Whistle-Blowing to Get Easier in EU Clampdown on Corporate Crime

(Bloomberg) -- Whistle-blowers reporting corporate misdeeds will for the first time enjoy minimum protection across the whole European Union under new rules approved by the bloc’s parliament on Tuesday.

All organizations with more than 50 employees will have to set up internal channels to allow people to report irregularities related to areas including tax fraud, money laundering, environmental protection and public health. External reporting, either to authorities or to the media, will also be possible, while any form of retaliation will be prohibited.

The European Commission proposed the measures last year, citing revelations over Luxembourg’s tax practices, Volkswagen AG’s emissions scandal and the handling of Facebook Inc. user data as motivation. Only 10 EU countries currently have a comprehensive framework protecting whistle-blowers, while elsewhere the rules are fragmented, according to the EU executive.

“From exposing dodgy tax deals between governments and multinational companies to showing how political campaigns manipulated voters using data driven profiling, whistleblowers have played a vital role in holding the powerful to account in recent years,” Virginie Roziere, the lead European lawmaker on the file, said in a statement.

Financial Services

The rules will complement existing frameworks that exist for specific sectors, such as financial services, where the EU introduced some protection following the financial crisis. The role of reporting by employees in uncovering the industry’s wrongdoings was recently highlighted by Danske Bank A/S’s money-laundering scandal, which was brought to light by a whistle-blower.

For example, more people working in the financial services, including contractors, will be covered by the new rules. They will also introduce more detailed protection against retaliation and specific rules to protect confidentiality, which may not be in place in all of the EU’s 28 member states.

One point of contention during the political negotiations was whether employees would be required to first report internally before turning to external channels. After pressure from the parliament, whistle-blowers will be protected either way under the final version. Member states will have two years to transpose the EU directive into national law.

To contact the reporter on this story: Alexander Weber in Brussels at aweber45@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Nikos Chrysoloras

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