Compliance is a really complicated and complex area.[2] It is not wide-spread in Hungary yet; however, it seems to be increasingly spreading in economic sphere, and in the field in a broader sense.[3] Reducing the risk of non-compliance is becoming a larger and larger driving force for companies. Compliance means different and various measures for persons working in different fields, and it also depends on the level of the organisations they are at.[4] Corporate wrongdoing might entail a fine and a negative return on equity and cause reputation effects and private law damages.[5]
Today compliance with legal provisions and ethical rules is becoming more and more common in the operation of companies; both kinds of conduct to be followed belong to the category of compliance (legislative compliance). Sometimes differentiation only rests upon theoretical bases; therefore, compliance with legal provisions consists of hard, while compliance with ethical rules consists of soft directives.[6]
In the corporate (multinational) sector, and even in the public sector, it occurs that some managers, leaders, or members of a consolidated group commit criminal abuses. Corporate abuse seems to have no more than one elaborated legal definition in the Hungarian literature, in addition it has constant elements.
The term refers to illegitimate conducts that are:
- "in interaction with companies, or
- takes place in the corporate workplace,
- usually meet the prosecution requirements of the state".[7]
In a broad sense, corporate compliance (corporate wrongdoing) includes any infringements of law committed by the employees, which infringements of law do not contravene any passage of the Criminal Code. This might include any action that contravenes no legal provision but can only be considered unethical and only violates the internal norm of the company. The third element of the classification is any infringement of law realising disciplinary offence; and finally, it includes clearly private law misconducts.[8] Misconducts are committed by managers or employees of the organisation or third parties
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being in relation with the former persons, with the devices of misleading, in order to acquire unlawful advantage, on condition that information can also be unlawful advantage.[9]
By way of derogation, in technical literature criminal compliance specifically refers to infringements of law when a criminal offence is (also) realised within the organisation. German dogmatics makes a difference between cases when the commission of a crime is for the benefit of the organisation (the purpose is to obtain gain for the organisation), while a crime can be committed to the debit of the organisation, causing unlawful disadvantage to it.[10]
Typically, the following criminal offences (misconducts) can be committed to the debit and in favour of a company: all kinds of corruption criminal offences, budget fraud, violation of accounting order, bankruptcy crime, violation of trade and economic secrets prohibited acquisition of data, embezzlement, violation of information system or data, fraud committed with the use of information system.[11] In my view, agreements restricting free competition also belong to this category, which can be either good or bad for an economic operator. I must add that a survey does not actually name the former felony; however, it includes all misconducts related to procurements and the violation of competition laws.[12]
Criminal compliance is seeking the answer to the question what measures can precede criminal offences to be committed in favour or to the detriment of a company. Besides substantive law compliance, there are fields harping on procedural law questions, too. Internal investigation and whistleblowing are key elements of this category.[13] These two institutions are definitely criminal law institutions, but rather interdisciplinary, because it includes labour law, administrative criminal law, constitutional law, administrative law.[14]
Public and non-public officials working in the working community are often under pressure because when these misconducts come to their knowledge, they either leave the institution (whether voluntarily or because of dismissal), the economic operator, or they should - at least - get involved in this circle. The necessity of their involvement requires no special explanation. For the remedy, handling and reporting on these misconducts, the legal institution of whistleblowing is not common in Hungary yet but has been existing relatively long abroad.
Corporate compliance can exist in itself, since keeping in mind the rules of conduct prescribed and to be followed also contributes to legislative compliance; however, we can speak about partial efficiency if there is no proper system for the reporting of misconducts (prosecuted by criminal law) or such system is unable to serve its intention entirely.
Since, unlike lobbying activity, in this area a criminal offence can be committed by a natural person being a member to the organisation of a company (executive officer, employee, member, etc.) in favour of or to the detriment of "their own" or another company, it was worth examining criminal
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law cases in Hungary, with the focus on corruption criminal offences.
In business-to-business legal transactions, the customer or principal lays down as a condition for the maintenance of certain partnership (extension of contract) or the establishment of a new partnership (conclusion of contract) the requirement that the contractor or supplier hands over an amount equalling certain percentage of the turnover.
For instance, according to the statutory definition in the explanation of a judgement passed by Tatabánya Regional Court[15], the Accused said to Managing Director of a strategic supplier, (...) Company as Witness T1 at a business meeting in Komárom at the end of June 2012 that he requires 2-3% of the monthly turnover arisen from (...) company, the firm managed by him, and he also mentioned that (.) company can remain a supplier of (.) company if he receives these amounts regularly.
According to the statutory definition of another decision[16], during a discussion with Witness T1 at the premises of (...) Company in Esztergom at the end of 2008, at the beginning of 2009, the Accused raised the subject that on behalf of (.) Company he provides plenty of work to (.) company, thanks which the latter firm has a considerable income; therefore, he considers it appropriate that Witness T1 pays to him and to Witness T2 Firm Manager HUF 250-250.000 per month. In case of non-payment, the Accused also held out the prospect of giving another company all the orders offered by (...) Ltd. to (...) Ltd.
In the case conducted before the Szolnok Regional Court[17], Accused of the Second Order informed Witness 10 - Managing Director of (...) Company -in October 1997 that Firm 1 shall only maintain their existing contract of carriage with the company represented by him if 10% of the turnover transferred from Firm 1 and the countervalue received for material handling is restored to him and to the Accused of the Second Order in cash. Witness 10 provided a total of HUF 6,148,092 to the Accused of the Second Order from January 1998 until February 1999 on a monthly basis so that Firm 1 does not terminate the existing contract.
In the criminal proceedings conducted before the Győr Regional Court[18] it was concluded that at the beginning of July 2007 the Accused and the Plaintiff met at the premises of (.) Company in person, and while discussing the difficulties of business life the Accused persuaded the Plaintiff to provide him with unlawful advantage every month, which in the beginning was specified as a percentage, and later as a fix amount of HUF 250,000 so that the contractual relationship can remain between them in the future. From July 2007 to October 2007 the Plaintiff gave the Accused HUF 250,000 per month, who thus violated his obligation to supply information and make a bid towards his employer.
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A default judgement[19] was passed in a bribery case where the Accused Persons of the Second and First Order contacted representative of Firm 8, Person 7 to jointly make arrangements through linkages so that dog food of a certain composition with a basic material of production which Firm 8 possesses can get into the formulation of Firm 2 and they conclude a contract of supply for this raw material with them. After the quantity supplied, in exchange, they asked for a pre-defined amount to be transferred to Firm 1.
In a case conducted before the High Court of Justice, Mrs. S turned to the Bank for a credit to purchase the state-owned shares of P. Rt., to a nominal value of HUF 354,010,000, and Accused of the First Order requested 30% of the shares of the firm to be purchased from Mrs. S, against the loan facility -without countervalue - for the Bank.[20]
According to another case before the Budapest-Capital Regional Court[21], Accused of the First Order as Procurement Manager of Firm 1 kept contact with representatives of Firm 3, Person 3, Person 4 and Person 5, whom he asked in 2014 to forward a "transport organisation commission" to Firm 1, which corresponds to 14% of the amount of monthly invoices issued by Firm 3 to Firm 1 in order to maintain the contract of carriage, or otherwise they will enter into a contract with a competitor of Firm 3. At the end of 2015, Accused of First Order amended this amount from 14% to 24% at the premises of Firm 1 during a discussion with Person 3 and Person 5, which the representatives of Firm 3 accepted.
In the cases examined[22], the passive bribing defendants fulfilled high positions at the companies, and most of them were entitled to pass economic decisions independently.
The acting courts found the passive bribers guilty - if no aggregation was determined - of bribery committed at least (generally) continuously, by a person performing activity for an economic entity with breach of duty; however, this action mainly contravened Paragraph (1), Section 291 of the Criminal Code and, with reference to Article a), Paragraph (2), the quality was the felony of accepting bribery committed by a person with independent powers to take action, which was qualified and punishable according to Article b), Paragraph (3).
The legal cases also show that active and passive bribers hid the unlawful advantage from publicity on some legal grounds (e.g. commission).
We can also state that in many cases active bribers are under pressure prior to the commission of the delict: they either accept the conditions offered by the passive briber or they cannot conclude a contract and the existing partnership is terminated.
A solution to such and similar cases can be a well-functioning and efficient whistleblowing system.
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In order to discover any corporate abuse, also highlighting that latency is particularly high, we should establish a legal environment where the reporting person or complainant can report his or her observations anonymously as efficiently as possible.
One of the key purposes of whistle-blowing[23] is that no insider information whose disclosure promotes the fight against corruption and action against economic delinquency can remain hidden within a given organisation. The employee "provides confidential information about an activity observed by him or her during the operation of the organisation, which violates the public interest or any legal provision, possibly causes damage to others or is merely unethical".[24] One of the requirements of disclosing such information or at least forwarding such information to the competent body or authority is the establishment of the legal guarantees of whistleblowing, since, on the one hand, it promotes the protection of public interest (transparency, accountability), and on the other hand, it enhances the economic efficiency of the state and companies;[25] moreover, it protects the good reputation of the firm.
