No protection against prosecutorial confiscation for Corporate Ombudsmen in Germany

The implementation of a whistleblowing system in a company is a core element of an effective compliance management system. It serves to disclose compliance breaches within the company, such as cases of corruption, breach of trust or fraud, by giving employees and third parties a secure point of contact where they can anonymously report misconduct. Often the companies engage external lawyers as ombudsmen, who filter the information and forward it anonymously to the company, thus acting as an interface between the company and the whistleblower. The ombudsman usually guarantees confidential treatment of the information that has been revealed by the whistleblower.

However, a recent decision of the regional court of Bochum suggests that this promise cannot always be kept. In the case at hand the company's external ombudswoman had received an anonymous report from a whistleblower who was lodging serious accusations of corruption and breach of trust against the managing director of the company. The ombudswoman scanned part of the complaint and forwarded it to the company's integrity protection commissioner. In the course of the investigations the prosecution authorities found an email from the company's integrity protection commissioner to the suspect which contained the incomplete scan of the complaint. In order to gain full access to the anonymous report the prosecution authorities obtained a search warrant of the ombudswoman's premises. Hence, she filed a complaint against the search warrant claiming that with view to her capacity as a lawyer and the whistleblower's trust in her professional confidentiality obligation the document was protected against confiscation by criminal prosecution authorities (see Sec. 97 (1) no. 3 of the German Code of Criminal Procedure).

In its ruling rendered on 16 March 2016 (II-6 Qs 1/16) the regional court of Bochum rejected this argument. It held that information regarding compliance breaches conveyed to an ombudsman is not fully privileged and not protected from seizure by criminal prosecution authorities. Sec. 97, 160a of the Code of Criminal Procedure does not protect the relationship between the non-accused whistleblower and the lawyer because the latter is primarily acting in the interests of the company which appointed him. Therefore, there is no client-like, privileged relationship of trust between the corporate ombudsman and the whistleblower. Anonymity and confidentiality cannot be guaranteed.

Thus, the regional court's decision creates the risk that whistleblowers will choose not to report misconduct. As this may seriously undermine the effectiveness of whistleblowing systems the legislator is called upon to find a well-balanced solution considering the importance of ombudsmen in effective and functioning compliance systems.