Tobias Bumm/ August 9, 2020/ Uncategorized

Whistleblower report information about unethical or illegal misconduct and grievances. However, whistleblowers have not been common in Germany. So far, only a few sectors are required to set up an external system for reporting violations to the federal financial supervisory authority. Examples are banks, insurance companies and securities trading. Furthermore, whistleblowers are not yet fully protected by legal regulations. Therefore, information is likely kept secret for fear of negative consequences.

The EU Whistleblower Directive

The EU has set itself the goal of strengthening and standardizing whistleblower protection. Hence, the Whistleblower Directive came into force in December 2019. Now, the EU countries have until December 2021 to implement the directive into national law. Overall, the EU regulations concern reports of violations of EU law. However, member states are encouraged to extend them to national laws.

The new guidelines

Whistleblowers will have the opportunity to report information internally within the company or externally to the competent authority. Eventually, the reports will be published at a later stage. However, whistleblowers have special legal protection against retaliation and against the disclosure of their identity. In addition to the financial sector, the directive requires companies with more than 50 employees or sales of more than EUR 10 million and all legal entities in the public sector to set up internal whistleblowing systems.

It should be possible to submit information via an online system, a mailbox or a telephone hotline. Anyhow, this can also be done in a personal conversation at the request of the whistleblower. However, the company must appoint a suitable person to receive and follow up the reports. The compliance officer, the human resources manager or an external ombudsman are good examples.

Don’t wait for a legal obligation

Even before a legal obligation, it is worthwhile for companies to set up an internal whistleblower system. Many large companies have already done so anyway. Thus, it is possible to first check incidents internally and, if necessary, to initiate appropriate measures before major damage occurs. Thereby, those notification systems can be limited to internal departments or be accessible to customers and/or suppliers.  

Whistleblower systems in times of Covid-19

In the current situation, reporting systems are particularly important. Many people are forced to work from home by the threat of Covid-19. But this increases the risk of compliance violations. Hence, a trustworthy internal whistleblowing system offers companies the opportunity to minimize risks and avoid fines or sanctions. Ideally, a digital whistleblowing system is provided, which guarantees a location-independent and anonymous report.

With the Corona emergency aid, the German Government wants to support the self-employed and small entrepreneurs in the crisis in a fast and easy way. However, the Aid is not always used lawfully. There are already numerous cases of suspected and confirmed fraud. In this case, development banks and investigating authorities could take advantage of those reporting systems to receive indications of illegal behavior and thus effectively combat subsidy fraud.  


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