WHISTLE-BLOWER PROTECTION SYSTEM -

A COMPARATIVE ANALYSIS OF AMERICAN v. INDIAN MODEL OF

WHISTLEBLOWER PROTECTION & A PROPOSAL FOR INDIA

A Dissertation submitted to Guru Gobind Singh Indraprastha University, Delhi in partial

fulfillment of the requirement for the Degree of Bachelor of Law

Submitted By
MILIND JAIN
11610303813
UNDER THE SUPERVISION OF
MR. DEEPESH KUMAR

AMITY LAW SCHOOL

BLOCK F-1, AMITY UNIVERSITY,

SECTOR 125, NOIDA - 201303

[i]
 DECLARATION

I, Milind Jain, student of BALLB (H), hereby declare that the dissertation titled “WHISTLE
BLOWER PROTECTION SYSTEM – A COMPARATIVE ANALYSIS OF
AMERICAN v. INDIAN MODEL OF WHISTLEBLOWER PROTECTION & A
PROPOSAL FOR INDIA” which is submitted by me to Amity Law School, Delhi in partial
fulfilment of the requirement for the award of the degree of B.A.LL.B (H) by the Guru
Gobind Singh Indraprastha University, Delhi is my original work. I further declare that all the
sources of information used in the dissertation have been duly acknowledged. I understand
that the dissertation may’ be electronically checked for plagiarism by the use of plagiarism
detection software to assess the originality of the submitted work.

Place: New Delhi

Date:
MILIND JAIN

[ii]
 CERTIFICATE

On the basis of declaration submitted by Milind Jain, student of BALLB (H), I hereby certify
that the dissertation titled “WHISTLE BLOWER PROTECTION SYSTEM – A
COMPARATIVE ANALYSIS OF AMERICAN v. INDIAN MODEL OF
WHISTLEBLOWER PROTECTION & A PROPOSAL FOR INDIA” submitted to the
Amity Law School, Delhi in partial fulfilment of the requirement for the award of the degree
of B.A.LL.B (H) by the Guru Gobind Singh Indraprastha University, Delhi has been carried
out by him under my guidance & supervision.

_____________ ________________

Mr. Deepesh Kumar

(Supervisor) (Chairperson)

Academic Affairs Committee,

Amity Law School, Delhi

Place: New Delhi

Date:

[iii]
 ACKNOWLEDGMENT

I would like to express my genuine gratitude to the Chairperson, Amity Law School, Delhi,
Prof. Dr. D.K. Bandyopadhyay for providing me this opportunity to prepare this dissertation
as a result of which I have learnt a lot of new things.

Further I am indebted to my mentor Mr. Deepesh Kumar, Amity Law School, Delhi, who
helped me broaden my vision and provided me the path to reach the end of successfully
completing this project. I thank her for her constant support, co-operation, inspiration and
blessings.

Lastly I would like to thank my family for the moral support with whom I shared my day to
day experience and received many suggestions that improved the quality of my work.

Milind Jain

[iv]
 TABLE OF CONTENTS
I. List of Abbreviations......................................................................................................................[vii]
II. Table of Cases................................................................................................................................[viii]
1. Whistle-Blower Protection System: Acomparative analysis of American vs. Indian model
of whistleblower protection &aproposal for India
1.1. Introduction........................................................................................................................1
[a.] Defining – Whistleblowing....................................................................................3
[b.] Perception of Whistleblowing................................................................................6
[c.] The Importance of Whistleblowing.......................................................................8
1.2. Statement of Problem........................................................................................................13
1.3. Objective of the study.......................................................................................................14
1.4. Hypothesis.........................................................................................................................14
1.5. Research methodology......................................................................................................14
2. Indian Model of Whistleblowing
2.1. Introduction.......................................................................................................................15
2.2. Current Scenario...............................................................................................................15
2.3. Whistleblowing Protection in India – A Struggle for Truth.............................................19
2.4. Evaluation - From, the Public Interest Disclosure (Protection of Informers) Bill,
2002 to Whistleblowing Protection Act, 2011..................................................................21
[a.] Preamble..............................................................................................................21
[b.] Applicability........................................................................................................23
[c.] Scope of Public Interest Disclosure.....................................................................23
[d.] Receipt of the Public Interest Disclosure Complaints.........................................25
[e.] Identity of the Complainant.................................................................................25
[f.] Revealing the identity of the Complainant..........................................................26
[g.] Undue burden on whistleblowers........................................................................27
[h.] Dismissal of Public Interest Disclosure...............................................................27
[i.] Statutory time limit..............................................................................................28
[j.] Non-adherence to the recommendations of Competent Authority......................29
...............................................................................................................................
[k.] Time limit for actionable disclosure....................................................................30
[l.] Exemption given to bonafide action or bonafide discretion................................32
[m.] Disclosure of sensitive information.....................................................................32
...............................................................................................................................

[v]
 [n.] Victimisation of the Whistleblower....................................................................33
[o.] Protection to whistleblowers...............................................................................34
...............................................................................................................................
...............................................................................................................................
...............................................................................................................................
[p.] Frivolous/malafide disclosure.............................................................................35
...............................................................................................................................
[q.] Powers of Competent Authority..........................................................................36
3. The American Model of Whistleblowing
3.1. Introduction .....................................................................................................................38
3.2. Background.......................................................................................................................40
3.3. Major Factors Leading to Whistleblowing Legislation ...................................................41
3.4. Specific Federal Statutory Provisions for Whistleblowers...............................................45
[a.] False Claims Act...................................................................................................47
[b.] The Whistleblower Protection Act .......................................................................49
.................................................................................................................................
[c.] The Sarbanes-Oxley Act.......................................................................................53
3.5. Conclusion........................................................................................................................56
4. Comparative Analysis - American Model vs. Indian Model of Whistleblowing & A Proposal
for India
4.1. Scope of Whistleblowing..................................................................................................59
4.2. Reporting Procedure and Enforcement Authority............................................................62
4.3. Types of Protections to Whistleblower.............................................................................69
4.4. Risk v.Reward...................................................................................................................71
4.5. Specific Provisions for Private Sector Whistleblower Protection....................................72
4.6. Conclusion........................................................................................................................74
5. Indian Whistleblower Protection Model – A Proposal
5.1. Introduction.......................................................................................................................77
5.2. Whistleblower Protection Act in Public Sector................................................................78
5.3. Anonymity........................................................................................................................79
5.4. Whistleblower Protection Act in Private Sector...............................................................82
5.5. Office of Independent Counsel.........................................................................................85
6. Conclusion.................................................................................................................................87
III.Bibliography ...................................................................................................................................89

[vi]
 LISTOF ABBREVIATIONS

 § : Section
 §§ : Sections
 ¶ : Paragraph
 ¶¶ : Paragraphs
 A.C. : Appellate Cases
 AIR : All India Reporter
 All ER : All England Reports
 Anr. : Another
 BCCI : The Bank of Credit and Commerce International
 ECHR : European Court of Human Rights
 GOI : Government of India
 IRLR : Industrial Relations Law Reports
 L.J.Ch. (N.S) : Law Journal, Chancery (New Series)
 Mich. : Michigan
 OECD : Organization for Economic Co-operation & Development
 Ors. : Others
 QB : Queen’s Bench
 Russ. Ch. C. : Russell (Court of Chancery)
 SC : Supreme Court
 SCALE : Supreme Court Almanac
 SCC : Supreme Court Cases
 SCR : Supreme Court Reports
 Supp. : Supplementary
 U.S. : United States
 UNAM : Universidad Nacional Autónoma de México
 v. : Versus
 WLR : Weekly Law Reports

[vii]
 TABLE OF CASES

S.No. NAME OF THE CASE Page No.

1. 21
A.G. v. Prince Ernest Augustus of Hanover, (1957) AC 436.

2. Brett. v. Brett, (1826) 162 ER 456. 21

3. Center for PIL. v. Union of India, (2015)2SCC362. 82

4. Dolan v. Cont'l Airlines, 563 N.W.2d 23, 26 (Mich. 1997). 38

5. Emanuel v. Constable, (1827) 3 Russ. Ch. C. 436. 21

6. Indirect Tax Practitioners Ass. v. R. K. Jain, (2010) 8 SCC 281. 4,81

7. Japani Sahoov. Chandra Sekhar Mohanty, (2007) 7 SCC 394. 31

8. Manjeet Singh Khera v. State of Maharashtra, (2013) 9 SCC 276. 81

9. Manoj H. Mishra v. Union of India, (2013)6SCC313. 6

10. McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995). 80

11. R v. Pierce [1814] EngR 477. 21

12. Sarah Mathew v. Institute of Cardio Vascular Diseases, (2014) 2 SCC 62. 31

13. VankaRadhamanohari (Smt) v. VankaVenkata Reddy (1993) 3 SCC 4. 31

[viii]
 WHISTLE-BLOWER PROTECTION SYSTEM -
A COMPARATIVE ANALYSIS OF AMERICAN v.INDIAN MODEL OF
WHISTLEBLOWER PROTECTION
&
A PROPOSAL FOR INDIA

“Whistleblower protection is a policy that all government leaders support in public but few
in power will tolerate it in private”1 - Thomas M. Devine

“Silence is a powerful enemy of social justice”2 - Amartya Sen

1.1. Introduction

Corruption has been a common phenomenon all over the world, only the degrees of the
corruption differs and response towards it. The history is filled with various incidents that
clearly prove that corruption leads to inequality and hampers public interest because
firstly, the people, who reap the fruits of corruption, have access to the resources and
preferential state treatment to which they are not entitled, hence the inequality. Secondly,
corruption constitutes a drain on the funds of many ordinary citizens, in the form of
demands for bribes by state functionaries, without which their services, on which they
have legal rights, cannot necessarily be obtained; hence the public interest goes down the
drain. Hence in the words of Kofi Annan, it undermines democracy and the rule of law
[which is one of the basic features of our Indian constitution], leads to violations of
human rights, distorts markets, erodes the quality of life and allows organized crime,
terrorism and other threats to human security to flourish3.

The United Nations had found that corruption was the chief reason why the poor nations
continued to remain in poverty. World Bank’s studies have established that “corruption

1
Thomas M. Devine, ’The Whistleblowers Protection Act, 1989: Foundation for the Modern Law of
Employment Dissent’ Vol. 51, Washington College of Law, Administrative Law Review (1999), p. 533. See,
Varma, Rajasree,Whistleblowing: Indian Paradigm and Blemishes (December 21, 2012).XI Capital Markets
Conference, 21-22 December 2012, Indian Institute of Capital Markets (UTIICM).Available at SSRN:
http://ssrn.com/abstract=2258296 or http://dx.doi.org/10.2139/ssrn.2258296.
2
Sen A., The Argumentative Indian: Writings on Indian History, Culture and Identity, Picador (September 5,
2006), ISBN-13:978-0312426026.
3
See, United Nations Convention against Corruption (UNCAC), pg.26, available at http://www.unodc.org
/documents /treaties/UNCAC/Publications/Convention/08-50026_E.pdf.

[1]
 ….was the single greatest obstacle to economic and social development4” and when
corruption goes unchallenged, when people do not speak out about it and it flourishes in a
culture of inertia, secrecy and silence, then the problem become worse and in many cases
damage is beyond repair. Consequently, United Nations’ Convention on Corruption
(UNCAC) was signed on 9thDecember 2003, as being the only legally binding universal
anti-corruption instrument. Article 33 of UNCAC states that:
‘Each State Party shall consider incorporating into its domestic legal system appropriate
measures to provide protection against any unjustified treatment for any person who
reports in good faith and on reasonable grounds to the competent authorities any facts
concerning offences established in accordance with this Convention.5’

It encourages states to provide protection against ‘any unjustified treatment’, and is thus
not confined to physical threats or dismissal. Many legal systems have measures to cover
crude forms of retaliation (e.g. life threats, abduction etc.) in the form of substantive laws
(such as the Indian Penal Code,1806), but there may be a gap as regards more subtle
forms, which can have equally serious consequences (e.g. by forcing resignation). Article
33 requires states to consider adopting appropriate measures to protect whistleblowers
because they play an important role as legal-monitors they are frequently the victims of
retaliation. Article 33 of UNCAC, has extremely wide scope, which may include any
infinite list of different forms of mistreatment that can be anticipated. What may be an
appropriate measure to provide protection for people to report corruption will depend on
the cultural, social and legal frameworks that apply in that particular state.

The opportunity of corruption is significantly heightened in environments where the

reporting of wrongdoing is not supported or protected by any means. A key challenge in
preventing and fighting corruption is to detect and expose bribery, fraud, theft of public
funds and other acts of wrongdoing. People are often aware of misconduct but are
frightened to report it. Public inquiries into major disasters and scandals have shown that
such a workplace culture has cost lives, damaged livelihoods, caused thousands of jobs to
be lost and undermined public confidence in major institutions.

4
A Guide to the World Bank, World Bank, World Bank Publications, 2011, 3 rd Edition (illustrated), ISBN 08213
86573, pg. 165.
5
See, United Nations Convention against Corruption (UNCAC), pg.26, available at http://www.unodc.org/
documents /treaties/UNCAC/Publications/Convention/08-50026_E.pdf.

