The scale of economic fraud occurring in enterprises grows year by year. This trend is observed not only in Poland, but also around the world. One of the elements to prevent this is the implementation of regulations related to whistleblowing. Therefore new laws and guidelines are being prepared to support organisations in paving the way towards the effective implementation of a whistleblowing system.
However, there is not much time. By December 17, 2021, Poland must implement the provisions of the Directive on the protection of persons reporting on breaches of Union law, adopted in 2019 by the European Parliament and the European Council. The EU directive regulates, inter alia, the protection of persons who report irregularities. The organisation will also be tasked with providing an internal channel and developing procedures by which whistleblowers will have the opportunity to report frauds.
What do the facts say about the disclosure of frauds by the whistleblowers?
Fact #1: The results of the survey conducted in 2020 show that nearly every second Polish entrepreneur has experienced fraud (PwC Global Economic Crime Survey 2020. Polish edition).
Fact #2: Over the past two years, there has been a significant decrease in the number of frauds reported by whistleblowers – from 45% in 2018 to just 6% in 2020 (PwC Global Economic Crime Survey 2020. Polish edition).
Fact #3: Many Polish organisations have not implemented effective anti-corruption programs within their structures, including whistleblowing systems. Why is this happening? The most obvious answer is the lack of unified regulation, which, on the one hand, would cover the entire market, and on the other hand, would define sanctions resulting from failure to comply with the imposed obligations.
Whistleblowing regulations in the financial sector
It is worth recalling that the provisions relating to whistleblowers already exist under Polish legislation, but they apply to the financial sector. The obligation to implement the procedure of anonymous reporting of violations of law, internal procedures and ethical standards, described in the Banking Law and later specified in two regulations published by the Minister of Development and Finance, is also enforced by the provisions of the Counteracting Money Laundering and Financing of Terrorism Act. Provisions of above-mentioned Act provide for financial penalties - in the case of natural persons, the fine may be up to approx. PLN 21 million, and in the case of legal persons or organisational units without legal personality – up to EUR 5 million or up to 10% of the turnover (reported in the financial statement) - for failure to meet the requirements.
Examples of other regulations in the area of reporting irregularities
The sectoral nature of the regulations does not justify the lack of interest from entrepreneurs who act outside the financial industry. The guidelines set out in the existing solutions constitute an important indication on how to effectively implement the reporting system in the organisation. And paying attention to it could be beneficial for entrepreneurs, in particular due to the fact that the obligation of implementation of internal reporting channels results from the various regulations, which are currently at the design stage, have been already published or will come into force soon.
According to the Draft Act on Transparency of Public Life, about 20 thousand Polish companies would be required to develop and implement procedures for reporting to the authorities cases of corruption proposals. In what manner? It was not specified. It was clearly indicated that if the companies do not fulfil this obligation or the solutions implemented by them are ineffective, and the person acting on behalf or for the benefit of the entrepreneur is charged with committing a corruption offense, it may ultimately be subject to a financial penalty in the amount from PLN 10 thousand up to PLN 10 million. At the same time, the act provides for the institution of the so-called prosecutor's whistleblower, who will be able to report the irregularity bypassing the internal channel and who will therefore be entitled to protection from the law enforcement agency.
This issue was dealt with differently in the Draft Act on the Liability of Collective Entities for Acts Prohibited under Penalty, which provides for the protection of whistleblowers already at the stage of intra-company reports. Pursuant to its provisions, the entrepreneur will have to conduct a proceeding regarding each report related to activities specified in the act and remove any identified irregularities. If, in connection with the reported information, the whistleblower's employee rights are violated, he or she will be able to claim damages or reinstatement of employment in court. In justified cases, the court may order compensation for the entire period of unemployment by the person reporting the information. Although the companies were thus obliged to implement an effective whistleblowing system and precisely define the rules for dealing with received reports, also in the case of this regulation it was not specified how it should be carried out.
The set of guidelines on whistleblowing was also presented in the ISO 37002 Whistleblowing management systems - Guidelines, published in July 2021. This document systematizes the rules for managing whistleblowing systems, including conduct at all stages of the process from receipt to closure of the report, assignment of responsibilities in the organisation, whistleblower protection, requirements in terms of procedures, reporting channels, documentation, training, communication and system monitoring. ISO 37002 assigns specific responsibilities to individuals in the organization, such as setting goals for the whistleblowing system. Despite the fact that compliance with the rules of the standard is voluntary, we can expect an increase in the awareness of stakeholders and their expectations in relation to the activities undertaken by the organisation, in order to ensure the effective functioning of the whistleblowing system.
A comprehensive solution may be provided by the Polish Act on the protection of persons reporting on breaches of law, the draft of which is currently being developed by the Minister of Family and Social Policy. The directive leaves some flexibility to the member states regarding the regulations that have to be implemented. The new obligations of the organisation and sanctions for non-compliance, which will be implemented by the Polish legislator, are not yet confirmed. However, one thing is certain – in the light of the upcoming legislative decisions, it is necessary to change the organisational approach to whistleblowing. The provision of internal channels for reporting irregularities is no longer a whim and becomes an important obligation. Nevertheless, in order to fulfil it effectively, the development of mechanisms should be started well in advance and based on a previously prepared system adapted to the specificity of a given organisation.
Contact us
