The Labor Code of Georgia does not outline the concept of a whistle-blower and its respective protection. Further, the Law of Georgia on Entrepreneurs does not provide any regulation on disclosure of unethical, illegal or illicit behavior within an organization.
The Law of Georgia on Conflict of Interest and Corruption in Public Service (Law on Corruption) defines whistle-blower and affords protection. The Law on Corruption mainly aims to prevent, discover and eliminate conflict of interest and corruption in public institutions, as well as provide the foundation for whistle-blower protection and the rules of ethics and conduct. The Law on Corruption defines a whistle-blower as a person who, including anonymously, requests that an authority in charge review possible misconduct of a public servant that prejudices or may prejudice the public interest and the reputation of the respective public institution. The authority that reviews the complaint may be a division of internal control and/or official inspector of the respective public institution.
The Law on Corruption prohibits intimidation, harassment, humiliation, persecution, oppression, moral or material damage, violence, threats or discrimination against whistleblowers or their family members. It is also against the law to initiate civil, administrative or criminal prosecution or proceedings against and impose liability on the whistle-blower, unless they are not connected to the act of disclosure or aim to infringe sovereignty and security of the state. The head of the respective institution monitors the whistle- blower’s protection.
Commercial bank code
In addition, the Code on Corporate Governance of Commercial Banks (Code) sets forth the obligation for the supervisory board members of the bank to constantly monitor the bank’s anonymous whistle- blowing system for its effectiveness and impartiality. The Code does not provide the definition of whistle-blower, nor the process of reporting/disclosure of any inappropriate behavior or wrongdoing. The Code does provide that whistle- blowing is anonymous. Those who exercise the whistle-blowing right must be fully protected from any potential damage or discrimination.
The Code was adopted on 26 September 2018 by Order N215/04 of the President of the National Bank of Georgia. Its requirements apply to commercial banks as well as the branches and subsidiaries of foreign banks. Considering how recently the order was enacted, the effectiveness and impartiality of the anonymous whistle- blowing system within banks has not yet been analyzed.
Code on Ethics
In addition to the adoption of the Code, the National Bank of Georgia, on 9 July 2018, adopted the Code on Ethical Principles and Standards of Professional Conduct for Commercial Banks (Code on Ethics).
The requirements of the Code on Ethics apply to commercial banks carrying out activities in Georgia. The Code on Ethics further applies to shareholders, administrators and employees of the commercial banks. Its purpose is to ensure ethical conduct of people involved in banking, which in turn helps the reputation of the banking system, boosts consumers’ trust and aids the banks’ sustainability and the community’s welfare.
The Code on Ethics requires the commercial banks to, among other things, submit applications or complaints about violations of ethical requirements and standards by people involved in banking. The anonymity of the person filing the complaint shall be protected if the person requests.
Commercial banks are required to establish an authority that will monitor the banks’ internal standards and accept and review the applications/complaints. The authority will have the right to make decisions on the applications/complaints and, if violations are revealed, impose measures against violators. The authority must base its decisions on the Code on Ethics, the internal standards of the commercial banks and standards of the CFA Institute, general ethical norms, and principles of non- discrimination and impartiality.
The Code on Ethics further provides that decisions of the authority can be appealed. Appeals are to be reviewed by the supervisory board or the ethics committee of the commercial bank. The supervisory board or ethics committee may decide to review the matter again, amend the measures used by the authority, or uphold or repeal the authority’s decision.
Since the Code on Ethics was adopted only recently, its effectiveness is to be analyzed in the future.
Country-by-country and EU whistle-blowing rules need to be taken into account in setting the best practices and policies in this growing area of risk, including what an employer must do when faced with a whistle-blower claim, such as whether an investigation is required, protections of the employee who complained of company practices and litigation issues.
Best practice requires companies to take action in advance by creating a hotline and training its employees in ethical behavior.