Abstract

The corporate world has seen a tremendous boom in past years, one side of the coin is vast growth and opportunities whereas the flip side is darker which includes frauds, corruption, mismanagement and abuse of power inside the organisation, this when exposed results in loss of confidence of investors and ultimately leads to a huge impact on the global economy. These frauds cannot be seen from the outside world until and unless an internal member of the organisation reveals the true picture of corporate.

This exposure is termed as whistleblowing. A whistleblower puts his well being at stake just to highlight issues and bring that to attention. It’s hard to imagine the consequences faced by them after deciding to blow the whistle. They are tortured, harassed and threatened for life.

Exposing corruption has never been easy in India, even though we have the Whistle-blower protection act 2014 in place, still, we have a number of examples where whistleblower goes through hell day in and day out.

Therefore, a critical point of concern is that though there are rules and regulations to give whistleblowers the sense of protection to come out and speak for good, but the lack of security and safety makes them feel unsafe as they have fear of losing everything. Hence it’s crucial to examine the consequences faced by whistleblowers and address their grievances.

INTRODUCTION

In the corporate world, whistleblowing refers to when an employee, a worker or their group, or an outside agency reports questionable, unethical, or illegal activities that are occurring or have occurred in the organisation. Here, a whistleblower is an employee, a worker, their group, government regulators, or an outside agency who reports suspected wrongdoing. This Whistle-blower provides information to the employer, an authenticated person, or a committee investigating suspected illegal or improper activities, or to law enforcement.

                      One cannot understand that how difficult it is exactly for Whistle-blower after taking the decision to blow the whistle. He put his life under threat throughout. Exposing corruption and any abuses has never been easy in India, there are many famous cases in India in which whistle-blowers faced negative consequences after blowing the whistle for the good of society. They face consequences because of fighting for truth.

                      Even now when we have Whistle-blower Protection Act 2014 still we have such kinds of incidents like what happened in the case of Air Asia. Therefore, the Present major point of concern is that although there are rules and regulations to protect Whistle-blowers but still when it comes to the sake of organizational image and organizational impression. Dominant authorities in corporate take strict action on Whistle-blowers, such as termination or suspension from work by giving false accusations. As a result, it is necessary to examine the real consequences faced by a person who blew the whistle and providing the centre of attention.

CONSEQUENCES OF WHISTLEBLOWING

“If you must sin, sin against God, not against the Bureaucracy. God may forgive you, but the bureaucracy never will.”

U.S. Admiral Hyman Rickover^[1]

Whistle-blowers have saved countless lives and millions of dollars by disclosing information about wrongdoings and illegal activities. Whistleblowing, on the other hand, carries a high personal risk for those involved. As a result of their actions, Whistle-blowers may be fired, prosecuted, threatened, apprehended, or, in extreme cases, physically attacked or killed.^[2] Whistleblowing is a double-edged sword in that it has both positive and negative consequences. A Whistle-blower is regarded as a hero for bringing positive outcomes to the organisation and society; however, he is also regarded as a traitor because his act of whistleblowing also has negative outcomes. As a result, whistleblowing can have far-reaching consequences which can be summarised into two categories i.e. (i) Positive consequences and (ii) Negative consequences.

1. Positive Consequences:

In society, the sense of doing the right thing and the intolerance of misconduct are valued qualities, and the person who possesses them is respected. People with high moral values and ideologies are brave, courageous, and responsible. They have the courage to speak out against wrongdoing and malpractice. Their ability to stand up to wrongdoing and malpractice has a positive impact on the organisation and society as a whole. Some of the positive consequences are: –

• Whistleblowers can help organisations by informing higher authorities about illegal activities in advance. Thereby, allowing the responsible officials to take proper action before the wrongdoing escalates into something more serious and uncontrollable.
• It boosts the morale of employees in a company. When higher authorities act on the information provided by employees, it gives employees confidence that they have the ability or power to change wrong or corrupt behaviour in the organisation.
• It will also foster a positive and productive working environment within the company. It promotes openness in the workplace as an organisational value.
• By disclosing information, it will improve the safety and well-being of society’s members. Early warnings can help to mitigate the effects of a larger disaster.
• It will also help the community to build a moral code. Whistle-blowers may be portrayed as role models or idols in the community to urge others to adopt ethical behaviour and report wrongdoings.
• It improves the organization’s security. When employees believe that someone in the organisation who has ethical principles and moral standards is watching them, the likelihood of wrongdoing decreases and the organization’s security improves.

