External lawyer as interface
Ombudman's premises searched
Confiscation of anonymous reports permitted
No client-lawyer relationship
According to a recent Bochum Regional Court decision, under certain conditions investigative authorities can search the premises of external ombudsmen.
Compliance breaches, in the form of corruption, breach of trust or fraud, cannot be prevented, even by sophisticated compliance management systems. Hence, the disclosure of compliance breaches stemming from anonymous reports from employees or third parties is important. There are different ways and means for a company to communicate with the potential whistleblower, but the ombudsman model is frequently used in practice.
An external lawyer is often asked to act as an interface between the company and the whistleblower. This lawyer receives information from an informant, filters it and, as a rule, forwards it anonymously to the company. The whistleblower's anonymity is often guaranteed with the argument that the prosecuting authorities are unable to seize any of the whistleblower's documents from the lawyer. However, the Bochum Regional Court recently found that this promise cannot always be kept.
A company used a lawyer as an ombudsman to accept anonymous information relating to compliance breaches. In this function, the ombudsman received an anonymous report from a whistleblower, who was raising serious accusations of a breach of trust against the managing director of a company. The district attorney issued a warrant to search the ombudsman's premises to gain access to the anonymous report. To avoid having her premises searched, the lawyer handed over the anonymous report and at the same time filed a complaint about the search warrant. The reason she gave for her complaint was that the anonymous report concerned documents that were protected and exempt from confiscation, owing to her client-lawyer relationship. As a result, the court adopted the view held by the district attorney and confirmed that anonymous reports could be confiscated from an ombudsman.
Confiscation of anonymous reports permitted
Essentially, the court decided that the confiscation provision in Section 97(1)(3) of the Code of Criminal Procedure does not protect compliance ombudsmen with regard to obtaining information from anonymous whistleblowers, as there is no client-like relationship of trust between an ombudsman and whistleblower that is worthy of protection. Under Section 97(1)(3), items covered by a lawyer's right to refuse to give evidence may not be confiscated. Lawyers may refuse to give evidence with regard to what has been entrusted to them or what they have gained knowledge of. In this particular case, the ombudsman, as is generally the case, was instructed by the company. There was no client-lawyer relationship between the whistleblower and the ombudsman.
As a result of this decision, high demands were made on the existence of a client-like relationship of trust. However, the demands were not satisfied. The whistleblower, who was not accused in criminal proceedings or at risk of criminal law charges, was not in the position at the time to avail himself of the services of a lawyer without fear of criminal prosecution. Even the lawyer guaranteeing the whistleblower confidential treatment with regard to the information she had received in her position as ombudsman did not suffice as the assumption of a client-like relationship of trust between the lawyer and the anonymous whistleblower. Otherwise, there would be a danger that the statutory provisions on the permissibility of criminal procedural measures would be circumvented by making private law promises.
A core element of ombudsman systems to date has been the guarantee of whistleblower anonymity or confidential treatment. According to this recent decision, the company and the lawyer instructed by the company as an ombudsman can no longer fully guarantee anonymity. Protecting the whistleblower's anonymity could, in theory, be guaranteed by a client-like relationship of trust between the ombudsman and the whistleblower. However, in practice this is ruled out, as an ombudsman is instructed by the company and acts in its interests. This decision means that there is a risk that potential whistleblowers will choose not to submit anonymous reports. The importance of ombudsman and whistleblower systems, which have hitherto been a key element of effective, functioning compliance systems, would thus go into decline.
For further information on this topic please contact Daniel Kaiser at CMS Hasche Sigle by telephone (+49 711 97 64 0) or email ([email protected]). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.