What is WB?

What is whistlwblowing?

Sarbanes and Oxley Act
Public interest
Channels of Disclosure
Data protection


In almost every sector writemyessayquick.com – grade my paper service of our society the most important condition of an effective fight against edit my paper | edit my essay, proofreading, paper rater, check my paper misconducts and malpractices is the proper flow of information. A big barrier to this flow is often the fact that those involved in wrongdoings have an interest in keeping information hidden from publicity and authorities. In revealing such abuses or irregularities those may be of the most help who are witnesses of these acts and are ready to share with others the information they possess.

Whistleblowing is providing a solution to resolve such situations: it opens nonexistent or hidden information sources and channels. The reasons for revealing information can be manifold: e.g. when someone notices such an abuse at his/her place of work and would like to discuss it with the relevant person within the organisation. We may call it whistleblowing as well when an employee is forced to try to put an end to some kind of unlawful or malignant activities with the help of extra-organisational channels as within the organisation either the proper investigation of the case is not guaranteed or the employee might be subject to reprisals. In many cases someone considers it a cause enough to publicise confidential information when the information in question concerns the public at large. In such cases the whistleblower maintains that informing the public is of much stronger interest (namely of public interest) then reserving the confidentiality, exclusivity of the information.

There have been several attempts to define whistleblowing, but certainly there is no generally accepted definition (Questionnaire I/15). However, there are some definitions which are widely-used or often quoted. One of the first ones in the modern history of whistleblowing was used by a consumer activist called Ralph Nader, who claimed: Whistleblowing is „an act of a man or woman who, believing that the public interest overrides the interest of the organization he serves, blows the whistle that the organization is in corrupt, illegal, fraudulent or harmful activity.”[1]

Maybe the most often used explanation of whistleblowing was written by Marcia P. Miceli and Janet P. Near in 1982. They say, whistleblowing is „the disclosure of organisational member’s (former or current) disclosure of illegal, immoral, or illegitimate practices under the control of their employers to persons or organizations that may be able to effect action.”[2]

However this definition is widely-used, as whistleblowing is getting prevalent (Questionnaire I/16), in practice a more expansive view became dominant. Whistleblowing promotes „accountability by allowing for the disclosure by any person of information about misconduct while at the same time protecting the person against sanctions of all forms. It recognizes that whistleblowing relates to internal and external disclosures and should apply to all organisations, public and private.” In this sense, whistleblowing has to „ensure that individuals have the ability to speak out in their conscience and that organizations are more open and accountable to their employees, shareholders and the greater public in their activities.”[3]

Whistleblowers are always facing two dilemmas: a conflict between personal and organisational values, and a conflict between obligations owed to an organization and to parties beyond it.[4] In some countries, Labour Law or Criminal Code may help employees to decide in these dilemmas: it makes it possible to refuse specific commands that result in breaking the law (Questionnaire I/7).

Whistleblowing must involve an intentional disclosure of information to which the whistleblower has privileged access. In general, employees have such a privileged access. They know what is going on at work, and specific jobs entail specific information about what an organization is doing. The disclosed information must be about a perceived malpractice in the organisation, or under responsibility of the organisation, and the aim of the disclosure has to be rectification of that malpractice or wrongdoing.[5]

The most important way of ensuring the mentioned ability to disclose is the protection of people willing to blow the whistle. One of the possible reasons for not blowing the whistle is the fear of retaliations, mostly the fear of being fired, or be pushed to resign. Other barriers for whistleblowing are legal restrictions. Nearly every company has strict rules for employees concerning the duty of loyalty and confidentiality (business secret, trade secret). An even stronger obstacle can be regulation on classified information (state secrets) (Questionnaire I/6). In 2004 two Labour MPs have defied the UK Official Secrets Act by passing on the contents of a secret British document revealing how President George Bush wanted to bomb the Arabic TV station, al-Jazeera.[6] In May 2007 both were sentenced to jail for disclosing a memo with the mentioned information. A further barrier of disclosing can be libel and defamation acts.

