European Parliament Resolution Provides Hope For The Possibility Of Financial Rewards For European Whistleblowers
By Richard Pike and Yulia Tosheva
On 25 November 2015, the European Parliament adopted a resolution on tax rulings which calls on the European Commission to propose, by June 2016, an EU legislative framework for the effective protection of whistleblowers.
The European Parliament:
Stresses that it is not acceptable that citizens and journalists can be subject to prosecution rather than legal protection when they disclose information or report suspected misconduct, fraud or illegal activity, in particular in cases of tax avoidance, tax evasion and money laundering, or any other conduct infringing the fundamental principles of the EU.
- Proposes the creation of an independent European body responsible for collecting information and carrying out investigations, as well as a pan-European whistleblower common fund, to ensure that whistleblowers receive adequate financial assistance, both funded through a levy on a proportion of the funds recovered or fines imposed.
- Points at the U.S. experience and, in particular, the U.S. Dodd-Frank Act, which both remunerates whistleblowers for providing the authorities with information and protects them from legal prosecution and job loss.
The resolution follows a Recommendation of 30 April 2014 adopted by the Committee of Ministers of the Council of Europe on the protection of whistleblowers. The Recommendation explains that the existing national rules of EU Member States for protection of whistleblowers are not sufficiently reliable and sets out a number of key principles to ensure that:
- Laws to protect whistleblowers cover a broad range of information that is in the public interest;
- Individuals have access to more than one channel to report and disclose such information;
- Mechanisms are in place to ensure reports and disclosures are acted on promptly;
- Whistleblowers are entitled to have their identities kept confidential by those to whom they report, unless they agree otherwise (subject to fair trial guarantees).
What are the legal protections for whistleblowers currently in place in Europe? A report by Transparency International, a global non-governmental organization that fights corruption, concluded that only four EU countries have legal frameworks for protection of whistleblowers which are considered advanced: Luxembourg, Romania, Slovenia and the United Kingdom. Of the other 23 EU countries, 16 have partial legal protections and the remaining seven countries have either very limited or no legal frameworks.
In fact, there are also shortcomings in the protection for whistleblowers within the EU institutions themselves. The EU institutions were supposed to have introduced rules by January 2014 but questioning by the European Ombudsman, Emily O’Reilly, showed that seven out of nine institutions approached had failed to meet the deadline. She has called on the institutions concerned to introduce the required rules as soon as possible.
The resolution adopted by the European Parliament is definitely a step in the right direction. It remains to be seen, though, whether the European Commission will take action to enhance the protection for whistleblowers in Europe and, if so, whether it will be prepared to go so far as to introduce a requirement for financial rewards. For our own part, we consider that financial rewards are long overdue in Europe. Being a whistleblower is tough. Protection of employment is important but may not be relevant where the person has already left the job in question and may not be enough, anyway, to provide the confidence to speak up. Our experience is that the possibility of financial reward is an effective incentive and leads to the discovery of wrongdoing that would otherwise remain undisclosed.
We will be following developments in the European legislature closely and looking for opportunities to provide our own input. Please get in touch if you would like to be involved as well.