A whistleblower can represent an assurance against the tendency of organisations wielding power that he or she prevents the inner problems and concerns from rising to the surface by excluding outsiders. In many cases the whistleblower is the ultimate solution, when other, formal accounting systems cannot be used.[26] In a reporting process of public interest, two contradictory interests press against each other: the reporting person's private interest and his or her interest attached to the disclosure of the abuse;[27] therefore, it is essential that the reporting person's identity be hidden and he or she stay anonymous. Besides losing his or her job, a whistleblower also risks that his or her chances of inclusion in another, similar and related field considerably decreases.[28]
We can only speak about a whistle-blower if he or she supplies the information coming to their knowledge to the manager or agent belonging to the organisation, so the information is forwarded through the procedural channels specialised for this purpose, in the procedural order established for this purpose, within the organisation.[29]
Whistleblowing is a system set up for the reporting of misconducts, where an internal person being in a privileged position[30] provides access to the confidential or qualified information of a private or state organisation, which information can be led back to present or past misconducts and abuse of power, and the aim is to show the potential or actual damage for the protection of public interest.[31]
First of all, we should briefly and concisely discuss the basic norms set up by the European Union over the past decades, because at the turn of the millennium we started from the bribing of a foreign public official and came to the unification of criminal statutory provi-
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sions,[32] and to the United Nations Convention against Corruption;[33] therefore, it is necessary to briefly refer to the EU whistleblowing instruments.
Without the intention of being exhaustive, these norms are the following:
- the United Nations Convention quoted,
- Act XLIX of 2002 on the Announcement of the Criminal Law Convention on Corruption of the Council of Europe, dated in Strasbourg 27.I.1999,
- Act L of 2004 on the Announcement of Civil Law Convention on Corruption of the Council of Europe dated in Strasbourg, on 4.XI.1999,
- Act XXXVII of 2000 on Announcement of Convention on Combating Bribery of Foreign Foreign Public Officials adopted by Member States to the Organisation for Economic, Cooperation and Development (OECD) as well as Argentina, Brasilia, Bulgaria, Chile and Slovakia in Paris, on 21 November 1997 (OECD Convention),
- Act CXV of 2005 on Announcement of the Convention of 26 May 1997 on the Fight Against Corruption Involving European Officials and Officials of European Union Member States.
Article 33 of the UN Convention deals with the protection of the reporting persons, requesting each State Party to consider "incorporating into its domestic legal system appropriate measures to provide protection against any unjustified treatment for any person who reports in good faith and on reasonable grounds to the competent authorities any facts concerning offences established in accordance with this Convention".
The Criminal Law Convention on Corruption included no such or similar provisions; however, in Article 12 it calls the States Parties to qualify passive trading in influence as a criminal offence.[34] Besides establishment of passive trading in influence as a criminal offence, the Council of Europe also aimed to punish any action during which "when committed intentionally, the promising, giving or offering, directly or indirectly, of any undue advantage to anyone who asserts or confirms that he or she is able to exert an improper influence over the decision-making of members of foreign public assemblies, officials of international organisations, members of international parliamentary public assemblies or judges, officials of international courts".[35]
Similarly to the Criminal Law Convention on Corruption, OECD Convention does not cover the protection of the whistleblower either; the norm was established in the subject of the criminal liability of bribing a foreign public official.
The Civil Law Convention on Corruption aimed to establish a legal environment concerning the enforcement of claims for damages for persons suffering damage owing to corruption. Besides, in Article 9 the Convention dealt with the protection of employees, according to which "Each Party shall pro-
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vide in its internal law for appropriate protection against any unjustified sanction for employees who have reasonable grounds to suspect corruption and who report in good faith their suspicion to responsible persons and authorities".
Article 6 in the Convention on Fight Against Corruption Involving Officials of the European Communities urges to allow heads of businesses to be declared criminally liable in cases of corruption criminal offences by a person under their authority acting on behalf of the business. Therefore, the norm intends to specify the criminal responsibility of any natural person as an executive officer (also members) whose task and responsibility would have been -in my view - to prevent any bribery or passive trading in influence committed by an employee or a person acting for and on behalf of the economic entity on any grounds.
Ultimately, in the second place, this endeavour intends to prevent any illicit and undue influence to potentially be exerted by the lobbyist by holding the executive officer supervising the lobbyist's activity (member) criminally responsible, too.
Due to the lack of space, I have no opportunity to analyse all the noticeable Union norms dealing with whistle-blowing, so I will discuss them marginally, as a list; however, a greater emphasis should be laid on the Whistleblower Directive, as it has not been implemented in the legal system in Hungary up to present.
The European Parliament issued Resolution of 14 February 2017 on the role of whistleblowers in the protection of EU's financial interests.[36] In this Resolution, the European Parliament urged the Commission to "immediately submit a legislative proposal establishing an effective and comprehensive European whistleblower protection program which includes mechanisms for companies, public bodies and non-profit organisations", and called on the Commission to submit a legislative proposal protecting whistle-blowers, affording effective and equivalent protection in the Member States and in all the Union's institutions.
