In an article for the magazine “comply.”, our partner Dr. Oliver Pragal examined the interactions between whistleblower systems, internal investigations and corporate defence, in particular in the context of the German Whistleblower Protection Act (HinSchG). Legal pitfalls and strategic considerations are analyzed from the perspective of a company at risk.
Background
Whistleblower systems are an essential component of modern compliance structures, the importance of which has been strengthened by the Whistleblower Protection Act. Nevertheless, the legal situation harbors risks for companies, as information from whistleblowing systems is not always protected from access by the authorities. Searches and seizures can lead to sensitive data ending up in the hands of investigating authorities. This can lead to conflicts of interest and friction with the company’s defence.
No confidentiality protection for official measures
The HinSchG cannot fully guarantee the confidentiality of information. For example, official access is possible by means of search warrants or requests for information. This protection gap affects both whistleblowers and companies and has a potential impact on internal investigations and corporate defence.
Effects on internal investigations and corporate defence
Whistleblower systems can trigger internal investigations, which are often legally required. Companies are faced with the decision of whether to cooperate fully with investigating authorities or to exercise their rights similar to those of an accused person as part of a corporate defence. Full cooperation carries risks, as it can lead to serious consequences if extensive compliance violations come to light. Alternatively, a company can invoke its right to remain silent and develop defence strategies, which, however, presuppose that defence documents are exempt from seizure.
Strategic recommendations
When engaging law firms for internal investigations, the defence purposes should be taken into account and documented accordingly in order to protect legal privilege. Data from whistleblower systems can be protected by encryption or storage abroad. Companies should be aware that “dissatisfied” whistleblowers may provide follow-up information to external bodies, which could undermine the defence strategy.
Pitfalls and risks
The integrity of the whistleblowing system must not be compromised under any circumstances, for example by discriminating against or influencing whistleblowers. Likewise, manipulative investigation reports beyond justifiable assessments (“whitewashing”) or even the destruction of incriminating evidence are risky under criminal law and must be avoided at all costs.
Conclusion
Whistleblower systems are indispensable and a valuable compliance tool. However, in the event of a compliance crisis, the planning of an internal investigation and a corporate defence requires careful consideration of the interactions of the whistleblowing system by experienced criminal lawyers in order to minimize legal risks and avoid potential conflicts and frictions.
Author: Dr. Oliver Pragal, LL.M. (Cape Town), lawyer and specialist lawyer for criminal law.
