Doge Has Failed; Bring on the Anti-graft Bounty Hunters

A group of start-up founders reckon that, where efficiency hawks failed to slim government deficits, anti-graft snitches might succeed.

The Antifraud Company, whose founders include a former Federal Trade Commission regulator, reckons it can save government money by attacking fraud rather than flab — specifically through whistleblower programmes. It will use AI and shoe-leather investigation to spot incidence of malfeasance, and then claim the rewards on offer to those who flag misdeeds.

For the likes of the Antifraud Company, there is decent money to be made. The Government Accountability Office reckons fraud costs the government as much as $521bn a year. If a fifth of that can be recovered, it could produce winnings for anti-graft headhunters of more than $30bn. The SEC awarded $279mn in a single case in 2023, the IRS last year paid out an award of nearly $80mn.

Though riches-for-snitches might appeal to free market adherents, vested interests and intermediaries still loom. Whistleblower programmes have tended to be dominated by no win, no fee law firms who specialise in filing claims and can end up taking up to 30 per cent of awards. At the SEC, more than half of last year’s 25,000 tips came from two sources.

Nonetheless, unleashing market forces makes sense. Most importantly — and unlike Doge — rewarding whistleblowers is a great example of results-based pay popular on Wall Street trading floors and investment banking desks, often known as “eating what you kill”.