[2]
 In some cases, victims may have been compensated but no one was held accountable for
what happened. To overcome that and to promote a culture of transparency and
accountability, a clear and simple framework should be established that encourages
legitimate reporting of corruption and other malfeasance and protects such
"whistleblowers" from victimization or retaliation.

[a.] Defining – Whistleblowing

The concept of whistleblowing can be defined as raising a concern about a wrong

doing within an organization. The concern may be a genuine concern or not, about a
crime, criminal offence, miscarriage of justice, dangers to health and safety and of
the environment – And the cover up of any of these. Whistleblowing is also taken to
mean disclosure by organization members about matters of ‘public interest’—that
is, suspected or alleged wrongdoing that affects more than the personal or private
interests of the person making the disclosure6

The term `whistle-blowing' is a relatively recent entry into the vocabulary of public
and corporate affairs, although the phenomenon itself is not new. The term
‘Whistleblower’ or ‘whistleblowing’ is not a technical term and it does not have a
common law definition. Black’s Law Dictionary, defines a “whistleblower” as
meaning “An employee who reports employer wrongdoing to a governmental or
law-enforcement agency7. Federal and state laws protect whistleblowers from
employer retaliation.” A whistleblower is sometimes described as an ‘internal
witness’, or as a person making ‘public interest disclosure, or ‘protected disclosure’
or giving ‘public interest information’.

In the words of Calland & Dehn, [w]histleblowing is now used to describe the
options available to an employee to raise concerns about workplace wrongdoing’ 8.
The test is not the whistleblower’s subjective motives or ethics (complaints or

6
Senate Select Committee on Public Interest Whistleblowing (1994):¶.2.2.
7
Black’s Law Dictionary, p.1327 (Bryan A. Garner ed., 8thed., West 2004).
8
Richard Calland and Guy Dehn, ‘Introduction - Whistleblowing Around the World: the State of the Art’, in
Richard Calland and Guy Dehn (eds) Whistleblowing Around the World: Law, Culture & Practice (2004) 9; See
also, Bjorn Rohde-Liebenau, “Whistleblowing Rules: Best Practice; Assessment and Revision of Rules Existing
in EU Institutions” (2006) European Parliament, 16. Accessed from,
http://www.europarl.europa.eu/comparl/cont/site/calendrier/documents/3mai06/etude.pdf.

[3]
 grievances) but the whistleblower’s perception or reason to believe that there has
been wrong doing. The definition given by Near and Miceli9 ‘the disclosure by
organization members (former or current) of illegal, immoral, or illegitimate
practices under the control of their employers, to persons or organizations that may
be able to effect action’. A whistleblower who wishes to disclose bribery, corruption
and patronage networks may live in a dictatorship with no rule of law, governed by
secrecy, fear, reprisal and death. It refers to the process by which insiders, called
whistleblowers, go public with their claims of malpractices by, or within,
organisations - usually after failing to remedy the matters from the inside, and often
at great personal risk to them and it can be said to be a form of dissent. Sometimes
the cost of such valiant efforts is just too high to pay.

According to the Supreme Court in, Indirect Tax Practitioners Association vs R. K.

Jain10the court observed that,

“A whistleblower is a person who raises a concern about wrongdoing

occurring in an organization or body of people. Usually this person
would be from that same organization. The revealed misconduct may
be classified in many ways; for example, a violation of a law, rule,
regulation and/or a direct threat to public interest, such as fraud,
health/safety violations and corruption. Whistleblowers may make
their allegations internally (for example, to other people within the
accused organization) or externally (to regulators, law enforcement
agencies, to the media or to groups concerned with the issues). Most
whistleblowers are internal whistleblowers, who report misconduct
on a fellow employee or superior within their company.”

The definition of whistleblowing used for the purpose of this dissertation is:

9
See, Janet Near & Marcia Miceli, ‘Organizational Dissidence: the Case of Whistleblowing’ (1985) 4 Journal
of Business Ethics 1, 4; adopted by, eg, Brown, Whistleblowing in the Australian Public Sector; Marcia Miceli
and Janet Near, Blowing the Whistle: the Organizational and Legal Implications for Companies and Employees,
Lexington Books (1992),ISSN: 978-0-669-19599-6.
10
(2010) 8 SCC 281.

[4]
 Whistleblowing is the exposure by people within or from outside an
organization, of significant information on corruption and
wrongdoing that they believe to be against the public interest and
that would not otherwise be publicly available11.

There are a number of disagreements with this definition, which are worth
mentioning, although they do not materially impact on the remainder of the
paper. One is whether the whistleblower needs to be internal to the organization.
Micali and Near, maintain that the whistleblower does need to come from within
the organization.12

This paper argues that an internal location is immaterial – an external supplier

who discovers a dishonest purchasing officer, for instance, should still blow the
whistle. The supplier can still be discriminated against, and could still need
protection. Also the legislation should still require that complaint be
investigated, and any necessary corrective action be taken. Journalists who act
as conduits for anonymous whistleblowers are another case, but it could also be
argued that they need protection.

Many examples exist of journalists who have faced imprisonment for refusing to
reveal their sources (A recent example is Herald Sun journalists Michael Harvey
and Gerard McManus facing jail if they refused to identify the source of an
article on secret documents revealing a $500 million Government rebuff to war
veterans.). One other definitional difference relates to distinguishing between
whistleblowers and activists, who are sometimes classified as whistleblowers. In
the above definition, the whistleblower has to reveal information that would not
otherwise be known. Activists are campaigning against an issue that is already
public knowledge. The protection of these acts would not be relevant to them.

A third definitional issue relates to the motivations of the whistleblower.

Fletcher, Sorrell and Silva, for instance, assert that the whistleblower must blow

11
Bowden, Peter, A Comparative Analysis of Whistleblower Protections (September 10, 2006). Australian
Journal of Professional and Applied Ethics, Vol. 8, No. 2, September 2006. Available at SSRN:
http://ssrn.com /abstract=1534042.
12
Micali MP and Near, JP,Blowing the Whistle, Lexington Books,(1992), New York.

[5]
 the whistle for the right moral reasons.13 Provided the whistleblower is acting in
the public interest however, this paper argues that it is of little importance if the
informant’s motivations are not entirely pure. That is, even if the whistleblower
is driven by anger, spite or even dislike for the person against whom they are
making the complaint, the more important issue is the stopping of illegal or
corrupt activities.

It is important to observe the Supreme Court in has observed in case of Manoj

H. Mishra vs. Union of India & Ors.14

“One of the basic requirements of a person being accepted as a

“whistle blower” is that his primary motive for the activity should be
in furtherance of public good. In other words, the activity has to be
undertaken in public interest, exposing illegal activities of a public
organization or authority15………that every informer cannot
automatically be said to be a bonafide whistleblower. A whistleblower
would be a person who possesses the qualities of a crusader. His
honesty, integrity and motivation should leave little or no room for
doubt. It is not enough that such person is from the same organization
and privy to some information, not available to the general public. The
primary motivation for the action of a person to be called a
whistleblower should be to cleanse an organization. It should not be
incidental or byproduct for an action taken for some ulterior or selfish
motive.16

[b.] Perception of Whistleblowing

Through a review of the considerable amount of research that has been focused
on government whistleblowers, it is clear that the majority of employees who
witness acts of wrongdoing choose not to report it. Despite the inaction of the

13
Fletcher, JJ, Sorrell, JM, and Silva MC. (1998).‘Whistleblowing as a Failure in Organizational Politics’,
Online Journal of Issues in Nursing, Dec 31, 1998.
14
(2013) 6 SCC 313.
15
Ibid.
16
Ibid.

[6]
overwhelming majority, there are those who do step forward and act, regardless
of the potential consequences they face.

What constitutes a whistleblower, what are the characteristics that set these
individuals apart, and what psychological factors influence their decisions? This
section will define whistleblowers, explore both the dispositional and situational
factors that affect them, and ultimately, propose some key issues that must be
addressed to support increased whistleblowing in general.

Popular culture has seen the success of films, such as Serpico (1973), The Insider
(1999), The Whistleblower (2010), which honor whistleblowers ascourageous
champions of truth, standing alone in an environment of rampant corruption.
Significant cultural pressures have always existed not to break rank, with terms,
such as ‘snitch’ and ‘rat,’ prominently used to describe people who speak out
against their organization/group. Even among kids, ‘tattle-tale’ is used to label
those who inform authority figures (teachers/parents) of misdeeds or
wrongdoing. Classic example being an examination hall where many students
while giving exam cheats, now in this situation, there are student who have
cheated in the exam either with help of notes or with the help of another student.
There may be a lone student (who didn’t cheat), who witnessed it and
complained because according to his perspective, it was wrong to cheat in exam
and unfair to him and others, who were honest in their examinations and his rank
may get effected because of this unfairness. He may be called a snitch or traitor
among his peers.

The habit of maintaining secrets and observing the culture of ignorance is clearly
imbibed in us throughout our life, until it personally affects us. The environment
created by these factors has allowed the definition of whistleblowing to be
usurped and applied (by both extreme secrecy advocates and extreme
transparency advocates) to people whose actions are not whistleblowing, but to
those who, in fact, may have jeopardized national security.

Debates have occurred as to the actual damage to national security caused by

those releases; however, the presence of information that serves the ‘public

[7]
 interest’ is also unclear. Classifying this action as whistleblowing, which has
been promoted by both sides of the transparency and secrecy debate, only serves
to destabilize support for legitimate cases of whistleblowers in the eyes of the
public.

[c.] The Importance of Whistleblowing

“Corruption creates vulnerabilities in the Corrupt Entity & these vulnerabilities

can be exploited, by people[whistleblowers]who know what they are and how
they can be used.It takes strategy [i.e. whistleblowing] to induce a Corrupt Entity
to actively become its own worst enemy.”
Dr. Bill Corcoran

Whistleblowing is an important public policy issue for two major reasons.

Integrity in government relies on the effective operation of a range of ‘integrity
systems’ for keeping institutions and their office-holders honest and accountable.
Within these systems, few individuals are better placed to observe or suspect
wrongdoing within an organization than its very own officers and employees.
One of the most direct methods of shining the light on corruption is
whistleblowing. We often think about democracy only as a political system
where we elect those who will make laws that affect us. Yet everyday decisions
that are made in all kinds of organizations impact on us just as much. Therefore
we have to know when decisions taken in organizations are going to affect us in
ways that differ from the official organizational discourse. Whistleblowing plays
a role in providing that knowledge & thus is a means to democracy. From
exposing multi-million dollar financial scams to dangerous medical practices;
whistleblowers play a crucial role in saving resources and even lives.

In the initial beginning of any corrupt activity, there are some people who don’t
want to participate in that activity but they are forced, as they are afraid of the
consequences of speaking the truth and silence seems to be the best way out, but
when those people without thinking about the consequences, tell the truth then, to
put in the words of Nobel Laureate, CzesławMiłosz, “[when] people
unanimously maintain a conspiracy of silence, one word of truth sounds like a

[8]
 pistol shot”17, for which they are bound to suffer retaliation, of various degrees,
in return. They commonly face retaliation in the form of harassment, firing,
blacklisting, threats and even physical violence, and their disclosures are
routinely ignored.

As blowing the whistle carries high personal risk – particularly when there is
little legal protection against dismissal, humiliation or even physical abuse.
Controls on information, libel and defamation laws, and inadequate investigation
of whistleblowers’ claims can all, deter people from speaking out. Individuals
reporting incidents of bribery or corruption faced numerous hurdles, including
verbal threats, physical violence, and ostracism. Others encountered workplace
retaliation. Confronted with these risks, many potential whistleblowers chose to
remain silent. Whistleblowers are less likely to report workplace misconduct
when their employers do not provide clear internal reporting channels. And in
some settings, whistleblowing carries connotations of betrayal rather than being
seen as a benefit to the public. Ultimately, societies, institutions and citizens lose
out when there is no one willing to cry foul in the face of corruption.

Public and private sector employees have access to information concerning their
workplaces’ practices, and are usually the first to recognize wrongdoings. This
applies to both public and private sector environments, especially in cases of
bribery: Protecting public sector whistleblowers facilitates the reporting of
passive bribery, as well as the misuse of public funds, waste, fraud and other
forms of corruption. Protecting private sector whistleblowers facilitates the
reporting of active bribery and other corrupt acts committed by companies.
However, those who report wrongdoings may be subject to retaliation, such as
intimidation, harassment, dismissal or violence by their fellow colleagues or
superiors. In many countries, whistleblowing is even associated with treachery or
spying.

The purpose of whistleblower protection is to encourage people to report crime,

civil offences (including negligence, breach of contract, breach of administrative

17
"Czeslaw Milosz - Nobel Lecture". Nobelprize.org. Nobel Media AB 2014.http://www.nobelprize.org/nobel_
prizes/literature/laureates/1980/milosz-lecture.html.

