefore intriged by recent reports that the World Anti-Doping Agency (WADA) had long ago received information about allegations of cheating through state-sponsored doping for Russian athletes. The New York Times reported that its investigation “found that the agency had mishandled multiple warnings about Russia—including a 2012 appeal from a Russian Olympian who confessed to cheating, pleaded for help, and offered to cooperate with the agency.”

However, if your business is partially funded by the U.S. government, the fallout can be even greater scrutiny if Congress becomes interested in your failures. For WADA, these revelations took a new turn when Senator John Thune (R-SD), the Chairman of the Senate Committee on Commerce, Science and Transportation “sent a seven-page letter to the agency,”  asking it to explain “why it had taken years to investigate claims  of government-run doping programs in Russia and called for further inquiries into possible cheating.” Thune alleged that WADA had known of such allegations, as far back as 2004, yet had done nothing with the allegations. Worse yet, in 2012 when a Russian athlete came forward to confess and cooperate with WADA, all her written information was simply forwarded to Russian sports authorities.

Perhaps WADA does not deserve the same level of whistleblower response scrutiny as the average U.S. or UK company, which is subject to the FCPA or the UK Bribery Act. However, the lessons from WADA’s failures to investigate to provide an clear reminder to any U.S. company which receives a good-faith whistleblower allegation that there are significant negative consequences for failing to timely triage and investigate such claims. U.S. securities regulators report that up to 90% of all persons who reported allegations of securities violations do so internally and they only go to the SEC as a last resort for not being taken seriously.

The lesson from WADA is clear for any company; if you receive a whistleblower allegation, you must investigate it in a timely manner. Failure to do so can lead to government investigations, fines, penalties and significant reputational damage.