Of course not every act involving the disclosure of exclusive, hidden, confidential or secret information may be considered whistleblowing, since it has its unambiguous characteristics and rules: whistleblowers (Questionnaire II/2) reveal information by their own will, selfless (without any personal interest), and/or because of their commitment to public interest and public good. Another initial requirement of whistleblowing is that any kind of disclosure has to be made in good faith (Questionnaire II/12).

This is the main difference between whistleblowers and informants: informants are often involved in some sort of unethical affairs, and use disclosure for clarifying their own role, or reduce their liability. Governments often offer the chance of pardoning the crimes of people who report malpractices which they were involved in. Employees with the duty to inform cannot be considered as whistleblowers either since in their case disclosing wrongdoings is not an ethical issue, but an obligation (eg. employees of civil service, accounting, etc.) (Questionnaire I/8).

Whistleblowing can easily conflict cultural norms, which make it likely that whistleblowers will encounter hostility and alienation. As Terance Miethe explains in his book, Whistleblowing at Work, many people see the whistleblower as a “snitch,” or a “a lowlife who betrays a sacred trust largely for personal gain.”[7] It is not easy to give clear facts on people’s attitude towards whistleblowing (Questionnaire I/18-19).

Whistleblowing can also awake sympathy: whistleblowers such as Frank Serpico and Karen Silkwood are seen as “saviors” who ultimately helped create important changes in organizations. This approach to whistleblowers as guardians of public accountability is often taken by consumer advocates such as Ralph Nader.

An important step towards spreading the institution of whistleblowing throughout the world was the UN Convention Against Corruption (Questionnaire I/1). Article 33 of the United Nations Convention against Corruption says, “each State Party shall consider incorporating into its domestic legal system appropriate measures to provide protection against any unjustified treatment for any person who reports in good faith and on reasonable grounds to the competent authorities any facts concerning offences established in accordance with this Convention.” Under Article 13 2. „each State Party shall take appropriate measures to ensure that the relevant anti-corruption bodies referred to in this Convention are known to the public and shall provide access to such bodies, where appropriate, for the reporting, including anonymously, of any incidents that may be considered to constitute an offence established in accordance with this Convention.”
The Council of Europe also encourages countries to adopt whistleblower protection laws. Article 9 of the Civil Law Convention on Corruption adopted by the Council of Europe says, “each Party shall provide in its internal law for appropriate protection against any unjustified sanction for employees who have reasonable grounds to suspect corruption and who report in good faith their suspicion to responsible persons or authorities.”

National Whistleblower laws are good examples for the diversity of whistleblowing definitions and interpretations. But the sense of whistleblowing is common ever since the first whistleblower laws have been adopted: promptly reporting instances of suspected misconduct. The first law that can be regarded a whistleblowing law, was the Federal False Claims Act (1863) adopted during the Civil War in the United States. It was enacted in part because unscrupulous tradesman sold ill mules, faulty rifles and ammunition, and rancid rations and provisions to the Union Army.

These frauds caused President Lincoln to urge Congress to pass the original False Claims Act commonly known as “Lincoln Law”. The False Claims Act made it illegal for someone (claimants) to present false statements in writing (claims) to the United States government to improperly obtain more money from (or in some cases pay less money to) the government than actually owed by the government (or due from the claimant).[8]

The False Claims Act authorized a private citizen (a relator) acting as a “private attorney general” — as well as the government — to sue the claimant to recover the amount actually due the government plus a multiplier and penalties. A key provision of the original False Claims Act was to award 50 percent of the recovery to encourage and reward relators (the “relator’s share”) for exposing and prosecuting the fraud (Qui tam).[9]. The US Government estimates that $22 billion has been recovered (Questionnaire I/17) under the Act between 1986 and 2008.[10]

However giving rewards to whistleblowers is a very debated topic (Questionnaire II/11). Many whistleblower experts are weary of such provisions, seeing them as detracting from the public interest principles of legislation.[11] A number of Asian jurisdictions give huge rewards to people who revealed corruption. These are in some ways more like informer statutes than whistleblowing.