[9]
 law), miscarriages of justice and health and environmental threats by
safeguarding them against victimization, dismissal and other forms of
reprisal.18Whistleblowers need to be given adequate legal protection if they are to
expose the wrongdoings, to the public or external parties that are occurring in one
of the agencies of the government and/or an external organization that is
violating the law does regulations of the government.

Further, in 2010, the importance of whistleblower protection was reaffirmed at

the global level when the G20 Anti-Corruption Working Group recommended
G20 leaders to support the Guiding Principles for Whistleblower Protection
Legislation, prepared by the OECD (hereinafter referred as ‘Organization for
Economic Co-operation and Development’), as a reference for enacting and
reviewing, as necessary, whistleblower protection rules by the end of 2012. The
OECD also developed a Compendium of Best Practices to provide available
options in various contexts for decision-makers designing and implementing
whistleblower protection rules in line with the G20 Guiding Principles for
Whistleblower Protection Legislation.

Country examples with comprehensive and dedicated legislation -Australia19,

Canada20, France21 Ghana22, Japan23, Korea24, New Zealand25, Romania26, South
Africa27, the United Kingdom28, and the United States29 are among the countries
that have passed comprehensive and dedicated legislation to protect public sector

18
See, article 33 of the Convention against Corruption. http://www.unodc.org/pdf/crime/corruption/toolkit/
AC_Toolkit_chap6.pdf
19
All Australian jurisdictions, except for the Commonwealth, have stand-alone acts that provide for the
establishment of whistleblowing schemes and some form of legal protection against reprisals. See, for example
the Australian Capital Territory Public Interest Disclosures Act, the New South Wales Protected Disclosures
Act of 1994, the Northern territory Public Interest Disclosures Act of 2008, Queensland Whistleblowers
Protection Act of 1993, Tasmania Public Interest Disclosures Act of 2002, Victoria Whistleblowers Protection
Act of 2001, and the Western Australia Public Interest Disclosures Act of 2003.
20
Public Servants Disclosure Protection Act of 2005.
21
The Auroux Law passed in France on 23 December 1982 recognizes an employee’s droit d'alerteet de retrait
(right to notify and to withdraw). French law protects the whistleblower (lanceurd’alerte, donneurd’alerte; in
Quebec, fonctionnairesdivulgateursd’actesrépréhensibles, dénonciateur).
22
Public Interest Disclosure Act of 1998.
23
Whistleblower Act (Act 720) of 2006
24
Whistleblower Protection Act of 2004.
25
Act on the Protection of Public Interest Whistleblowers, 2011.
26
Protected Disclosures Act of 2000.
27
Whistleblower Protection Act (Law 571) of 2004.
28
Protected Disclosures Act of 2000.
29
Whistleblower Protection Act of 1989.

[10]
 whistleblowers. The U.K. is considered to have one of the most developed
comprehensive legal systems, having adopted a single disclosure regime for both
private and public sector whistleblowing protection. It also covers the hybrid
scheme - when public sector functions are outsourced to private contractors.
There are more than a hundred similar statutes in the various States in US which
protect different classes of whistle blowers. In some of the States the protection is
extended to employees in the private sector also. Some of these laws also deal
with the ‘right to disobey’ illegal orders of superiors. It is a powerful way for
people to help the government stop many kinds of fraud - Medicare and
Medicaid fraud, defence contractor fraud and numerous other types of frauds that
impact the government financially - and recover billions that have been stolen
from the U.S. Treasury and taxpayers. (Tax frauds and securities law violations
are handled differently.)

The OECD is a treaty-based organization of 30 industrialized countries with a

“commitment to democratic government and the market economy” based in
Paris, France. On the subject of anti-corruption and good governance, they had
taken the initiative has adopted an ‘Action Plan for Asia Pacific’. 30
Whistleblowing and protection of witnesses plays a prominent role in all three
pillars of the plan.

 Pillar 1 - Developing effective & transparent systems for public service

Measures which ensure that officials report acts of corruption and which
protect the safety and professional status of those who do.

 Pillar 2 - Strengthening anti-bribery actions

Strengthening of investigative and prosecutorial capacities by fostering
inter-agency co-operation, and by ensuring that investigation and
prosecution are free from improper influence and have effective means
for gathering evidence, by protecting those persons helping the
authorities in combating corruption, and by providing appropriate
training and financial resources.

30
‘Action Plan for Asia Pacific’ http://www1.oecd.org/daf/asiacom/ActionPlan.htm#actionplan

[11]
  Pillar 3 - Supporting active public involvement
Encourage public participation in anti-corruption activities, in particular
through [...] protection of whistleblowers
Whistleblower protection has been recognized by all major international
instruments concerning corruption. The 1998 OECD Recommendation on
Improving Ethical Conduct in the Public Service including the Principles for
Managing Ethics in the Public Service and the 2003 OECD Recommendation on
Guidelines for Managing Conflict of Interest in the Public Service were among
the first. The latter includes guidelines to advise countries to “provide clear rules
and procedures for whistle-blowing, and take steps to ensure that those who
report violations in compliance with stated rules are protected against reprisal,
and that the complaint mechanisms themselves are not abused.” The 2009
Recommendation of the OECD Council for Further Combating Bribery of
Foreign Public Officials in International Business Transactions also provides for
the protection of whistleblowers in the public and private sectors.

The 2003 OECD Guidelines for Managing Conflict of Interest in the Public Service
recommend:

2.3.2. (b) Complaint-handling - Develop complaint mechanisms to deal with

allegations of non-compliance, and devise effective measures to encourage
their use. Provide clear rules and procedures for whistle blowing, and take
steps to ensure that those who report violations in compliance with stated
rules are protected against reprisal, and that the complaint mechanisms
themselves are not abused.31

The OECD Guidelines for Multinational Enterprises states that MNEs should:

II (9). Refrain from discriminatory or disciplinary action against

employees who make bona fide reports to management or, as
appropriate, to the competent public authorities, on practices that

31
OECD Guidelines for Managing Conflict of Interest in the Public Service C (2003) 107, 28 May 2003.
http://webdomino1.oecd.org/horizontal/oecdacts.nsf/Display/BF81CE725CF6D47FC125708800581411?
OpenDocument.

[12]
 contravene the law, the Guidelines or the enterprise’s policies.32

The OECD also is the initiator of the Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, which has been signed by 36
countries. The Convention does not include any provisions on whistleblowing in the
text. However, the OECD Working Group on Bribery in International Business
Transactions has included questions on whistleblowing as part of the process
of monitoring implementation. In its Phase II reports on implementation, the
Working Group has recommended that countries adopt whistleblower protection
laws.

1.2. Statement of Problem

Whistleblowing serves as a critical check and balance system to government

bureaucracy, helping to circumvent administrative roadblocks and to provide a
mechanism through which every organization can monitor and increase efficiency 33. The
whistleblowing legislation should provide a monetary incentive for the whistleblower
that will help offset the individual's personal risks, costs and related career consequences
of blowing the whistle. As well the whistleblowing legislation can protect the
whistleblower from the wrongful backlash of the organization which the individual blew
the whistle.
Currently, there is a whistleblowing protection system in India that does not compare
well, to that, which is now placed presently in United States. This paper argues that India
needs to adopt a modified form of the American whistleblowing legislation, with certain
amendments and innovation, both in the private and public sectors, in order to provide
the whistleblower with an incentive towards reporting the unethical, illegal and/or
illegitimate activities of a person or an organization.
Whistleblowing legislation will encourage employees, management and organizations to
be more ethical in their conduct and work practices.The current lack of public trust in
government and its entities, and the non-existence of avenues for disclosure, serve to
exacerbate the problem.

32
OECD, Commentary on the OECD Guidelines for Multinational Enterprises.
http://www.oecd.org/dataoecd/56/36/1922428.pdf
33
Gregory M. Bernard, Whistleblowing In A WikiLeaks World: A Model For Responsible Disclosure In
Homeland Security, CreateSpace Independent Publishing Platform, ISBN-10:1500338214.

[13]
1.3. Objective of the study

This research is designed to identify the short comings of the Indian model of
whistleblowing i.e. Whistleblowers Protection Act, 2011, as even the best of the
legislation could be extended and strengthened, by comparing it to more developed and
experienced American model of whistleblowing. The purpose is to learn the strengths
and weaknesses of the legislation and from this analysis to identify if a prima facie case
can be established for strengthening the legislation. As will be noted, however, there are
provisions in the legislation where the wording may be clear, but the priorities,
associated administrative practices and the outcomes are not as clear.

1.4. Hypothesis

Whether the Indian attempt to protect Whistleblowers through Whistle Blowers

Protection Act, 2011 stand in comparison to the advanced Model of Whistle Blower
Protection followed in America?

1.5. Research methodology

The principle methodology behind this paper is a comparison of both primary sources
i.e. the current and the past, legislation(s)/bills on the whistleblowing protection in the
legislation in India and with that in the U.S. and secondary sources such as various
newspapers, journals, articles, websites and books have been accessed to collect the
information for the studies have been adopted for study.In making the comparison, one
overriding issue first needs to be stated i.e. that the comparison is necessarily limited to
the public sector, for there is virtually no specific legislative coverage of private sector
whistleblowing in India, as of now.

CHAPTER 2
INDIAN MODEL OF WHISTLEBLOWING

[14]
 "सत्यमेवजयतेनानत
ृ ं
सत्येनपन्थाविततोदे वयानः।
येनाक्रमन्त्यष
ृ योह्याप्तकामा
यत्रतत्सत्यस्यपरमंनिधानम ्॥६॥"
॥मु❱डकोपिनषत ्॥
॥तिस्रस्कारम्मण्ु ड: प्रथमकण्ड, षाष्ठमन्त्र॥34

"Truth alone triumphs; not falsehood,

through truth the divine path is spread out,
by which the sages whose desires have been completely fulfilled,
reach ,where that supreme treasure of truth resides."

“Third mundaka: first khanda, sixth mantra”

“Mundaka Upanishad”
“Atharvaveda”35
2.1. Introduction

According to the State Emblem of India (Prohibition of Improper Use) Act, 2005 and
consequent to the 2007 rules formulated by the Government of India in exercise of its
power under §2(b) , the Schedule of the providers, the motto “Satyamev Jayate” means –
“Truth alone triumphs” is a part of State Emblem of India 36. Further dharma chakra logo
of the Supreme Court of India, there is an inscription in Sanskrit beneath it, which read as
follows “Yatodharmastato Jayah” means – “Truth alone I uphold”. It is also referred to –
as the wheel of righteousness, encompassing truth, goodness and equity37.

2.2. Current Scenario

In 2012, A Chief Engineer of the Water Resources Department, Maharashtra and a

member of the state level technical advisory committee who wrote to then chief minister

34
Sanskrit Documents, "muṇḍakopaniṣat", available at
http://sanskritdocuments.org/doc_upanishhat/mundaka.pdf.
35
Swami Krishnananda, "The Mundaka Upanishad:Third Mundaka, First Khanda", available at
http://www.swami-krishnananda.org/mundak/mun_3-1.html.
36
The State Emblem of India (Prohibition of Improper Use) Act, 2005 available athttp://policewb.gov.in/
wbp/misc/act/emblem.pdf.
37
“History of Supreme Court of India”, Supreme Court of India, accessible from
(http://supremecourtofindia.nic .in/supct/scm/m2.pdf).

[15]
 of the state of Maharashtra and its governor alleging irregularities and cost inflation in
irrigation projects. He pointed out that Rs 120 billion 38spent on lift irrigation projects in
the state are a total waste as around 99 per cent of the total 227 projects in Maharashtra
are not working and 90 per cent never began functioning.

Vyapam scam39 was a massive admission and recruitment scam involving politicians,
senior officials and businessmen.40 Indore Bench of Madhya Pradesh High Court served
notices to Madhya Pradesh Professional Examination Board and Medical Council of India
following a public interest litigation filed by parents of some students after reports that
more than 300 ineligible candidates managed to get into the merit list.41

Indore based Dr. Anand Rai and Gwalior based social activist Ashish Chaturvedi were the
two main whistle blowers for this scam.42 While Dr. Anand Rai blew the lid over this
scam, Ashish Chaturvedi blew the whistle over involvement of Chief Minister Shivraj
Singh Chauhan’s relatives in the scam.43 Ashish Chaturvedi has already suffered three
attacks on his life including an abduction bid. Chaturvedi had also petitioned CBI to
probe admissions of 5,000 doctors in MBBS and PG courses of 2003-2013 in all state
colleges44.