• Negative Consequences:

Being a Whistle-blower is difficult because they face numerous consequences for their actions. Whistleblowing has a number of disadvantages for individuals, organisations, and society. Whistleblowing has several negative consequences: –

• Employers frequently retaliate against whistleblowers who attempt to expose or stop illegal activity. Retaliation can include intimidation, harassment, reprisal, dismissal, transfer, threatening, and, in the worst-case scenario, death can be used as retaliation.
• Whistle-blowers are also subject to legal action as a result of their disclosure of information. They have been charged with breaching their duty of loyalty and confidentiality. Employers intimidate employees into not disclosing confidential information by threatening to sue them for defamation if their information turns out to be false. Superior officials or other powerful individuals frequently intimidate Whistle-blowers because they have the power to use the legal system to silence the other party.
• When information is shared with subordinates or superiors, it always raises costs and creates mistrust within the organisation, which has a negative impact on output. Whistleblowing makes people distrustful of one another, which can disrupt company culture and collaboration. In the long run, this has an impact on the company’s operations.
• Whistleblowing can be used to harass employers or individuals, as well as to settle old grudges. Employees who are greedy may take advantage of the whistleblowing mechanism for personal gain.

Although there are both positive and negative consequences to whistleblowing, the positive consequences outnumber the negative consequences. It is necessary and desirable to support and encourage whistleblowing because it results in more benefits to the institution and society as a whole than the harm or cost to the organisation and society.

LEGAL PROVISION Of WHISTLE-BLOWING/VIGIL MECHNISM UNDER COMPANIES ACT, 2013

“Certain companies are required to establish a Vigil/Whistle-blowing mechanism under Section 177 of the Companies Act, 2013, to report any unethical behavior or other concerns to management^[3]”

Companies Act,2013 & Rules,2014^[4]

“It is mandatory for

• All the listed companies and
• Companies which accept deposits from the public
• Companies which have borrowed money from Banks and PFI in excess of Rs.50 crore under section 177(9) read with Companies (Meetings of Board and its Powers) Rules, 2014^[5]”.

A vigil system provide adequate safeguards against victimisation of those who use it, as well as direct access to the Audit Committee’s chairperson in appropriate or extraordinary cases^[6].

REAL SCENARIO WHICH CREATES NEED TO INTRODUCE ACT; WHISTLEBLOWER CASES IN INDIA

Corruption, as a social ill, has accelerated an individual’s as well as a nation’s growth and development in every way.^[7] In India, there are numerous anti-corruption laws, but the evil of corruption persists despite these laws. The 2008 2G spectrum scam^[8], the Bihar fodder scam, the Bofors Scandal, the Satyam scam, the Indian Coal Allocation(ICA) scam^[9], and the Commonwealth Games(CG) scam^[10] are a mere handful of evidence which depicts corruption widespread in India. Internal members are aware of wrongdoings or irregularities in advance in almost all of these scams, but due to absence of protection and fear of losing everything they hesitate in speaking out. Corruption cannot be stopped unless Whistle-blowers and witnesses are protected. This lack of adequate protection and safeguards for whistle-blowers acts as a major roadblock in removing corruption from government and private offices, workplaces and businesses.

                    The Right to Information Act of 2005 is one of the laws in place to combat corruption. Every ordinary citizen has become a potential Whistle-blower as a result of the Act, which gives him access to information from public authorities.^[11] However, since the passage of the Right to Information Act in 2005^[12] there have been numerous cases where whistle-blowers and their families being threatened for life, the assault and harassment has even been as severe as being murdered.

                       As a result, the increased attacks and murders of RTI activists indicates that this Act is insufficient & that additional measures are required. One of the flaws in the Right to Information Act, 205 is lack of provision for the people who file requests for information are not adequately protected. People involved in corrupt practices are usually very powerful, and they don’t want to come upfront against the alleged crimes to give statements or evidence because they are afraid of being exposed. This results in the non-production of material evidence, which leads to the accused’s acquittal. As a result, it became necessary to draft legislation that protects Whistle-blowers. The RTI(Right to Information) Act, introduced in India with an ambition to increase accountability & transparency in government offices, has been criticized for failing to achieve its goals due to the lack of accompanying legislation, such as Whistle-blower protection laws, to protect RTI activists^[13].