In South Korea, the Anti-corruption Act allows for individuals who disclose corruption to recover up to twenty percent of the recovered amount. The reward was raised in 2006 to encourage more cases. In Taiwan the Anti-corruption Informant Rewards and Protection Regulation sets seven different levels of rewards. If a person is convicted of a penalty of 15 years to life imprisonment or the death penalty, the person can receive even $180.000.

The most known whistleblower laws were adopted in response to tragedies or scandals. The Whistleblower protection Act arose from the aftermath of the Challenger disaster in 1986. In the United Kingdom accidents in industry and public transport resulting in serious losses of life led to the adoption of the Public Interest Disclosure Act. Later the scandals at Enron, Worldcom and others led to the adoption of the Sarabanes-Oxley Act.

Sarbanes and Oxley Act

As a response to the Enron scandal, the Congress of the United States adopted the Sarbanes and Oxley Act of 2002 (enacted 30 July, 2002; hereinafter: SOX), because the scandal shook public confidence in the nation’s securities markets. As the whole scandal was triggered off by an internal whistleblowing, no one was surprised that SOX contains whistleblower sections (Questionnaire I/14).

The Act attempts to encourage and protect whistleblowers in a variety of ways by providing channels for anonymous whistleblowing, establishing criminal penalties for retaliation against whistleblowers, and protection for whistleblowers in order to preserve their work status. While SOX was passed in response to domestic issues, it was written in haste, which allowed for potential extraterritorial application.

The SOX applies to every publicly registered company issuing securities in an American secondary exchange market. Former chairman of the Security Exchange Commission once told at a conference, that “our mandate is to implement the Sarbanes-Oxley Act fully for all companies, foreign or domestic.”[12] The provisions of the SOX are mirrored in the Nasdaq and the New York Stock Exchange (hereinafter: NYSE) rules.[13] If listed on NYSE, companies must certify their accounts to those markets yearly, and this certification process implies that companies are in position to assert that they comply with whistleblowing rules (Questionnaire I/12).

SOX made hundreds of companies to adopt whistleblowing in their codes of conduct, and not only companies listed in American exchange markets (Questionnaire I/10-11). It became one symbol of transparency and compliance.

1. Section 301 of the Act is a distinctive part of the SOX for its requirement of a channel for anonymous whistleblowing. The section requires audit committees of covered companies to establish whistleblowing procedures whereby employees can anonymously submit issues of concern regarding questionable accounting or auditing matters:

Section 301.4.

4) COMPLAINTS.—Each audit committee shall establish procedures for—
‘‘(A) the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
‘‘(B) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable
accounting or auditing matters.

This whistleblowing channel shall be set up not later than 270 days after the date of enactment, and the Securities Exchange Commission shall, by rule, direct the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that is not in compliance with the requirements of any portion of paragraphs (2) through (6) of section 301 of the Act.

Section 301 requires the committees to have procedures for retaining and treating the reports. Most commonly, the organizational response to this requirement has been to contract with an independent hotline company to receive the reports. Experiences show that these hotlines are unlikely to spur whistleblowing, but they greatly increase costs in time and money.

Unfortunately, we don’t have much information on these internal channels, because companies tend to treat relevant information as trade secrets and consequently it is difficult to determine their effectiveness. What information is available shows that hotlines and other designated recipients of whistleblowing find that a large percentage of the reports involve human resource issues, and only very few case involve legal or ethical issues.[14]

2. If a whistleblower suffers retaliation for reporting, Section 806 gives the employee the right to seek protection. This section prohibits any kind of retaliation, such as discharging, demoting, suspension, harassment, or any other kind of discrimination against an employee in the terms and conditions of the employment against a whistleblower who reports covered information to someone within the organization who has the authority to investigate, discover, or terminate misconduct.

