Whistleblowers are better protected

By the end of the year, companies with 50 or more employees and the public sector in Austria must set up a whistleblower system. Yesterday, Wednesday, the Labor and Social Affairs Committee of Parliament met on the so-called “Whistleblower Protection Act”. With the (delayed) implementation of the corresponding EU directive, it should be easier to uncover abuses or criminal activities through tips from insiders. The law is expected to be passed in February.

Large companies are already well prepared, but for up to 9,000 medium-sized companies that still means a lot of work, said Martin Eckel, a lawyer at Taylor Wessing, and Mirco Schmidt from the software consulting group EQS. There is rarely a separate legal department or a “compliance officer” (corruption officer).

An internal reporting office must be set up, but a third party (e.g. ombudsman) can also be commissioned to do this. In addition, there will be a new external reporting office at the Federal Office for Combating Corruption (BAK). The external reporting offices also include the Federal Competition Authority, the Financial Market Authority and the Office of the Public Prosecutor for Economic Affairs and Corruption.

Eckel advises companies that it would be better to encourage employees to use the internal whistleblower system, as this allows them to apply for leniency and thus impunity. If, for example, a violation of corruption rules is reported to the BWB, this can lead to house searches and fines running into the millions. “Then companies have to pay in full.”

A major shortcoming in the law is that if a company does not set up a registration office, there is no fine. “There is obviously a lack of political will.” An intentionally wrong reference is punished very well.

Eckel expects a significant increase in whistleblower information. A number of whistleblowers had waited until then and would only submit reports with the new law, which offers them more protection. The reputation of whistleblowers in society has improved, and companies often see them positively because grievances can be remedied without public attention.

Rewards for whistleblowers, as in the USA, are not provided for in either the EU directive or Austrian law. Yesterday, Wednesday, the US Securities and Exchange Commission (SEC) announced it had paid a reward of more than $28 million to several whistleblowers. Since 2007, whistleblowers have been rewarded by the public purse in more than 300 cases totaling $1.3 billion. The record is $114 million to a single whistleblower.

Criticism from NGOs: Too unclear

Criticism of the draft came from the NGOs epicenter.works, Transparency International and Forum Informationsfreiheit. The law does not go far enough and leaves important points open – such as whether anonymous tips are possible or not. It is also unclear what protection whistleblowers have against any reprisals from the employer – such as dismissal or career disadvantages.

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Ulrike Rubasch

Editor Economics

u.rubasch@nachrichten.at

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