Italian law permits its citizens to report frauds against the U.S. Government under the False Claims Act, or violations of the provisions of the Securities & Exchange Act, Foreign Corrupt Practice Act, or Commodities Exchange Act.
What disclosures are currently protected?
Italy passed an overarching whistleblower law in 2017 called Law No 179/2017. This law protects both public and private employees who blow the whistle on employment-related misconduct from retaliation.
Employees in the public sector may report “unlawful conduct(s) of which the employee of the public entity became aware of by reason or his or her employment” to the person at their office who is in charge of corruption prevention and transparency, to the National Anticorruption Authority (“ANAC”), or to the judicial or accounting authority. Private sector employees, however, are limited to making internal disclosures. Furthermore, private companies are only required to provide the safeguards for whistleblower reporting prescribed by the law if they are already required to have compliance programs under Legislative Decree 231/2001.
Additionally, there are no reward provisions for successful whistleblowers in Italian law. Therefore, whistleblowers, particularly private sector whistleblowers, may be better off reporting to U.S. regulators, where applicable, at least until the transposition of the Whistleblower Directive is complete.
Can Italian whistleblowers receive rewards?
There is no law in Italy providing whistleblowers rewards, however, they may receive rewards through U.S. laws
Recent updates and future legislative developments
Italy has just begun the process of transposing the EU Whistleblower Directive. Therefore, it is unclear what improvements will or will not be made to the current legal regime.
Can/should Italian whistleblowers report to U.S. officials?
No law in Italy currently prohibits Italian citizens from reporting frauds against the U.S. government under the False Claims Act, or violations of provisions of other statutes including the Securities & Exchange Act, Foreign Corrupt Practice Act, or Commodities Exchange Act. Therefore, Italian whistleblowers can and should report relevant violations to U.S. officials under these laws.
An overview of the whistleblower protections in the United States
The United States has over 50 separate whistleblower laws, and they each define a protected disclosure separately.
The most comprehensive and widely used U.S. laws offering whistleblowers significant protections are the False Claims Act, the Dodd Frank Act, the Commodities Exchange Act, and the Internal Revenue Code.
These laws all provide various degrees of anonymity, confidentiality, and rewards and cover a myriad of common legal violations.
Protection and anonymity under commonly used whistleblower laws
The False Claims Act permits a whistleblower to file his or her original complaint without revealing his/her identity to the public or a would-be defendant. However, after the government concludes its investigation as to the subject of the complaint, in most cases, the complaint is made public.
The SEC Whistleblower Program (created by the Dodd Frank Act), which includes fraud under the Securities Act of 1933 and the Securities and Exchange Act of 1934, and bribery under the Foreign Corrupt Practices Act, allows for anonymous and confidential filings with the SEC. Similarly, the Commodity Futures Trading Commission’s Whistleblower Program allows for confidential and anonymous filings. Both programs have significant safeguards in place to protect confidential whistleblowers from detection and retaliation.
The IRS whistleblower program, which covers tax frauds, underpayments, and money laundering does provide that whistleblowers’ confidentiality will be protected to the maximum extent permitted by law but does not permit anonymous filings.
Federal employees also can follow rules for confidentiality under the Inspector General Act and other laws.
Examples of what to do or not do to ensure you are protected as a whistleblower under U.S. law
Every whistleblower program discussed in the prior section has its own explicit rules that whistleblowers must follow to maintain anonymity and confidentiality and to preserve their claims. However, there are also a set of “unwritten rules” in Kohn, Kohn & Colapinto’s experience for whistleblowers who want to make sure that their identity and status as a whistleblower are fully protected.
For example, we recommend only reporting to U.S. regulators and against reporting internally as made clear by the Danske Bank Whistleblower Case. In that case, Howard Wilkinson did everything right in reporting up the internal chain of command. However, despite “internal controls” his identity was ultimately leaked by Danske in retaliation.
We also recommend finding an attorney familiar with whistleblower law as soon as possible, before making any disclosures, and only reporting to agencies with strict whistleblower protection guidelines based on for example our experience working on Bradley Birkenfeld’s case. Before retaining Kohn, Kohn & Colapinto, LLP, Mr. Birkenfeld voluntarily provided information about tax fraud directly to Justice Department prosecutors who did not consider him a “whistleblower.” As a result, these prosecutors filed charges against Mr. Birkenfeld, and he was sentenced to a term in jail for participating in the fraud he was blowing the whistle on. After this misstep, he retained Kohn, Kohn & Colapinto, LLP through which he correctly filed his IRS whistleblower claim. His disclosure and cooperation with U.S. authorities began the dismantling of the historical secrecy of Swiss banks and, as of 2018, more than 56,000 delinquent taxpayers had come forward, and the IRS had collected $11.1 billion in back taxes, while numerous banks were successfully prosecuted or entered into settlement agreements with the U.S. government. The total amount of revenue generated from the U.S. government’s use of whistleblowers in detecting and prosecuting illegal Swiss banking is estimated at $16.19 billion.
The majority of Kohn, Kohn & Colapinto, LLP’s current and former clients remain anonymous and confidential, including non-U.S. whistleblowers from numerous European countries, such as France, Greece, Germany, Russia, Serbia, Spain, Switzerland, and the United Kingdom, some which do not offer confidential and anonymous reporting and are known for allowing retaliation against whistleblowers. However, our expertise in the written and unwritten laws have allowed us to continue to protect these clients.
