It was not unprecedented when a Chinese doctor warned against the potential outbreak of a deadly virus that would go on to mark its ominous presence as one of the most tragic events in the global history of mankind. More than a decade ago, Dr. Jiang Yanyong prevented a similar fate by divulging the extent of the spread of the SARS virus, a close relative of the SARS Cov-2, in China despite a special order passed by the authorities to contain the information.
While there was a significant difference in the extent of these two outbreaks separated in time by over a decade, there is little difference in the fate of the whistleblower doctors at the hands of the Government. It is ironic that the demise of Dr. Li Wenliang, who exposed the Coronavirus outbreak, could in a sense be freedom from his real nemesis when juxtaposed with the troubled life of Dr. Jiang who continues to survive years after his brave whistle-blowing.
This tragic pandemic story has once triggered a critical discussion on Whistle Blower protection and has incidentally also blown the whistle on the existing whistle protection laws in India. The ILO defines whistleblowing as “the reporting by employees or former employees of illegal, irregular, dangerous or unethical practices by employers”. The protection is required as whistleblowers are often threatened, harassed, and murdered after they report the wronging in the organization.
The important question is whether the efficacy of this protection when gauged against the anvil of Employment Law should point towards the empowerment of whistleblowers or protection from draconian measures meant to thwart their position? In other words, this view essentially rests on the balance between strengthening the position of whistleblowers versus preserving their position on the ladder. The former imbues an active sense of encouragement in the employees to come forward with potential revelations while the latter ensures passively a sense of security in the event where whistle-blowing takes place
why protection is required?
Whistleblowers aid in the detection of latent corruption, fraud, and other types of wrongdoing. Whistleblowing is beneficial to the organization and the employer but it can be harmful to the employees. They can end up losing their employment and other career opportunities in the same industry as a result.
Whistleblower protection is necessary because it would reduce the amount of misconduct that goes unreported and unpunished. On countless occasions, whistleblowers in India have been killed for coming forward to disclose unlawful behaviour. I instantly think of the cases of Manjunath Shanmugam and Satyendra Dubey . Both paid the ultimate price for their courage in exposing adulteration of gas at petrol stations and corruption in the Golden Quadrilateral Project respectively. Whistleblowers are still carrying out their duties. They are insiders who are open to imparting their knowledge and experience to people outside of their organisations. Unfortunately, whistleblowers have not been protected from retaliation by the procedures and regulations placed in place.
Whistleblowing Around the World
Employees in the public and private sectors are protected in the UK against retaliation for reporting misbehaviour. Whistleblowers in the public and commercial sectors in Japan are protected against termination and unjust treatment if they report to enforcement agencies and, in some situations, to external parties like labour unions and the media. The Anti-Corruption and Civil Rights Commission (ACRC) in Korea serves as a reporting organisation and gives rewards to informants whose reports advance the common good. The United States has primary three laws protecting whistleblowers (The Whistleblowers Protection Act of 1989, the Sarbanes-Oxley Act of 2002, and the Dodd-Frank Act, 2010). The first one concentrates on government workers, the second on privately held corporations that trade on a stock market and their subsidiaries, and the third one, on whistleblowers in the banking system. Respectively. They address various facets of whistleblower protection, and when taken collectively, they close the various gaps. Identity secrecy and personal data protection are covered by all three legislations.
India has primary three legislations pertaining to Whistleblowers firstly, the Whistleblowers Protection Act, 2014, secondly, the Companies Act, 2013 and lastly, the Security Exchange Board of India (“SEBI”) regulations.
The Whistle Blowers Protection Act, 2014 (“Act”), although ratified by the Indian Parliament, hasn’t been implemented in the nation for almost eight years. The Act solely addresses complaints made against public employees, and as a result, only protects public workers. The government’s “neglect” to operationalize and put the legislation into practice has undercut the intention of Parliament to give whistleblowers statutory protection. The non-implementation of the law had greatly damaged the battle against corruption. The Act requires the whistleblower to reveal his or her identity, yet this obligation occasionally may cause difficulty for such whistleblowers, since they report any improper conduct, such individuals typically desire to maintain their anonymity to safeguard themselves from any prejudice in their specific workplaces or any negative measures that may be made against them.