38
Aparna Pallavi, Reservoir ofcorruption, Down To Earth, available at http://www.downtoearth.org.in/content/
reservoir-corruption, last accessed on (11 April 2015).
39
On March 26, 2015, the Delhi High Court granted the police protection granted to Vyapam scam
“whistleblower” and directed him to submit copies of the documents relating to the case before the Madhya
Pradesh High Court within 15 days. The counsel appearing for the whistleblower told the court that several
people allegedly involved in the scam “died under mysterious circumstances” and sought extension of police
protection, a day after Madhya Pradesh Governor’s son, Shailesh Yadav who is an accused in the case, was
found dead in Lucknow. According to the plea filed in the High Court by the whistleblower, he had come under
threat from “senior officials” of Madhya Pradesh after the documents related to the scam were leaked. “Seven
are already down. I don’t want to be the eighth,” the whistleblower’s counsel told the court on his behalf.
(Vide; Aneesha Mathur, Vyapam scam: Delhi HC extends protection to whistleblower, Indian Express, available
at http://indianexpress.com/article/india/india-others/vyapam-scam-delhi-hc-extends-protection-to-
whistleblower/.
40
Business Standard, Vyapam scam: Youth Congress workers protest against MP Govt, available at http://www.
business-standard.com/article/news-ani/vyapam-scam-youth-congress-workers-protest-against-mp-govt-
11502180 1004_1.html.
41
MPPMT impersonation scam: HC notices to state, MPPEB, MCI, The Times of India July 24, 2013.
42
Exam Scam, “Meet the whistleblowers who shook Madhya Pradesh, and now fear for their lives”, available at
http://scroll.in/article/709594/Meet-the-whistleblowers-who-shook-Madhya-Pradesh,-and-now-fear-for-their-
lives.
43
Supra note 6.
44
Gwalior man who blew lid on MPPEB scam faces life threat, The Times of India July 28, 2014.

[16]
 Both of them face threat to their life and were denied police protection. 45The complaints
of irregularities and crooked deals in pre-medical test were surfacing since 2009 but in the
year 2013, a major scam was unearthed involving several officials and politicians from
the state ruling party46.

Coal allocation scam was a major political scandal concerning the Indian government's
allocation of the nation's coal deposits to public sector entities (PSEs) and private
companies. In a draft report issued in March 2014, the Comptroller and Auditor General
of India (CAG) office accused the Government of India of allocating coal blocks in an
inefficient manner during the period 2004–2009.47

The essence of the CAG's argument is that the Government had the authority to allocate
coal blocks by a process of competitive bidding, but chose not to. 48 As a result both public
sector enterprises (PSEs) and private firms paid less than they might have otherwise. In
its draft report in March the CAG estimated that the "windfall gain" to the allocatee’s was
INR 10,673 billion (US$170 billion)49.

The Supreme Court will hearing the PIL seeking to cancel the allotment of 194 coal
blocks on grounds of arbitrariness, illegality, unconstitutionality and public interest
observed that:
“You may have well laid down policy but, was it implemented? Is it
a sheer coincidence, that a large number of beneficiaries were
either politicians or their relatives or associates?50”

Justice R M Lodha & Justice A R Dave

(Supreme Court of India)

45
Arshad Khan, “WHAT IS VYAPAM SCAM?”, available at http://www.arshadkhanonline.in/what-is-vyapam-
scam/.
46
Supra note at 11.
47
"Draft Performance Audit, Allocation of Coal Blocks and Augmentation of Coal Production by Coal India
Limited", “Report of the Comptroller and Auditor General of India”, Union Government, (Commercial)".
Comptroller and Auditor General of India, Union Government, (Commercial), Retrieved 8 September 2014.
Hereafter “Draft CAG Report”.
48
Ibid.
49
Ibid.
50
"SC on Coalgate", The Indian Express. 14 September 2012. & "SC on Coalgate – Outlook article". The
Outlook India (New Delhi). 14 September 2012. Archived from the original on 14 September 2012.

[17]
 On 24th September, Supreme Court of India decided to cancel 214 out of 218 coal blocks
allocated since 1993. Apart from the cancellation, operational mines will have to pay a
penalty of Rs 295 for every ton of coal extracted since they started 51. Meaning thereby the
allegation of CAG wasn’t mere a rope of sand but of concrete.

Moreover, in 2014 India ranked 85th out of 175 countries in Transparency International's
Corruption Perceptions Index, scoring just 38 out of 100 (best score being 92 that of
Denmark)52 and all of this is weighing on India's economy. India's budget for 2012-2013
shows that the government is trying to cut its deficit to 5.1 percent of GDP in 2012, after
having missed its target in 2011.53 Such losses in revenue make it significantly harder for
India to meet such targets.54 The figures have been better since the formation of NDA
government, but the policies like Demonetisation, etc. have an equal adverse impact on
the economy, virtually making no difference with the past records.

Hence, if a person can provides us information about black money, tax evasion,
corruption, financial frauds, that are in the process of being perpetrated or even if that
person informs, those who have the authority to prevent such wrong (irrespective of the
fact that whether the wrong complained of it directly affects him or not) then the purpose
of law i.e. establishing justice, can be fulfilled.

Therefore, if corruption levels in India were reduced to levels in developed economies

such as Singapore or the United Kingdom, India's GDP growth rate could increase at a

51
Shuchi Srivastava; Rachita Prasad (September 25, 2014). "Coalgate verdict: Worst fears of power companies
come true". The Economic Times.
52
Transparency International, Corruption Perceptions Index (2014), available at https://www.transparency.
org/cpi2014.
53
Mamta Badkar, “A Blatant Example Of How Corruption Is Destroying The Indian Economy”, Business
Insider, available at, http://www.businessinsider.com/how-corruption-is-destroying-the-indian-economy-2012-
3?IR=T.
54
Ibid.

[18]
 higher rate annually55. Krishnarao Prahalad56estimates the lost opportunity caused by
corruption, in terms of investment, growth and jobs for India is over US$50 billion a
year.57

2.3. Whistleblowing Protection in India – A Struggle for the Messengers of Truth.

In India, Mr. N. Vittal, who was the Chief Vigilance Commissioner in 1993, initiated the
whistleblower protection legislation58. He requested via a letter dated 24/8/1999 to Law
Commission to draft a Bill encouraging the disclosure of corrupt practices by public
functionaries and protecting honest persons making such disclosures 59. The Law
commission headed by Justice, B.P. Jeevan Reddy submitted a report on the “Public
Interest Disclosure Bill”, and submitted it on 14.12.2001 to tackle this problem.60

Meanwhile, the absence of legislation on protection for whistleblowers was clearly felt by
the entire nation when National Highways Authority of India (NHAI) engineer Satyendra
Dubey was killed after he wrote a letter to the office of then P.M. Shri. Atal Bihari
Vajpayee, detailing corruption in the construction of highways.61

55
See,Howes, S.; Lahiri, A. & Stern, N.,State-level Reforms in India: Towards More Effective Government,
Macmillan India, 2003See, Peng, M.,Global Business, Cengage Learning, 2010.See, IBP, I. Australia Oil, Gas
Resources and Exploration, Handbook Volume 3, South Australia - Strategic Information and Regulations
International Business Publications, USA, 2013. See, Sowell, T. Basic Economics 4th Ed: A Common Sense
Guide to the Economy,Basic Books, 2010. See, Indian bureaucracy ranked worst in Asia: Survey, The Times of
India, 3 June 2009, (last accessed on 24 March 2015). See, Hope, N.; Yang, D. & Li, M. How Far Across the
River?: Chinese Policy Reform at the Millennium, Stanford University Press, 2003. See, Daniel Treisman, The
Causes Of Corruption: A Cross-National Study, Journal of Public Economics, 76, 3, June 2000, pp.399-457,
available at, http://www.sscnet.ucla.edu/ polisci/faculty/treisman/Papers/causes.pdf ,(last accessed on 28 March
2015). See, A Abdulraheem, Corruption in India: An Overview (Causes, Consequences and Remedial
Measures), Social Action Journal, VOL. 59, OCTOBER – DECEMBER 2009, pp.351-363, available at,
http://www.isidelhi.org.in/ saissues/articles/artoct09.pdf.
56
Prahald was the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the
Stephen M. Ross School of Business in the University of Michigan, USA, he is an alumnus of Harvard
University, and Indian Institute of Management Ahmedabad, (IIM-A).
57
Nirvikar Singh (19 December 2010), "The trillion-dollar question", The Financial Express.
58
179th Report – Part I, pg. 2.
59
Ibid.
60
Ibid.
61
Legal Point, No legal shield for whistleblower in Ranjit Sinha case, Vol. I Part 4 (16th September to 30th
September 2014), available at,
www.legalpoint.in/legal_golgappe_16_sept_to_30_sept_2014.pdf+&cd=2&hl=en& ct=clnk&gl=in.

[19]
 In the letter, he had asked specifically that his identity be kept secret. Instead, the letter
was forwarded to various concerned departments without masking Dubey's identity.
Dubey's murder led to a public outcry at the failure to protect him62.

As a result, in April 2004, the Supreme Court directed that machinery be put in place for
acting on complaints from whistleblowers till a law is enacted 63. The GOI passed the
Public Interest Disclosures and Protection of Informers Resolution, 200464 designating
CVC as the nodal agency to handle complaints on corruption. Over a year later,
Manjunath Shanmugham, an IIM graduate and a sales manager of the Indian Oil
Corporation was murdered on Nov 19, 2005 for honestly carrying out his duties i.e.,
exposing the racket of adulteration of petrol and the mafia behind it.

This incident has shocked the entire nation and has shaken the confidence of thousands of
aspiring officers. This brought renewed focus on need for a law to protect whistleblowers
— but five years after the last episode 65. (The Supreme Court of India on 11 th March 15,
201566 convicted six persons who had appealed to the Apex Court, as they were found
guilty by the Allahabad High Court in its judgment dated February 11 th, 2009 had
awarded life term to six persons who were found guilty.)

Sanjiv Chaturvedi, chief vigilance officer at the All India Institute of Medical Sciences,
was sacked in 2014 after he had blown the whistle on corruption. The health ministry
denies that his departure was linked to his determination to expose malpractice. 67 The
newly elected Delhi government wants to appoint him as top anti-corruption officer,
which will require approval from the health ministry68.Mr. H K Jethi, central vigilance

62
TNN, India doesn't have a law to protect whistleblower ,TOI, http://timesofindia.indiatimes.com/india/India-
doesnt-have-a-law-to-protect-whistleblower/articleshow/5736903.cms?referral=PM
63
Dwivedi S., and Agrawal, P., The Whistleblower Protection Bill, 2011: A Review, ILJ, Vol 6, Issue 2, July –
Dec. 2013. http://www.indialawjournal.com/volume6/issue-2/article7.html.
64
Central Vigilance Commission CVC, Office Order No. 33/5/2004, Government of India,
http://cvc.nic.in/004vgl26_ 1.PDF.
65
TNN, India doesn't have a law to protect whistleblower, Mar 29, 2010, 02.42AM IST, http://times
ofindia.indiatimes.com/india/India-doesnt-have-a-law-to-protect-whistleblower/articleshow/5736903.cms.
66
Pawan Kumar vs. State of Uttar Pradesh, 2015 (3) SCALE 511.
67
Sethi N. AIIMS whistle-blower removed at BJP leader Nadda’s behest. Business Standard, 2014 Sep 24.
www.business-standard.com/article/current-affairs/aiims-whistle-blowerremoved-at-bjp-leader-nadda-s-behest-
114092400043_1.html.
68
Mehrotra S. Arvind Kejriwal keen to appoint whistleblower Sanjiv Chaturvedi as anti-graft chief: sources.
NDTV 2015 Feb 15.

[20]
 officer of the Medical Council of India (MCI), has complained of “statutory and physical
harassment” in retaliation for his drive against corruption in the council.69

It has taken more than 11 years, after Law commission submitted its report on the subject,
for the bill to become, the Whistle Blowers Protection Act, 2011, which was passed on 9
May 2014, after receiving president assent.

2.4. A shift from the Public Interest Disclosure (Protection of Informers) Bill70, 2002 to
Whistleblowing Protection Act, 201171.

The journey of Whistle-blower Protection began from PID Bill, 2002 and ended in the
form of enactment on the subject WPA, 2011. For the purpose of better comparative
analysis and for suggesting a more impactful proposal, a review of both of them is
inevitable.

[a.] Preamble

Preamble of an act is considered a useful guide to the intention of the Parliament in

that it may detail the mischief to which the Act is directed, explain the reason,
purpose, scope of the Act; and detail facts or values which are relevant to the Act.

The constructive role of a preamble in statutory interpretation relates to the effect

that a preamble may have in modifying the ordinary meaning of substantive
enactments in a statute.72 The preamble is a good mean to find out the meaning of
the statute. As Sir John N. Cholla put it in Brett v. Brett73

“The key to the opening of every law is the reason and spirit of the law-it is
the “animus imponentis”, the intention of the law-maker, expressed in the law
itself, taken as a whole. Hence, to arrive at the true meaning of any particular
phrase in a statute, that particular phrase is not to be viewed detached from
69
Nagarajan R. CVC seeks report on MCI vigilance officer’s harassment. Times of India, 2014 Nov 7.
70
Hereinafter referred as “PID Bill”.
71
Hereinafter referred as “WPA, 2011”.
72
R v Pierce [1814] EngR 477; (1814) 3 M & S 62; 105 ER 534, 536 (Lord Ellenborough CJ); A-G v Prince
Ernest Augustus of Hanover [1957] AC 436, 474 (Lord Somervell).
73
(1826) 3 Add 210; 162 ER 456, Emanuel v. Constable (1827) 3 Russ 436; 38 ER 639.

[21]
 its context in the statute: it is to be viewed in connexion with its whole context
– meaning by this as well the title and preamble as the purview or enacting
part of the statute. It is to the preamble more especially that we are to look for
the reason or spirit of every statute rehearsing this, as it ordinarily does, the
evils sought to be remedied, or the doubts purported to be removed by the
statute, and so evidencing, in the best and most satisfactory manner, the
object or intention of the legislature in making and passing the statute
itself.”74

The preamble of the proposed PID Bill, 2002 stated that

“A bill to encourage disclosure of information relating to the conduct of any

public servant involving the commission of any offence under the Prevention
of Corruption Act, 1988 or any other law for the time being in force, abuse of
official position or mal-administration, to protect the persons making such
disclosures and for matters connected therewith or incidental thereto.”

Whereas the preamble of WPA, 2011.

An Act to establish a mechanism to receive complaints relating to disclosure

on any allegation of corruption or wilful misuse of power or wilful misuse of
discretion against any public servant and to inquire or cause an inquiry into
such disclosure and to provide adequate safeguards against victimisation of
the person making such complaint and for matters connected therewith and
incidental thereto.

A bare comparison of the preambles of PID Bill, 2002 and WPA, 2011 elucidates
that:

Firstly, PID Bill, 2002 was drafted with the intention “to encourage the disclosure
of information” whereas WPA, 2011 establishes “a mechanism to receive
complaints relating to disclosure”, the change in the language while drafting the
preamble from ‘encouraging’ to ‘establishing mechanism’ reflects the approach
74
Ibid.

[22]
 taken by the government while drafting WPA, 2011. The approach of the former
gave importance of the encouragement factor, which is extremely important for the
success of this kind of statue, while the latter more on the structural aspect.
Secondly, the ambit of PID Bill, 2002 related to “the conduct of any public servant
involving the commission of any offence under the Prevention of Corruption Act,
1988 or any other law for the time being in force, abuse of official position or mal-
administration” whereas WPA, 2011 related “to [the] disclosure on any allegation
of corruption or wilful misuse of power or wilful misuse of discretion against any
public servant and to inquire or cause an inquiry into such disclosure”.

The ambit as contemplated by the former preamble, though not perfect but, was
much greater as compared to the latter, which will be established in subsequent
paragraphs.

[b.] Applicability

§ (1) of PID Bill, 2002 provided that it applies to whole of India and also to public
servants outside India. Whereas under WPA, 2011 § (1) sub- section (4) the
provisions of this Act shall not apply to the armed forces of the Union, being the
Special Protection Group constituted under the Special Protection Group Act,
1988.

[c.] Scope of Public Interest Disclosure

The Bill provided whistleblower to complain about “disclosable conduct”75 which

included “mal-administration”76; against any public servant77 including Prime
Minister or any of the Chief Ministers.
75
(d) “disclosable conduct” means such conduct as a public servant may engage in or has engaged or is
engaging, or proposes to engage in, which amounts to,-
(i.) abuse or misuse of power or discretion vested in him; or
(ii.) an attempt to commit or the commission of an offence under the Prevention of Corruption Act,
1988, the Indian Penal Code, 1860 or any other law for the time being in force; or
(iii.) mal-administration;
76
(e)“mal-administration” includes any action taken or purporting to have been taken or being taken or
proposed to be taken in the exercise of administrative or statutory power or discretion,-
(i.) where such action is unreasonable, unjust, oppressive or discriminatory;
(ii.) where there has been negligence or undue delay in taking such action;
(iii.) where there has been reckless, excessive or unauthorized use of power in taking such action;
(iv.) where such action amounts to breach of trust;

[23]
 Whereas, The Act provides whistleblower to make a “disclosure78” which includes
excludes “mal-administration” meaning thereby it doesn’t recognize
whistleblowing against ‘maladministration’, 'human rights violations' and
wrongdoings that may have adverse effect on 'public health, safety or
environment’ against “public servant.”79It is submitted that expression ‘willful
misuse of power or discretion by a public servant’ is vague in itself as misuse of
power and discretion can never be unintentional80. Firstly, such misuse should
have caused demonstrable loss to the government or helped the public servant to
accrue demonstrable gain. In other words, if the loss or gain is not demonstrable,
then it does not qualify as a disclosure and the onus to show this lies on the person
making the disclosure81. Secondly, disclosure is time-bound according to the Bill.
Landmark cases such as Bhopal gas leak, Delhi anti-Sikh riots, Babri Masjid
demolition, Godhra have all exceeded the five-year statute of limitations applied
to disclosure82. Thirdly, the Bill brings complaints against any attempt to commit,
(v.) where such action involves the conduct of a public servant which would result in wastage of
public funds or causes loss or prejudice to the State or is prejudicial to public interest in any
manner;or
(vi.) where such action is outside the authority
77
(h)“public servant” denotes a person falling under any of the descriptions hereinafter following, namely:-
(i.) every Minister;
(ii.) every officer who is appointed to a public service or post in connection with the affairs of the
Union;
(iii.) every person in the service or pay of, -
(A.) any local authority in any Union territory, (which is notified by the Central Government
in this behalf in the Official Gazette),
(B.) any corporation (not being a local authority) established by or under a Central Act and
owned or controlled by the Central Government,
(C.) Any Government company within the meaning of section 617 of the Companies Act, 1956,
in which not less than fifty-one per cent. of the paid up share capital is held by the
Central Government, or any company which is a subsidiary of a company in which not
less than fifty-one per cent. of the paid up share capital is held by the Central
Government,
(D.) any cooperative society receiving any financial aid from the Central Government;or
(E.) any society registered under the Societies Registration Act, 1860, which is subject to the
control of the Central Government and which is notified by that Government in this
behalf in the Official Gazette;
78
(d)"disclosure" means a complaint relating to,—
(i) an attempt to commit or commission of an offence under the Prevention of Corruption Act,
1988;
(ii) willful misuse of power or willful misuse of discretion by virtue of which demonstrable loss is
caused to the Government or demonstrable wrongful gain accrues to the public servant or to
any third party;
(iii) attempt to commit or commission of a criminal offence by a public servant,
79
(i) "public servant" shall have the same meaning as assigned to it in clause (c) of section 2 of the Prevention
of Corruption Act, 1988 but shall not include a Judge of the Supreme Court or a Judge of a High Court;
80
Apurba Kundu, Public Interest Disclosure & Protection to Persons Making the Disclosure Bill, 2010, accessed
from http://www.manupatra.co.in/newsline/articles/Upload/BF2D91EF-8910-4535-8648-D7A37CA9BF38.pdf.
81
Ibid.
82
Ibid.

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 or the commission of, a criminal offence by a public servant under the ambit of
disclosure. But there may be acts that do not strictly satisfy the ingredients of a
criminal offence, yet need to be exposed for the sake of the public interest83.

[d.] Receipt of the Public Interest Disclosure complaints

As per the mechanism envisaged in the Bill [Clause 2(b)], the sole authority
authorized to receive a public interest disclosure was the Competent Authority, i.e.,
CVC or State Vigilance Commissions. With respect to a Minister an Authority
would have been notified by the President84.The Standing Committee suggested
that, this may not be the best way to instil confidence in the minds of potential
whistleblowers and that multiple points may be provided for receiving complaints,
specially to facilitate complainants inthe remote areas to make use of the
enactment85. It was suggested that if multiple points are to be made for receipt of
public disclosure complaints, it has to be particularly ensured that the identity of the
complainant is protected for sure and no loopholes creep in, weakening the
system86.Under the act, the suggestion multiple points has been accepted and forms
the part under §3(b).

[e.] Identity of the Complainant

Both the Bill87 and the Act88 makes it mandatory that the disclosure should indicate
the identity of the complainant as in the opinion of the government this may inflate
unusually the number of false complaints thereby defeating the purpose of the Bill.
It is submitted that the anonymous complaints, if accompanied by sufficient
evidence, should be taken cognizance of and in that case, it would be easier to
protect the complainant. If an anonymous complaint is received by the Competent
Authority, and the facts mentioned in the complaint and the supporting documents
reveal a prima facie case, the Competent Authority should not reject it only for want
83
Ibid.
84
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, §2(b).
85
Parliament of India, Rajya Sabha, Department Related Parliamentary Standing Committee on Personnel,
Public Grievances, Law &Justice, Forty Sixth Report on the public interest disclosure and protection to persons
making the disclosures bill, 2010, ¶5.24-5.28, pp.26-27.
86
Ibid.
87
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, §3 (6).
88
See, Whistleblowing Protection Act, 2011, §4.

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 of identity of the complainant. Anonymous complaints, if substantiated, would
make the task of the Competent Authority easier as it would be less worried on the
aspect of protecting the identity of the complainant which is an important objective
of the Whistleblower Protection.

[f.] Revealing the identity of the Complainant

On the subject of, Identity of the whistleblower, the bill provided the name of
person making the disclosure shall be revealed to the public servant unless the
complainant requests that his identity be kept hidden or it is necessary in public
interest89.

Whereas, The Act WPA, 2011 The Vigilance Commission shall not reveal the
identity of the complainant to the head of the organization except if it is of the
opinion that it is necessary to do so90.The proviso to Clause 5 of the Bill laid down
that “if it becomes necessary”; the identity of the complainant may be revealed to
the Head of the Department of the organization, during inquiry in relation to public
interest disclosure.

This provision is a virtual death knell for a potential whistleblower. The main
concern is that does not specify the conditions under which it may become
necessary to reveal the name of the complainant and that it leaves the Competent
Authority with wide scope of discretion in this regard. Further, it may make it very
difficult to keep the identity of the complainant secret from the person/organisation
against whom the complaint is filed.

The protection of the identity of the complainant is pivotal to the successful

implementation of Whistleblowing. In order to make sure that the interests of the
complainant are protected, it is submitted that the identity of the complainant should
not be revealed by the Competent Authority to the Head of the Department, at least
not without the written consent of the complainant.

[g.] Undue burden on whistleblowers

89
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, §5 – (2)(3).
90
See, Whistleblowing Protection Act, 2011, §5 – (3)(4)(5).

[26]
 Both the bill91& the Act92 require the whistleblower to make a disclosure
specifically naming the public servant responsible for or involved in the
wrongdoing. Further, the whistleblower is required to submit supporting documents
and other material in support of his or her disclosure.

It is submitted that these provision put the burden on the potential whistleblower
that might not have all the data. Both the Bill 93 and Act94 proposes to turn CVC/SVC
into a sort of a Court where each whistleblower might struggle to prove his point, by
himself. This will probably mean as if the whistleblower is taking on the role
resembling that of an investigating agency or a public prosecutor, for which the
State will neither pay him, nor recognize him, nor accord him special status,
protection or extent assistance of any kind. It is further submitted, that the above
mechanism is inherently contradictory to the main intention of the statue. The
complainant is making the disclosure in the public interest; therefore, undue burden
should not be placed on him/her to provide proof to substantiate his/her case.

Moreover, it would be unreasonable to expect a private citizen, who is the sufferer

or at the receiving end having minimal resources at his/her disposal, to place before
the Competent Authority proof sufficient to substantiate the complaint. The
Competent Authority may have a reasonable expectation from the complainant, i.e.,
he/she should make out a prima facie case, and subsequently, the Competent
Authority should follow up the complaint to its logical conclusion.

[h.] Dismissal of Public Interest Disclosure

91
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, § 3.
92
See, Whistleblowing Protection Act, 2011,§ 3.
93
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, § 4.
94
See, Whistleblowing Protection Act, 2011, § 5.

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 The Bill provided under clause (4)95 the conditions under which the Competent
Authority had the discretion to close the matter namely; that it is frivolous or
vexatious; is misconceived or lacking in substance; is trivial; or has already been
dealt with adequately.

Whereas, the Act provides a provision which confers the same discretion, as found
in the bill with certain touch ups in the language, upon the competent authority to
close the matter on same grounds.96.

It is submitted that whistleblower must be kept informed about the progress of the
inquiry made into the allegations of wrongdoing and that the Competent Authority
must place in the public domain, the details of the outcome of every inquiry
launched and the action taken, if any, subsequent to the receipt of the public interest
disclosure. The whistle blower may be informed of the final outcome of the inquiry.
However, the procedure therefore, could be incorporated in the Rules/Regulations to
be issued under the Act.

The Competent Authority should also state the reasons for dismissing the complaint.
Further, the whistleblower should be given reasonable opportunity to adduce his
justification/arguments, if he is not satisfied with the conduct/outcome of the
enquiry. Further, inform the complainant about the outcome of the complaint, since
the complainant has a crucial role under the scheme in the statute. The Competent
Authority should also give the reasons if the complaint is dismissed. Further, the

95
4. Procedure on receipt of Public Interest Disclosure.
(1) On receipt of a public interest disclosure under section 3, if the Competent Authority considers,
after conducting a preliminary inquiry that such disclosure –
(a) is frivolous or vexatious;
(b) is misconceived or lacking in substance;
(c) is trivial; or
(d) has already been dealt with adequately;
It shall dismiss the complaint and inform the person making the disclosure accordingly.
(2) If an issue raised in a disclosure has been determined by a court or tribunal authorized to
determine the issue, after consideration of the matters raised in the disclosure, the Competent
Authority shall decline to act on the disclosure to the extent that the disclosure seeks to reopen the
issue.
(3) If the Competent Authority is of the opinion that the disclosure should be inquired into then it shall
proceed in accordance with the provisions of section 5, to inquire into the facts and allegations
contained in the disclosure.
96
See, Whistleblowing Protection Act, 2011, §5(6).