Reporting under the Directive
Under the new Whistleblowing Directive there are three tiers of protected reporting, which will be implemented in every state party: reporting internally, reporting to government authorities, and reporting to the public (i.e. going to the press).
Under the Directive, whistleblowers are not required to report internally before reporting to the relevant government authorities. However, in order to “go public” whistleblowers must have first reported either internally or to government authorities and no appropriate action was taken or else have reason to believe that either there is an imminent or manifest danger to the public (i.e. a public emergency), or that there is a high risk of retaliation and a low prospect of the violation being addressed due to the particular circumstances of the case (such as where a public authority is in collusion with the violator).
Reporting under the U.S. law
Disclosing information internally to a prescribed person and the likely response
In the U.S. whistleblowers may similarly report internally and may be protected by statutes such as the Dodd Frank Act/Sarbanes Oxley as well as state anti-retaliation laws. However, there is a well-established history of employees suffering retaliation after disclosing internally, and in such cases litigation is often long and costly, and corporations often win. Whistleblowers should contact a whistleblower or employment attorney before making an internal report to discuss its advisability and properly document and escalate any internal report.
Disclosure to public officials
Whistleblowers may also report through the whistleblower offices of various agencies and remain confidential and anonymous and thereby avoid retaliation as discussed above. This is the best option for whistleblowers in most cases. Contact a whistleblower attorney to identify the best agency to report violations to and the best procedure for making a report.
Disclosure to an external person (e.g. journalist, media, public forum)
Lastly, whistleblowers who go to the media in the U.S. largely do so at their own risk, although certain First Amendment protections may apply. Neither journalists nor confidential informants have a recognized privilege to remain confidential. The First Amendment of the U.S. Constitution can provide some protection from government intrusion for the information you communicated to a journalist, but these protections are not absolute and a corporate defendant may still seek your identity in a civil proceeding. There may be strategic reasons to go public with information, however, whistleblowers considering such a step are advised to consult a whistleblower attorney first.
Local redress currently available in Italy
As stated above, private sector whistleblowers only have the option to report to internal channels, if they exist. Public employees may report to a superior in charge of corruption prevention and transparency, to the ANAC, or a judicial authority. ANAC provides an online form through which whistleblowers may report as well as further information for whistleblowers.
Additionally, Transparency International’s Italy chapter has an Advocacy and Legal Advice Centre (“ALAC”), which offers free legal advice and support as well as other resources to Italian whistleblowers.
Because whistleblowers may not be retaliated against as a result of a protected disclosure of corruption, whistleblowers who have already made such a report and faced retaliation should consider contacting ANAC, ALAC, or an employment attorney in Italy.
Appeal to the EU
To appeal your rights under the Whistleblower Directive to the EU, you should first seek enforcement in your national system because public authorities and national courts have the main responsibility for the application of Union law and are the other bodies able to award compensation or annul decisions.
You may also reach out to your national ombudsman to submit your complaint of violation of EU law. The contact information for Italy’s national ombudsman can be found at: https://www.ombudsman.europa.eu/en/european-network-of-ombudsmen/members/national-ombudsmen.
Finally, if your complaint has or cannot be sufficiently redressed at the national level, you have various options at the EU level.
First, you have the right to submit a petition to the European Parliament about the application of Union law. You may submit your petition online at: https://www.europarl.europa.eu/about-parliament/en.
Second, you may submit your complaint about a breach of the Whistleblower Directive by national authorities in an EU country to the European Commission. The complaint form is available online at: https://ec.europa.eu/assets/sg/report-a-breach/complaints_en/.
Then, if you then believe that your complaint has not been adequately addressed by the commission you may submit a complaint to the European Ombudsman at: https://www.ombudsman.europa.eu/en/home.
We highly recommend contacting a lawyer before taking any of these steps or reaching out to Your Europe Advice, to ensure that your complaint is made properly to the proper authorities based on the facts of your case. Your Europe Advice provides free advice to EU citizens about EU law and rights of EU citizens.
On September 19, 2018, news broke of $234 billion money laundering scheme. The scheme moved rubbles out of Russia, converted them to dollars at the Estonian branch of Danske Bank, and then moved the dollars to New York with the assistance of three correspondent banks (Bank of America, J.P Morgan, and Deutsche Bank).
Danske Bank admitted all of its internal controls designed to prevent money laundering had failed. The bank also revealed that the scheme had been reported to the highest levels of the bank by a whistleblower over four years before. The whistleblower’s identity was required to be secret. But it took only days for his name to leak out.
Soon the entire international banking world learned that the former Danske Bank manager Howard Wilkinson had exposed the largest money laundering scheme in history, and that the bank had tried to cover it up.
Kohn, Kohn and Colapinto and Athens-based Greek law firm of Pavlos K. Sarakis & Associates jointly represented Greek whistleblowers who proved that the multinational Swiss-based pharmaceutical company Novartis paid millions in bribes to illegally market drugs in violation of the Foreign Corrupt Practices Act. Novartis was required to pay over $300 million in sanctions and fines to the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ).