Whistleblowers would be permitted to report wrongdoing to outside authorities before reporting to their company or agency’s internal review program, according to a provisional rule approved this week by the European Commission and member countries.
Action on the EU whistleblower directive had been stalled over the reporting issue. Several member countries, led by Germany and France, wanted to require employees to report potential crimes and fraud internally before going to regulators and law enforcement. Transparency, anti-corruption groups and their supporters believe that approach would have made it more difficult for individuals to come forward with information about wrongdoing.
“The debate has been quite lively over the course of the last few weeks,” Virginie Rozière, a French Member of the European Parliament (MEP) said in French at a press conference following the decision.
The provisional rule allows for what are called “safe reporting channels.”
From the European Commission release:
Whistleblowers are encouraged to report first internally, if the breach they want to reveal can be effectively addressed within their organisation and where they do not risk retaliation. They may also report directly to the competent authorities as they see fit, in light of the circumstances of the case.
Transparency International called the provisional rule “a pathbreaking piece of legislation,” citing the case of Danske Bank whistleblower Howard Wilkinson.
“Whistleblowers in the EU, like Howard Wilkinson, the Danske Bank whistleblower, have spent far too long facing unjust retaliation for speaking out. It is quite an accomplishment that negotiations between the institutions have come to a positive end,” according to a statement from Nick Aiossa of Transparency International.
Read Wilkinson’s testimony to the EU Parliament here.
The provisional rule would also allow whistleblowers to go to the press if “if no appropriate action is taken after reporting to the authorities or in case of imminent or manifest danger to the public interest or where reporting to the authorities would not work.”
Examples include instances where the “the authorities are in collusion with the perpetrator of the crime… This will protect whistleblowers when they act as sources for investigative journalism.”
The new rules cover laws governing money laundering and corporate taxation, data protection, protection of the Union’s financial interests, food and product safety and environmental protection and nuclear safety.
The commission urges member countries to establish whistleblower protection programs based on the same principles. In addition to safe reporting channels, those principles include:
- Clear reporting procedures and obligations for employers: the new rules will establish a system of safe channels for reporting both within an organisation and to public authorities.
- Prevention of retaliation and effective protection: The rules will protect whistleblowers against dismissal, demotion and other forms of retaliation. They will also require from national authorities that they inform citizens about whistleblowing procedures and protection available. Whistleblowers will also be protected in judicial proceedings.
Last week, a group of NGOs led by the Whistleblowing International Network sent a letter to EU member states urging support for “flexible reporting channels.”
Mandatory internal reporting is a hugely counter-productive measure and predicating legal protection on employees’ use of employer-prescribed systems is also highly problematic for the good governance of responsible organizations.
In the meantime, the EU’s money laundering scandal is widening.
From a Sunday, March 10 Bloomberg story.
It’s slowly dawning on legislators in Europe that a money-laundering crisis they thought was limited to the Baltic and Nordic countries has spilled into the rest of the EU. A picture is emerging in which criminals, mostly from Russia, sought out the weakest links in the chain surrounding the EU to gain access to the wider Western financial system.
Though many banks all across Europe have now been implicated in the complex web of illicit flows, Danske remains at the center of the scandal. Its tiny Estonian branch allegedly handled about $230 billion in questionable funds between 2007 and 2015. Danske recently announced a full retreat from the Baltics and Russia in response to the scandal.
In addition, a new report from Organized Crime and Corruption Reporting Project OCCRP found that “financial Laundromat that shuffled billions of dollars through offshore companies on behalf of the bank’s clients, many of whom were members of Russia’s elite.”