The French lower house, the National Assembly, this month approved a bill of law which, for the first time in France, gives whistleblowers a broad legal status. The “transparency, anti-corruption and modernization of economic life” law, drafted by finance minister Michel Sapin, also allows for the first time that companies will have to submit country-by-country reporting of their tax liabilities. Yet the bill, approved on its first reading on June 10th (it will only become law after its second passage through the National Assembly), was a huge disappointment for some MPs and anti-corruption militants who slam it for being too vague and timid.
Enlargement : Illustration 1
Under the bill, the independent national ombudsman (Défenseur des droits) will have the powers to follow up a whistleblower’s revelations, to arrange protection for the whistleblower and give the whistleblower advance funding for an eventual legal dispute with their employer, and also “financial aid intended to repair moral and financial prejudice” caused to them. If an employee is sacked as a result of their revelations, the law provides that they can take the matter to an industrial (employment) tribunal which must decide with 21 days whether, while waiting for the matter to be judged, the sacked employee can remain within the company or continue to receive a salary.
But while these initiatives are seen as welcome innovations, there was unanimous disappointment among NGOs and trades unions campaigning for whistleblower protection on the very definition of a whistleblower as contained in the text of the bill and now to be inscribed, once it is approved by both houses of parliament, in law. “A whistleblower is a person who reveals, in the name of public interest and in good faith, a crime or misdemeanour, a serious failure to abide by the law or regulations, or events that present a risk or serious prejudice to the environment, public health or security, or who testifies to such activity,” reads the text of the bill. It also stipulates that the whistleblower must act “without hope of personal gain nor the will to harm others”.
That definition is too restrictive for 15 NGOs and trades unions, who include the French League of Human Rights, Transparency International, Greenpeace, Sherpa, Anticor, the CGT and CFDT unions (the largest in France). They and others issued a joint statement hours after the bill was approved in the National Assembly in which they call on “the government and parliament to re-write the definition of the whistleblower in response to the declared ambition of offering a global and protective status”. The organizations regretted that, unlike the definitions of a whistleblower adopted by the Council of Europe in 2014 and the United Nations in 2015, the definition adopted in Sapin’s bill gives no protection to those who “denounce a serious threat or prejudice to the public interest”. Importantly, this threat or prejudice may not be strictly illegal.
Under the bill, the dangers which a whistleblower is entitled to disclose are limited to the fields of “the environment, public health or security”. The unions and NGOs have in mind the case of the whistleblowers in the LuxLeaks scandal. When Antoine Deltour and Raphaël Halet, former employees in Luxembourg of auditing company PricewaterhouseCoopers, revealed how Luxembourg gave massive tax breaks to a number of large multinational companies, the two Frenchmen disclosed few illegal actions (very few of the agreements with the companies contravened EU laws). But nevertheless, Deltour and Halet can hardly be described otherwise than whistleblowers.
The concerns are shared by several Memebers of Parliament (MPs), including the socialist Yann Galut, notably knowledgeable on the issue of the protection of whistleblowers for which he has long campaigned, his socialist MP colleague Pascal Cherki and the Green party MP Sergio Coronado.
In the bill’s initial stages, its rapporteur, Sébastien Denaja, had amended the text to include the term “serious risks” as a legitimate reason for whistleblowing. But when the bill reached the debating stage in parliament, Denaja said “a certain number of governmental services” had pointed out to him difficulties over the lack of clarity. Finance minister Michel Sapin came down clearly against such a term, citing the need “to avoid that these dispositions - which will give place to litigation – be a source of legal insecurity”. A wide definition of legitimate fields of action by a whistleblower, argued Sapin, would open up the likelihood of lengthy legal disputes which would not allow for the effective protection of the whistleblower.
However, during the parliamentary debates, the MPs pushing for a wider definition succeeded in having the notion of “public interest” adopted into the text of the bill.
If ever the discussion about what constitutes a whistleblower might appear a little esoteric, that is not the case concerning another feature of the bill, namely the question of company reporting country-by-country. The principle has been pushed for over many years by tax transparency activists, and is already a legal requirement for French and European banks. Regarding the bill, it concerns the publication of all of a company’s activity, profits and tax payments in every country where it or its subsidiaries operate. The aim is to monitor the fiscal strategies of companies.
Last December, the government, hostile to the introduction of the country-by-country reporting, just managed to escape the adoption of the process, attempted by several MPs, in a parliamentary vote on its 2016 budget. It argues that France cannot introduce such a measure on its own, and it should wait for a European directive (currently under discussion) on the issue. “We could clearly amuse ourselves by voting for a disposition which will serve no purpose,” Sapin told parliament during the debates on his bill. In the end, he compromised and accepted the stipulation that the country-by-country reporting would become a requirement in France as of July 1st 2017, whether or not the discussions in Brussels had reached a conclusion.
But the essential question is what type of reporting this refers to. The EU discussions concern the reporting only of a company’s activities in whichever member states where it, or its subsidiary, is present, as also wherever it is present in a list of tax havens which the European Commission has yet to establish. The reporting would not be required to list activities, profits and tax payments elsewhere in the world. The French Law Commission has foreseen that France would follow the terms of the European directive, much to the ire of transparency activists who argue that because it would exclude activities in Switzerland or the US, which welcome companies looking to reduce their tax payments, it would serve little purpose.
The bill’s rapporteur Sébastien Denaja was sympathetic to that argument and in the end proposed, and succeeded in having adopted, the requirement that the reporting covered every country in the world. But the text approved by the lower house says the reporting requirement concerns those countries where a company has a certain as yet unspecified number of subsidiaries. The number, which is to be fixed by the government, will be announced later in a decree.
This compromise between MPs and the government has dismayed transparency activists. They warn that if ever it was decided that the reporting of activities concerns only those countries where they have just two subsidiaries, this would in the case of French oil giant Total exclude 37 countries where it has one subsidiary. If the number was five subsidiaries, as Sébastien Denaja had originally envisaged, 52 out of the total of 67 countries where cosmetics giant L’Oréal operates would be excluded from the reporting. The NGOs hope that this issue, as also the definition of a whistleblower, will be redefined when the bill returns from the Senate for a final passage through the National Assembly, but none appear to be holding their breaths until then.
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- The French version of this article can be found here.
English version by Graham Tearse