In the Inside Track, General Counsels across CEE share the nuances of their roles, challenges, and strategies for success. With organizations continuously challenged to adapt to new and complex legal frameworks, this time we asked: For the implementation of whistleblowing requirements, do you intend to use internal resources or outsource, and why?
Wioletta Kaloska, General Counsel & Proxy, Symfonia: I chose to outsource the entire whistleblowing procedure because I lacked the internal resources to manage this topic effectively. I needed someone with experience in this area not only to advise me but also to guide me through the process, leveraging their knowledge and experience, even assuming the role of project manager, and eventually managing the tool we selected together as one of the channels for reporting suspicions of any wrongdoing. It was crucial for me to build trust with such an advisor, ensuring that when a report is made, I have a trusted, experienced individual by my side who understands our organization’s values and knows how to navigate Symfonia. An additional advantage of this approach is undoubtedly the maximization of anonymity/confidentiality of the report and protection of whistleblowers, limiting the number of individuals with access to the report to just one person (General Counsel) and ensuring that only a select few individuals know the whistleblower’s identity. The entire process occurs outside the organization, and individuals within the organization involved in the investigation do not learn the whistleblower’s identity unless absolutely necessary.
Natalia Mochales, Vice President and Head of Compliance, Ericsson Middle East & Africa: Today we can say that it is not possible – and in many cases, it is legally required – to have an effective compliance program if the company does not have an internal reporting system. It is a decision that requires some evaluation and assessment before implementation. The company will have to consider among other aspects the budget, resources, company size, and number of employees to decide whether the ideal is a whistleblowing channel managed entirely internally, outsourced, or in a hybrid way.
Once this is clear, each system has advantages and challenges and therefore the decision will depend on different factors. Utilizing internal resources for a whistleblower program ensures direct control over the whole process. However, this approach requires significant investment in software and personnel who are dedicated to managing the program. Maintaining confidentiality and objectivity can also be challenging, as internal staff may have biases or conflicts of interest. Outsourcing to third-party providers can enhance anonymity and objectivity, making employees more willing to report misconduct. However, you will not have full control over the investigation process and security standards.
In my experience, I have always worked with hybrid systems in which you subcontract to a third party the reception of the allegations which provides a 24/7 service, translates the messages received, and subsequently passes them on to the internal compliance department who are responsible for the matter from that moment on. This model has the advantages of external and internal models and reduces the disadvantages to a great extent. One of the main challenges is that organizations must dedicate significant efforts and resources to training their people and engaging them via internal communication as in the internal model.
In conclusion, the decision between internal and outsourced whistleblower programs depends on organizational priorities such as control, cost, and the need for objectivity and expertise. A hybrid approach can also be considered to leverage the strengths of both options.
Mate Lapis, Head of Legal, Cherrisk: We adopt a hybrid approach for whistleblowing management. We utilize an external platform provided by whistleblower software on a subscription basis. However, we have developed an internal group and company-wide policies alongside compliance officer oversight to ensure adherence to regulations and effective handling of cases. Our compliance officer manages the platform, ensuring its alignment with legal requirements and overseeing the evaluation process, including contingencies for potential complaints against the officer. This approach combines external technological support with internal responsibility, ensuring comprehensive whistleblowing management in line with regulatory standards.
This article was originally published in Issue 11.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