The recommendation referred to Council of Europe recommendation CM/Rec(2014)7 or the protection of whistleblowers (30 April 2014), which specified some basic terms (whistleblower, public interest and report or disclosure, report, disclosure), and - ultimately - it provided for the establishment of an internal whistleblowing network for employees and specified the parameters of such network.[37]
After such antecedents, the European Commission was proposing a new law to strengthen the protection of whistleblowers who report breaches of EU law on 23 April 2018,[38] and finally the Whistleblower Directive[39] was adopted on 7 October 2019.
The personal scope of the Whistleblower Directive covers persons who work in the private and public spheres and learn about any infringement of law in connection with their work (Paragraph (1), Section 4). In the Directive, employees include persons working under the supervision or direction of
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contractors, subcontractors and suppliers - in a broad interpretation. Beyond this, the provisions of the Directive are also applicable to persons who are not yet in an employment relationship but have obtained information about infringement of law during the recruitment process or the pre-contractual negotiations; what is more, the definition (Article 9, Section 5) also includes employees whose employment relationship has ceased to exist earlier. In this respect, therefore, the norm should be applied widely, which is definitely advised.
Article 11 of Section 5 defines what retaliation means. Retaliation "means any direct or indirect act or omission which occurs in a work-related context, is prompted by internal or external reporting or by public disclosure, and which causes or may cause unjustified detriment to the reporting person".
The Directive states that the conditions specified for the protection of a whistleblower shall apply if the report is not submitted in bad faith (the whistleblower has a well-founded reason for presuming the infringement of law), the information supplied by him or her can be brought into connection with the sectors under the material scope of the Directive (e.g. public procurement, environmental protection, consumer protection), and an internal or external report is made in accordance with the Directive.
With respect to the present study, we should discuss the protection measures prescribed by the Directive (Section VI). Article 19 expressly specifies the forms of retaliation under the definitions in an open-end exhaustive list. This particularly includes (as examples) demotion, discrimination, early termination of employment contract, cancellation of a licence or permit, psychiatric or medical referral.
The following level of Section VI includes measures aiming at protection against retaliation (Article 21) and measures aiming at the protection of the persons affected (Article 22).[40] In summary, Article 21 sets forth that a reporting person shall not be considered to have breached any restriction on disclosure of information and shall not take any responsibility for such disclosure. The reporting person shall have no criminal liability for any actions in respect of the acquisition of or access to the information.
Finally, we should also emphasise that in court or public proceedings in the subject of disadvantage or detriments suffered by a whistleblower it should be presumed that such detriment has been applied against them as a retaliation owing to their report or disclosure of information.
Article 22 attaches a guarantee to official, court procedures against the reporting person; therefore, they have the right to a fair trial, the presumption of innocence, the right of defence and the right to an effective remedy. Additionally, authorities shall ensure that the identity of the reporting person is entirely protected.
Perhaps one of the most interesting parts of the Whistleblower Directive is the sanctioning of persons acting against whistleblowers, highlighting that penalties can (should) be applied
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against both natural persons and legal persons, and retaliation should also be applied against whistleblowers with malafide intentions.
According to the Directive, it is the competence of Member States to specify the penalties, and the Directive only governs the conditions for application. Thus, penalties are required in the following cases: hinder or attempt to hinder reporting, retaliation, launching vexatious proceedings, and breach the duty of maintaining the confidentiality of the identity of reporting person.
At this point we should proceed with the investigation of the legal provision on whistleblowing, primarily considering the question to what extent the Hungarian law complies with the stipulations set forth in the Whistleblower Directive (at present).
Act I of 1997 on notifications, proposals and complaints of public interest was the first more modern act on the reporting of abuses in Hungary.[41] Considering this Act, two components are worth mentioning. Firstly, this Act obliged the organ causing disadvantage to the reporting person to restore the original condition, provide reparation to the person suffering disadvantage and pay compensation for financial damages arising from such case (as a sanction). Secondly, the report of public interest had to serve the interest of the whole society, that is, such report - in my interpretation - may not have been aimed at the insult suffered by the employee.
Nevertheless, it was the first act to allow for anonymous reporting,[42] sowing the seeds of whistleblower protection in the legal system in Hungary.
The Act that became effective in 1977 was superseded by Act CLXIII of 2009 on the Protection of Fair Procedures and the related act amendments.[43]
It was the first act to have spread in the United States of America; it integrated and contained solutions related to the legal institution of whistleblowing.[44] The Preamble of the Act suggests that the legislator formed the norm as part of the strategy of the anti-corruption fight, and reports could be submitted both in the private and the public sectors. According to Section 4, the conduction of the investigation would have been the authority and national competence of the organ appointed for the fulfilment of tasks of public procurement and public interest protection, that is, the Office for Public Procurement and Public Interest Protection (hereinafter as: the Office).
The minister's explanation[45] stated that the information published in the press and the reports released by the State Audit Office of Hungary are an important source to the Office. The reporting person aims to promote the effective operation of the organisation, which necessitates an approach contributing to the prevention of corruption.
