Vatican Recognizes Importance of Financial Whistleblowers, But Offers No Anonymity

Kohn, Kohn & Colapinto LLP

In January, the Vatican issued new procedures on whistleblowing, expanding on 2019 procedures for reporting financial anomalies to the Office of the Auditor General. The new procedures are a recognition of the importance of whistleblowers in exposing financial misconduct, however, they fail to offer both anonymity and financial awards to whistleblowers.

The Vatican, which Reuters reports is “no stranger to financial scandals,” has increased efforts in recent years to instill financial transparency and fight corruption. In 2016, it signed on to the United Nations Convention against Corruption which includes an article centered on whistleblower protection.

According to Vatican News, the official news portal of the Vatican Holy See, under the new procedures the Auditor General will accept whistleblower tips on “particular situations related to anomalies in the use or allocation of financial or material resources; irregularities in the awarding of contracts or in the conduct of transactions or disposals; and acts of corruption or fraud.”

The procedures define a whistleblower as someone “who in the course of their own work becomes aware of particular situations.” The procedures establish that whistleblowers can confidentially make disclosures to a specific email address for disclosures or by a letter addressed to the Auditor General.

"The issuance of the procedure will give even greater impetus to the reports, already received by the Office of the Auditor General in previous years, making it easier, especially through the electronic channel, to send them," said the Auditor General, Alessandro Cassinis Righini. "The procedure also clarifies the scope of admissible and excluded reports, as well as the fact that those who legitimately entertain economic relations with the Holy See and the Vatican City State are also included among the legitimized subjects."

While the procedures are a recognition of the role whistleblowers play in exposing financial crimes and combating corruption, they fall short of best-practice whistleblower legislation.

Notably, the procedures do not allow whistleblowers to make disclosures anonymously, though the procedures do stress the Auditor General’s commitment to protecting the confidentiality of whistleblowers’ identity. Furthermore, there is no mechanism by which a whistleblower can receive a monetary award for stepping forward and exposing financial crimes or corruption.

Anonymity and awards are cornerstones of the United States’ major financial whistleblower laws, including the Dodd-Frank Act and Anti-Money Laundering (AML) Whistleblower Improvement Act.

Under these laws, which established the SEC Whistleblower Program and AML Whistleblower Program, whistleblowers may make disclosures anonymously and qualified whistleblowers are entitled to monetary awards of 10-30% of the funds collected by the government in the enforcement action connected to their disclosure.

The combination of anonymity and awards have proven to be extremely effective in incentivizing insiders with direct knowledge of financial fraud to come forward and cooperate with authorities. For example, since it was established in 2010, the SEC Whistleblower Program has recovered over $6 billion from fraudsters through penalties and disgorgement.

Notably, the U.S. whistleblower award laws are transnational in scope, whistleblowers do not need to be U.S. citizens to qualify, and the misconduct can occur overseas. Due to the lack of anonymity and award provisions in other countries’ whistleblower laws more than 5,000 whistleblowers from around the world have flocked to the SEC Whistleblower Program.

While the Vatican’s new procedures are a step forward and an important recognition of the significance of financial whistleblowers, they fall short of best-practice provisions found in U.S. laws. Thus, Vatican whistleblowers are best off exploring the potential of reporting financial misconduct through U.S. whistleblower channels in instances where there is U.S. jurisdiction.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kohn, Kohn & Colapinto LLP | Attorney Advertising

Written by:

Kohn, Kohn & Colapinto LLP

Kohn, Kohn & Colapinto LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide