Belgian and Dutch risk managers warned to prepare for delayed whistleblower laws

Belgian risk and insurance managers have been advised to take action to prepare for the country’s delayed transposition of the EU’s Whistleblowing Directive, which the Parliamentary Committee on Economy, Consumer Protection and Digital Agenda has finally approved. Speaking at Commercial Risk’s 'ESG at the heart of risk management conference' in Antwerp, Herman Kerremans, CEO of Howden Belgium, warned delegates from partner associations Belrim and Narim that the long-awaited legislation would impose strict requirements on corporations to set up the systems and channels required for staff and consultants to blow the whistle on wrongdoing without fear of reprisals. Failure by corporations to take the new law seriously enough could lead to criminal prosecution, reputational damage and legal action taken against directors and officers. The new law, which the Netherlands has also not transposed yet along with many other EU member states, is likely to impact the D&O market over time as cases inevitably emerge, as was the case in the 'dieselgate' scandal that was sparked by a whistleblower. The new Belgian law will soon be published in the Belgian Official Journal and it will enter into force two months later, probably around the beginning or middle of February 2023. From that date, companies with more than 250 employees must set up an internal reporting channel through which whistleblowers can report breaches (anonymously) without fear of sanctions or reprisals. Companies with 50 to 250 employees will be given a grace period until 17 December 2023. Kerremans explained that the reason for the delay was "pushback" from employers as the new law creates new risks for corporates and their directors and managers. “Employees (and even self-employed consultants etc) can now report various abuses, law violations, scandals they see within their company. It will be more difficult for corporates to keep delicate, sensitive matters behind closed doors. If the internal reporting procedure is inadequate or there is no trust in the company, whistleblowers can complain directly to the Federal Ombudsman,” explained the head of Howden’s Belgium operation. The ombudsman, with the Federal Human Rights Institute, must inform, guide and support those concerned. If there is an immediate danger to the public interest or a risk of the destruction of evidence, reporting can also be done through the press, added Kerremans. Under the new rules, corporates need to set up a reporting channel, which can be an email address or a tool or app that whistleblowers can turn to. The channel must have an administrator, such as a person from the HR department or the legal department, who must provide a response to the whistleblower within three months. “Those who do not respect the legislation and, for example, retaliate against whistleblowers or do not set up a reporting channel, risk criminal sanctions. The new law also provides compensation of 18-26 weeks' pay for victims of retaliation. The consequences in terms of corporate reputation should not be underestimated either,” commented Kerremans. The broker said employers must take the necessary steps to implement the reporting channel and look for advice where needed. “Not respecting the new law may end up in criminal prosecution and reputational damage. Further, corporates should have open communication with their employees and other collaborators. A system should be put in place to tackle potential issues quickly before they are reported or brought to the media. Corporates must avoid a culture of denunciation, which is not always an easy thing to do,” he added. Kerremans believes the new law will probably have an impact on the liability exposure of directors and officers. “This law may also result in an increased visibility of what may go wrong within a company, which in itself may increase the probability of D&O claims. D&O Insurance also provides coverage for reputational damage recovery costs,” he said. A bill to strengthen existing whistleblowing rights and transpose the EU Directive on Whistleblowing has been in the Dutch parliament since summer 2021, but is facing opposition. A committee meeting was held in April, during which the minister announced that she would submit a second memorandum of amendment to the House of Representatives before the summer, in order to meet the wishes of critics. According to the Whistleblowing International Network, a specialist interest group created to monitor progress in this area, the minister also indicated that "quick wins" will be included in this memorandum and that once the law has been enacted, further necessary amendments will be made that cannot be included in the short term. To address the perceived shortcomings of the bill, MP Pieter Omtzigt (rapporteur on whistleblowing protection to the Parliamentary Assemby of the Council of Europe), submitted an initiative note to the parliament with 15 concrete proposals to improve the protection of whistleblowers in the Netherlands. Kerremans said corporations in the Netherlands need to also prepare for the new law but added that the impact may not be as great because of existing rights for whistleblowers. “Like any other country, part of the EU, the Netherlands will have to transpose the EU Whistleblowing Directive into its national legislation. There is no escape possible. "However, the Netherlands was among the nine EU member states that the EU Commission considered already had comprehensive whistleblower protection. This protection is currently set out in The House for Whistleblowers Act. Nonetheless, it will still need to introduce some changes to comply with the directive,” he said.

Belgian and Dutch risk managers warned to prepare for delayed whistleblower laws

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