The proposed mechanisms which should allow whistle-blowers to report wrongdoings are threefold. Firstly, a mandatory internal reporting procedure should be established. Public administrations and municipalities of more than 10.000 citizens as well as private companies of more than 50 employees having more than 10 million of euro in turn-over have to create an internal procedure to allow reports from whistle-blowers. Secondly, there should be a possibility to report to the competent public authorities, but only if the internal reporting mechanism is not effective. Thirdly, and on the condition that neither the internal nor the public reporting were successful, the possibility to report directly to the media or grand public still remain.
According to CESI, the first channel, even if mandatory, may in practice be insufficient due to a lack of awareness. The second ‘public authorities’’ channel could however lead to major outcomes whilst respecting the secret of investigation and the innocence assumption. The third channel only appears to be appropriate when all other options have been exhausted and unsuccessful.
CESI believes that the inclusion of too many other grounds (such as the wide range of listed breaches of EU law) only weakens the very purpose of the proposal itself which is to capture complex wrongdoings in tax matters. As a matter of fact, other (important) grounds such as public procurement, financial services, money laundering or terrorist financing have been included in the proposal, hence broadening its scope. Furthermore, the notion of tax fraud or tax evasion only appears briefly within the proposal, both of which render the proposal less and less appropriate to tackle situation such as Luxleaks, Swissleaks, Offshore leaks etc. It is important to remember the outcome of the public consultation, which were that ‘tax evasion’ and ‘tax avoidance’ were mentioned by 84% of individuals and 68% of organisations as areas in which rules on whistle-blower protection was the most beneficial.
On a positive note, CESI supports the highly ambitious aim/intention of the proposal to harmonise whistle-blowers’ reporting procedures across the EU member states. CESI hopes that member states will be able to find common grounds and agree with this proposal so that the directive could be effective by the end of 2019.