Danske Bank whistleblower testifies at European Parliament
The now famous Danske Bank Whistleblower, Howard Wilkinson, testified before the TAX3 European Parliament Committee last week.
The statement was given on the day after the European Parliament’s legal affairs Committee adopted its report on the whistleblower protection Directive – which was significantly stronger than expected.
Wilkinson reported suspicious financial transactions at Danske Bank’s Estonia branch, where he worked until 2014. It has been calculated that up to $20 billion in fraudulent financial activity have been brought to light by Wilkinson’s disclosures.
Wilkinson told the parliamentary committee that although he chose to report internally, it would be disastrous if the EU insisted on internal reporting as part of a tiered approach to reporting criminal activity and wrongdoing. ‘Ultimately, whistleblowers must have the right to go straight to the authorities’ if they suspect criminal activity of breaking of regulatory rules. It would be strange if the EU enacted legislation which made it even harder to report.
It would be disastrous if the EU insisted on internal reporting as part of a tiered approach to reporting criminal activity and wrongdoing
Wilkinson’s legal counsel Stephen Kohn, who has been representing whistleblowers for more than three decades, informed committee members that he would be forced to actively oppose the EU Directive if mandatory internal reporting was part of the legislation – as this would undermine a whistleblower’s fundamental right to report wrongdoing to the appropriate authorities and law enforcement agencies.
Kohn forthrightly told parliamentarians, the EU’s whistleblower laws ‘must be designed to undercut the fear to report wrongdoing and a culture of silence that permits crimes, such as money laundering, to go undetected by law enforcement agencies’. According to Kohn the EU Directive must both better protect the whistleblower and encourage and incentivise the disclosure of wrongdoing, if the EU is serious about effectively combating financial crimes.
The EU’s whistleblower laws ‘must be designed to undercut the fear to report wrongdoing and a culture of silence that permits crimes, such as money laundering
Kohn noted that increasingly, the premise of modern whistleblower protection laws is about incentivising employees to report hidden fraud. Crimes such as illegal banking, money laundering and foreign bribery all largely take place in secret. Without an ‘insider’ whistleblower to detect, document and report these types of financial crimes, then they can be extremely hard to uncover.
He believes that the EU should harmonise Europe’s whistleblower protections with the highly effective whistleblower laws, that are part of the US tax code. The US-based lawyer also believes the EU needs to identify the toughest whistleblower protection laws among member states and ensure the European legislation takes these on board.
The EU needs to identify the toughest whistleblower protection laws among member states and ensure the European legislation takes these on board
Both Wilkinson and Kohn stressed the importance of Europe’s whistleblowers legislation giving those reporting complete confidentiality and anonymity. Wilkinson said, think of a Danske Bank employee, a single mum, with a mortgage. If she discovers something wrong, is she going to risk everything, her career, her reputation, her financial security? She most probably will not – unless she knows she will enjoy complete anonymity and confidentiality. She may not be fired, but she might suffer come the next round of redundancies. The financial sector in Estonia being fairly small, she will never work in the sector again. Can you ask someone to risk everything on the off-chance that they may me vindicated, years down the line, this would be optimistic in the extreme.
Kohn added: ‘Banks are rational economic actors. Even if they are 90 per cent certain they are going to lose a case against a whistleblower, they will pursue it, if only to discourage future whistleblowing.
Wilkinson’s counsel supports the formation of an EU Whistleblowers Office
Wilkinson’s counsel supports the formation of an EU Whistleblowers Office, tasked with accepting confidential and anonymous complaints. The office would also provide detailed information to perspective whistleblowers both in person and online.
The directive must be changed to that whistleblowers can report not only a special internal whistleblowing channel, but also to managers or law enforcement.
In an open letter 81 signing organisations urge the EU Council to adopt the Parliament’s position on reporting channels. The whistleblower protection directive is currently in trilogue. The signatories express serious concerns about the reporting channels regime in the Council and Commission positions in these negotiations.
A few weeks left to improve the whistleblower protection directive. Make your voice heard and sign the new petition for strong whistleblower protection!
The Romanian Presidency will play a key role is securing a robust whistleblower protection Directive, argues R. Nicolae, of Syene. He believes that Romania has a number of strengths which will support it leading the negotiations, as the whistleblower protection file moves from the Council to trilogue.
According to the Legal Counsel of the Danske Bank Whistleblower, S. Kohn, the Howard Wilkinson case clearly demonstrates that the EU Whistleblower Directive urgently needs to be revised to protect the right to report directly to law enforcement agencies and regulatory authorities.
The Duty Speech Loophole: how the EU Whistleblower Directive could backfire against its own objectives
Tom Devine, Legal Director of GAP explains why a series of technical contradictions within the EU draft directive need to be resolved, or the legislation could backfire and actually work against whistleblowers.
Council legal opinion must not be used to delay completion of whistleblower protection legislation
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European institutions have been seen as being too close to lobbyists and vested interests. It would be a real shame if member states’ representatives were now seen as acting against public concerns, in resisting a whistleblower protection law which encourages the reporting of crime and wrongdoing, said Virginie Rozière MEP.