Based on the minister's detailed explanation, the Office "investigates any conduct violating the requirements of fair trial in the fields of decision-making on the application of public funds, public procurements and in public administrative
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procedures." The legislator would have attributed such investigation and legal means to the Office that the Hungarian Competition Authority possesses.
When defining the term "fair trial", the bill considered the decisions of the Constitutional Court as its basis[46] and defined what it meant by the violation of the requirements of fair trial. It required no deliberateness or culpability but the fact that the conduct demonstrated would classify as violation of fair trial and that it would aim at or result in any advantage for someone, that is, the "perpetrator" would obtain advantage to the detriment of another person with no legal basis or legal title.
Overall, it can be seen that the legislator primarily aimed to create such a legal institution based on a foreign model, through which, over the use of public funds and the clarity of public procurement procedures - as a hidden guard - it established an employee's attitude reflecting on the huge latency of corruption (and rewarded with remuneration). Although the central element of the Act was the fulfilment of the requirement of fair trial in both the private and the public sectors, I basically suppose that the task of the Office (and the reporting person) would primarily have been intra-corporate cartelisation, and in relation to this, the detection of economic and official corruption offences, although the legal provision did not name that.
Finally, Act CLXV of 2013 on Complaints and Public Interest Disclosures (hereinafter as: the Complaint Law) became effective on 1 January 2014. A precursor was that Article XXV set forth in the Fundamental Law of Hungary becoming effective on 1 January 2012 declares: "Everyone shall have the right to submit, either individually or jointly with others, written applications, complaints or proposals to any organ exercising public power".
Compared to the earlier acts, the Complaint Law involves a shift forward, though it provides far weaker protection to the whistleblower in an international comparison.[47] To this statement we should also add that according to a study most European Union Member States fail to provide sufficient protection to the whistleblower.[48]
The minister's explanation of the Complaint Law explicitly states that the protection of whistleblowers is required by the actions against corruption, and it is also important to point out that the effect of the Law covers not only persons having a legal relationship with public bodies and local governmental bodies, that is, the Law also contains stipulations concerning the private sector, similarly to the Act of 2009.
One of the main purposes of the Complaint Law was to provide protection to reporting persons and complainants of public interest, and, as a novelty, the legal provision set up the system of whistleblowing.[49] Before discussing what this protection and system means exactly, I would just like to draw attention to the following.
First of all, a complaint or a report is at odds with a police report. A report of public interest can be made not only when an employee observes the commission of a crime or an attempt
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to commit a crime (preparation for a crime) but it can also refer to unethical behaviour, unreasonable operation or measures of an organisation, or some administrative error. Although the majority viewpoint supposes that the Complaint Law can be considered the whistleblowing act in Hungary, the provisions protecting employees standing up for public interests can be found in other legal provisions, too (such legal provision is, for instance, the Labour Code, Act II of 2012 on Misdemeanours, the Misdemeanour Procedure and the Misdemeanour Registry System, Act CXXV of 2003 on Equal Treatment and Promotion of Equal Opportunities, Act XCIII of 1993 on Occupational Safety and Health, etc.).[50]
Secondly, we should highlight that Act IV of 1978 on the Criminal Code punished the prosecution of the reporting person of public interest until 31 January 2013 according to Section 257, as an offence. The provisions intended to punish a perpetrator who took a detrimental measure against the reporting person owing to his or her report of public interest. According to HVG-ORAC Large Commentary, this measure could not only be observed in legally regulated procedures, but also any decision passed in the inner life of an organisation was classified like this, which could be initiated or passed by the perpetrator either directly or indirectly. (An example of this latter is the initiation of a disciplinary procedure before the competent body or organ, while an example of the former is cut in salaries.) A measure was detrimental if it affected the reporting person's rights attached to their property and person as well as their legitimate interests.[51] This criminal offence, for a reason, was classified as a criminal offence prejudicing the integrity of public life.
To illustrate it with an example, if a middle or senior manager of a state organ terminated or initiated the termination of a public servant's legal relationship with immediate effect because such public service had reported on a corruption crime, the crime was disposition-like.
Act CCXXIII of 2012 on the Provisional Measures Related to the Putting into Force Act C of 2012 on the Criminal Code and the Amendment of Certain Acts formed Section 206/A of Act II of 2012 on on Misdemeanours, the Misdemeanour Procedure and the Misdemeanour Registry System, the formation of misdemeanour prosecuting a whistleblower.
According to the minister's explanation[52] - although the prosecution of a whistleblower has not been qualified as a crime since 1 February 2013, and it has not been changed by the Criminal Code that became effective on 1 July 2013 -, it is necessary to sanction the provisions eliminated from the former Criminal Code as a misdemeanour.[53]
The explanation does not discuss what reason(s) this legislator's decision can be led to; however, in accordance with Ambrus' standpoint, this decision needs review, mainly because of the new Whistleblowing Directive.[54]
Continuing the analysis of the Complaint Law, we can see that according to Section 11 thereof such measure shall be qualified as detrimental which is ap-
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plied against the whistleblower owing to his or her report, even if otherwise such measure is lawful. An exception for this is the case when the whistle-blower acted in bad faith. The Complaint Law also knows the institution of vulnerable whistleblower, concerning whom the threatening disadvantages are likely to severely jeopardise his or her living conditions.