The section specifies a process. First, the employee – within 90 days – has to file a complaint with the Secretary of Labor. An administrative law judge hears the evidence resulting from the investigation and decides (Questionnaire II/9). The case will not go forward if the employer can show clear evidence that the sanctions would have taken place in the absence of the whistleblowing.

As we already mentioned, the law is vague enough that it may cover U.S. citizens working for a foreign subsidiary or for a private foreign subsidiary of a covered U.S. company, or a foreign employee working for a foreign subsidiary. Section 806 virtually makes no distinction between domestic and foreign companies that have securities registered or listed in the USA. Even though it has the potential to reach foreign companies, the jurisdiction interprets the SOX in a more restrictive manner.

In Carnero vs. Boston Scientific Corporation, the First Circuit Court found that the SOX do not protect a foreign worker who reported accounting irregularities at a foreign subsidiary of an American corporation. The Court concluded that pertinent factors would not support a finding of congressional intent in order to overcome a presumption against extraterritorial application of the SOX.[15]

The judgment described the policy behind the presumption as preventing unintended conflicts between U.S. law and laws of other countries, and stated that congress is primarily concerned with domestic conditions: “We believe if Congress had intended that the whistle-blower provision would apply abroad to foreign entities, it would have said so and certainly would have considered, before enacting the law, the problems and limits of extraterritorial enforcement,” wrote Judge Levin H. Campbell.[16] Scholars argue that this interpretation denies the reality that over a thousand foreign companies list their securities in the United States and voluntarily subject themselves to U.S. laws.[17]

In Penesso v. LLC International, the administrative judge found that a U.S. citizen working abroad could bring a claim under Section 806 of SOX. In this case, the judgment stated that Cranero was not controlling on the issue of extraterritoriality because Penesso was U.S. citizen working abroad and some of the actions he complained of took place in the USA.[18]

3. Despite the relative uncertainty as to the applicability of all the SOX provisions to companies established in Europe, companies want to be in a position to comply with the specific whistleblowing provisions of the Act. However, in Europe, whistleblowers are looked at as informants, and certainly not considered as folk hero as in America. Some countries taken lead in resisting provisions of the SOX that shield from retaliation and set up channels to report.[19]

Europeans tend to think that some core provisions conflict with their national laws regulating labor and privacy. German and French regulators in 2005 refused to ap¬prove whistle-blower mechanisms sought by three U.S. companies—McDonald’s Corp. and CEAC/Exide Tech¬no-logies in France and Wal-Mart in Germany.[20] The companies wanted to weave the protections into their operations in those countries to comply with Sarbanes and Oxley.

A European Union committee composed of privacy protection officials (Article 29 Working Group) from member states expanded the debate’s scope to the rest of the continent with a nonbinding opinion that offers suggestions for resolving the conflict. U.S.-listed companies would have to deal separately with the governments in each nation where they operate.

The Sarbanes and Oxley Act is only one an example, but maybe the most important one for sectoral laws because of its worldwide effects. Particular problems these laws arose from have also defined the frames of whistleblower laws, so differences in regulation are necessary. Approximately thirty countries around the world have national whistleblowing laws.[21]

A basic question is whether a country needs a comprehensive whistleblower law, or only partial regulation in specific fields. Comprehensive, free-standing laws are not that widespread yet, only the United Kingdom, New Zealand and South Africa have laws that can truly be considered as comprehensive (Questionnaire I/2). Some countries have adopted laws to cover only the public sector (eg. Romania), others like Japan have a law for the private sector.

Public interest

Even if a country lacks proper whistleblowing legislation, presumably it has some channel where topic specific public interest disclosure can be made. These specific rules often not only guarantee the possibility of reporting, but also give a right to step up against socially harmful phenomena with legal means like actio popularis, an action to obtain remedy by a person or a group in the name of collective interest. (To give an example, we can mention the hotlines operated by national broadcasting supervisory authorities where every citizen can report and ask for remedy if some illicit content was broadcasted.)

