Whistle blowing on corporate misdeeds is soon going to become a lot safer in India.
Seeking to aggressively go after cartels, the government plans to offer special protection to whistle blowers, either individuals or companies, under the law governing competition.
Coupled with recent changes that give Indians the right to seek information from government agencies, the whistle blower protection law could have a significant impact on policing private and public institutions in the country.
A formal proposal will be put forward in the budget session of Parliament, which starts on 22 February, confirmed Union minister for company affairs Prem Chand Gupta.
As part of the plan—and as an incentive for people with information to step forward, even if they were involved in potentially illegal activities—the government is proposing reduced punishments and, in some cases, total amnesty.
“We are examining how best we can define the role of a whistle blower and the extent of reduced penalties (on a whistle blower) so that it serves the ministry’s purpose of preventing cartelization,” said Gupta.
The proposed changes by the government will be made as part of an amendment to the law that governs the Competition Commission, which was started in 2003 through the Competition Act. The commission was an attempt to try and prohibit anti-competitive agreements as well as abuse of dominant positions by one company or a group of companies.
The latest moves come a year after the changes were first mooted in Parliament. At that time, the proposal was referred to a standing committee of Parliament members.
Officials familiar with the changes say that under the proposal, even if a whistle blower was a participating member of a cartel, that person or company could be extended a special status and thus protection, allowing them to cooperate with the commission until it has concluded its probe. The ministry is also considering extending such special whistle blower status to more than one member of the cartel.
Vinod Dhall, acting chairman and member of the commission, points out that such reduced punishments—either fines or jail terms—are an integral part of breaking cartels in any country.
Laws protecting whistle blowers vary from country to country. In general, a whistle blower is someone who is either a current or a former employee of an organization who reports misconduct to authorities that have the power to take corrective action. Often, such misconduct is a violation of laws in the region or country.
While whistle blowers have always been around and some companies—including in India—have their own internal policies to encourage and protect whistle blowers, increasingly, governments have been trying to create conditions that would allow for such people to raise red flags.
In the US, for example, the Sarbanes-Oxley Act of 2002 enacted by the US Congress granted legal protection to whistle blowers in publicly-traded companies. This act was passed in the wake of corporate scandals such as Enron Corp. and Tyco International. The US law also provides for jail terms for those retaliating against whistle blowers.
Indeed, Time magazine paid a tribute to whistle blowers by naming three: Sherron Watkins of Enron, Coleen Rowley of the US Federal Bureau of Investigation and Cynthia Cooper of WorldCom as its ‘Persons of the Year’ for 2002, for their courage in exposing illegal behaviour in their organizations.
In the UK, the Public Interest Disclosure Act of 1998 protects whistle blowers from victimization and dismissal and other countries, such as South Africa, have put in place similar laws.
India has had a couple of high-profile cases in recent years where whistle blowers have died in suspicious circumstances after their names became public.
When approved, the changes that government is proposing would bring Indian laws on whistle blowers on par with those in many Western nations.
“The (current) Competition Commission does not offer any protection to the whistle blowers as such,” said Rohit Kochhar, managing partner at the law firm of Kochhar & Co., which has offices in the US and India. “There is an immediate need for India to enact a law, which will ensure transparency and provide a sense of security to the whistle blower.”