The Complaint Law left the possibility that the reporting person, the complainant submits his or her application or complaint paper-based or verbally, and - at the whistleblower's discretion - such report may be submitted in the protected electronic system set up for reports, too.
The employer or employer's proprietor operating in the form of an economic company may specify rules of conduct protecting public interest or strong private interest. These rules of conduct should be published. Therefore, this is the starting point. In practice, this means that - for the time being, mainly multinational corporations or even medium-size enterprises - a regulation which is accessible to all workers and employees and generally functions as a code of ethics specifies in detail what conduct is to be demonstrated by the employees (compliance).[55]
The employer's organisation may decide on a non-mandatory, thus optional basis to set up a whistleblowing system for reporting on the violation of the legal provisions and the specified rules of conduct. The reporting person can be not only an employee but any natural person as specified by the law who is related to the employer on any grounds (contractor, subcontractor, supplier, dismissed employee, person applied for a job advertisement).[56] The legal provision specifies (Paragraph (1), Section 14) only one criterion: the whistleblower "should have a sound legitimate interest attached to the whistleblowing, or the remedy or elimination of the conduct comprising the subject of whistleblowing".
Further provisions of the Complaint Law stipulate the detailed rules of the whistleblowing procedure. Within this scope, Paragraph (3), Section 16 of the Complaint Law should be highlighted, according to which a reporting obligation arises if the results of the examination necessitate the initiation of criminal proceedings. The statutory reporting obligation can or maybe should be debated, as it is true that the immediate disclosure of criminal offences of smaller weight is not always justified. On the one hand, because the successful conduction of criminal proceedings often requires proper timing (topicality as investigation tactics), and on the other hand, smaller workplace, corporate offences or even felonies should not necessarily and always enforce the public demand for punishment if criminal offences of greater weight are hidden in the background.[57] However, it should be taken into consideration that the reporting obligation declared by the Complaint Law should not be rendered meaningless either.
Compared to the Whistleblower Directive, the Complaint Law will definitely have to be refined and supplemented. This Law does not specify legal consequences for sanctioning the actions against whistleblowers and it
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should also be reviewed that the Complaint Law does not make the establishment of a whistleblower system compulsory, it remains an option for the employer.[58]
I have presented my main statements above and drawn the conclusions at the end of each Chapter, so now I would like to provide a brief executive summary.
It can undoubtedly be concluded that the current non-regulation of lobbying by law allows for the felonies of passive trading in influence and active trading in influence. Non-transparent lobbying in a non-transparent way and with non-transparent means serves the increase in latency.
It would be a brave and rash decision to elaborate provisions that can form a part of an act to be adopted in the future, even because the Lobbying Act was not equal to the expectations at all, although at first reading it scrutinised nearly all legal issues arising in practice. Moreover, the European Union only sees the potential in publicity, transparency, registration and codes of conduct (ethics) for the time being. This, however, has already proved to be too little.
Corporate (criminal) compliance and whistleblowing that forms an integral part of it can definitely facilitate the detection and prevention of criminal offences committed within an organisation, mainly including corruption and economic criminal offences, but even more so the prevention of them. Compliance that functions well within a corporation can potentially contribute to the repression of unlawful corruption. Corporate management can specify rules of conduct for lobbyists, and any non-compliance thereof can be reported both in the public and the private sectors with an efficient whistleblowing system.
In my view, therefore, we should facilitate the wider spread of compliance culture in Hungary; nevertheless, certain terms described in detail above should not only be defined in codes of conduct.
Finally, after the implementation of the Whistleblower Directive the Complaint Law needs further review. ■
NOTES
[1] Supported by the ÚNKP-20-3 New National Excellence Program of the Ministry for Innovation and Technology from the source of the National Research, Development and Innovation Fund.
[2] Hopefully, the compliance, the compliance approach shall be naturalised in the public sector by Government Decree 339/2019. (XII. 23.) on the internal control system of publicly owned economic entities. For this, see. Ambrus István: The internal control system of publicly owned economic entities. In.: https://jogaszvilag.hu/cegvilag/a-koztulajdonban-allo-gazdasagi-tarsasagok-belso-kontrollrendszererol-szolo-339-2019-xii-23-korm-rendelet/ and Ambrus István: The latest developmental trends in compliance. In.: https://jogaszvilag.hu/cegvilag/a-compliance-legujabb-fejlodesi-iranyai/ (2021.08.23.)
