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Introduction of the European Directive on reporting misconduct (Whistleblowing)

The purpose of this Directive is to make it easier for people to report any possible offences or irregularities that they find out about in the public or private entities where they work or that they are associated with. This is reported through pre-established procedures and channels to guarantee that they stay anonymous and to make sure that they do not suffer any reprisals for what they have done.

Indeed it is of no surprise that this figure of Anglo-Saxon origin is used. In our everyday reality, for example, there is the case of a teacher of an academy who reported the improper conduct of awarding master’s degrees to certain public figures from politics, and then an attempt was made to divert the attention by attacking the informant. Or the cases of corruption in political parties.

Therefore, this action might be crucial to prevent or uncover these irregularities; it helps promote a role of considerable public interest to benefit society in general.

So far, European law on the matter has been scattered among different rules, but this Directive aims to specifically standardize this regulation throughout the European Union.

The most important points of this Directive are as follows:

  • A period of two years is established for the transposition of this Directive into national law, which will directly affect public entities (until December 2021); and a period of four years is established to adapt the corresponding regulation for private entities (until 2023).
  • The areas affected by this Directive, among others, are public procurement, services and financial markets, the environment, public health and animal well-being, consumer protection, the protection of personal data, obtaining tax benefits through corporate tax, etc. So, as you can see, there is a wide range of activities that can encompass almost any existing company in the world of economic relations or public law.
  • The whistleblowing systems can be joined together by both internal (preferably) or external channels, or through public disclosures (not to the press) if the aforesaid channels or sector-specific rules don’t work, if there were any.
  • There are two types of entities that must have these internal whistleblowing channels: The public entities (apart from towns with less than 10,000 inhabitants or public institutions with less than 50 workers), or the privates entities (companies with 50 or more workers). The limit of quantitation of 50 employees shall not apply to companies that are involved in financial services, markets or products; prevention of money laundering; safety in transportation or the environment.
  • The protected whistleblowers would be: workers or ex-workers of the company, partners, shareholders and directors of companies; and anyone who works under the supervision of these entities. The protection shall also cover third parties who suffer from some type of reprisal for whistleblowing.
  • The protection measures might include the prohibition of reprisal such as dismissal or punishment, negative references, the protection of the identity of the whistleblower or the prohibition of the waiver of rights or remedies, in such a way that the whistleblower, where appropriate, cannot be expected to waive certain rights or make claims against the entity that has been reported.
  • The whistleblowing channels must be confidential and a record of them must be kept. As aforementioned, the channels can be internal, in the entity itself, which means that there is someone inside the organization or an external person to process it; or externally, which means that they can go to the competent authorities that are subject to the provisions of this Directive, especially in terms of anonymity.

Currently in Spain there are a few whistleblowing channels that are controlled to a certain extent, such as for example, those of the Penal Compliance, through which a company that is involved in criminal proceedings for something that one of its members has done, can be exonerated from it (the company, not the actual person who might have committed the offence), if it can prove that it has a “compliance” system set up precisely to prevent this type of misconduct, which includes the confidential whistleblowing of someone in the organisation. The channels set up for the Prevention of Money Laundering are also included in this, so anyone who has knowledge of an act related to money laundering is expected to inform the corresponding monetary authorities, even anonymously.

In short, this new regulation that has just been issued –which will have a medium-term effective implementation – is designed to promote a preventive attitude in the whole company to deal with any possible offences that might be committed and insofar as possible, stop it having a negative impact on society, given the sensitivity of the affected sectors. So, if these whistleblowing systems do indeed exist, we can deter those who feel they can act with impunity in these activities and therefore prevent damage being caused to the whole society.

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