Compliance Group newsletter – Up to Dentons November/December 2019

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Compliance Group newsletter - Up to Dentons
Compliance Group newsletter – Up to Dentons November/December 2019

Compliance Group newsletter – Up to Dentons November/December 2019

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December, 2019

How to avoid the gun-jumping fever

When an M&A transaction needs to be approved by a competition authority, parties are usually prohibited from implementing it before securing clearance (the so-called “standstill obligation”). For many years, European authorities rarely focused on violations of standstill obligations (a.k.a. gun-jumping). This has changed in recent years, as both the number of cases and the level of fines has increased dramatically. In an M&A context, steering away from gun-jumping must now be high on the agenda.

Tip of the month by Nextlaw Inhouse

Whistleblowing is where a person (not necessarily an employee) “reports” (most likely to the public or government) alleged wrongdoing within a company. The world’s first whistleblower protection law was adopted by the fledgling government in newly independent America in 1778, and was a reaction to reports of a US Navy commodore allegedly torturing British prisoners of war. Whistleblowers have been reporting wrongdoing by government institutions, government contractors and politicians ever since. There are also “Qui Tam” lawsuits brought under the US False Claims Act which can reward/incentivize whistleblowers by providing them with a percentage of substantial recovered damages (often 15-25%). Recent laws in the U.S., Europe, and elsewhere have been enacted to better protect whistleblowers from retaliation.

Practical Tips:

(1) know the whistleblower protection laws and qui tam laws applicable in your jurisdiction;

(2) some may urge you to terminate/discipline/isolate the whistleblower, but you must take care to consider the consequences: a failure to correct the potential wrongdoing and the penalties for retaliating against the reporting; and finally

(3) the organizational culture and internal procedures for making complaints should be examined. Do employees feel they can make complaints internally without fear of retaliation? Is there an ombudsman or similar person within the company to which complaints can be raised confidentially? Are complaints listened to and effectively addressed? Many whistleblower complaints only go public or are reported outside the organization because there are no effective options to address matters internally. It is not unusual to find that the complaining party initially tried to raise the complaint internally.

Whistleblowers should not be viewed as a problem, but should be embraced as a means to enhance compliance and improve performance. Sometimes they have their facts wrong, but they are usually focused on doing the right thing.

Sanctions

The impact of Brexit for UK and EU sanctions – "Dentons' Business Crime and Investigations Podcast, Episode 2"

In the second episode of ‘Dentons' Business Crime and Investigations Podcast’, Maya Lester QC, of Brick Court chambers, and Roger Matthews, international trade partner at Dentons, discuss with host Daren Allen the implications of Brexit for UK and EU sanctions, look ahead to how the use and operation of sanctions might develop and the key compliance considerations for businesses, and assess the approach of OFSI, OFAC and other sanctions authorities to the enforcement of sanctions.

Data Protection

The European countries overview on GDPR fines and the new fine model in Germany

Since the implementation of the GDPR, most of the European countries have already issued fines for violations of Art. 5 (principles relating to the processing of personal data) and for breaches of Art. 6 (lawfulness of processing). The top fined industries are inter alia, the finance sector, professional services, real estate, the public sector, healthcare and hospitality. There are still eight countries left that have not issued any fines yet: Croatia, Finland, Ireland, Luxembourg, Switzerland, Slovakia and Slovenia.

In line with the GDPR, German data protection authorities adopted a new fine model according to which breaches against GDPR rules will be fined having regard to the following calculation: the daily rate – the company global turnover of the past year divided by 365 – will be multiplied by the severity of the breach committed in each case – which is the result of a severity assessment and goes from 1 to 14.4. This first calculation will determine the “regular fine corridor”. After that, the authorities will multiply the factor according to mens rea, which goes from 0.75 to 1.5, and this result will also be multiplied by the “repetition factor”. Other factors like nature, extent and purpose of the unlawful processing, number of data subjects involved and extent of harm will also be considered in the calculation. The implementation of this model will, according to practical experience, lead to higher fines, especially for companies with high revenue.

Anti-Corruption

Global Corruption Barometer (GCB) – Latin America and the Caribbean 2019

Transparency International has issued the Global Corruption Barometer for Latin America and the Caribbean 2019 with information on how citizens view and perceive corruption in the region. The survey results show that most citizens think their government is not working hard enough to fight corruption in their countries and that the level of corruption has increased in the past months.

United Nations Global Compact launches network of chief financial officers to direct funds towards Sustainable Development Goals

The United Nations Global Compact has launched the first network for chief financial officers focused on advancing the Sustainable Development Goals (SDG) through corporate strategy and investments. The network of chief financial officers will build on the growing momentum of private actors developing innovative financial instruments to bridge the annual financing gap of US$2-3 trillion to achieve the SDGs by 2030.The new network of CFOs will provide a platform for companies to create innovative corporate finance models serving the SDGs. One instrument of companies is to create general purpose SDG-linked bond as a step towards the goal of financing sustainable development.

Whistleblowing Guide - Internal Whistleblowing

The issue of whistleblowing is receiving more and more attention. The press is increasingly reporting on whistleblowers who have reported legal violations in politics and business and have thus been able to avoid serious damage. In the course of time, the topic has moved onto the legislator's agenda in several countries. The different national regulations range from whistleblower protection regulations to requirements for reporting channels. In October 2019, the European legislator adopted a new directive to protect people reporting on breaches of European Union law. The aim of the directive is to set minimum standards for whistleblowing in Europe.

The subject is also gaining in importance for non-EU Member States: the International Standard Organization (ISO) is planning to issue a Standard 37002 at the end of 2021, which will establish guidelines for whistleblowing management systems.

In this guide on whistleblowing co-written by Dentons’ Compliance lawyers - we offer insights and practical tips on the issue of internal whistleblowing.