[28]
 complainant should be given a reasonable hearing to present his case if he is not
satisfied with the dismissal of his complaint/ outcome of the enquiry.

[i.] Statutory Time Limit

The Law Commission of India, in its Bill proposed in its 179 th Report, provided
that:

Ҥ9(1) The Competent Authority shall hold every such

inquiry as expeditiously as possible and in any case
complete the inquiry within a period of six months from
the date of the receipt of the complaint. Provided that if the
Competent Authority is of opinion that the inquiry cannot
be completed before the said period, it may, for reasons to
be recorded in writing, extend the said period and in no
case the said period shall be extended beyond a period of
two years from the date of receipt of the complaint.”97

The Act does not provide a time limit: - (i) for conducting the discreet enquiry; or
(ii) for inquiry by the head of the organisation/office; 5(2), 5(3) respectively, of the
Act, but grants discretion to the competent authority, to provide a time frame for the
inquiry. It is submitted that in the absence of time limit in the statue will retard the
pace of disposal of cases and thereby defeating the objective of the Act itself. 98

It may not be appropriate to provide time-frame in the Bill because, if that is done,
we may also have to spell out what action has to be taken if the prescribed action is
not completed within the time-frame. It is submitted that such provision is essential
to ensure the effective implementation of this statute because the malady which
presently affects the country’s system is not the absence of statutes, but rather their
non-effective/lax implementation. As it has been witnessed from a relatively
successful implementation of the Right to Information Act, 2005 is mainly due to

97
See, Whistleblowing Protection Act, 2011,§9(1).
98
See, Whistleblowing Protection Act, 2011, §(5).

[29]
 the statutory provisions in it for furnishing information within the stipulated time
limit and penalty for non-adherence to the same.

[j.] Non-adherence to the recommendations of Competent Authority

The Act does not envisage the consequences of non-adherence to the

recommendations made by the Competent Authority in terms of §5(7)99 of the Act
but provides under §5(8)100 that in case of any disagreement between the competent
authority and public authority reason shall be recorded. The Ministry has stated that
the recommendations under § 5(7) cannot be made binding lest it will give over-
riding power to the Competent Authority over the entire Executive101.

It is submitted in the absence of such a provision, the implementation of the

Competent Authority's recommendations can be ensured. If the recommendations
are not acted upon and kept in cold storage based on one lame excuse or another, the
primary objective of the Act i.e., tackling corruption will be vanquished. Moreover,
the Committee feels that quick action on the recommendations of the Competent
Authority will also have a deterrent effect on prospective wrong doers. It is
submitted that it is inevitable that the consequences of non-adherence to the
recommendation made by the Competent Authority should be provided in the Act.

[k.] Time limit for actionable disclosure

The Bill didn’t provided any time limit for actionable disclosure, but the Act
provides a the time limit of seven years from the date on which the action
complained against is alleged to have taken place, as provided in §6(3) 102, It means
that after the lapse of seven years of the action complained, the competent authority
is completely debarred from taking any kind of action.

99
Ibid.
100
Ibid.
101
See, Parliament of India, Rajya Sabha, Department Related Parliamentary Standing Committee on Personnel,
Public Grievances, Law &Justice, Forty Sixth Report on the public interest disclosure and protection to persons
making the disclosures bill, 2010, ¶5.55-5.56, pp. 37-38.
102
See, Whistleblowing Protection Act, 2011, §(6).

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 It is submitted that it is not in consonance with the spirit of the whistleblowing law
because it doesn’t grant any kind of discretion to the authority to condone the delay
even in exceptional cases that is usually allowed in both civil and criminal systems
of our country. It is further submitted that the Act also envisages initiation of
criminal proceedings against the wrong doer if so warranted, preventing the
Competent Authority from investigating any disclosure involving any allegation, if
the complaint is made after the expiry of seven years from the date on which the
action complained against is alleged to have taken place, is contrary to the existing
practices under the criminal law which does not prescribe any limitation period for
criminal offences.

“Nullum Tempus Aut Locus Occurrit Regi”103, this famous Latin maxim means that
a crime never dies. It is, [considered to be] a general rule of criminal justice
[system]104. It is the basis of §473 of the Code of Criminal Procedure, 1973 which is
read as following:
“§473. Extension of period of limitation in certain cases. –
Notwithstanding anything contained in the foregoing
provisions of this Chapter, any Court may take cognizance
of an offence after the expiry of the period of limitation, if it
is satisfied on the facts and in the circumstances of the case
that the delay has been properly explained or that it is
necessary so to do in the interests of justice.”

This § provides wide discretion to the court to take cognizance even after Section
473 enjoins a duty on the Court to examine not only whether such delay has been
explained but as to whether it is the requirement of the justice to condone or ignore
such delay. Thus, it enjoins a duty on the Court to examine not only whether such
delay has been explained but as to whether it is the requirement of the justice to
condone or ignore such delay105.The rational, according to the government, for
inserting such a section was that, as it may not be possible to retrieve files/records
older than this period (initially this was five years but due to the suggestion of the
parliamentary committee it was changed to seven years). This argument holds does
103
See, Sarah Mathew v. Institute of Cardio Vascular Diseases, (2014) 2 SCC 62, [Per Constitution Bench].
104
See, Japani Sahoo vs Chandra Sekhar Mohanty, (2007) 7 SCC 394
105
See, Vanka Radhamanohari (Smt) vs. Vanka Venkata Reddy, (1993) 3 SCC 4.

[31]
 not hold water as contrary to the above rational the Right to Information Act allows
people to collect information over a period of twenty years.

Therefore, there should be no limitation because it leads to an apparent conflict. The

situation in the current system is that person may have the right to obtain
information through RTI but the after the period of 7 years from the date of alleged
wrong took place the WPA debars the authority to carry out any kind of
investigation and throw out the complaint, merely on this threshold. The same is
true about Secretaries deciding whether something is information or not. That also
contradicts the Right to Information Act. The Act empowers the Competent
Authority to recommend for initiation of criminal proceedings under the relevant
laws and there is no limitation period under the existing criminal law for such
proceedings, hence the statutory time limit of 7 years should not be prescribed.
Further, limiting of complaints on events older than 7 years, merely on the ground
that records beyond 7 years may not be available is unreasonable argument. In
Government, records are maintained as per retention schedule and important records
are definitely kept for a longer period.

[l.] Exemption given to bonafide action or bonafide discretion

The §6(4)106 of the Act prohibits the Competent Authority from questioning, in any
inquiry under this statute, any bonafide action or bonafide discretion (including
administrative or statutory discretion) exercised in discharge of duty by the
employee. It is submitted that no parameters have been provided as to ascertain,
whether the alleged action amounts to bonafide action or bonafide use of discretion
or not, hence in the absence of which leaves the room for foul play to be committed
with malafide intentions.

[m.] Disclosure of sensitive information

The §8 of the Act107 which exempts certain matters from disclosure, if such question
or document or information is likely to prejudicially affect the interest of the

106
See, Whistleblowing Protection Act, 2011, §6.
107
See, Whistleblowing Protection Act, 2011, § 8.

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 sovereignty and integrity of India, the security of the State, friendly relations with
foreign State, public order, decency or morality or in relation to contempt of court,
defamation or incitement to an offence and the authority to determine as what
constitutes “likely to prejudicially affect” the abovementioned grounds is the state
and central government itself through the Secretary to the Government of India or
the Secretary to the State Government, as the case may be. There was no such
provision in the Bill.

The most astonishing part of this provision is that the decision taken by them as to
what prejudicially affect and what does not is, by the reason of statutory fiction is
binding and conclusive. Therefore, the government has the authority to determine as
to what constitutes sensitive information and what does not and the decisions taken
under section 8 are unchallengeable. It is submitted binding and conclusive powers
to the Secretary to the Government of India or the Secretary to the State
Government, to certify that a document is of the nature specified in clause 8(a) and
(b), is inappropriate since the RTI Act clearly states what information can be given.

[n.] Victimisation of the Whistleblower

The bill defined “victimization” as it intended to grant ‘protection’ to the persons

who make disclosures. Protection against victimization is provided by the
Competent Authority, being empowered to issue appropriate directions upon
complaints of the whistleblower are victimized. The competent authority is being
empowered to restore the public servant making the disclosure to the status quo
ante. In that context, it was considered necessary to have a definition of
“victimization”108.

108
(i) “victimization” with all its grammatical variations, in relation to a public servant other than a Minister,
shall include –
(A.) suspension pending inquiry, transfer, dilution or withdrawal of duties, powers and responsibilities,
recording adverse entries in the service records, issue of memos, verbal abuse, all classes of major or
minor punishment specified in the disciplinary rules, orders or regulations applicable to such public
servant and such other type of harassment;
(B.) any of the acts referred to in sub-clause (A) whether committed by the person against whom a
disclosure is made or by any other person or public authority at his instance.

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 Whereas, The Act WPA, 2011 however, doesn’t include a definition of
“victimization” of the whistleblower despite the Parliamentary Committee and the
Law Commission109recommending one. It fails to define key terms like
“victimization”, allowing plenty of room for interpretation and subsequent misuse
of the proposed law. This again limits the effectiveness of safeguards that are
proposed to be provided under Chapter – 5, §(11), because according to the act
provides safeguards but against undefined victimization. It is submitted that the
term ‘merely’ in §10(1) may be replaced with ‘directly or indirectly’ and that in
every case of allegation of victimization, the burden of proof should be on the
employer. It is also submitted that the penalty for victimization should be made very
high.

[o.] Protection to whistleblowers

The Bill provided under §10110, §11111, §12112, §13113 for safeguards against
victimisation, transfer of public servant for avoiding victimisation, protection of
witnesses and other persons and a residuary provision to pass interim orders,
respectively. §10 of the Bill casted a duty upon Central Government to ensure that
whistleblower is not victimized “merely” on the ground that such person had made
a disclosure. §11of the Bill provided a right to the whistleblower to file an
application for transfer from his workplace in an anticipation of victimization,
provided that there is some reasonable ground that victimization is likely to occur.

§12 provided a scheme of witness protection to those who are“persons assisting the
inquiry” and §13 gave the competent authority a residuary provision to pass interim
orders for “granting adequate protection to the witnesses and other persons
assisting the inquiry”.

109
Law Commission of India, One Hundred & Seventy Ninth Report - On the Public Interest Disclosure &
Protection of Informers, December 2001, p.94, ¶ 7.15(i).
110
See, Whistleblowing Protection Act, 2011.
111
Ibid.
112
Ibid.
113
Ibid.

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 The Act also provides the same kind of protection that were provided in the Bill,
Chapter V, provides for “Protection to the persons making disclosure” from §11-
§14.
The Bill stated that the onus of protecting a whistleblower would be on the Central
Government. There is no mention of the State Governments in this context. It is
obvious that in a federal setup, the Central Government cannot provide for
protection for employees of the State Government. It was suggested that the Bill
should authorize the State Governments to make rules for carrying out the
provisions of this Act and also protect whistle-blowing employees in the States.

It is submitted that neither the Bill nor the Act included any specific provision of the
State protection to those who are victimized because the capacity of the State to
provide for an effective mechanism for ensuring protection to the life, liberty and
property of the complainant would be directly proportional to the degree of faith
that the public would be willing to repose in the noble system envisaged in the Bill
to promote accountability to the public. Therefore, it is inevitable that the
Government puts in place a flawless mechanism for the protection of the
whistleblower in order to ensure effective implementation of this statute. It is
submitted that a new Clause may be inserted in Chapter V of the Act to provide that
the burden of proving that a public interest disclosure, was not revealed to anybody,
without proper authorization, shall be on the Public Authority dealing with the
disclosure. It was felt that such a provision will ensure that the confidentiality of the
complainant is not compromised by the Public Authority.

[p.] Frivolous/malafide disclosure

“One smidgen of falsehood, fallacy, or overstatement from a whistleblower cancels

a truckload of truth, logic, and accuracy.”
Bill Corcoran

Both the Bill and Act provided provision to deal with ‘Frivolous/malafide
disclosure’. Clause 16114 of the Bill and §17115, the bill provided up to three years
114
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, § 16.
115
See, Public Interest Disclosure (Protection of Informers) Bill, 2002, §17.

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 and also to fine which may extend up to fifty thousand rupees 116 whereas the act
provided punishment extend up to two years and also to fine which may extend up
to thirty thousand rupees117.

