New EU law may criminalize whistleblowers

The European Parliament has approved a new directive making it easier for companies in the EU to protect their trade secrets. But critics say the law could make exposures like Dieselgate and the Panama Papers impossible.

The European Union is sending mixed signals on business transparency. On Tuesday, the European Commission responded to the Panama Papers disclosures by unveiling new legislation that would force more tax transparency on major companies in member states. But on Thursday, the European Parliament voted in favor of a new measure that critics say could prevent such leaks in the future.

Campaigners say the new Trade Secrets Protection Act - aimed at protecting multinationals from corporate spying - will effectively criminalize whistleblowers and make it less likely that revelations like the Panama Papers and the Volkswagen scandal will ever see the light of day.

"If the Trade Secrets law had been in place, we may never have known about emissions testing and the whole Dieselgate issue," said Giulio Carini, of the Italian anti-corruption organization Riparte Il Futuro. "Volkswagen could have argued that their testing processes were trade secrets."

The Panama Papers disclosures relied on a whistleblower

"The Trade Secrets Directive seems to have a quite chilling effect on whistleblowing, and is clearly in contrast to the public outcry over the Panama Papers," he added. Part of the reason for the contradiction is timing - the Trade Secrets directive has been under discussion for years, while the dramatic revelations about how the powerful hide their money burst into the public domain only two weeks ago.

"But I haven't seen much in the media connecting the two - about how if the Trade Secrets Act gets passed, something like the Panama Papers may not come about," said Carini.

Sensitive disclosures

The act, entitled "on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure," is designed to protect firms' competitive advantages. In the introduction, the legislators argue that "innovative businesses are increasingly exposed to dishonest practices aiming at misappropriating trade secrets."

And while many individual countries already have laws against industrial espionage, the bill says, "without effective and comparable legal means for defending trade secrets across the Union, incentives to engage in innovative cross-border activity within the internal market are undermined and trade secrets are unable to fulfil their potential as drivers of economic growth and jobs."

The Corporate Europe Observatory was among many organizations behind a petition to stop the bill that gathered over 150,000 signatures. The group argued that the act's definition of a trade secret was too vague, covering as it does anything of "commercial value because it is a secret" that the firm has taken "reasonable steps" to keep from the public.

On its website, the Observatory acknowledged the importance of trade secrets, but said the lobbyists for the multinationals had been "too successful" - an effort to protect competition between companies had, it said, handed them too much power.

"They transformed a legislation which should have regulated fair competition between companies into something resembling a blanket right to corporate secrecy, which now threatens anyone in society who sometimes needs access to companies' internal information without their consent: consumers, employees, journalists, scientists..." the Observatory said.

Carini agrees. "This directive goes too far because it puts the burden of proof of acting in the public interest on the whistleblower, and doesn't define what public interest is," he said. "So it's in favor of companies, because they don't have the burden of proof to show that's it's within their competition interests."

Critics argue that "Dieselgate" may never have seen the light of day under the trade secrets law

Journalists divided

Journalists, meanwhile, seem to be divided on the bill. The European Federation of Journalists, which was unhappy with an earlier draft, expressed satisfaction with the final version, because, in the words of its director Renate Schroeder, there are "clear exceptions for journalists."

But the German journalist associations were less easily appeased. Both the German Journalists Union (DJU) and the German Federation of Journalists (DJV) put out statements this week calling on Members of the European Parliament to reject the bill.

DJV chairman Frank Überall said the exceptions amounted only to the "minimal consensus for the work of journalists," because so much depended on how the directive would be implemented in national laws. "Anyone who sees wrongdoing and informs the media must not be put in danger of being treated like a serious criminal," he said.

"Journalists, like whistleblowers, will have to fear massive legal consequences from making revelations, and their work will be significantly limited," warned DJU chairwoman Cornelia Hass.