Excerpt from session:
Whistleblowers are one of the most effective tools in preventing corporate misconduct. Recent reports show that nearly 40% of corporate fraud and misbehavioris identified and addressed thanks to whistleblower tips. How can (and must) companies protect and encourage them?
In November 2017, after almost two years of debates and multiple campaigns by Transparency International, the Italian Parliament approved a law that improves Italy’s whistleblowing regulation applicable to employees in both the public and private sectors. Notably, Law 179/2017 prohibits employers from adopting retaliatory measures (including job transfers or demotions)against employees who have reported illegal practices, and imposes on the employer the burden of proving thatthe measures taken against the whistleblower were takenfor reasons other than thewhistleblowing.
Despite these significant efforts, there remain certain structural elementsin Italy that could affect whether these provisions will result in an increase in internal complaints.Indeed, Law No. 179/2017 does not introduce any incentives for whistleblowers, whomust bear the legal fees and costs of the possible litigation originating from the whistleblowing.This is mostly in line with legislation adopted by several other E.U. countries, which still resist U.S.-style financial incentives.
After having described the changes introduced by Italian Law 179/2017, the presentation will compare the protection and incentives provided to whistleblowers by Italian law with those offered by other countries (including France, the U.K., and the U.S.). The presentation will then discuss what additional measures both legislators and corporations could adopt in order to encourage whistleblowers to speak up.
- Pros and cons of The Law
- The Law enforcement, public and private reactions, expectations
- Executive and judicial system as a support to succesful implementation of The Law
- The Law as the role model to other countries
Speakers corner / Preface to session
ZEC 2018: What’s the background of new 179/2017 law?
Arnaldo: Italy’s 2012 Anti-Corruption Law (190/2012) introduced a first set of rules on whistleblowers; however, these rules only applied to employees in the public sector. Under 2012 Anti-Corruption Law, public employees could not be dismissed, sanctioned, discriminated against or face retaliation when reporting illegal practices within the public sector. The 2012 Anti-Corruption Law also required public administrations and state-owned companies to adopt internal whistleblower protection measures, including the preservation of the whistleblower’s identity. However, these rules were deemed to be unsatisfactory as, inter alia, they did not protect whistleblowers in an adequate manner, and did not apply to private sector employees.
ZEC 2018: With new law, discriminatory sanctions are extended to employees and contractors of companies supplying goods or services to public administration. What’s your opinion, how this new law will influence on public procurement procedures and implementation of e.g. ISO 37001?
Arnaldo: The interpretation of “private companies providing goods and services to public sector or state-owned entities” is yet to be defined (as it is potentially extremely broad). For this reason, it is still unclear which private companies are subject to Law 179/2017. With specific reference to public procurement, it is very likely that most public administrations will require private companies participating to public tenders to show that they have adopted compliance programs under Law 231/2001, and that these programs have been updated to meet the requirements of Law 179/2017 (see answer to question 3 below).
ZEC 2018: In order to demonstrate compliance with the provisions of the new law, private companies will have to develop and impose their compliance programs? Am I right? Which basic components such programs should have?
Arnaldo: Private companies are formally not required to adopt compliance programs under Law 231/2001. However, they are strongly encouraged to do so, as such compliance programs are required to shield them from corporate liability in the event that an employee commits one of the offenses expressly enumerated by Law 231/2001 (including corruption and embezzlement).
The content of the compliance programs are generically defined by Law 231/2001. Notably, these models should contain principles of conduct, internal control mechanisms, policies and procedures, training programs and disciplinary systems. As Law 231/2001 does not provide any detailed guidance with respect to the content of the organizational model, companies may structure their organizational models according to guidelines issued by trade unions or industry associations, provided that these guidelines are filed with and approved by the Ministry of Justice. All major Italian unions and industry associations (including Confindustria, the General Confederation of Italian Industries, grouping more than 113,000 voluntary member companies) have issued guidelines as to the requirements of organizational models (and filed them with the Ministry of Justice).
Law 179/2017 requires private companies having adopted corporate compliance programs to include in these programs specific mechanisms to protect whistleblowers. Therefore, if a company (i) does not provide goods and services to public sector or state-owned entities, and (ii) has not adopted a compliance model under Law 231/2001, it is not subject to Law 179/2017.