Since 2010, with the enactment of the “Dodd-Frank Act”, the United States introduced the whistleblower, i.e., someone who witnesses an irregularity within the following parameters:
- Any irregularity that results in monetary sanctions exceeding 1 million dollars;
- The information must meet the following requirements:
- is derived from the independent knowledge or analysis of a whistleblower;
- is not known to the U.S. Securities and Exchange Commission from any other source, unless the whistleblower is the original source of the information; and
- is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.
The Dodd-Frank Act is indeed a very interesting act and anyone wanting to learn more about it should access this link.
In the US, an allegation made under the Dodd-Frank Act may provide the whistleblower with an award between 10 and 30% of the value of the monetary sanctions imposed to the company.
Brazil followed the same path by sanctioning former minister Sérgio Moro’s anti-crime bill, converted into Statute #13,964 of December 24, 2019, during the Covid-19 pandemic. This brought the possibility of providing an award to the whistleblower of up to 5% of the amount recovered when the information results in the recovery of criminal proceeds against the federal government. Little is disclosed in this regard and the majority of the population is unaware of this fact.
Nonetheless, what’s the current situation of the whistleblower issue in Europe? It should be highlighted that the anti-corruption act that innovated by providing protection to whistleblowers was precisely a European law, i.e., Sapin II. It was approved at the end of 2016 in France; although the French act does not ensure any compensation to whistleblowers for unveiling wrongdoings committed by a company.
The European Union ended up editing Directive 1937 on October 23, 2019, establishing whistleblower protection rules to be internally incorporated by its nations, being mandatory for public and private sector organizations with annual turnover or total assets of over 10 million of Euros. This is a 40-page document, the summary of which will be explained below.
All legal entities with more than 250 workers had the deadline of December 17, 2021 to start complying with the legislation , and those with 50 to 249 employees by December 17, 2023. Following an appropriate risk assessment taking into account the entity’s nature, Member States were free to decide whether they would require legal entities in with fewer than 50 workers to establish internal reporting channels. For legal entities in the public sector, the guideline becomes mandatory to be fully implemented for when serving 10,000 people or more.
It should be highlighted that the guideline protects the whistleblower, which comprises workers, public servants, managers and supervisors, self-employed workers, contractors, their workers and their subcontractors, suppliers, volunteers, interns, shareholders, apprentices, former workers, and candidates that obtain information during pre-contractual selection or negotiation processes. Those who report incidents outside of work or information about external matters are excluded from this guideline’s protection.
As for the nature of the allegations, appropriate channels must be prepared to receive reports on (i) public procurements, preventing and detecting fraud and corruption, (ii) financial services, (iii) products and markets, (iv) money laundering and terrorist financing, (v) safety of products, manufacturing, and distribution chains, (vi) transport safety, (vii) protection of the environment, (viii) radiation and nuclear energy, (ix) food and feed safety, (x) public health, (xi) consumer protection, (xii) protection of privacy and personal data, (xiii) financial interests of the Union, and (xiv) taxes and revenues.
Whistleblowers are encouraged, although clearly not required, to report primarily through the company’s own internal channels. Considering the circumstances of the case, whistleblowers may also contact relevant national authorities or relevant European Union institutions, organizations, offices, and agencies.
In the event of an allegation, the guideline establishes the following protections for whistleblowers:
| 1. Confidentiality |
| 2. Non-disclosure of whistleblower information |
| 3. Compliance with the General Data Protection Regulation |
| 4. Anonymity |
| 5. Protection from retaliation |
| 6. Prohibition of retaliation |
| 7. Free legal and financial assistance |
| 8. Psychological support |
Finally, it should also be noted that the channels for receiving allegations must be easily accessible, secure, confidential, and must offer the possibility of anonymity.