Law 93/2021 establishes the general whistleblower protection regime.
Although it sounds, by description, like something negative for a company, the truth is that it may not only be an advantage but also an opportunity to avoid major losses and deal internally with any problems or even avoid them.
Whistleblowing involves any action that reveals or reports unethical or illegal activities or information. While such activities may be minor infractions, others can be serious and quite damaging to individuals and institutions.
For the purposes of the law, an infraction is defined as:
a) The act or omission contrary to rules contained in the acts of the European Union referred to in the Annex to Directive (EU) 2019/1937 of the European Parliament and of the Council, (…), including those providing for crimes or misdemeanors, concerning the areas of:
i) Public procurement;
ii) Financial services, products and markets, and the prevention of money laundering and terrorist financing;
iii) Product safety and compliance;
iv) Transportation safety;
v) Environmental protection;
vi) Radiation protection and nuclear safety;
vii) Food and feed safety, animal health and animal welfare;
viii) Public health;
ix) Consumer protection;
x) Privacy and personal data protection and network and information systems security;
b) The act or omission contrary to and detrimental to the financial interests of the European Union;
c) Act or omission contrary to the rules of the internal market;
d) Violent crime, especially violent and highly organized crime, and
e) The act or omission contrary to the purpose of the rules or standards covered by paragraphs a) to c).
Cases usually occur in a workplace, where an employee may perceive something like fraud taking place. Some whistleblowers also reveal irregularities in public institutions and national security issues. The common factor is to use whistleblowing for the greater good of the public or the organization.
Thus, more companies should support whistleblowing so that its benefits can be felt more widely. That way, more people can feel brave enough to confront what is wrong.
The importance of whistleblowing
There are numerous reasons why whistleblowing is important and should be encouraged. We list some benefits of whistleblowing:
Prevents wrongdoing
Whistleblowing is very effective in cases of corporate fraud. Yes, whistleblowers can benefit from rewards. Although, their information tends to lead to the apprehension of people involved in fraud and misconduct. So, to decrease fraud and corruption, and its effects, it is essential to encourage whistleblowing, in a secure manner and protecting the interests of the whistleblower, i.e., complying as much as possible with the security levels that this law provides.
Whistleblowing can also help prevent illicit practices in 3 ways:
- Those responsible for the problems can be arrested or properly punished for their actions. In a company, this could mean removing them from the position that allowed the crime or firing them. Either way, it allows the company to address the “cause.”
- It prevents malpractice as far as it has a cascading effect. Colleagues and other workers realize the consequences of wrongdoing and thus stay away from it.
- Such activities are curbed when everyone is aware that wrongdoers are punished, because whistleblowing is a possibility.
Minimizes risks and costs
When misconduct and fraud are not reported, they are not exposed to those who can address them in the processes of their resolution.
As a result of not knowing (and in some cases ignoring), the proper authorities cannot resolve the problem. This poses several risks to the company, including things like:
- Legal proceedings;
- Damage to the company’s reputation;
- Ruinous public scandals;
- Financial penalties.
Fraud causes tremendous blows to individuals, governments, reputations, industries, companies, and the environment.
Whistleblowing minimizes the cost of fraud, both financially and to the company’s image. In this way, it allows risk management to be much more efficient and effective for the company.
Happy employees and a happy brand
Transparency and accountability allow the company to function effectively. Being close to your employees cultivates commitment and trust. In turn, it allows them to feel happy, comfortable and safe within the company.
The mental health and safety of employees increases productivity. Thus, whistleblowing can have a very positive direct impact on the company’s results.
Bad publicity is definitely not better than no publicity at all
Bad publicity is definitely not better than no publicity at all when it comes to business. Being linked to misconduct affects how a company is ‘seen’.
Having problems of illegal and unethical activities tarnishes the ‘image’ of a brand. It makes the brand’s values and mission questionable and can cause distrust from workers as well as customers. Whistleblowing allows the company to tackle problems head-on to ensure that its reputation lives up to all its principles.
Provides more detailed information about the problems
Whistleblowers usually have an insider’s perspective on the reported problems. They can often provide details and insights into company issues that would otherwise go unnoticed.
This is something that whistleblowers should keep in mind, they may be the only ones with access to the information. Even if other people are aware, they may not be willing to provide evidence to support the report.
It is the right (and ethical) thing to do
It is a giant philosophical question, spanning centuries in history: what is right versus what is ethical? Whistleblowing reports satisfies both. It is ethical and right!
Whistleblowing enables fairness and transparency. In your company, this can encourage a culture of openness and accountability. It empowers workers and creates an organization that rejects wrongdoing.
Overall, it creates an environment in which workers can feel safe and secure from problems that might harm them. And, if they don’t feel that way, whistleblowing will empower them to bring about change.
Like everything in life, there are risks
Sure, there are risks in being the brave representative of what is fair. Any worker who points out misconduct and failures in an organization can face mistreatment, discrimination, threats, and physical harm.
Whistleblowing can also be damaging to the company. Some companies have cited losing employees after a whistleblowing case. Encouraging whistleblowing can also foster a culture of fear if policies and procedures are not implemented effectively. It is up to the management of each case and the effective investigation to deal with and discourage unfounded reports.
When weighing pros and cons, however, the benefits that whistleblowing adds to public safety far outweigh the risks.
Fortunately, these risks can also be mitigated somewhat, if not avoided altogether!
Maria Cristina Freitas, Lawyer
Published at: 03/05/2023