The Whistleblower Bill in India and the private sector

India looks a bit like the American Wild West when it comes to corruption. From illegal mining to kickbacks in government projects, from pilfering of funds from public welfare projects to violation of environmental regulations, instances of corruption are ubiquitous. So much so that one is led to wonder whether illegality is the norm and adherence to the legal framework an exception. Hopefully, the reality is different and the cases one hears about in the media are exceptions to the rule. But the trend is a decidedly worrisome one. The scale of corruption and the frequency with which major political figures and ministers are implicated in corruption scandals are both indicators that either public morality has taken a nosedive or that the news media has become more adept at uncovering and reporting cases of corruption. What should be even more troublesome than the scale of corruption and the frequency with which the laws are violated is the brutality that the entrenched corrupt elements sometimes mete out to those who dare take them on. A cursory search on the internet reveals that several people have been murdered for trying to expose corrupt activities in India in recent years. When it comes to public morality, respect for public wealth and adherence to norms of honesty in the public or private sector, the trend has been from the bad to the ugly in recent times.

The recent hoopla surrounding anti-corruption activism by figures like Anna Hazare and Baba Ramdev, which has revolved around the Lokpal Bill of 2011, has pushed to the background the Whistleblower Protection Bill which was drafted in 2010, which was approved by the Cabinet and which has been tabled in the Lok Sabha. The Jan Lokpal Bill, which is the civil society version of the bill, does contain some clauses about whistleblower protection. However, it is not the version that is under consideration in the Lok Sabha. Reporting of corrupt activities must form a crucial element of any systematic framework to fight corruption, and the Whistleblower Bill, which has received less public attention than the Lokpal Bill, seeks to do just that. It is a crucial requirement to strengthen the grass-roots aspects of the fight against corruption. Sadly enough, the Whistleblower Bill has a glaring omission in that it leaves out private corporations from the provisions of the bill. Even the Standing Committee on Personnel, Public Grievances, Law and Justice, which has suggested modifications and additions to the bill, failed to mention whistleblowers in the private sector. For a country that has witnessed the horror of deaths resulting from a gas leak at a Union Carbide factory in Bhopal, stock market scams of different kinds and accounting fraud by a prominent company like Satyam, this kind of omission is unforgivable. However, it is consistent with the pro-big-corporation and pro-business ethos that the mainstream political establishment has committed itself to. Despite paying lip service to rural development and “ inclusive growth “, this establishment has consistently followed policies that favor big business and a model of economic growth that not only perpetuates economic hardships for the vast majority of the population, but worsens their conditions in many instances by displacing tribals and farmers from their lands without proper compensation. This elitist bias of the establishment does not portend well for the public interest in those areas where the private sector's activities have or have the potential to have non-trivial effects on public health, safety etc. Moreover, even countries like the United States, which supposedly have better systems to track and prevent corruption, have witnessed examples of egregious violations of expected norms of corporate behavior. Accounting scandals, in which companies like Enron inflated profits, and private accounting firms like Arthur Andersen certified these misleading profit numbers as being correct, resulted in enormous losses to stockholders. As the Indian political establishment tries to push India in a direction where big corporations, conglomerates and billionaires dominate the scene, accounting frauds, tax evasion, flouting of environmental regulations, bribery as a means for obtaining contracts for government projects and failure to follow established safety norms can become more common and can cause havoc to public safety and to the economic well-being of both the rich and the poor. By leaving out whistleblower protection for the private sector, the bill will embolden aggressive businesses and unscrupulous citizens of the corporate world when it comes to violating rules that have serious public interest implications.

Individuals can file law suits against corporations and businesses for damages caused. However, for cases like tax evasion or damage to the environment, public interest litigations are probably the best option for society as a whole to seek redress for damages caused by negligent corporations. However, for society to be able to track and fight against corruption in the private sector, many more legal features are needed. Whistleblower protection for the private sector is one such feature and its omission from the Whistleblower Bill is unfortunate, especially when the private sector and big corporations are growing rapidly in their influence. Given what we know about the mainstream political establishment's predilection for the rich corporations and the economic elites, this exclusion of corporate India and the business sector from the Whistleblower Bill smacks of cynicism. Hopefully, it will be incorporated in a modified version of the bill or it will be part of a future bill.

by C. Jayant Praharaj