It is submitted that in terms of imprisonment, the bar is too high. In fact, it acts as a
big deterrent for anybody to even use the Act. There are lot of applications which
are filed in the Supreme Court and the High Courts which are frivolous, which are
misconceived, but the court does not send those people to jail. It usually just fines
them. Therefore, “Currently the issue, now, is that there are whistleblowers.
Maybe, there are not enough whistleblowers, but we do have a lot, I mean lot of
corruption.”So, the real question is how to make sure that people who find fault
with the functioning, in terms of real corruption happening can come forward
without fear of victimization or suffering any consequences. And, at the same time,
we need to make sure that honest officers are not unnecessarily dragged.

That is why a clause to penalize the people for mala fide and knowingly false and
misleading complaints is inevitable. The provision for penalizing frivolous/
malafide complainants is acceptable; but the quantum of punishment prescribed in
the Act is not at all acceptable. It will not only be a major deterrent for the
prospective whistleblowers, but also increase the possibility of misuse of this
provision, especially in cases where the accused is high and mighty and is able to
influence the decision as to whether a complaint is frivolous/ malafide. There may
be case where the complaint is not proved beyond reasonable doubt or a complaint
is not found to be sustainable or a complaint is dismissed for other reasons, it should
not be, termed as frivolous/ malafide, it should be expressly mentioned in the act as
an explanation. It is submitted that whether a disclosure is frivolous/ malafide or
not, the Competent Authority should exercise great amount of caution and give
primary importance to the fact whether the complainant, while making the
disclosure, had based his/ her action on the documents/ information in his
possession/ knowledge. Hence, the focus should be on the intention and not the
outcome of the enquiry.

116
Supra note 81.
117
Supra note 82.

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 [q.]Role of Competent Authority

The role of the Competent Authority under the Bill was of conducting investigation
and inquiry as it was provided under clause (5) sub-clause(6) 118 whereas under the
Act also role of the Competent Authority has changed to a great an extent as
provided under §5(7).119

The role of the Competent Authority under the act is limited to the extent of
recommending to the public authority, certain measures, against the public servant.
Upon which the public authority are bound to make decision within three months of
receipt of such recommendation and it provides the discretion to the public authority
that in case, if does not agree with the recommendation of the Competent Authority,
it shall record the reasons for such disagreement as provided under §5(8).120

118
See, Public Interest Disclosure (Protection of Informers) Bill, 2002.
119
See, Whistleblowing Protection Act, 2011.
120
Ibid.

[37]
 CHAPTER 3
THE AMERICAN MODEL OF WHISTLEBLOWING

‘History will have to record that the greatest tragedy of this period of social transition
was not the strident clamour of the bad people but the appalling silence of the good
people.’121

Martin Luther King Jr.

3.1. Introduction

Whistleblowers protection has provided a valuable service to both their employers and the
public at large in U.S. They have played a prominent role in U.S.A, in the discovery and
remediation of employer and government misconduct in such areas as aviation safety,
public health, privacy, and corporate sales and marketing practices. As these employees
are often in a unique position to recognize and report wrongdoing within both the private
and public sectors. They can alert employers to problems before those problems escalate.
If an employer refuses to resolve the issue, employees may be the only parties capable of
reporting the problem to external authorities. As one court noted, "[w]ithout employees
who are willing to risk adverse employment consequences as a result of whistleblowing
activities, the public would remain unaware of large-scale and potentially dangerous
abuses."122The presence ofwhistleblowers also helps deter misconduct in the first instance
and as a warning for future corrupt acitivity. Finally, information provided by
whistleblowers can substantially reduce the cost to the public of detection and
investigation of wrongdoing or corruption.

121
Nfor, N., “In Chains for My Country: Crusading for the British Southern Cameroons”,p. xiii,LangaaRpcig,
2014
122
Dolan v. Cont'l Airlines, 563 N.W.2d 23, 26 (Mich. 1997).

[38]
 John Stuart Mill wrote over a century ago:

“The proper office of a representative assembly is to watch and control the

government: to throw the light of publicity on its acts: to compel a full exposition
and justification of all them which anyone considers questionable: to censure
them if found condemnable and if the men compose the government abuse their
trust, or fulfill it in a manner which conflicts with the deliberate sense of the
nation, to expel them fromoffice.... This is surely ample power and security
enough for the liberty of the nation.”123

The US has dozens of whistleblower laws at the state and federal level, as well as
separate clauses in legislation designed to achieve other health, safety or welfare
objectives. There are more than a hundred similar statutes in the various States in US
which protect different classes of whistle blowers. In some of the States the protection is
extended to employees in the private sector also. Some of these laws also deal with the
‘right to disobey’ illegal orders of superiors. The Whistleblower Protection Act of 1989,
the successor to the ineffective Civil Service Reform Act of 1978 124, provides general
whistleblower protection to most federal employees and allows reporting to anyone 125. It
also provided a specific external entity to which whistleblowers may report, namely the
Office of Special Counsel126.

The Office of Special Counsel investigates both the alleged violations that whistleblowers
report and claims of retaliation against whistleblowers.127 While the WPA applies only to
federal employees, some federal statutes extend whistleblower protections to workers in
the private sector. For instance, the Clean Air Act 128, the Energy Reorganization Act129,

123
Barnett, H., Constitutional & Administrative Law, Taylor & Francis, 2014, p.299 ¶3.See, Advani, L. A
Prisoner's Scrap-book Arnold-Heinemann, 1978. See also, G. Calvin MacKenzie, American Government:
Politics and Public Policy (Random House Series in Political Science), Random House Inc., 1986, p. 134.
ISBN-10:0075544768.
124
See Thomas M. Devine, The Whistleblower Protection Act of 1989: Foundation for the Modern Law of
Employment Dissent, 51 Administrative Law Review, 531, 532-35 (1999) (discussing the ineffectiveness of the
CSRA).
125
5 U.S.C. § 2302(b)(8) (2006).
126
Id.
127
5 U.S.C. § 1212(a) (2006)
128
42 U.S.C. § 7622 (2008).
129
42 U.S.C. § 5851 (2008).

[39]
 the Safe Drinking Water Act130, and the Occupational Safety and Health Act131 all provide
some form of protection to public or private employees who report employer actions that
violate the respective statute.

The Sarbanes-Oxley Act is a prominent recent example. It provides protection to

employees of publicly traded companies who report violations of federal securities
laws.132These topic-specific statutes, as interpreted by the federal courts, also provide
employees with significant discretion when deciding on a report recipient.

The four principal acts the False Claims Act, 1863 133, Civil Service Reform Act, 1978 134,
Corporate & Criminal Accountability Act (Sarbanes-Oxley Act), 2002 135 and the
Whistleblower Protection Act, 1989136. It is these legislations that will be examined for
the purpose of this dissertation.

3.2. Background

In the United States, legal protections vary according to the subject matter of the
whistleblowing, and sometimes the state in which the case arises. The Continental
Congress enacted the first whistleblower protection law in the United States on July
30, 1778 by a unanimous vote.137 The Continental Congress was moved to act after an
incident in 1777, when Richard Marven and Samuel Shaw blew the whistle and
suffered severe retaliation by Esek Hopkins, the commander-in-chief of the
Continental Navy.138 Congress declared that the United States would defend the two
whistleblowers against a libel suit filed against them by Hopkins. The Continental
Congress also declared it the duty of “all persons in the service of the United States,
as well as all other the inhabitants thereof” to inform the Continental Congress or

130
42 U.S.C. § 300j-9i (2008).
131
29 U.S.C. § 660(c) (2006).
132
18 U.S.C. § 1514A (2006).
133
31 U.S.C. §§ 3729–3733
134
Pub.L. 95–454, 92 Stat. 1111.
135
Pub.L. 101-12, 103 Stat. 16.
136
See, Sangrey Lewis,"Whistleblowing: US Approach to Disclosure in the Whistelblowing."Virginia Journal
of International Law, Vol. 49 (2009): 899.
137
Dr-Buchert, Informant – Whistleblower, accessed from http://www.dr-buchert.de/en/glossary/informant-
whistleblower.html.
138
See, World Heritage Encyclopedia, WHISTLE-BLOWING, accessed from
http://self.gutenberg.org/articles/Whistle-blowing#India.

[40]
 proper authorities of “misconduct, frauds or misdemeanors committed by any officers
in the service of these states, which may come to their knowledge”.

Seventy-five years after the ratification of the Constitution, as the Civil War render
the United States, Congress enacted one of the first laws that protected
whistleblowers, the 1863 United States False Claims Act (revised in 1986), which
tried to combat fraud by military suppliers.139The act encourages whistleblowers by
promisingthem a percentage of the money recovered or damages won by the
government and protects them from wrongful dismissal.

3.3. Major Factors Leading to Whistleblowing Legislation

There were many factors that led the American government to be the leader in
developing legislation for whistleblowers in their country. The first factor was the
situation with patronage employees of the late eighteenth century. A second major
factor was the evolution of Congress over the year. It was Congress responsibility to
investigate the allegations of illegal or improper conduct by the Executive Branch.
Though, the Congress often ignored these allegations.But these shortcomings were
greatly demonstrated to the public in the Watergatescandal. 140 (“Watergate” is a
general term used to describe a complex web of political scandals between 1972 and
1974. The word specifically refers to the Watergate Hotel in Washington D.C.141)‘

The first major factor was that the American government was primarily staffed with
patronage employees prior to 1883. The person up for election would promise jobs for
key support by leaders in the community and Cabinet positions for support
frommembers within his or her party. These are just some of the patronage examples
of the times. This patronage led to an administration that was in the hands of
incompetent political hacks, and corruption was rife throughout the government.

139
Yellow Freight System, INC. v. National Labor Relations Board, Supreme Court of United States, October
Term, 1991, accessed from, https://bulk.resource.org/courts.gov/juris/j1705_20.sgml.
140
Miceli, Marcia P., Janet P. Near, and Terry Morehead Dworkin. "A Word to the wise: How managers and
policy-makers can encourage employees to report wrongdoing." Journal of Business Ethics 86, no. 3 (2009):
379-396. See, also Miceli, Marcia P., Janet Pollex Near, and Terry M. Dworkin. Whistle-blowing in
organizations.Psychology Press, 2013.
141
Watergate: The Scandal That Brought Down Richard Nixon, accessed from, http://watergate.info/.

[41]
Some of the federal employees who were trying to expose corruption to the public
were quickly silenced by being fired, threatened, transferred harassed and
occasionally killed in 1881.

The Pendleton Act in 1883 established the civil service system that was based on a
merit principle for the hiring of federal employees as in contrast to patronage
appointments. It was passed in the backdrop of President Garfield assassination by an
angry, rejected jobseeker. Chester A. Arthur, the next President, wanted to prevent
any more assassinations from occurring, especially his own and the Pendleton Act.
This Act merely helped to decrease the amount of patronage that was occurring in the
federal government. The issue of patronage is as relevant today as it was in the 1880s.

The Ethics Act permits the Attorney General to ask the Special Federal Court for an
Independent Counsel when there is reason to believe that an official has violated a
criminal law. Congress and Resident Carter believed that the Ethics in Government
Act of 1978 and the establishment of the Independent Counsel would restore the
public's confidence in the objectivity of investigations involving allegations of
wrongdoing on high-level ranked government officials. A second major factor was the
evolution of Congress. The United States of America uses a presidential form of
government. Hence, Congress is responsible for the administrative oversight.
Congress establishes various committees to scrutinize the decisions and actions of the
executive branch. 'The importance of administrative oversight derives Born a view
that was widely held among the author of the Constitution: that the American people
need not only be service by their government but protected from it as well”.

The committees and organizations that Congress has established to scrutinize the
Executive Branch cannot take punitive action towards the officials. However, the
legislators themselves can take action against the wrongdoing of public officials. The
House of Representatives may impeach an official by calling for a majority vote to
impeach the person. The Senate sits as a court in this situation, and both parties are
allowed to present their case. Once the cases have been presented a vote is held to
decide if the charged person is guilty of the alleged charges. Two-thirds of the vote is
required to convict an official and conviction automatically results in the person's
removal from office. This is the only way that Congress can remove Executive

[42]
 Branch Officials that are committing wrongdoings. Article II §4 of the Constitution
specifies “treason, bribery, or other high crimes and misdemeanors” as impeachable
offenses.142 Since there is no clarification as to which acts constitutes high crimes or
misdemeanors, Congress gets the discretion to decide as to what it means in each and
every situation. Most scholars agree that the impeachable offenses should include an
act(s) involving illegality or unconstitutional behavior. An official should not be
impeached for unpopular behavior.

Impeachment is a difficult, slow and cumbersome process that rarely results in the
impeachment of the accused. Andrew Johnson, in 1868, was the only President that
was ever impeached. However, the Senate did not convict Johnson. Opponents argued
that the impeachment was entirely biased for some people detested Johnson's policy
toward the South after the Civil War. There was much controversy surrounding the
charges since many supporters viewed the charges as not referring to high crimes or
misdemeanors. For example, charges are not in themselves crimes. There have
continued to be scandals of illegal, immoral and illegitimate activities of the
government since its conception in the United States. Some of these scandals have led
the public to push the American government into establishing laws that would protect
the people that blow the whistle on the government and act on behalf of the public's
interest. The third major factor that led to the whistleblowing legislation was the
Watergate scandal.