The peculiarity of such schemes is that in contrast to whistleblowing procedures, these public interest schemes provide means to fight against wrongdoings for people outside of the organization (Questionnaire I/4). These public interest disclosures (or announcement) are typically made to a public agency of the government, and are investigated in an administrative process. Traditionally, a whistleblowing is an act of a man who believes that the public interest overrides the interest of the organization he serves, and reports that the organization is involved in corrupt, illegal, fraudulent or harmful activity.[22]

Topic specific public interest announcements and public interest litigation assume the existence and usage of the public interest concept. Public interest often appears to be an empty vessel to be filled at different times with different content. Given that people will seek to be fill it with different values, we cannot be sure about the extent to which it might meet our particular expectations of its content. However, such problems do not prevent the concept being used in debate or in the context of our examination. It can be used as a means of justifying or legitimating actions or proposals, it can serve as a contested arena for debate, and it might have some potential in the service of democratic values, like transparency, equality, protection of individual safety and health.[23]

General welfare are often to be found to underlie the use of this concept, and it can be observed that the public interest may variously be an ethical imperative – such as the natural law – some superior standard of rational. According to Bell, the public interest is “used to describe where the net interest of particular individuals may not be advanced, but where something necessary to the cohesion or development of the community is secured”.[24] Some scholar argue that this theory generally carries no cleared and shared meaning and can lead to confusion, and if there is an alternative, clearer and less contentious concept available, then the public interest should not be utilized.[25]

Braybrooke offers a deflated version of the public interest, identifying three prerequisites that determine when it might appropriately applied. The first is where a special interest group is arrayed against the general public, second, that the issue is in an area where genuine potential exists for the exercise of power by government, and third, that the issue is one of domestic and internal concern for the society.

The contemporary constructs of the public interest should at any time serve as a counterbalance to the power of the dominant interest groups of the society, yet also mesh with the prevailing view of the state and the social and economic apparatus and traditions. On one hand, a well constructed public interest scheme can be a strong mean of the opposition to develop and voice public interest claims contrary to dominant interest groups and values – polluters vs. environmentalists, multinational companies v. consumer protection NGO, etc.

On the other hand, the absence of both a clearly stated normative content and an appropriate institutional framework with which to pursue it, may found on occasion to have relegated the public interest to represent the state interest or, worse, allow for its potential capture by powerful interest groups. Such situation may explain why the concept is presently so hopelessly ill-defined and vulnerable to capture.[26]

Public interest has to be marked off the concept of preponderance and common interest, which tend to serve crude majoritarianism and fail to serve as any sort of counterbalances. The well established public interest scheme –let it be a special reporting channel or actio popularis- has foundations established within the core values of liberal democracy, so it has normative foundations independent of temporarily value sub-sets. Using this concept is an attempt to make democratic values trumps, and to avoid the otherwise inevitable dominance of economically powerful, which may readily override presently vulnerable democratic promises and expectations of equality of citizenship

In countries without comprehensive laws, sectoral laws may act as a basis for whistleblower activities. Civil Servant Laws, Labour Laws, Witness Protection Acts, Freedom of information Acts, or laws defining public interest may be used as partial guarantees and protection for disclosure (Questionnaire I/5). Anti-corruption laws can also have provisions on whistleblowers (Questionnaire I/3).

Differences are also noticeable in the range of subjects of whistleblowing, or in the definition of wrongdoings (Questionnaire II/1). In many countries whistleblowing is not just limited to one area as anti-corruption, but applies to a variety of issues, such as danger to the environment, working conditions or any kind of discrimination. Comprehensive laws mostly cover a wide range of subjects opened to whistleblowing.

