Strengthen E.U. Whistleblower Laws

The National Whistleblower Center is working with NGOs and partners to combat corruption and strengthen whistleblower laws within the European Union following the Whistleblowing Directive passed by Parliament in 2019.

In April 2019, the European Parliament passed a landmark Whistleblowing Directive instructing European Union (EU) countries to enact greater protections by shielding whistleblowers from retaliation and creating “safe channels” to report violations of the law. This Directive is the first effort to create a common minimum whistleblower standard across the EU.

Before the passage of this Directive, whistleblower laws were handled by the 27 individual member states, 13 of which currently do not have any law in place. For those that do have existing whistleblower laws, they are generally weak and missing key components for whistleblower protections. The Netherlands, for example, passed the Whistleblowers Authority Act in 2016 which created a House for Whistleblowers where public and private sector employees could report wrongdoing. This law, however, is not comprehensive as it lacks (1) penalties for employers who retaliate against whistleblowers, (2) provisions to reinstate a whistleblower, and (3) compensation for financial loss due to whistleblowing.

The need for stronger whistleblower laws was highlighted by a series of scandals such as the Panama Papers, Cambridge Analytica, and Danske Bank, in all of which whistleblowers played a key role in bringing wrongdoing to a light. Additionally, in 2017, the European Commission released a report estimating the EU lost between EUR 5.8 billion to 9.6 billion (US $6.4 to $10.7 billion dollars) in public procurement alone due to the lack of whistleblower protections across the EU.

Now, all EU states are required to transpose the Whistleblowing Directive into their national law by December 17, 2021. For countries such as Poland, Germany, Ireland, and Portugal, this means enacting the first whistleblower laws within their countries. For those who have existing laws such as the Netherlands, France, and Hungary, they will need to strengthen their laws in order for them to meet the standard of the Whistleblowing Directive.

The National Whistleblower Center (NWC) has been closely involved in advocating for the existence and implementation of the Whistleblowing Directive. The initial drafts proposed in 2018 would have led to completely ineffective protections, requiring whistleblowers to report internally and thus forcing the sharing of incriminating information with those perpetrating crimes.

In two letters addressed to the Presidents of the European Parliament and the European Commission, NWC explained the grave risks that come with internal reporting requirements. NWC argued that type of language “undermines the rule of law, violates international anti-corruption conventions, [and] violates U.S. securities laws applicable to numerous European companies.” Additionally, in November 2018, Stephen M. Kohn, then Executive Director and now Chairman of the Board, testified before the European Parliament. Among other things, Kohn’s testimony exposed efforts to create a loophole for those committing tax law violations. NWC also joined a coalition of 80 international organizations calling for the European Council and the Member States to remove the mandatory internal reporting regime.

Fortunately, the final directive contains no tax loophole and ensures that whistleblowers are permitted to report wrongdoing to outside authorities. However, there is still ambiguity in the requirements that could potentially leave whistleblowers unprotected. To ensure each EU country’s whistleblower law is robust and effective, in September 2020, NWC, partnered with Whistleblowing International, the European Center for Whistleblower Rights, and the international whistleblower law firm Kohn, Kohn & Colapinto, LLP, wrote to each member country providing guidance and recommendations which include:

  1. Expanding whistleblower protections to cover disclosures permitted under international anticorruption conventions signed by Member States;
  2. Adopting language and procedures that have proven effective in protecting whistleblowers when implementing Articles 6-7, 11, 14-16, 19-21, and 23-24;
  3. Narrowly interpreting Article 22 in order to ensure that whistleblowers are not chilled from making disclosures and their confidentiality is maintained;
  4. Enacting whistleblower reward laws to combat specific legal violations, including foreign bribery, money laundering, tax evasion, government procurement fraud, and ocean pollution.