Guide to Whistleblowing

Contributing Editors

In this new age of accountability, organisations around the globe are having to navigate a patchwork of new laws designed to protect those who expose corporate misconduct. IEL’s Guide to Whistleblowing examines what constitutes a protective disclosure, the scope of regulations across 18 countries, and the steps businesses must take to ensure compliance with them.

Learn more about the response taken in specific countries or build your own report to compare approaches taken around the world.

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04. Is there a specific sanction if whistleblowing procedures are absent within the Company?

04. Is there a specific sanction if whistleblowing procedures are absent within the Company?

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Australia

  • at Lander & Rogers

Sections 1311(1) and 1317AI(4) of the Corporations Act notes that it is an offence of strict liability not to implement a whistleblower's policy.

The penalty for non-compliance for individuals is 60 penalty units (A$13,320) and for companies is 600 penalty units (A$133,200), and is enforceable by ASIC.

Last updated on 23/08/2022

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Belgium

  • at Van Olmen & Wynant

The absence of an internal reporting channel can be sanctioned with an administrative fine of up to 5% of the revenue of the company (legal entity) the previous year. The fine has to be proportionate, and the government will still create a system that will give more guidance to the administration regarding the amount of the fines (in a future royal decree).

Last updated on 01/08/2022

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Brazil

  • at CGM
  • at CGM
  • at CGM

No, there is no specific legal sanction for not implementing a whistleblowing procedure.

Last updated on 29/07/2022

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Croatia

Croatia

  • at Babic & Partners
  • at Babic & Partners

Yes, a failure by the company to adopt or implement an internal whistleblowing policy by 23 June 2022, or appoint a WBP Officer and their deputy by 23 July 2022 may each result in liability for an administrative offence and a related fine, which may be up to about 4,000 EUR for the  company, and up to about 1,350 EUR for the responsible individual within the company.

Last updated on 29/07/2022

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France

  • at Proskauer
  • at Proskauer

There is no specific legal sanction for failing to create a whistleblowing procedure.

However, the absence of an internal reporting channel increases the risk for the company’s reputation as whistleblowers could use external reporting such as public disclosure in the press or social media.

Besides, any person who obstructs the transmission of a report may be exposed to criminal suit and a penalty of up to one year’s imprisonment and a fine of 15,000 EUR.

Last updated on 29/07/2022

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Germany

  • at Oppenhoff
  • at Oppenhoff

If there are no whistleblowing procedures in the company (ie, an internal reporting system is not implemented and operated), this constitutes an administrative offence punishable by a fine. This fine may amount to up to 20,000 EUR (section 40 (2) No. 2, (5) HinSchG-E.

At this point, it should be noted that there is a high incentive for employers to implement an internal reporting channel, since the external reporting channel is available to the whistleblower in any case. Consequently, if an internal reporting office were not implemented or operated, the whistleblower would be forced to report directly to the external reporting office. As a result, the employer would not be able to make internal corrections without the reported information leaving the company.

Last updated on 29/07/2022

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India

  • at Khaitan & Co
  • at Khaitan & Co

For failure to adopt and implement a whistleblowing procedure, a Covered Company and every officer of that company who is responsible for such non-compliance may be punished with a fine of up to 10,000 rupees and, if non-compliance continues, a further fine of up to 1,000 rupees a day.

Last updated on 29/07/2022

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Japan

  • at City-Yuwa
  • at City-Yuwa
  • at City-Yuwa

The prime minister:

  • may ask the business operator to submit reports or may give advice, guidance or recommendation to the business operator if necessary for the enforcement of the provisions of article 11, paragraphs 1 and 2 of the Act, such as ensuring the business operator establishes a system for responding to whistleblowing (article 15 of the Act); and
  • may disclose the company’s name if the business operator has not followed the recommendations to establish a system for responding to whistleblowing, etc. (article 16 of the Act).

Any business operator who fails to make a report or makes a false report may be fined up to 200,000 yen (article 22 of the Act).

Last updated on 29/07/2022

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Latvia

Latvia

  • at Ellex Klavins
  • at Ellex Klavins

No, there are no sanctions provided in the law if there is no internal whistleblowing procedure or internal reporting channel. The absence of an internal whistleblowing procedure will likely promote the use of other reporting channels, such as:

  • directly approaching the competent public authority that supervises the field or area where the breach occurred,
  • approaching the State Chancellery as the contact point for whistleblowing,
  • reporting publicly, if the requirements provided in the law are met.

To avoid risks associated with the use of external reporting channels, which may result in investigations and sanctions by public authorities, it is advisable to have an internal reporting channel and whistleblowing policy.

Last updated on 29/07/2022

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Lithuania

Lithuania

  • at Ellex Valiunas

Yes, an administrative fine may be imposed. This may be up to 300 EUR (or up to 500 EUR for repeated infringements) and if the infringement is related to the disclosure of the identity of the whistleblower, the fine may be up to 2,000 EUR (or up to 4,000 EUR if it is a repeated infringement).

Last updated on 29/07/2022

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Luxembourg

Luxembourg

  • at Castegnaro
  • at Castegnaro

Yes. If the obligations to set up internal reporting channels are not met, private legal entities will be liable for an administrative fine of between EUR 1,500 and EUR 250,000.

Nothing is specified for public entities.

Last updated on 29/07/2022

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Nigeria

Nigeria

  • at Bloomfield LP

There is no sanction in place for the absence of whistleblowing procedures within a company. The NCCG and some of the sectoral codes listed above merely recommend that a whistleblowing policy be put in place by companies as part of good corporate governance practice.

However, the Investment and Securities Act (ISA) stipulates a penalty of 5 million naira on any capital market operator or public company that contravenes the provisions of the ISA on whistleblowing or disclosure.[1]

 

[1] Section 306 (10) of the Investment and Securities Act, 2007

Last updated on 29/07/2022

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Portugal

  • at Cuatrecasas
  • at Cuatrecasas

Entities that fail to establish a whistleblowing procedure will incur a serious penalty, with fines from 1,000 EUR to 125,000 EUR.

Last updated on 29/07/2022

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Romania

  • at STALFORT Legal. Tax. Audit.
  • at STALFORT Legal. Tax. Audit.

There are several administrative fines for companies failing to comply with the new whistleblowers’ legislation – between 500 EUR and 5,000 EUR for not establishing internal reporting procedures.

Last updated on 16/08/2022

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Spain

  • at Cuatrecasas
  • at Cuatrecasas
  • at Cuatrecasas

No. There is no specific sanction in the Draft if whistleblowing procedures are not implemented within the company. However, section 63.3.(c) establishes that “Any failure to comply with the obligations provided for in this law that is not classified as a very serious or serious infringement” will be considered a minor infringement.

Considering that the absence of a whistleblowing procedure is not expressly listed as a very serious or serious infringement, it could be argued it would qualify as a minor infringement.

According to section 65, for a minor infraction, the sanction is a fine of up to 10,000 EUR if the perpetrator is a natural person, and 100,000 EUR if it is a legal entity.

Last updated on 29/07/2022

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Sweden

  • at Lindahl
  • at Lindahl
  • at Lindahl

If whistleblowing procedures, including internal whistleblowing channels, are not established according to the Whistleblowing Act, the Swedish Work Environment Authority (SWEA, being the supervisory authority) may order the business to fulfil its legal obligations subject to a fine.

Any business preventing or hindering whistleblowing according to the Whistleblowing Act (eg, by omitting to implement whistleblowing procedures) may be held liable for damages payable to the relevant persons.

Last updated on 02/08/2022

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United Kingdom

  • at Proskauer
  • at Proskauer
  • at Proskauer

No, because there is no underlying legal requirement under the Employment Rights Act 1996 for companies to implement a whistleblowing procedure or policy.

Last updated on 29/07/2022

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United States

  • at Proskauer
  • at Proskauer

There is no specific, pre-designated sanction for failure to implement a whistleblower procedure. However, the lack of a clear process for raising concerns can expose an employer to significant legal and reputational risk as incidents of improper conduct will be less likely to be discovered and appropriately remedied.

Last updated on 29/07/2022