Navigating the Legal Landscape of Whistleblowing in KSA

On 13 February 2024, the Saudi Council of Ministers approved a law for the Protection of Whistleblowers, Witnesses, Experts and Victims (the New Law), signalling a further shift in the Kingdom’s approach to transparency and accountability. Legal protections for whistleblowers should enhance corporate governance standards and strengthen investor confidence in Saudi Arabia. This followed the announcement earlier this year that whistleblowers can now be financially rewarded following successful reports.

The New Law was published in the Official Gazette on 1 March 2024 and comes into force 120 days after publication.

 

Details of the New Law

The New Law allows the Court to protect individuals who give evidence in court cases from intimidation that may adversely impact their testimony, including whistleblowers, other witnesses, experts, or purported victims (the Protected Person). Measures include removing their name and address from any correspondence, documents, and minutes, concealing them whilst giving evidence in court or allowing them to give evidence behind closed doors. In certain cases, these measures will be mandatory.

Like other whistleblowing laws in the region, and globally, there is also an element of good faith required in the making of the whistleblower report. The Protected Person is protected from criminal proceedings following their report or testimony, except in cases where the reporting is malicious, false or grossly negligent.

In addition, the Protected Person can apply to the “Protection Program for Whistle-blowers, Witnesses, Experts, and Victims” established by the Public Prosecution (the Protection Program). Protection will be determined on a case-by-case basis, with relevant considerations including the criminal history of the individual, the nature of any threat, the type of offence in relation to which the evidence is being given.

Entry to the Protection Program can also be recommended by the Court.

The Protection Program initiatives can include security, concealment of personal data, transfer to new employment, legal and psychological guidance, and financial assistance.

Those accepted into the Protection Program are also provided with legal protection from reprisals from their employer (if the reprisals relate to the testimony provided), including termination, demotion, reduction of rights and any arbitrary action, lawsuit, or disciplinary penalty.

 

Breaches of the New Law

If protection is provided under the Protection Program, no person may disclose, directly or indirectly, anything that may harm the individual protected, including any information that reveals or infers their identity, their whereabouts, or any information about the type of protection being offered. The penalty is imprisonment for a period not exceeding one year and a fine not exceeding SAR200,000 (c. USD50,000). Penalties for threatening behaviour, bribery, blackmail, inducement, force, or violence towards the whistleblower varies from SAR300,000 to 500,000 (c. USD80,000-130,000), and imprisonment for a period of up to three years, depending on the offence.

Penalties may also extend to a company involved in any whistleblowing reports. Any private company operating in the Kingdom whose employee commits one of the crimes within the New Law for its benefit, shall be punished by a fine not exceeding SAR5,000,000 (c. USD1.3 million), or prohibition from contracting with any public authority for a period not exceeding five years. The New Law makes clear that any crime committed pursuant to it by a public servant will be considered a crime of corruption.

 

Importance of the measures

These new measures are important in encouraging individuals to come forward with information regarding illegal activities within their organisations, and allowing the courts to administer justice once these matters are reported. It also represents the desire of the Kingdom to bolster transparency and corporate governance. Whilst the introduction of the New Law appears to represent an important development, the effectiveness of the protections offered will depend to a large extent on how the measures operate in practice.

In order to mitigate the risk of liability or potential risk to reputation, businesses will need to ensure they have processes and procedures in place to encourage reporting of misconduct, as well as encouraging a culture of compliance including setting a tone of compliance “from the top”.

In conclusion, the New Law represents a significant milestone in Saudi Arabia’s ongoing efforts to combat corruption and promote transparency. The impact on businesses is expected to be positive in the long run, improving stakeholder confidence in the corporate system within Saudi Arabia, laying a foundation for a more ethical economy in a continuing effort to attract foreign investment.