System of Whistleblowing in India
- Posted By
Polity & Governance
27th Feb, 2021
GS-II: Polity and Governance
- Important Aspects of Governance, Transparency and Accountability
With the rise in whistleblower complaints in India, the need for a robust legal regime for the protection of whistleblowers has gained importance.
In this context, it is important to do an in-depth examination of the current system of whistleblowing in India.
- There is a complicated mechanism of governance, corporate structures & other non-governmental organizations' abrupt power.
- With these complicated structures, the give and take of consideration are not limited to two hands but the process of giving and taking of this consideration itself has turned out into a complicated process.
- India is now caught in a situation where many sectors are steeped in endemic corruption, including those charged with controlling corruption itself.
- However, in this entire organization or structure, there is often one person who is committed to his work ethics and cannot see scams right under his nose.
- Committed to their job with utmost honesty, these people bear all the risks to themselves, their families, property and decide to expose the scams.
- These people are called ‘Whistleblowers’ as they make people cautious of the insider scams in the organization by exposing them.
What is Whistleblowing?
- Whistleblowing is an act whereby an individual discloses any unethical, illegal, or unauthorized act of an individual or group to the public at large.
According to the Companies Act, 2013, whistleblowing is an action aimed at drawing the attention of stakeholders to instances of unethical practices in an organization.
- Whistleblowers are the best source of information on malpractices in any organization — public or private.
- The RTI Act, 2005 has come to be seen as 'twin sister' of whistleblowing.
- The Act has been used effectively to expose off illegal activities. Much of the information that comes out through this is related to development projects, illegal mining, land acquisitions, welfare schemes, money laundering, etc.
- But, the large number of whistle-blowers has to meet drastic fate for their noble intention and work.
- The vulnerable condition in our country can be anticipated from the fact that 68 RTI activists have been killed since 2005, while six (6) committed suicide and many more have been assaulted, attacked, and victimized.
- NHAI scam paved way for whistleblowers law: In 2003, Satyendra Dubey, a project engineer with the National Highways Authority of India, exposed corruption in the Golden Quadrilateral project in Bihar.
- He was shot dead in November 2003 in Gaya. Three persons were given a life term in 2010 for the murder.
- Calls for a law to protect whistleblowers arose in the wake of his murder.
- ICICI loan scam: Arvind Gupta, a shareholder activist, exposed the alleged loan fraud and quid pro quo between the bank’s then CEO Chanda Kochhar and her family and the Videocon group. Kochhar stepped down following the allegations.
Categorization of whistleblowers
- Informants: Whistleblowers who enjoy the legal protection of a whistleblower law fall within the first of three categories of “informants”.
- Leakers: The second category of whistleblowers are those that fall outside the realm of this protection and are referred to, opprobriously, as “leakers”.
The state of whistleblowing programs in India
- Samuel Shaw and Richard Marven, two naval officers, witnessed the torture of British prisoners of war at the hands of their commanding officer, Esek Hopkins.
- Outraged by his action, they reported him, which resulted in their dismissal from the US Navy. That was 1777.
- Shaw and Marven sought Congressional support and testified before the Congress. A year later, on July 30, 1778, the US Congress passed a whistleblower resolution, now widely considered as the world’s first whistleblower protection law.
- Many countries have since enacted laws for the protection of whistleblowers. Two hundred years later, India almost did the same.
- In 2011, the Whistleblowers Protection Bill was drafted. The Act was later enacted as The Whistleblowers Protection Act, 2014.
- This statute was framed to provide public servants with a mechanism that safeguards person/s making such complaints from being victimized.
- The Act passed by both Houses of Parliament but never notified.
- Meanwhile, whistleblowers were encouraged to call out corporations for corporate fraud, with requisite provisions under the Companies Act, 2013 and the SEBI legislations.
- But protections for whistleblowers against the government remained elusive.
- India has been a signatory to the UN Convention Against Corruption since 2005 which provides adequate safeguards and protection to the person making complaints and facilitates reporting against corrupt public officials.
