Lionel Paraire participates in the IR Global Virtual Series – Exposing the Truth: What the EU Whistleblower Directive means for global business

Foreword By Editor, Andrew Chilvers

Speaking Out: What impact will the EU whistleblowing law have on business transparency? In the past few years, demands have been growing around the world for more accountability by businesses and governments – particularly since the start of the Covid-19 crisis. Indeed, the global pandemic has heightened issues around whistleblowing like never before.

Nevertheless, whistleblowers often still face dire consequences – often fatal – if they report on problems their superiors would rather the world didn’t know about.

Dr Li Wenliang, in Wuhan China, was a case in point. Officially reprimanded for warning the world about Covid-19, he was then later ruthlessly silenced by the Wuhan public security bureau. In Poland, meanwhile, Renata Pizanowska, a nurse and midwife, was sacked for posting pictures on social media of her totally inadequate homemade surgical mask used by hospital staff for protection against the deadly virus.

Elsewhere, in the UK at the start of the pandemic, Linda Fairhall, an NHS nurse since 1979, was sacked after warning that the crippling workload NHS staff were under had led to a patient’s death. After she raised the alarm she was summarily dismissed for concerns about her leadership capabilities.

Theoretically, this was all set to change on December 17, with the implementation of the EU’s new whistleblowing directive that was due to be adopted into national laws by different EU states. The aim is a laudable one – to fight for more transparency from governments and organisations not just in the EU but beyond its borders. As with GDPR compliance, the hope is that there will be a positive knock-on effect with all businesses and public sector organisations that are located or have an office in an EU state.

The idea of the directive is to set up uniform minimum protection for people who want to report breaches of EU law – giving them legal security against any retaliation by companies or colleagues. Along with this minimum level of protection, each EU state is obliged to introduce a national legislation to give an added layer of security for whistleblowers. However, almost all professional services advisers agree that this added protection in the form of national laws will take time to enact given the patchwork of legislation that exists across the diverse EU member states.

What is the status of legal whistleblower protection within your jurisdiction and – if outside the EU – will there be an alignment with EU legislation because of the new law?

Whistleblower protection is a hot topic in France, as a new act aimed at improving the protection of whistleblowers was adopted at first reading in the National Assembly on November 17, 2021 and sent to the Senate the following day, where it will be discussed on January 19 and 20, 2022. The new act should come into force in France by mid-2022.

Essentially, the new text is aimed, by modifying the provisions of the “Sapin 2” law dated December 9, 2016 “on transparency, the fight against corruption and the modernization of economic life” to broaden the scope of beneficiaries of the protective status, to simplify the terms of alerts and improve the protection granted to whistleblowers, in particular employees. In doing so, it transposes into French law the provisions of European Union Directive 2019/1937 of 23 October 2019 on the protection of persons who report violations of Union law, but gets also a bit further than the Directive on several points.

The so-called “Sapin 2” already sets for a protection regime for the person who launches an alert in the general interest, but also for those legal or natural persons who could be the object of an alert which would ultimately prove to be malicious or unfounded.

According to the new act, a whistleblower should be now a “natural person who reports or discloses, without direct financial compensation and in good faith, information relating to a crime, an offense, a threat or an injury to the general interest, a violation or an attempt to conceal a violation of an international commitment duly ratified or approved by France, of a unilateral act of an international organization made on the basis of such a commitment, European Union law, law or regulation”.

Will anonymous reporting be permitted? Will this help develop a culture of transparency?

One of the main modifications to the current legislation is to offer the whistleblower the possibility of going directly through an external channel (administrative or judicial authority, professional order, etc.). Currently, they must report internally, within the company or administration, and can only use the external channel if the first alert has not been taken into account. Potentially, whistleblowers can then find themselves in a fragile situation for several months, even in companies that have set up a specific system.

Confidentiality is obviously key in both the EU Directive and the “Sapin 2” law, the latter providing that the procedures implemented to collect reports guarantee strict confidentiality of the identity of the authors of the report, of the persons targeted by it and of the information collected by the report. Disclosing one of this information is punishable by two years’ imprisonment and a fine of EUR 30.000. The text currently under discussion strengthens the rights of whistleblowers. Criminal penalties, up to three years’ imprisonment and heavy fines (EUR 45.000), should be introduced for retaliation.

The text also provides for the impossibility of resorting to any method likely to destabilize the whistleblowing employee: layoff, demotion, refusal of promotion, disadvantageous treatment, placing on blacklist in a given sector of activity, etc.

Under the Directive, criminal law will remain a prerogative of each member state. How will the new legislation impact criminal law in different jurisdictions?

French legislation already provides that whistleblowers benefit from civil and criminal immunity.

The new act should provide that whistleblowers would not be civilly liable for damage caused by their reporting or public disclosure when they could consider, when they did so, that the reporting or disclosure was necessary to the protection of the interests in question.

Article 122-9 of the penal code already provides that the person who meets the definition criteria of a whistleblower who infringes a secret protected by law is not liable if this disclosure is necessary and proportionate to the safeguard of the interests in question and that it intervenes in compliance with the reporting procedures defined by law.

This immunity would be extended to the persons referred to in article 6-1 of the “Sapin 2” law, namely facilitators and relatives in particular, who remove, reveal or conceal data covered by secrecy or confidential.

However, facts, information or documents, whatever their form or medium, covered by national defense secrecy, medical secrecy, secrecy of judicial deliberations, of the investigation or of the judicial investigation, or legal privilege.