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More Room for Sensitive Information

More Room for Sensitive Information

Poland
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Welcome corporate whistleblowers

Recently we have seen a growing interest in issues relating to whistle-blower protection and its role in modern business. The main emphasis in the discussion about whistleblowers and their duties, rights and obligations was put on the individuals involved in whistle-blowing. It was also focused on creating mechanisms allowing individual whistleblowers to feel safe once they make their notification, either internally within the organization or externally with public authorities.

However, it has to be noted that not only an individual can be a whistle-blower. In the Polish legal system, a number of regulations penalize individual and corporate behaviors and the list of such regulations is constantly growing.

Troublesome discovery

An important question is what happens when the discovery of compliance irregularity is a result of a regular internal audit carried out in the company and is not coming from an individual whistleblower? How should the company react when the discovered compliance problem happens to be a legal problem which may trigger regulatory or even criminal investigation? We hear those questions commonly asked in all types of corporate companies in all sectors. Often companies discuss also whether the company should file official notification. Companies even perform detailed risk assessments on how such notifications and further investigations can impact their business. From our experience the main reason of such questions is not the will to hide irregularities but fear of what will happen once the company self-reports.

The biggest challenge for a company is to find itself in situation where the discovered problem is a common market mechanism used in other companies in the same sector. Filing a notification in such a situation may seem for some companies as an act of corporate suicide. However, if the company wants to continue business operations without a constant risk of regulatory or criminal investigation, reporting the irregularities is the only way to move forward.

Keeping in mind problems and doubts that companies have when it comes to self-reporting, we believe that steps aimed at creating mechanisms protecting corporate whistleblowers are as much important as enhancing the protection of individual whistleblowers. As for now, the only operational leniency system protecting corporate whistleblowers in Poland is based on competition law but its application is limited to competition law violations only. If incentives for corporate whistleblowers, as well as their protection, would be guaranteed generally by the law, a large number of self-reporting doubts could be avoided. Especially, if the corporate whistleblower would know that reporting could give them some sort of protection or exclude from sanctions if the revealed irregularity was not known to the public authorities before.

No bounty for self-reporting

Currently, apart from the competition law, other binding regulations do not provide for any kind of benefits for a company acting as a whistle-blower in its own case. Reporting irregularities discovered within an organization or adopted throughout companies operating within a relevant sector does not lead to mitigation of risks of liability of any kind, including civil, administrative or even criminal (based on the Act on the Liability of Collective Companies for Punishable Offenses). Moreover, apart from the risk of liability imposed on a company, other side effects must be taken into consideration, consisting of dawn raids and inspections from prosecutor's offices, police, tax offices or regulator. The Polish Criminal Code stipulates the means of mitigation of penalty or even excludes the possibility to impose punishment if the individual perpetrator reveals the details of an offense or accomplices. Nevertheless, there are no reflecting provisions relating to the actions of companies.

Therefore the legislator's plans to enact regulations which would protect a whistleblowing company or at least would allow it to be treated in a more favorable manner, should be recognized as a step in the right direction for our legal system. Such mechanisms were proposed in the last draft of the Act on Transparency in Public Life which allowed a company to avoid the imposition of multimillion fines if a company filed a notification of listed crimes before the inspection in this respect was commenced by the Central Anticorruption Bureau. That draft also provided for an extensive protection of whistleblowers notifying about specific crimes, including the protection for an entrepreneur, and also a company, if the notification concerned its business partner, but did not guarantee anonymity for such a whistle-blower.

Likewise, the last draft of the new Act on the Liability of Collective Entities for Punishable Offenses provided for that a company was not a subject of liability, if it notified prosecuting agencies of a crime, disclosing relevant circumstances of its commitment, especially perpetrators or other companies acting as accomplices. The projected changes included also companies' obligations to protect whistleblowers from retaliation, discrimination and other unjustified treatment.

Conclusions

Putting aside the doubts and criticism regarding the specific shape of the projected legislations, in our opinion it should be considered as a legislative step in the right direction. The Polish legal system lacks the provisions protecting proactive attitude of companies. Certainly, the drafts of new legal acts were not perfect and there might have been multiple controversies regarding their applications. However, the proposed changes would allow companies at least to compare the risks and advantages following from notifying about disclosed irregularities and violations. To date, the only ones assessed were risks as the advantages were almost imperceptible. One should hope that the legislation gap in this regard will be filled as soon as possible. We believe that change will come with the newly approved EU Directive on whistleblower protection which will need to be adopted by all EU Member States.

The plans to enact regulations which would protect a whistleblowing company should be recognized as step in the right direction for our legal system. 

By Dominika Wolf-Jezierska, Senior Associate, and Piotr Falarz, Senior Associate, DLA Piper

Poland Knowledge Partner

Established in 1957, Wolf Theiss is one of the leading European law firms in Central, Eastern and South-Eastern Europe with a focus on international business law. With 300 lawyers in 13 offices located in Albania, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine, Wolf Theiss represents local and international industrial, trade and service companies, as well as banks and insurance companies. Combining law and business, Wolf Theiss develops comprehensive and constructive solutions on the basis of legal, fiscal and business know-how.

All News about, and Legal Analysis by, Wolf Theiss can be found here.

Firm's website: http://www.wolftheiss.com/

 

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