- The OECD 2010 Good practice Guidance on Internal Controls, Ethics, and Compliance also recommends companies ensure the protection of whistle-blowers both internally and externally.
- The need for protection for whistle-blowers was first highlighted in the Report of the Law Commission of India in 2001. The Committee even drafted a bill to address the issue.
- The Hota Committee (Committee on Civil Service Reforms) 2004 considered protecting civil servants who report confidential information of misuse of power and authority. However, it did not make any recommendations.
- Then, in response to the petition of Satyendra Dubey, the government in 2004 came up with a resolution titled 'Public Interest Disclosure and Protection of Informers Resolution (PIDPIR)’ which gave the Central Vigilance Commission (CVC) the authority to act on complaints from whistle-blowers.
- Further, the report of the Second Administrative Reforms Commission in 2007 also expressed the need to settle a law for protecting whistle-blowers.
- The Whistle-blowers Protection Act came into being in 2014 but since then it has not been enforced yet.
Corruption Perception Index (CPI)
- Transparency International, an organization based in Berlin, shows corruption trends among nations released its Corruption Perception Index (CPI), 2020, and reports that India has slipped six places to 86th position among 180 countries.
- In the latest development, Indian social activist Anjali Bhardwaj, an Indian social activist working on issues of transparency and accountability, has been awarded by the US.
- She is among 12 anti-corruption champions awarded by the Biden administration.
- According to the State Department, Bhardwaj has served as an active member of the Right to Information Movement in India for over two decades.
- Anjali Bhardwaj, the 48-year-old activist is also the founder of the Satark Nagrik Sangathan (SNS), a citizens' group with a mandate to promote transparency and accountability in government.
- Implementation hurdles: The country is witnessing growing uptake in the use of whistleblowing programs, although implementation remains an issue.
- Lack of awareness: Various problems emerge in the way these programs are implemented. Awareness is one major issue.
- Lack of infrastructure: Then there is the lack of infrastructure. Nearly half of all respondents to in invest less than 5 lakhs per annum on whistleblower mechanisms. As a result, employees are given a single channel to come forward in most cases, with only a third opening up multiple avenues.
- Threat to life: In India, there have been innumerable instances of whistleblowers being killed. So it’s hardly a surprise that such few people come forward with instances of wrongdoing.
- Fear of social stigma and job risk: The fact that plays an essential role in whistleblowing is the individual coming up to report instances of a potential fraud or abuse. But the fear of social stigma and losing their job makes it difficult for even those who are aware of such frauds to come up.
- Dilemma between professional and organizational responsibility: Further, such whistleblowers are shunned by management and as such, it becomes very difficult for them to make a choice between professional responsibility and organizational responsibility.
International Practices/ Principles
Many nations have passed legislation to ensure the protection of public sector and private sector employees. Some countries like Canada, the USA, UK have a 'one-stop shop' approach to receive, manage, and investigate all whistleblowing matters.
- Canada: Canada has set up an Office of Public Sector Integrity Commissioner to receive reports and investigate the matters maintaining the confidentiality of the whistle-blower.
- United Kingdom: Similarly, UK has the Office of the Civil Service Commissioners to promote honesty, integrity, and impartiality through public sector disclosures.
- United States: US do so through the Office of Special Counsel (OSC) and Merit System Protection Board (MSPB) to adjudicate decisions.
Thus to ensure the proper enforcement of the legislative provisions, an independent agency needs to be established. The mechanism should be set up for dealing with frivolous complaints. The individuals must be imposed with hefty compensation for their malicious activities.
There are three major recommendations to improve whistleblower mechanisms.
- Communication and transparency: Clear communication is key, be it about the policy or the action taken with respect to individual complaints.
- Promotion of ethical behavior: The second pillar is to use employees as a channel to promote ethical behavior.
- Rewarding system: When examples of ethical behavior emerge, these should be rewarded publicly.
The way forward
In recent times, where large corporate scams have become far too common, India urgently needs to improve governance and enhance transparency. Moving forward, there is a need for the greater emphasis placed on internal controls and fraud-fighting. Increased transparency and accountability will lead to an improvement in the standards of corporate governance and a cleaner business environment.