Channels of Disclosure

In some countries, disclosures must be made inside the organisation. In others, legislation prefers external channels (special authorities, anticorruption office (Questionnaire II/7). Had Enron survived the scandal in 2002 of its illegal auditing activities, Sherron Watkins who blew the whistle, would have suffered from the company’s retaliation, because under Texas’s whistleblower law, employees of private employers receive legal protection against unlawful retaliation only if they report wrongdoing to an external law enforcement agency.[27]

This law is not unique in the United States, most state whistleblower statues restrict the parties to whom a whistleblower can report in order to receive protection (Questionnaire II/3). A vast majority of states – such as California, Michigan, Arizona, Iowa, and Connecticut – protect only those employees who file reports to external government bodies. Anyone, reporting internally, cannot rely on the protection of their state whistleblower law. However, some American states – New York, Colorado, Alaska, Indiana, New Jersey – take the opposite approach, and require first to report to the internal supervisor.[28] (Virtually no states protect those who choose to report to media or other non-governmental third parties.)

Should the law protect both ways to blow the whistle? If not, what reasons should be taken into consideration when deciding between internal and external reporting mechanism? Studies indicate that whistleblowers choose their report based on a wide variety of practical considerations – including the employee’s and wrongdoer’s status in the organization, significance of the wrongdoing, etc.[29] Rigid reporting requirements probably cannot match the diversity of situations in which whistleblowers may find themselves. This may cause unjust denial of protection.

The diverging approaches stems from often conflicting goals: lawmaker must consider whether the primary purpose of the law is to protect those who have made a good faith report, or to provide incentives to encourage reporting in the first place. Designer of whistleblower law must also weight the interest of the employer, because excessive protection and incentive may lead to an over laden administration and disruptive work environment. An internal reporting requirement demonstrates a more employer friendly view while external reporting favors the public role of the whistleblower.

In the United States, the federal Whistleblower Protection Act provides general protection to most federal employees, and allows reporting to anyone. It also provides a specific entity to external reporting, the Office of Special Counsel, which investigates the alleged violations that were reported and the claims of retaliation. This law applies only to federal employees, some other federal law extend to workers in the private sector. A prominent example of this is the Sarbanas-Oxley Act which provides protection to employees of publicly traded companies who report violations of federal securities law. Topic specific statues offer protection normally to public and private employees, but only apply to a narrow set of unlawful activities.

Proponents of external reporting stress that unlawful activity must be brought to the public’s attention, and properly investigated in order to ensure proper redress of injured parties and widespread compliance with the law.[30] Good example is the environmental whistleblowing, in which third parties – if not the nation- are always affected. If a serious pollution is not reported, then third parties won’t be able to get compensation. However, the practical reality is that whistleblowers prefer to report internally first, because of ht loyalty to an employer, the belief that the problem can be handled more effectively, to maintain good working relationship.

Proponents of internal violations highlight that if violations have little impact or no impact at all on third parties, then the public interest does not necessitate external intervention. An internal report can be much quicker and most cost efficient. Another important argument: employer should be provided an opportunity to correct the problem before external entities are notified. Internal reporting helps to preserve the corporate chain of command, to avoid unwarranted negative publicity. However, some worry that this leads to employer cover up.

According to a study, employees are likely to report externally when superiors are involved, when an illegal activity is essential to an organization’s wellbeing, when the employer failed to respond to a previous complaint.[31] Internal reporting is disadvantageous in situations where the violation of the law necessitates external enforcement.

One possible venue for whistleblowers is the media (Questionnaire II/4). Many laws recognize the importance of disclosure to the public including the media as a last worse case scenario. In the United Kingdom and Canada, the law allows for disclosure to the media as a least resort if a procedure or a series of conditions have been satisfied. The reason of this higher threshold is intended to use the fixed procedures set up by the lawmaker.

The media’s role in whistleblowing is also recognized by generally accepted principle that they should have a special privilege to protect their source from disclosure. Thus, if the media have the possibility to hide the identity of its sources, then whistleblowing is possible. Contrary, if the source has to be disclosed, whistleblowing is not promoted (Questionnaire II/5).

In countries with a longer tradition of whistleblowing NGOs might help whistleblowers to select the proper channels and ways of disclosure (Questionnaire I/21). They also offer legal advice, and contact to people already went through the procedure of whistleblowing. They also help to reach the media if no other way out.

