EU close to deal on stronger whistleblower protection

European Union states are poised to back new rules to boost protection for whistleblowers who expose fraud, tax evasion, data breaches and other misdeeds, EU sources told Reuters.

The move follows criticism from transparency campaigners about the lack of EU protection for individuals who report such breaches, citing the prosecution of two whistleblowers who leaked information in 2012 about Luxembourg's illegal tax deals with large corporations.

Whistleblower protection is currently handled by national authorities in the 28 EU states, resulting in largely different treatment, with no laws at all in some countries.

Though a number of Luxembourg tax deals were ruled illegal by the EU, the two whistleblowers received nine-month and one-year prison sentences from the Grand Duchy, with one ultimately fined 1,000 euros ($1,136) and the other acquitted last year.

The new regulations proposed by the European Commission last year would bring in EU-wide rules requiring companies to set up internal channels for whistleblowers and shield them from reprisals such as sackings, demotion and even litigation.

Envoys from EU states are expected to endorse the new rules at a meeting on Friday, two EU sources told Reuters on Thursday.

EU governments and parliamentarians will then have to agree on the final text before it becomes law.

Talks among EU governments had been hampered by opposition from some smaller states.

Luxembourg, Ireland and Hungary wanted whistleblowing on tax matters to be excluded from the protection regime, according to EU internal meeting minutes seen by Reuters.

However, a coalition of the larger EU states, including Germany, France and Italy, eventually prevailed in keeping tax revelations within the proposal, the sources said.

The so-called Luxleaks revelations by the two whistleblowers prosecuted in Luxembourg exposed the Grand Duchy's schemes to attract multinationals with illegal tax sweeteners and triggered EU investigations.

The European Commission, chaired since 2014 by Luxembourg's former prime minister Jean-Claude Juncker, later found that some of those deals made with automaker Fiat, online retailer Amazon and energy utility Engie were illegal.

Brussels also concluded that Ireland had granted illegal tax benefits to smartphone maker Apple.

Luxembourg and Ireland were not fined, but were required to recoup the tax due from the corporations.