UNDERSTANDING THE VALUE OF WHISTLEBLOWING

UNDERSTANDING THE VALUE OF WHISTLEBLOWING

Action by the European Union to protect individuals who unmask corporate and public wrongdoing signals a new direction for ethical business practices

The European Union’s Directive for the protection of persons reporting on breaches of Union law (or ‘Whistleblower Protection Directive’) was forged in the heat of several recent scandals. Cases as diverse as LuxLeaks, the Panama Papers and Cambridge Analytica each had two things in common: firstly, they would never have seen the light of day had it not been for the determined efforts of individuals who spoke out, and secondly, they all harmed the interests of European voters and taxpayers. The magnitude of these scandals, coupled with Luxembourg’s decision to prosecute the individuals involved in the LuxLeaks case, as well as and a growing body of evidence to support the moral and financial value of protecting and supporting ‘whistleblowers’, all helped galvanise the European Commission and Council of Europe into action. Indeed the EU’s own 2017 report, Estimating the Economic Benefits of Whistleblower Protection in Public Procurement concluded its findings “clearly demonstrate the economic value of whistleblower protection.” True to its word, the EU’s new Directive grants protection to a far wider range of potential whistleblowers than under existing national law across EU member states. In addition to employees, it also shields the self-employed, interns, former employees and shareholders from retaliatory action. Announcing the approval of the Directive by the EU Council of Ministers on 7 October 2019, EU Commissioner for Justice Věra Jourová said: “Whistleblowers should not be punished for doing the right thing. Our new, EU-wide rules will make sure they can report in a safe way… I urge member states to implement the new rules without delay.” The scope of activities for which speaking up is protected has also been widened – going beyond the core crimes and misdemeanours of corrupt practices and money laundering, to also include those that spark threats to individual freedom through the abuse of personal data, as well as activities causing serious environmental harm and threats to public health. 

The directive will be drafted into national law by EU member states by 2021 at the latest. Its key stipulation requires any private-sector firm or public-sector body with 50 or more staff to establish formal reporting channels for employees and others to express concerns, while also requiring employers to give feedback and respond to a reporter’s testimony within three months. While such implementations may sound challenging, 2018 research conducted by George Washington University showed that companies with effective internal reporting processes also experience better business performance: a win-win for both the business and its employees. Some EU member states did express concerns about the new Directive’s scale and scope and had sought to exclude disclosures relating to tax fraud from the legislation. In the end, this did not materialise and its scope has remained deliberately broad. The Directive is a step in the right direction and firmly establishes the value that whistleblowing can play in society. By enabling and protecting those who speak out against perceived misconduct, the EU is paving the way for both nations and organisations to re-evaluate whistleblowing and at last see it in a new, more positive light.

Whistleblowers should not be punished for doing the right thing