Critics argue that media have no means of influencing an employer’s conduct as they lack oversight and enforcement capabilities. On the other hand, media is able to serve as a catalyst when the government fails to act or acts slowly (Questionnaire I/20).[32] The threat of negative publicity may also deter further wrongdoing.

An important topic regarding whistleblowing is the difference between confidentiality and anonymity. An anonymous disclosure guarantees little or no possibility of identifying the disclosing person and so contacting him or verifying the information. By contrast, a confidential disclosure is where the recipient knows the identity of the person but agrees not to disclose it when he/she makes use of the information (Questionnaire II/8). As to the message, anonymity raises real problems as it makes the concern more difficult to investigate and the facts more difficult to corroborate, and it excludes the possibility of clarifying any ambiguous information or asking for more.[33] The advantage of anonymity is that it makes it easier for people afraid of retaliation to leak out information, so it is more used in countries with less sophisticated systems of protecting whistleblowers. Public hotlines are often offered for anonymous reporting (Questionnaire I/9).

Data protection

Crucial for confidentiality is the question of data protection. The implementation of whistleblowing schemes relies on the processing of personal data: collection, registration, storage, disclosure of data related to an identified person (Questionnaire I/13). On one hand, personal information of the whistleblower is handled – except of course the anonym reporting scheme; on the other hand, personal information of the presumed wrongdoer is processed. As a result, in most European countries the data protection rules are applicable.

In Europe, the most important common ground of data protection rules is the Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995. Traditionally, EU countries have data protection rules in harmony with the Directive, and those who apply for EU membership, have to adjust their data protection regulation to the EU Directive. Consequently, whistleblower or other public interest disclosure regulation must be implemented in compliance with EU data protection rules.

To be legitimate, the data processing in a whistleblowing regulation has to satisfy one of the grounds set out in Article 7 of the Directive. Under the Article 7 c.), the establishment of the whistleblowing system is legitimate if it is necessary for compliance with legal obligation to which the data controller is subject. This means that the establishment of a reporting channel should have the purpose of meeting a legal obligation imposed by the EU or member state law, and more specifically a legal obligation to establish internal control procedures in well defined areas.[34]

According to Article 7 f.), the establishment of reporting system may be found necessary for purposes of a legitimate interest pursued by the controller or by the third party to whom the data are disclosed. According to the Article 29 Working Group, “the goal of ensuring financial security in international financial markets and in particular the prevention of fraud and misconduct in respect of accounting, internal accounting controls, auditing matters and reporting as well as the fight against bribery, appears to be a legitimate interest of the employer that justifies the processing of personal data by means of whistleblowing system in these areas.”[35] For instance, in this context, a not fully incorporated international treaty or the SOX as a foreign statue may be considered a legitimating norm.

There is a wide spectrum of possibilities for protecting whistleblowers, the ways of protection are an essential part of whistleblower laws (Questionnaire II/10). One key topic is the burden of proof: who has to prove that his/her claims are well-founded? In most cases the employer has to show that an eventual dismissal was not a reprisal for disclosing or reporting malfunctions. There still are exceptions. In the UK employees employed for less than a year, have the duty to prove that their dismissal was an act of retaliation.[36]

Whistleblowing procedures can take months. During this time whistleblowers live a life in suspense and insecurity. Time limits (Questionnaire II/6) are necessary for each stage of the procedure. If the time limits pass without any satisfactory action being taken, the concerns should be raised at the next level of review (Questionnaire II/13).

Remedies and compensation is another key issue in whistleblower protection. Most whistleblowing laws provide for compensation to the whistleblower in cases where they have suffered harms that cannot be remedied by injunction. This includes lost salary but can also include money for harm. Often, the laws use discrimination statutes to determine harm from harassment[37].


