Dialectics of Transparency and Secrecy in the Information Age: The Role of Whistleblowing Legislation in the Regulatory Governance of Markets and in National Security A DISSERTATION Submitted in Partial Fulfilment of the Requirements for the Degree of Doctor Iuris To the Department of Law of Freie Universität Berlin by Ioannis Kampourakis Berlin, 2018 Referees: Prof. Dr. Klaus Hoffmann-Holland Prof. Dr. Mordechai Kremnitzer Date of defence: 10 July 2019 List of abbreviations ACHPR African Commission on Human and Peoples’ Rights CCSDN Commission consultative du secret de la défense nationale CIA U.S. Central Intelligence Agency CME Coordinated Market Economy CNCTR Commission de Contrôle des Activités de Renseignement CPP French Code of Penal Procedure CSR Corporate Social Responsibility ECHR European Convention of Human Rights ECtHR European Court of Human Rights FBI U.S. Federal Bureau of Investigation FISC U.S. Foreign Intelligence Surveillance Court FOIA U.S. Freedom of Information Act GRI Global Reporting Initiative ICCPR International Covenant on Civil and Political Rights ICWPA U.S. Intelligence Community Whistleblower Protection Act ISC UK Intelligence and Security Committee LME Liberal Market Economy NPM New Public Management NSL National Security Letters OAS Organization of American States OECD Organisation for Economic Co-operation and Development OLC U.S. Office of Legal Counsel OSCE Organization for Security and Co-operation in Europe PIDA U.K. Public Interest Disclosure Act PPD-19 Presidential Policy Directive 19 QPC Question Prioritaire de Constitutionnalité SEC U.S. Securities and Exchange Commission SOX Sarbanes-Oxley Act UNCAC United Nations Convention Against Corruption UNODC United Nations Office on Drugs and Crime WPA U.S. Whistleblower Protection Act WPEA U.S. Whistleblower Enhancement Act Table of Contents 1. Introduction ................................................................................................... 1 The rise of whistleblowing to prominence and the transparency discourse ......... 1 The dualism hypothesis: Research questions ........................................................... 4 Definitions and distinctions ........................................................................................ 8 1.3.1. Whistleblowing ..................................................................................................... 8 1.3.2. Regulatory governance........................................................................................ 10 1.3.3. National Security ................................................................................................. 12 1.3.4. Transparency, secrecy, and dialectics ................................................................. 12 1.3.5. Information age ................................................................................................... 14 Methodology .............................................................................................................. 15 Plan ............................................................................................................................ 20 2. The functional approach to transparency: Whistleblowing in regulatory governance ................................................................................ 23 Whence transparency? The functional rationale for the emergence of transparency in contemporary governance and regulation.................................. 25 2.1.1. The historical shift laying the foundations for a new conceptualization of democratic legitimacy and governance ............................................................... 28 2.1.1.1. Legitimacy through representation ............................................................... 28 2.1.1.2. Criticizing a State of “unfreedom” and the neoliberal project ..................... 31 2.1.1.3. The erosion of collective identities and the individualization of the workforce ....................................................................................................... 34 2.1.1.4. The advent of sub-politics .............................................................................. 36 2.1.2. The crucial role of transparency in the deliberative democracy paradigm .................................................................................................................... 39 2.1.2.1. A paradigm shift? Deliberative democracy and classic liberalism .............. 39 2.1.2.2. The Habermasian model of democratic principle and discursive participation .................................................................................................. 43 2.1.2.3. Transparency as a prerequisite for the legitimacy of norms ......................... 46 2.1.2.4. Deliberation, new governance, and participation: The ambiguous mediating role of transparency ..................................................................... 49 2.1.3. The function of transparency in contemporary governance: Between efficiency and legitimacy .................................................................................... 52 2.1.3.1. A (nominal) increase of governmental and institutional transparency ......... 52 2.1.3.2. Transparency within governance: assuring legitimacy through public accountability ................................................................................................ 56 2.1.3.3. Transparency as governmental rationality ................................................... 59 2.1.4. The function of transparency in corporate regulation: New governance, reputational accountability, and the optimal information flow for market economy .............................................................................................................. 64 2.1.4.1. Transparency as fundamental for Corporate Governance ........................... 64 2.1.4.2. From Corporate Governance to Corporate Social Responsibility: The advent of non-financial disclosures ............................................................... 67 2.1.4.3. Toward a ‘new governance’ paradigm ......................................................... 73 Effectuating transparency: The diffusion of whistleblowing legislation in the United States and the European Union and its function in securing market conditions ..................................................................................................... 78 2.2.1. Whistleblowing as a transnational regulatory instrument ................................... 81 2.2.1.1. Facilitation and protection of whistleblowing as transparency reform ........ 81 2.2.1.2. The history of whistleblowing protection: A nexus of efficiency and individualism ................................................................................................. 83 2.2.1.3. Whistleblowing in international law: A “soft law” approach that brings results ............................................................................................................ 87 2.2.1.4. Whistleblowing as a transnational phenomenon: Beyond the continental divide ............................................................................................................. 92 2.2.2. Whistleblowing as function: The U.S. example of corporate and financial regulation............................................................................................................. 95 2.2.2.1. The Sarbanes-Oxley Act of 2002: The dawn of a new approach to whistleblowing protection ............................................................................. 95 2.2.2.1.1. The scope of protection: Subject of protection and type of conduct ..... 97 2.2.2.1.2. Procedure: Internal vs. External Whistleblowing (Part A) .................. 100 2.2.2.2. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010: A different approach to “problem-solving” ...................................... 102 2.2.2.2.1. Financial incentives and the -resolved- ambiguity over internal whistleblowers ..................................................................................... 102 2.2.2.2.2. Internal vs. External whistleblowing (Part B)...................................... 104 2.2.2.3. And trade secrets? ....................................................................................... 106 2.2.3. Protecting whistleblowers in the EU: A progressive expansion of the legislative framework and the dominant instrumental approach ...................... 109 2.2.3.1. Main issues aspects and issues of whistleblower protection in European states ............................................................................................................ 109 2.2.3.1.1. Scope of protection .............................................................................. 110 2.2.3.1.2. Channels and procedure ....................................................................... 113 2.2.3.1.3. Public interest and good faith .............................................................. 116 2.2.3.1.4. Financial incentives ............................................................................. 119 2.2.3.1.5. Anonymity and data protection ............................................................ 120 2.2.3.2. The first European framework for whistleblowing protection: The instrumental approach of the Market Abuse Regulation ............................. 122 2.2.3.3. Whistleblowing contributing to a well-functioning single market: The proposal for a Directive on the protection of whistleblowers ..................... 125 2.2.3.4. The Trade Secret Directive