Whistleblowing Bank Executive Flags Down Health Care Giant Profit


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Whistleblower cases often reveal something much bigger than a single complaint: now, a transnational banking procedure may reveal something of the wave of deceptive trade practices, almost too big to catch. Cardinal Health, INC., has been assessed penalties and fees, as well as ordered to pay taxes on “inappropriate deductions” reported to the IRS of $179.8 million.

But the total claimed due by the IRS has swollen to a clock stopping $598.1 million.

The can of worms opened by an unusual whistleblower may also cause the IRS to investigate other Cardinal Health tax deduction claims for 2003 through 2005.

This unique tax whistleblower case has pitted not only the IRS against Cardinal Health, but the Netherland’s enormous transnational banking entity, Rabobank. The Rabobank connection is what helps to make this whistleblower case so fascinating and potentially labyrinthine…at least some of the insider dealing data is coming from a seemingly unlikely source…a leading banking executive from Rabobank.

There are whole new classes of whistleblowers: the defensive defendants. Rather than argue for matters of conscience, while an employee, endangered executives are increasingly making deals —ofen avoiding their own troubles —and favorable plea agreements—as part of their whistleblower reward. The government is more than happy to help…especially with regards in the neighborhood these former uber execs live: in this case alone, half a billion dollars.

The Rabobank whistler first blew in 2007, when the disenchanted former executive (Joseph Insinga) first brought the matter to investigators. The allegation was that taxes were being structured for “tax avoidance” rather than legitimate business purposes.

The transactions, however, began in 2001. Rabobank apparently developed similar tax shelters for other major US domestic corporations, seeking to move tax liabilities off-shore. Two major companies named are Wal-Mart and Home Dept. No details are available as to whether these companies are also under investigation.

Notably, the IRS pursuit suggests a certain laissez faire attitude toward potential whistleblowing, almost, a cost of doing business. The defense between “legitimate” business purposes and not paying taxes (as illegitimate) may blur the distinctions about rewards to whistleblowers: but it brings into sharp focus exactly how businesses and governments may potentially end on two sides of the divide.


1. Rabobank is in the midst of investigations of other transnational financiers. See the major company Rabobnak keeps: http://bazaarmodel.net/phorum/read.php?1,6009

2. See Rabobank’s region-specific marketing (p. 3): http://www.adb.org/Documents/events/2005/atd/zwanenberg.pdf



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