1 Nader, Petkas, and Blackwell, Whistlebowing (1972). Quoted in Nicholas M Rongine, Toward a Coheren Legal esponse to the Public Policy Dilemma Posed by Whistleblowing. American Business Law Journal, Summer 1985, Vol 23. 2. Issue; page 28.
2 Miceli, Marcia P.; Near, Janet Pollex; Dworkin, Terry Morehead: Whistleblowing in organizations; Routledge/Psychpress; 2008, page 6.
3 Banisar, David: Whistleblowing International Standards and Developments, A study for the First International Conference on Corruption and Transparency, Mexico, City, 23-25 of March 2006. page 7-8.
4 Jubb, Peter B.: Whistleblowing: A Restrictive Definition and Interpretation, Journal of Business Ethics, Vol 21, No.1 (Aug. 1999), page 81.
5 Tsahuridu Eva E., Vanderkerckhove Wim: Organistional Whistleblowing Policies: Making Employees Responsible or Liable? Journal of Business Ethics (2008) 82, page 109.
6 http://www.guardian.co.uk/media/2006/jan/09/Iraqandthemedia.politicsandiraq
7 http://www.scu.edu/ethics/publications/submitted/whistleblowing.html
8 Lahman Larry D.: Bad Mules, a Primer on the Federal False Claims Act, Oklahoma Bar Journal, Vol 76. No. 12., 4/9/2005 Page 901.
9 Act of March 2, 1863, ch. 67, § 6, 12 Stat. 698.
10 Taxpayers Against Fraud Education Fund, Fraud Statistics, 2008. http://www.taf.org/FCA-stats-DoJ-2008.pdf
11 Banisar, David: Whistleblowing International Standards and Developments, A study for the First International Conference on Corruption and Transparency, Mexico, City, 23-25 of March 2006. page 82.
12 Speech by SEC Chairman: Remarks at the Financial Times’ Conference on Regulation & Integration of the International Capital Markets (October 8, 2002), available at http://www.sec.gov/news/speech/spch588.htm.
13 NYSE, Section 303§.06
14 Dworkin, p. 1761
15 Carnero v. Boston Scientific Corp. (Carnero II), 433 F.3d 1, 9 (1st Cir. 2006). at 8.18.
Id. at 7.
16 Dworkin page 1775.
18 No. 2005–SOX–00016 (ALJ) (Dep’t of Labor Mar.4, 2005).
19 Dworkin, p.1779.
20 http://www.abajournal.com/magazine/article/culture_clash/
21 Banisar, David: Whistleblowing International Standards and Developments, A study for the First International Conference on Corruption and Transparency, Mexico, City, 23-25 of March 2006. page 39.
22 Nader, Petkas, Blackwell: Whistleblowing (1974, Penguin ), page11.
23 Mike Feintuck: The Public Interest in Regulation, Oxford University Press, 2004. page 11.
24 Bell, J.: Public Interest: Policy or Principle?” in Law and the Public Interest, edited by Franz Steiner, 1993.
25 Braybrooke: The Public Interest? The Present and Future of the Concept, Atherton Press, 1962. p. 34.
26 Feintuck, p. 28.
27 Texas Government Code, Article 554.002 b.)
28 Gerard Sindzak: An Analysis of Current Whistleblowin Law, California Law Review, Vol. December. 2008. p 1634.
29 Elletta Sangrey Callahan & Terry Morehead Dworkin, Who Blows the Whistle to
the Media, and Why: Organizational Characteristics of Media Whistleblowers, 32 Am. Bus. L.J.
151, 162-63 (1994)
30 Sindzak, page 1641.
31 Callahan, Dworkin, page 151-152.
32 Callahan, Dworkin, page 396.
33 http://www.pcaw.co.uk/policy/cwbdataprotection.htm#1_5
34 Article 29 Data Protection Working Party, Opinion 1/2006 on the application of EU data protection rules to internal whistleblowing schemes int he fields of accounting, internal accounting controls, auditing matters, fight against bribery, banking and financial crime, 00195/06, 1 February 2006, page 7.
35 Idid page 9.
36 http://business.timesonline.co.uk/tol/business/law/reports/article1629582.ece
37 Banisar, David: Whistleblowing International Standards and Developments, A study for the First International Conference on Corruption and Transparency, Mexico, City, 23-25 of March 2006. page 68.

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