Protection in Indian Private Sector
Analysis and discussion of legislation that incorporates private firms in its protection are urgently needed. In addition to demonstrating a transparent whistleblowing regime in the public and private sectors for the benefit of employees, mutually beneficial legislation must also shield the business from potential reputational harm and commercial activities brought on by the frequent occurrence of such wrongdoing.
All Indian-listed firms are required by SEBI (via modifications to Clause 49 of the Listing Agreement) to set up a vigil system to notify any illegal practices or any breach of the firm’s code of conduct, as well as any real or suspected fraud. It offers a forum for its workers to inform the Board of any misappropriation, fraud, or other real or potential unethical behaviour. According to these provisions, the Audit Committee of the firm is accessible to any employee who wants to report any type of fraudulent behaviour or malpractice inside the organisation. The authorities had taken cognizance of these regulations in Sun Pharma and Chanda Kochhar’s case. Additionally, the method should offer sufficient protection against treating employees who report misconduct unfairly. The whistleblower initiatives that reward employees for disclosing financial fraud inside the corporation are a requirement of SEBI for listed companies. To encourage informants and strengthen its anti-insider trading stance, SEBI boosted the financial award to 10 crores.
With more examples of illegal activities being disclosed by workers in publicly traded firms, the situation of whistleblowing procedures in unlisted, private companies have become increasingly important to address. For private firms, the whistle-blower system is still mostly determined by policy. It is becoming more crucial to tackle the concerns of whistleblower processes in unlisted, private organisations as more instances of criminal activity are revealed by employees in publicly traded corporations. The whistleblower corporate governance mechanism is still largely governed by the policy for private businesses.
Companies Act of 2013 stipulates in Sections 177(9) and (10), that certain companies must develop vigil mechanisms for directors and employees to report genuine concerns. However, this requirement only broadly applies to listed companies, and even in those cases, the companies are free to choose the key components of the vigil mechanisms that must be developed. The Act is silent on the reporting process and its methods. Likewise, data protection—a vital component of whistleblower protection—is not specifically emphasised. There is no potential to create effective whistleblower protection due to the Companies Act’s basic protection.
The establishment of vigil committee provisions has also been adopted by certain private, unlisted corporations; however, the efficacy of such whistleblower processes is still debatable and discretionary. Any whistleblower policy’s efficacy suffers from unsatisfied employees. The reality is that employees would seldom take the chance of disclosing such behaviours if they don’t think their complaints will be processed in confidence and discretion.
Separate legislation addressing whistleblower protection is indeed urgently needed, even in the private or corporate sector. The Sexual Harassment of Women at Workplace Act, 2013 (“POSH Act”), which offers a practical model by appointing an Internal Complaint Committee tasked with the inquiry by law. The policy is detailed, and allows the organisation adequate leeway in terms of timeframes and the process This vigil mechanism might serve as a catalyst for whistle-blowers.
The structure of an internal inquiry carried out in response to a complaint acquires tremendous relevance due to the absence of a unique and independent Indian law governing whistle-blower investigations. This is particularly valid if severe disciplinary measures like suspension and/or termination are being considered. In several instances, Indian courts have rejected an employer’s decision because it was made without following the proper procedures if, in their words, “justice was not done or was not perceived to be done.” To avoid being accused of continuing any unfair labour practices, businesses that create whistle-blower frameworks must ensure that it is utilised to enforce workplace standards of discipline and good behaviour with the assistance of current employment legislation.
There is no defence for not putting the Act into effect. To protect individuals who reveal wrongdoing at tremendous risk, the government should swiftly adopt the regulations and put the legislation into effect. A law that includes private firms within its scope of protection demands prompt thought and attention. Whistleblowers in corporate companies should also be legally protected, in accordance with other countries.
Inadequacies in corporate monitoring systems as well as the specific importance of whistleblowing in revealing danger at an early stage have been demonstrated by whistleblowers acting as protectors during the COVID-19 pandemic. Throughout the COVID-19 crisis, systemic and worldwide deficiencies in data transmission and lack of openness have occurred. Maintaining accountability in the face of a catastrophe like COVID-19 is not just a good corporate governance check-box; it may save lives. Whistleblowers are filling this visibility vacuum and have established themselves as a crucial regulator in policing how authorities handle this pandemic. In the end, whistleblowing as a method of ensuring accountability isn’t only losing its stigma; during COVID-19, it has evolved into the “antidote” for repression.
This article is authored by Lokesh Rajoria, a student at NLIU Bhopal