Introduction

At present, it is unclear whether documents which are turned over to an ombudsman by an informant may be confiscated by the investigating authorities. In particular, it is unclear whether the involvement of an ombudsman might endanger a whistleblower's confidentiality. This update describes the use of an ombudsman by private companies and associated risks and takes a close look at the legal situation, particularly under criminal procedural law.

An ombudsman is appointed by an undertaking as an independent body to combat corruption and avoid possible antitrust violations. An ombudsman listens to reports from employees or clients regarding possible breaches and treats this information confidentially. After a plausibility check, the ombudsman forwards the information to the company in an anonymised form so that steps can be taken against the breaches. For example, leniency rules or voluntary tax disclosure could be used to prevent the management being made criminally liable or to avoid the imposition of heavy fines on the company. As a rule, the ombudsman is a lawyer who is not part of the corporate structure. The purpose of this is to guarantee independence and impartiality and try to create the required trust with regard to informants. In particular, anonymity should protect the informant from direct personal consequences and thus act as an incentive to contributing towards clarifying the facts. It is conceivable that the offender will confide in the ombudsman and admit any breaches committed, in which case the offenders have a vested interest in keeping their identity secret.

Implications of civil and criminal law on anonymity

As far as civil law is concerned, there are no specific regulations to be observed when drafting contracts appointing an ombudsman. As a rule, this is a classic legal services contract, so in principle the ombudsman has an obligation towards the undertaking to disclose the whistleblower's identity. However, an ombudsman is specifically deployed to ensure that the whistleblower remains anonymous. If this legal principle were upheld, many whistleblowers would not provide information for fear of revealing their identity. The actual purpose of an ombudsman would then be virtually unattainable. Therefore, the contract should specifically state that the whistleblower's identity may be disclosed only if the whistleblower has given his or her consent or if there is an official order to do so.

If this is agreed, the confidentiality obligation will still exist even if the undertaking would face damages if the whistleblower's identity were not revealed. This principle is abandoned only in exceptional cases, where there is a risk of death or physical injury or the existence of the undertaking as a whole is jeopardised. Even in such cases, it is up to the ombudsman to choose whether to reveal the whistleblower's identity; the ombudsman is not obliged to disclose the whistleblower's identity and merely has the possibility of breaching – legitimately – the confidentiality obligation which would normally apply.

Section 203 of the Criminal Code also protects the identity of whistleblowers. Like business and trade secrets, the whistleblower's identity constitutes privileged information and as such is protected by statute. In the event of a violation, the ombudsman would therefore face a criminal penalty unless the justified grounds for disclosing the person's identity existed.

Section 53(1)(1)(3) of the Code of Criminal Procedure also grants the ombudsman a comprehensive right to refuse to testify. It is up to the ombudsman to decide whether to exercise this right. As the ombudsman could face criminal penalties by disclosing confidential information, the right to refuse to testify thus becomes a duty to refuse.

The civil law framework of the contract appointing the ombudsman and the criminal law aspects of the situation thus mean that the informant's identity is adequately protected.

Safeguarding anonymity in event of document seizure

The question of safeguarding the whistleblower's identity becomes more complex once the investigating authorities become aware of the alleged breaches. It is reasonable to assume that the investigating authority will want to question the informant as either a witness or an accused, in which case the informant's identity must be disclosed. However, it is unclear whether any files which are in the ombudsman's possession can be confiscated.

In principle, documents which the informant has made available to the ombudsman are not precluded from seizure pursuant to Section 97(1)(2) of the Code of Criminal Procedure. In general, documents are exempt from seizure only if they have clearly been drafted by an accused or the accused's criminal counsel for the purpose of defence. However, during the investigation stage neither the informant nor the company can be regarded as accused. It is therefore necessary to clarify whether documents from an informant who has not (yet) been accused can be confiscated, in which case the informant's anonymity would inevitably be compromised and reporting wrongdoing to the ombudsman would be tantamount to self-incrimination.

There is no ban on confiscation as such. Providing information therefore always entails the risk of personal consequences, because the investigating authorities have the right to seize documents which the informant has turned over to the ombudsman or which have been created as a result of talks between the ombudsman and the informant.

However, the amended version of Section 160a(1) of the Code of Criminal Procedure sheds a different light on this, as it prohibits investigations against a lawyer where the findings of such investigations could entitle the lawyer to refuse to give testimony. Hence, confiscation would be unlawful if it caused the informant's identity to be disclosed and if the ombudsman had the right to refuse to testify on this matter. This is clearly the case in the scenario described above. It is also borne out by a Federal Constitutional Court ruling on confiscating documents of an accused party. Thus, in all probability documents cannot be seized under Section 160a(1), including in the present scenario.

However, the Federal Court of Justice has not yet issued a ruling on the lawfulness of confiscating documents held by an ombudsman. Thus, a certain element of risk remains. As a precautionary measure, an ombudsman should not accept company documents unless they clearly relate to the matter in question and should not keep such documents on the premises as they could be confiscated. Likewise, the ombudsman should not promise to safeguard the informant's anonymity if he or she has made any records.

For further information on this topic please contact Björn Demuth at CMS Hasche Sigle by telephone (+49 40 37 63 00) or email (bjoern.demuth@cms-hs.com). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.