[3] Jacsó Judit: About the term and role of compliance in economic life, Miskolci Jogi Szemle, 2019/1. Klnsz. p 83.
[4] D. Daniel Sokol: Teaching Compliance, University of Cincinnati Law Review, vol. 48, 2016, p 401.
[5] Sokol: op.cit. pp 403-405.
[6] Krisztina Szegedi - Roland Szilagyi: Ethics And Compliance Whistleblowing Systems In Hungarian Large Companies, European Scientific Journal, vol. 12, Nr. 7, 2016. p 94. To this, see also: Amanda C. Leiter: Soft Whistleblowing, Georgia Law Review, vol. 2, 2014.
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[7] Ambrus István - Farkas Ádám: The basic questions of compliance. The theory and practice of ethical corporate operation, Wolters Kluwer, Budapest, 2019. pp 49-50.
[8] Ambrus-Farkas (2019): op.cit. pp 49-51.
[9] Bíró Ferenc: Fraud, deception, abuses and irregularities - or are we watchful enough? In.: https://mkvk.hu/bundles/csmssite/mkvk/uploads/user-files/files/hu/letolthetoanyagok/tagozatok/Pttanyagok/20141112_BiroFerenc.pdf (2021.08.20.).
[10] Molnár Erzsébet: The special criminal law responsibility of the executive officer of an economic entity, Doctorate (PhD) dissertation, SZTE-ÁJK Doctorate School, Szeged, 2018. pp 20-21
[11] Ambrus István - Farkas Ádám: Whistleblowing and criminal law - aspects for judging corporate abuse, Magyar Jog, 2017/7-8. sz. p 443.
[12] PricewaterhouseCoopers Hungary: Economic delinquency means constant hazard. In.: https://www.pwc.com/hu/hu/kiadvanyok/assets/pdf/gazdasagibunozes_hu_18.pdf p 6. (2021.08.20.).
[13] Jacsó Judit: Money laundering compliance in a Hungarian and European dimension in the mirror of social innovation, Miskolci Jogi Szemle, 2019/2. Klnsz. Volume 1, pp 397-398.
[14] István Ambrus: Considerations for Assessing Corporate Wrongdoings - a Hungarian Approach to Whistleblowing, ELTE Law Journal, 2016/2. sz. p 10.
[15] Judgement No. B.503/2012/21 of Tatabánya Regional Court.
[16] Judgement No. B.399/2012/13 of Tatabánya Regional Court.
[17] Judgement No. B.1042/2008/64 of Szolnok Regional Court.
[18] Judgement No. B.35/2008/8 of Győr Regional Court.
[19] Judgement No. B.1408/2010/62 of Budapest-Capital Regional Court.
[20] BH 2000.6.238.
[21] Judgement B.1474/2019/35 of Budapest-Capital Regional Court.
[22] Also see: B.76/2015/93 of Kiskunhalas District Court, B.259/2005/39 of Budapest Environs Regional Court, B.311/2012/360 of Budapest-Capital Regional Court, B.356/2019/8 of Budapest-Capital Regional Court.
[23] For related legal cases of the European Court on Human Rights, see.: Wille v. Liechstenstein (28396/95.), Marchenko v. Ukraine (4063/04.), Guja v. Moldova (14277/04.), Kudeshkina v. Russia (29492/05.), Heinisch v. Germany (28274/08.), Matúz v. Hungary (73571/10.). For Hungarian legal cases, see.: BH 1979.39., BH 2003.344., BH 1978.221., BH 1999.98., BH 2010.4.106., BH 2017.12.420.
[24] Kun Attila: The protection of whistleblowers - focusing on labour law aspects. Pécsi Munkaügyi Közlemények, 2011/2. sz. p 113.
[25] Ibid.
[26] Denielle Ireland-Piper - Jonathan Crowe: Whistleblowing, National Security and the Constitutional Freedom of Political Communication, Federal Law Review, vol. 46, 2018, p 342.
[27] Hajdú József - Lukács Adrienn: Social media and whistleblowers in the private sector, with special emphasis on Hungarian legislation, Forum Acta Jurudica et Politica, 2018/2. sz. p 122.
[28] Noah Weingarten: How Pre-Dispute Arbitration Clauses Chill Whistleblowing and End-Run Doff-Frank Whistleblowing Protections, Cardozo J. of Conflict Resolution, vol. 19, 2018, p 433.
[29] Szente Zoltán: The possibilities of engaging insider informants (whistleblowers) in the fight against corruption, Közigazgatástudományi Közlöny, 2010/1. sz. pp 8-9.
[30] A pilot study demonstrated that the willingness of (self)reporting by the persons committing abuses can be enhanced with the introduction of an award more than with the promise of rejecting sanctions to applied. This study primarily focused on the disclosure of cartels. In.: Reinaldo Diogo Luz - Giancarlo Spagnolo: Leniency, Collusion, Corruption, and Whistleblowing, Journal of Competiton Law & Economics, vol. 13, Nr. 4, 2017. p 734.
[31] Daniele Santoro - Manohar Kumar: Speaking Truth to Power - A Theory of Whistleblowing, Springer, Cham, 2018. 40.
[32] Klotz Péter: The anti-corruption fight of the European Union - two steps forward, one step back? Külügyi Műhely, 2020/1. sz. pp 29-30.
[33] Act CXXXIV of 2005 on Announcement of the United Nations Convention Against Corruption dated in Merida on 10 December 2003.
[34] Mezőlaki Erik: Corruption criminal offences. In.: Karsai Krisztina (ed.): Large Commentary to the Criminal Code, second and revised edition, Wolters Kluwer, Budapest, 2019. p 674.
[35] The Hungarian legislator managed to fulfil this requirement after ten years; active trading in influence has been considered a criminal offence since 1 January 2012.
[36] https://www.europarl.europa.eu/doceo/document/TA-8-2017-0022_HU.html (2021.08.20.).
[37] Recommendation CM/Rec(2014)7 adopted by the Committee of Ministers of the Council of Europe on 30 April 2014 on the protection of whistleblowers.
- 100/101 -
[38] COM(2018) 218 final - 2018/0106 (COD).
[39] https://eur-lex.europa.eu/legal-content/HU/TXT/PDF/?uri=CELEX:32019L1937&from=HU (2021.08.20.).
[40] For further details, see also: Beata Baran: The protection of persons chiming the bell - legal consequences. In.: Farkas Ákos - Gerhard Dannecker -Jacsó Judit (szerk.): Criminal Law Aspects on the Protection of Financial Interests of the European Union, Wolters Kluwer, Budapest, 2019. pp 423-426.
[41] The very first substantive legislation was Act I of 1954 on the Administration of Citizen's Complaints, the provisions of which incorporated in Act IV of 1957 on the General Law relating to Administrative Law. See: István Ambrus: The historical development of the regulation of complaints and reports of public interests in Hungary, Közjogi Szemle, 2019/1. p. 28-30.
[42] István Ambrus: Corruption Offences in the Hungarian Criminal Law, and an anti-corruption tool: whistleblowing. In.: Tomáš Gábriš (ZOST.): KORUPCIA INTERDISCIPLINÁRNE, Wolters Kluwer, Bratislava, 2017. p 241.
[43] Act I of 1977 lapsed in 2004, transitional provisions from CXL of 2004 on General Rules of Administrative Authority Procedure and Service had been in force until CLXIII of 2009 came into force.
[44] Ambrus (2019): op.cit. p 33.
[45] Explanation to Bill T/11026.
[46] Constitutional Court Decision 6/1998. (III.11.) and Constitutional Court Decision 14/2004. (V.7.).
[47] Győry Csaba - Inzelt Éva: White-collar, economic and corruption criminal offences. In.: Borbíró Andrea - Gönczöl Katalin - Kerezsi Klára - Lévay Miklós (ed.): Criminology, Wolters Kluwer, Budapest, 2016. p 472.
[48] Daniele Santoro - Manohar Kumar: A right to protection for whistle-blowers. In.: Daniele ARCHIBUGI - Ali Emre Benli (ed.): Claiming Citizenship Rights in Europe, Routledge, London-New York, 2019. p 200.
[49] Ambrus-Farkas (2019): op.cit. p 189.
[50] Hajdú József - Lukács Adrienn: Whistleblowing and the role of social media in anti-corruption actions, Integritás Tanulmányok 13. Nemzeti Közszolgálati Egyetem, Budapest, 2018. pp 7-9.
[51] Mészár Róza: Criminal offences prejudicing the integrity of public science, jurisdiction and public life. In.: Akácz József - Belegi József - Katona Sándor -Kónya István - Márki Zoltán - Mészár Róza - Molnár Gábor - Soós László: Hungarian Criminal Law I-III. - old Criminal Code - Commentary in practice. HVG-ORAC Legal Codex. Online database.
[52] Bill T/9246 with explanation.
[53] Article 10 of Explanation to Sections pp 214232.
[54] Ambrus István: New European Union directive and Hungarian government decree in the service of compliance, Közjogi Szemle, 2020/1. sz. p 48.
[55] For instance, any signs suggesting corruption shall be reported to the management without delay.
[56] Ambrus-Farkas (2019): op.cit. p 193.
[57] Ambrus-Farkas (2017): op.cit. p 450.
[58] For comparison, see: Bölcskei Krisztián - Hajdu Krisztina - Jasku Zsolt: On the application of the whistleblowing system, Ügyvédek Lapja, 2021/1. sz. pp 30-31.
Lábjegyzetek:
[1] The Author is trainee lawyer, doctoral student, ELTE-ÁJK.
Visszaugrás
