The EU is failing to learn from US experience in prosecuting transnational white-collar crime by introducing financial incentives for informants — that means fewer results for prosecutors.
Athens (Brussels Morning) The most important difference between the US whistleblower legal framework and that envisaged in EU Whistleblowing Directive (2019/1937) is that the former provides potentially significant financial rewards to whistleblowers, the latter does not.
The possibility of following the US example was considered during the preparation of the Directive according to the relevant impact assessment. However, European legislators did not adopt this instrument, not least because this is an instrument absent from most EU member states. There is resistance to ‘commercialising’ whistleblowing, not least because there are serious concerns as to whether extending protection to for-profit whistleblowers is compatible with the European Court of Human Rights case law.
The legislation of Slovakia, however, does at least provide for financial rewards to whistleblowers. Moreover, the possibility for the EU member states to introduce a system of financial incentives to persons who give information on capital market abuses, such as insider dealing, unlawful disclosure of inside information and market manipulation is provided in EU law (Regulation 596/2014, Article 32 paragraph 4), although apparently this legislative option has not been picked up through national laws.
What’s more, Greece, has at least three special laws providing for financial rewards in exchange for information on crimes of tax evasion, smuggling of goods and crimes related to cultural heritage artifacts (theft, embezzlement, illicit sale, etc.). But all these legal instruments rely on secondary legislation, which has not been enacted.
There is still a question mark over whether extending rewards is actually effective. Greek legislation allows the Minister for Citizen Protection – in charge of Home Affairs and policing – to introduce rewards for information leading to the successful prosecution of organised crime. This possibility has been used in cases related to homegrown terrorism, where a court ruled the reward was unlawful and the informer was convicted for fraud, and a case in which the information provided was redundant and suspects had already been charged.
A study published by the European Commission (2015) on policy initiatives on the fight against organised crime suggests that more EU law enforcement agencies do provide some kind of compensation to informants in organised crime investigations. This study did not identify any contradiction with European Court of Human Rights case law.
The reservations over financial rewards for whistleblowers (at least in the context of the Whistleblowing Directive) are understandable, on either historic or moral grounds. Nevertheless, rewards to whistleblowers have proven critical for the successful conclusion of various complex corruption, tax evasion, and insider trading investigations in the US.
To identify and successfully investigate and prosecute the most systemically dangerous financial and corruption crimes, a more realistic and results-driven approach could be considered in the EU, at least for very serious offences and under prosecutorial or judicial supervision. Otherwise, it should be expected that the competent authorities of the US will remain the undisputed champions of anti-bribery, market manipulation and money laundering investigations, while their European counterparts shall stay mere observers.