                     Furthermore, there are a number of international instruments & agreements that allow member states to enact national laws that address protection of whistleblowing & Whistle-blower. Because India was a signatory to the majority of these conventions & agreements, there was a lot of pressure on it to enact a special law to protect Whistle-blowers. “On December 9, 2005, India signed the United Nations Convention Against Corruption” (UNCAC)^[14]. It’s the first universally anti-corruption tool that lawfully binds and encourages the Member States to enact legal structures that are consistent with internationally recognised principles in order to reduce corruption and better protect reporting persons.^[15]

Furthermore, the assassination of many Whistle-blowers in the past compelled the government to enact a law to protect Whistle-blowers. The following are some of the Whistle-blowers who died as a result of the lack of a Whistle-blowers Protection Act: –

1. Satyendra Dubey,
2. Manjunath Shanmugam,
3. Satish Shetty,

• Satyendra Dubey Case (1973-2003)^[16]: Satyendra Dubey was an Indian Engineering Services officer assigned to the National Highway Authority of India as Project Director (N.H.A.I). PM Atal Bihari Vajpayee launched the Golden Quadrilateral project, which will use four and six-lane highways to connect India’s major cities. Satyendra Dubey discovered that Larsen and Toubro had taken the government contract and passed it on to the mafia, who were incapable of handling such large projects and were abusing bank funds. As a result, he wrote a letter to the head of N.H.A.I. but received no response. Later, he wrote a letter to India’s Prime Minister, requesting that the identity not be revealed, but the letter was circulated within the bureaucracy and no action was taken. He was murdered in Gaya, Bihar, one year later, on November 27, 2003.

• M. Shanmugan Manjunath Case (1978-2005)^[17]: He was assigned to the Indian Oil Corporation as a manager in Uttar Pradesh. As a whistle-blower appointed by higher authorities, he was murdered for sealing the petrol pumps. He sealed the petrol pump because the quality of the fuel was poor, but his identity was discovered, and he was shot six times. There was no protection provided, and no action was taken to address the situation. Only IOC compensated his family with Rs. 2.6 million.

• Satish Shetty Case (1970-2010)^[18]: He was a social activist from India who was put in charge of uncovering land scams in Maharashtra. “He used the Right to Information Act to expose irregularities in government offices and construction projects in Maharashtra”. He was a meticulous Whistle-blower who assisted in the investigation of land scams. Later, he was discovered dead in a park while walking, and the police offered various theories of murder. The case was later turned over to the CBI, and it is still being investigated.

• “AirAsia Terminates Whistle-blower Pilot”: “Gaurav Taneja, an AirAsia India employee and Whistle-blower pilot who went public with allegations of the airline violating air safety regulations, has been fired. Taneja claimed that AirAsia India was breaking safety protocols put in place to stop the spread of the coronavirus and was endangering the lives of its passengers^[19]”.

“After which in Air Asia (India) Ltd v. Sri. Gaurav Taneja, a Devanahalli court in Karnataka dismissed a petition filed by AirAsia accusing Whistle-blower Gaurav Taneja of defaming the company. The court stated that AirAsia withheld material facts and that Gaurav Taneja acted as a responsible pilot by raising safety concerns on social media^[20]”.

In the last financial year, 50 companies in the Nifty index of the National Stock Exchange of India said they received 3,508 Whistle-blower complaints. Infosys and Wipro filed 1168 and 1526 complaints, respectively, but did not specify how many of those were Whistle-blower complaints. Wipro’s cases were solved in 71% of the time.^[21]

Taking into account all of the aforementioned cases, India requires a strong framework for whistle-blower protection. In India, there have been numerous cases of whistle-blowers being murdered and the death being attributed to suicide or being transferred. Some of the cases from ten years ago are still ongoing, with no resolution or punishment for the perpetrators. As a result, proper and elaborate laws for whistle-blower protection are required.

CONCLUSION

“A man is but the product of his thoughts. What he thinks, he becomes.” – M.K.Gandhi.

Whistleblowing is a noble and erotic act that helps to prevent fraud and wrongdoing through accounting and internal control mechanisms. Whistle-blowers are hailed as heroes or role models all over the world for exposing a company’s corruption, fraud, illegal activity, or mismanagement.

In India, the whistleblowing landscape is still developing, with the possibility of losing driving privileges for certain types of companies only recently coming into play. As a result, organisations should implement the mechanism proactively, not just as a compliance-related factor, but also as a sound governance framework.

In India, only the Whistle-blower is protected, not his family. As a result, legislation to protect the whistle-blowers family is being proposed. Along with that in order to protect Whistle-blowers, India needs a comprehensive, detailed, and well-coordinated Whistle-blower policy. Legislation should instil fear in corrupt and unethical employees, giving them the sense that others are watching them and that they need to get their act together and work for the betterment of their company and country.

 

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Research Paper By – Kritika Sharma 
Symbiosis Law School, Nagpur

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^[1] Shetty, K. A. V. (2003, March 25). India Needs a Whistleblowers Protection Act. https://www.thehindu.com/opinion/open-page/.  

^[2] Example – In recent years, several whistleblowers have been killed, including Satyendra Dubey, Shanmugam Manjunath, and D.K. Ravi. In addition, over 150 whistleblowers have allegedly been harassed, threatened, or imprisoned for exposing corruption in the last five years. 

^[3] Audit committee. (n.d.). http://ebook.mca.gov.in/Actpagedisplay.aspx?PAGENAME=17561.

^[4] Companies Act, 2013. (n.d.). http://ebook.mca.gov.in/Default.aspx?page=rules.

^[5] Maheshwari, K. (2020, May 30). Audit Committee under Section 177. https://taxguru.in/company-law/audit-committee-section-177-companies-act-2013-rules.html.

^[6] sandhu, hardeep. (2014, July 1). Corporate Governance – Audit committee (AC) – Vigil Mechanism. Retrieved from https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=5696.

^[7] According to the Annual Corruption Index released by Transparency International in 2018, India ranks 81 among a group of 180 countries. (n.d.). https://www.livemint.com/Politics/ 5cvYn8GTxsik5xSwoN0DhK/India-ranks-81st-in-global-corruption-perception-index-by-Tr.html.

^[8] What was the 2G spectrum scam? 10 things to know. (2017, December 21). INDIA TODAY. Retrieved from https://www.indiatoday.in/fyi/story/what-is-2g-scam-in-india-2g-scam-verdict-upa-a-raja-cbi-judge-op-saini-verdict-things-to-know-1113444-2017-12-21.

^[9]  (n.d.). (rep.). What is the Indian coal allocation scam? Retrieved November 21, 2013, from https://www.dnaindia.com/india/report-what-is-the-indian-coal-allocation-scam-1828830.

^[10] Commonwealth Games scam – a legal timeline. (2021, March 19). Retrieved from https://blog.ipleaders.in/commonwealth-games-scam-legal-timeline/.

^[11] BY AUTHORI1Y. (n.d.). THE RIGHT TO INFORMATION ACT, 2005 No. 22 of 2005. https://rti.gov.in/rti-act.pdf.

^[12] Gandhi , S. (2017, January 27). Right to information is misused, but those who do so make up less than 5% of total applicants. https://scroll.in/article/827689/right-to-information-is-misused-and-thats-all-the-more-reason-why-this-law-should-not-be-weakened.

^[13] Challenges Related To RTI Act. (2020, June 8). Retrieved from https://www.drishtiias.com/daily-news-editorials/challenges-related-to-rti-act.

^[14] United Nations Convention against Corruption. (n.d.). Retrieved from https://www.unodc.org/documents/brussels/UN_Convention_Against_Corruption.pdf.

^[15] Articles 32 and 33 of the United Nations Convention Against Corruption.

^[16] Where the law stands on whistleblowers in India. (2019, October 26). https://economictimes.indiatimes.com/news/company/corporate-trends/where-the-law-stands-on-whistleblowers-in-india/infosys-episode/slideshow/71770940.cms.

^[17] Narayan, H. (n.d.). The extraordinary tale of an ordinary man. Retrieved February 9, 2022, from https://www.thehindu.com/features/magazine/The-extraordinary-tale-of-an-ordinary-man/article12291362.ece.

^[18] K Giriprakash. (2019, October 25). Why India’s whistleblower protection programme is not as effective as that in the US. https://www.thehindubusinessline.com/companies/why-indias-whistleblower-protection-programme-is-not-as-effective-as-that-in-the-us/article29794564.ece.

^[19] AirAsia terminates whistleblower pilot. (2020, June 29). https://www.thehindubusinessline.com/companies/airasia-terminates-whistleblower-pilot/article31947459.ece.

^[20] Nagpal, C. (2020, December 27). Court comes to rescue of Pilot-YouTuber cum Whistleblower Gaurav Taneja in his fight against AirAsia [Read Order]. https://www.latestlaws.com/latest-news/court-comes-to-rescue-of-pilot-youtuber-cum-whistleblower-gaurav-taneja-in-his-fight-against-airasia-read-order/#:~:text=A%20famous%20Youtuber%20and%20Pilot,and%20two%20employees%20were%20suspended

^[21] Where the law stands on whistleblowers in India. (2019, October 26). https://economictimes.indiatimes.com/news/company/corporate-trends/where-the-law-stands-on-whistleblowers-in-india/infosys-episode/slideshow/71770940.cms.

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