In France, in 2013, three Laws bestowed a legal status on whistleblowers. The first Law dates back to 16 April 2013 and grants protection to people blowing the whistle on “grave risks for public health or environment”. Then, a Law of 11 October 2013 on transparency in public life extended this protection to whistleblowers denouncing situations of “conflicts of interests” in which elected people and politicians may find themselves. Finally, since 6 December 2013, a Law combatting tax fraud and financial and economic delinquency, the whistleblowers’ status is granted to any employee or civil servant who “reported or testified in good faith, facts constituting an offense or a crime of which he was aware in the exercise of its functions”1.
These provisions were adopted following several political and financial scandals in order for those who blew the whistle neither to jeopardize their job nor to be sued. More fundamentally, these Laws tend to reinforce the collaboration between the civil society and the public Justice system by facilitating evidence gathering, which is often hard.
The new French system inspired by the US legislation
The French Laws of 2013 on whistleblowers find their roots across the Atlantic.
The creation of a whistleblower status dates back to 23 July 1778 when the US Congress enacted a statute which compelled any person to report offences committed by a civil servant2. The role of whistleblowers was stressed in 1863 by the enactment under Abraham Lincoln of the False Claims Act (“FCA”) whose “qui tam”3 provision allowed citizens to sue, on behalf of the federal government, any legal or natural persons who defrauded it. Whistleblowers were entitled to receive 50 % of the amount the government recovered as a result of their cases. However, whistleblowers are only duly protected since 27 October 1986. Although the FCA has been amended several times, it still rewards whistleblowers, but at a more moderate rate since they are entitled to perceive a maximum of 30 % of the amount the government recovered as a result of their cases.
The Dodd–Frank Wall Street Reform and Consumer Protection Act from July 2010 has extended the protection granted to whistleblowers under the FCA to “associated others” who indirectly contributed to the “qui tam” action by providing, for instance, any useful documents4. As the systemic banking crisis of 2008/2009 revealed the failures of the Securities and Exchange Commission (“SEC”), the Act added a new mechanism to encourage reporting by relators who provide “original information”5. Now, they are entitled to perceive 10 % to 30 % of the fines inflicted by the SEC.
Parallel to the FCA, the 1989 Whistleblower Protection Act (“WPA”) specifically deals with reporting by federal employees of corrupt practices and illegal activities committed by members of federal agencies.
Finally, one must recall that the 2002 Sarbanes-Oxley Act (“SOX”), which came as a response to the Enron and WorldCom scandals, legally constrains US listed companies and their foreign subsidiaries to adopt whistleblowing programs and to ensure protection of whistleblowers encouraged by such programs to denounce offenders inside the company or associated with it.
Prior to France, other European countries followed the US example. Not surprisingly, in 1998, the UK adopted the Public Interest Disclosure Act. Its scope was strengthened by the 2010 Bribery Act which requires companies to take any “adequate” measures in order to prevent corrupt practices. Among such measures, the Ministry of Justice, in its guidelines, recommends to set up “whistleblowing procedures”.
In Ireland, the Protected Disclosure Bill of July 2013 intends to protect whistleblowers from reprisals in their jobs. Other countries adopted provisions on whistleblowers. Nevertheless, these legislations do not ensure the same level of protection as the French Law does6.
The institutionalization of whistleblowers in France is a major cultural milestone
- From the whistleblowing system to the Law of repent
France has a different legal culture. For a long time, the word “reporting” has been badly connoted. France, however, is about to change its paradigm. The financial flows stimulated by globalization, the fight against money laundering and the financing of terrorism have convinced the French public authorities to set up a whistleblowing system to help identify offenders. This system is clearly conceived to be incentive.
Consequently, if the above cited Law on the fight against tax fraud and financial and economic delinquency does not provide for pecuniary rewards for whistleblowers, it is nonetheless complemented by a leniency system for repent pursuant to the principle laid down in Article 132-78 of the French criminal code7.
First, the whistleblower’s status is embodied by a new Article L. 1132-3-2 of the French labor code under which paragraph 1 sets out that “no person can be excluded from a recruitment process or access to an internship or a training period in a company, no employee may be sanctioned, dismissed or be directly or indirectly, in particular as regards to remuneration, [...] incentive measures or distribution of shares, training, reclassification, assignment, qualification, classification, promotion, transfer or renewal of contract for having reported or testified in good faith, facts constituting an offense or a crime of which he was aware in the exercise of its functions”. A similar provision is inserted in Law n° 83-634 of 13 July 1983 on civil servants’ rights and duties8.
Second, with regard to whistleblowers that would also be offenders, the Law of 6 December 2013, along the lines of Article 132-78 of the French criminal code, provides for a legal mechanism which differs depending on whether the repented has prevented basic or aggravated money laundering9. If the repentant tempted to commit the offence but prevented its realization, he is exempted from sanction. However, if he already committed the offence and therefore only stops it, his custodial sentence is cut in half.
This regime nonetheless has a limit which can be seen as regrettable since it exclusively targets custodial sentences applicable to natural persons. Yet, the legislator could have extended this regime to legal persons as was the case under the leniency programs edited by the US Department of Justice (“DoJ”) in the field of antitrust and which address both natural and legal persons10. In any case, this question deserves an answer given the fact that the criminal liability of French companies may be entailed for offences committed abroad (ex: active corruption and influence peddling as described by Articles 435-3, 435-4, 435-9 et 435-10 of the French criminal code11).
- The involvement of the civil society in the reporting of offences
The main characteristic of the French whistleblowing system is the creation of a new way of reporting alongside the traditional binding obligation made for “every constituted authority, every public officer or civil servant who, in the performance of his duties, has gained knowledge of the existence of a felony or of a misdemeanor […] to notify forthwith the district prosecutor of the offence and to transmit to this prosecutor any relevant information, official reports or documents” as laid down under Article 40 paragraph 2 of the French code of criminal procedure. It is well-known that the effectiveness of this provision is limited, especially since its violation is not sanctioned12.
Until now, to strengthen the effectiveness of prosecution, the French legislator preferred to grant approved or unapproved associations the right to bring a civil action before the criminal tribunals. In 2013, the legislator maintained this tradition. The Law of 6December 2013 confers upon approved associations fighting against corruption the right to bring a civil action in corruption, influence peddling, concealment and money laundering cases13. Furthermore, by removing the Public Prosecutor’s monopoly over initiating proceedings14 for offences of corruption and influence peddling15, this Law enables the above associations to trigger criminal prosecution by bringing a complaint. It also means that companies which are victims of such behaviors may do the same.
It is a true revolution, at least in the particular sector of the fight against corruption and financial delinquency.
The other revolution concerning whistleblowers is no less important considering that they sometimes do not hesitate to seize foreign authorities in order to report facts they are aware of and which occur in France or abroad. For instance, former employees who had been laid off for serious misconduct linked to corruption practices in foreign subsidiaries of a French company decided to report those facts to the DoJ. Consequently, the Department launched investigations on the whole group listed in the US…
It is doubtless that the Law’s incentive effect for whistleblowers to report illegal activities they are aware of in their companies will have legal consequences outside our borders. Thus, investigations launched in one country by public authorities may prompt the authorities of the country where the relevant company also has an establishment, to launch, in turn, investigations with worldwide ramifications.
In addition, antitrust and anti-bribery rules have an extraterritorial scope. Consequently, there is a growing number of investigations led by national authorities on foreign companies.
Therefore, although the creation of a whistleblower status answers the need for public authorities to fight against economic delinquency more efficiently, we must nevertheless regulate a system conducive to abuses. In this respect, French companies should set up internal whistleblowing programs that clarify in which cases their employees must blow the whistle and insist on their obligation of “good faith”. With the institutionalization of whistleblowers, the compliance devices move away from soft law and enter the scope of hard law.