The Watergate affair happened during the first Nixon administration. The trials,
investigations, hearings and committee deliberations related to the allegations of
illegal acts arising from President Nixon's involvement in a cover-up were conducted
over two years. The allegations against President Nixon were based on his effort to
cover up his subordinate’s involvement in the burglary of the Democratic National
Committee headquarters in the Watergate building.

142
See, Rotunda, Ronald D. "Essay on the Constitutional Parameters of Federal Impeachment, An." Ky. LJ 76
(1987): 707. Berger, Raoul. Impeachment: the constitutional problems. Vol. 23.Harvard University Press,
1974.Rogers, E. Mabry, and Stephen B. Young. "Public Office as a Public Trust: A Suggestion that
Impeachment for High Crimes and Misdemeanors Implies a Fiduciary Standard." Geo. LJ 63 (1974): 1025.
Yankwich, Leon R. "Impeachment of Civil Officers Under the Federal Constitution." Geo. LJ 26 (1937): 849.

[43]
 Watergate is by far one of the worst presidential scandals in the history of the United
States. In the story of Watergate143, five burglars were found breaking into democratic
offices at the Watergate complex in Washington DC. The break-in was passed off as
just another burglary, but when the burglars were found to have connections with the
CIA, questions were starting to be asked, especially, when the phone number of
Howard Hunt was found in one of the burglar’s phone books, it made people think,
why would one of the burglars have the phone number of one of the president’s men?
When Watergate was uncovered, it revealed that the president lied about his
involvement, concealed self-incriminating evidence, abused his power, and planned to
have the CIA stop the FBI investigations.

Initial investigations of Watergate were heavily influenced by the media, particularly

the work of two reporters from the Washington Post, Bob Woodward and Carl
Bernstein, along with their mysterious informant, Deep Throat, who provided
information to Bob Woodward and Carl Bernsteinof The Washington Post in 1972
about the involvement of United States President Richard Nixon's administration. In
2005, thirty-one years after Nixon's resignation and eleven years after Nixon's death,
Deep Throat was revealed to be former Federal Bureau of Investigation Associate
Director Mark Felt (Whistleblower) also known as Deep Throat. Political
investigations began in February 1973 when the Senate established a Committee to
investigate the Watergate scandal. The public hearings of the Committee were
sensational, including the evidence of John Dean, Nixon’s former White House
Counsel.

The final blow came with the decision by the Supreme Court to order Nixon to release
more White House tapes. The transcripts brought to light a significant amount of
evidence against Nixon. The transcripts revealed payoffs, affiliation with the
burglaries and the OK's to the cover-up, but most important the transcripts showed
that Nixon had lied repeatedly after he had denied knowing anything about the
conspiracy. Soon the country would find a new problem with the tapes. When the
president’s lawyers were going over the tapes, they came along an 18 minute gap
during a conversation with Nixon and Haldman, which still remains a mystery. One of

143
"The Watergate Scandal." 123HelpMe.com., accessed from<http://www.123HelpMe.com/view.asp?
id=95929>.

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 these became known as the ‘smoking gun’ tape when it revealed that Nixon had
participated in the Watergate cover-up as far back as June 23, 1972. In 1974, the
House of Representatives authorized the Judiciary Committee to consider
impeachment proceedings against Nixon. Around the country, there were calls for
Nixon to resign and subsequently, he resigned on August 9, 1974. This scandal, which
was the last major factor, put immense pressure on the following government to
introduce whistleblowing legislation that would provide protection for people who
exposed wrongdoing in the government. This scandal led the public to be very
skeptical of integrity of the officials in office.

3.4. Specific Federal Statutory Provisions for Whistleblowers

It is important to note that all of the federal statutes that have potential provisions for
whistleblower. Legislation can originate in either the House of Congress or
simultaneously in the Congress and the House of Representatives. Only a Senator or a
Representative may in the Senate and the House introduce a bill. The Senate and
House of Representatives must approve the laws in identical form. “Lawmaking
involves the comprehensive information gathering, prolonged discussion, complex
and often tedious negotiation and political bargaining amongst adversaries.” 144The
legislation for protecting whistleblowers has evolved over time in America. Agencies
within the government normally resist external demands and pressures for change and
adamantly attempt to defend their own territory. This is done sometimes at all costs
through illegal, immoral and illegitimate means. At times, in USA, the Congress and
the President have found it easier to create a new agency than to force an existing
agency to implement programs it opposes. The public relies on whistleblowers to
expose this duplication, waste, corruption and collusion. Over the years, there have
been various statutes that have been enacted that provide general protection for
whistleblowers and others that provide protection for employees exercising rights
conferred by specific statutes.

One of the relevant statutes for whistleblowers is the Freedom of Information Act.
This Act was passed in 1967, but was significantly amended in 1974. The practice for
144
Supra note 127 at 181.

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federal employees of disclosing information on a 'need to know' basis was changed to
a 'right to know' policy. This helped whistleblower establish a legal defense for
disclosing information about the illegal, immoral or illegitimate activities of the
government. Whistleblowers could argue that the public had a 'right to know' about
the wrongdoing.

Secondly, the House and the Senate each passed their own codes of ethics in 1977.
These codes were very similar in nature. The codes of ethics made it mandatory for
the Senators and the Representatives to provide a personal financial audit each year.
These new codes of ethics were created based on the assumption that financial
transactions were associated with improper influence. Improper financial transactions
could occur both inside and outside of the government. For example, a bribe to a
public official could be paid from the opposition party, an individual, an interest
group or a corporation but there are not flawless, as these codes of ethics didn’t dealt
with the issue of improper bargaining that occurs between government officials.

Thirdly, the Ethics of Government Act of 1978 established a special prosecutor, later
known as Independent Counsel with the authority to investigate allegations of
wrongdoing by the executive branch officials. The Independent Counsel was part of
the Office of Special Counsel (hereinafter referred as ‘OSC’). This Independent
Counsel would prosecute the parties in the government that retaliated against the
whistleblower, once the whistleblower filed a formal complaint with the Merit
Systems Protection Board.

A fourth relevant statute is the Civil Service Reform Act. The Civil Service Reform
Act in 1978 abolished the old Civil Service Commission and replaced it with the
Office of Personnel Management (OPM). OPM is responsible for the screening and
hiring of federal employees. The Civil Service Reform Act created a Merit Systems
Protection Board (hereinafter referred as ‘MSPB’) that hears complaints from federal
employees. This is the authority to which the whistleblower would make a complaint
regarding any retaliation or reprisal that may have been directed toward the individual
in his or her agency or organization. Merit Systems Protection Board can provide
limited protection for 'Whistleblowers" who expose the wrongdoings of their agency.
The ninth principle of the United States Code, a legal framework governing personnel

[46]
 practices at a federal level, states that employees who speak out about government
wrongdoing should be protected from retaliation.

The Civil Service Reform Act states that in order to receive protection, an employee
must have adequate documentation proving there has been a violation of a law, rule or
regulation; or there has ken some gross mismanagement, waste of funds, abuse of
authority; or substantial and specific danger to public health and safety. 145This Act did
not provide protection for whistleblowers that disclosed confidential information that
was prohibited by law or specifically required by the Executive Order to be kept
secret in the interest of national defense or the conduct of foreign affair.

Whistleblowers do not always want to have their identities linked to allegations so

that they become known to the public and the accused. Individuals want the
wrongdoing to end but fear the consequences they may endure as a result of blowing
the whistle. The Office of Special Counsel (OSC) was one of the solutions to this
problem. A whistleblower would use the Office as a mechanism to anonymously blow
the whistle on the wrongdoing of an agency without the fear of retaliation and
identification.

The Civil Service Reform Act of 1978 established 'hot lines' for whistleblowers. In
addition, the Act helped to create agencies and subunits to protect federal employees
against retaliation when blowing the whistle on wrongdoing in their agencies. Other
agencies have established confident & lines through which anonymity of the
whistleblower cm be protected. For example, the GAO established a whistleblowing
hotline in 1979. This hotline was seen as a mechanism for combating fraud, waste and
abuse in federal expenditures. It has also been argued that "hotlines" act as a deterrent
for federal employees and even agencies as a whole to commit fraud.

[a.] False Claims Act

The American government (as like any other federal or democratic government),
tenders/contracts for goods and services for their citizens costing billions each year to
the state.The False Claims Act was established to prevent these companies from
145
United States, Civil Service Reform Act, Washington, D.C.: Congressional Record 1978, Section 2302.

[47]
 cheating the government on those goods and services, as it can be prevented by
disclosing the illegal and illegitimate activities of their employers. The False Claims
Act provides monetary compensation for individuals that expose the wrongdoing of
agencies or corporations. The False Claims Act, 1863146 (revised in 1986) was enacted
to combat fraud by suppliers to the federal government during the civil war. Under
that Act, whistle blowers could receive a percentage of the money recovered or
damages suffered by the government in fraud cases they exposed. It imposes liability
on persons and companies (typically federal contractors) who defraud governmental
programs. It is the federal Government’s primary tool in combating fraud against the
Government. It provides a ‘Qui Tam’ provision that allows people who are not
affiliated with the government, called "relators" under the law, to file actions on
behalf of the government (informally called "whistleblowing" especially when the
relator is employed by the organization accused in the suit). Persons filing under the
Act stand to receive a portion (usually about 15–25 %) of any recovered damages. As
of 2012, over 70 % of all federalGovernment False Claim Act, actions were initiated
by whistleblowers147 i.e. relator was employed by the organization accused, in the suit.
Claims under the law have involved health care, military, or other government
spending programs, and dominate the list of largest pharmaceutical settlements.148 The
government recovered $38.9 billion149 under the False Claims Act between 1987 and
2013150 and of this amount, $27.2 billion 151 or 70%152 was from qui tam cases brought
by relators.153

There were major amendments to the False Claims Act in 1986. “Any person with
knowledge of fraud or false claims against the government” can bring a lawsuit in his
or her name and in the name of the United States. The whistleblower does not have to
have first-hand knowledge of the fraud; the person can have learned information Corn
anyone else, like a friend, relative, co-worker, competitor, etc. The information must
simply not be publicly disclosed and a case cannot already be started on the same

146
31 U.S.C., §§ (3729–3733), also called the "Lincoln Law".
147
See,Fraud Statistics, U.S. Department of Justice (Dec. 23, 2013), available at http://www.justice.gov/civil/
docs_forms/C-FRAUDS_FCA_Statistics.pdf.
148
Ibid.
149
Ibid.
150
Ibid.
151
Ibid.
152
Ibid.
153
Ibid.

[48]
 matter.”154 The False Claims Act is relevant in cases regarding the federal
government, but does not cover state government or private cases. It can be applied
even when the fraudulent party does not directly cheat the government, but rather the
party cheats the Company that is receiving money from the government for goods or
services or grants. The whistleblower first files the case in the federal court, where it
is reviewed to determine if a valid case exists. The government has sixty days to
evaluate the claim. The government will then determine whether both the
whistleblower and the government will bring on the lawsuit. If the government does
not accept the case, then the whistleblower can still bring forth the claim in his name
only.

The reward can be substantial if the whistleblower wins the case. The company will
have to pay the government a penalty of three times the amount it gained in fraud. If
the case was in the name of the whistleblower and the United States, the
whistleblower can receive between fifteen to twenty-five percent of the penalty that is
paid to the government. If the case was in the name of the whistleblower only, the
person can receive between twenty-five to thirty percent of the penalty. The amount a
company may have to pay the government can easily range into the hundreds of
millions or even billions of dollars. Therefore, the whistleblower could be looking at
receiving a, enormous reward or compensation for blowing the whistle on a particular
situation.

[b.] The Whistleblower Protection Act

The movement for the passing of specific legislation that would protect
whistleblowers began in the mid nineteen-eighties. Critics contended that the OSC
was not an advocate for whistleblowers. This was substantiated by a 1985 GAO report
that indicated that OSC in 1984 had turned down ninety-nine percent of all of the
whistleblowers' complaints of retaliation that they felt they had endured from the
wrongdoer(s).155 Reports like this helped to substantiate the criticism that the Office of
Special Counsel rarely protected the whistleblower nom the retaliation that the person

154
United States, False Claims Act, Washington, D.C.: Congressional Record, 1986, section 1-2.
155
See, Chalk, R., "Making the World Safe for Whistleblowers", Technology Review, 91, January 1988, p.55.

[49]
 would experience in his or her agency. Subsequently, legislation was introduced to
provide protection for the whistleblower that reported wrongdoing.156

President Reagan made an executive order during his presidency that stated federal
employees had to sign Standard Form 189. Standard Form 189 held employees liable
for the disclosure of classified information or information that could be deemed
classifiable. This was a major setback for potential whistleblowers.But administration
officials said the new form was designed merely to reinforce the need to maintain the
security of those documents classified as top secret.

As the Federal employees are an important party, which, like elected representatives
watches over the government to ensure that it is acting with integrity and honesty. The
federal employees had to ask their supervisors if the information was classifiable
before they could disclose the information to any other person internally or externally.
This led to a silencing process of whistleblowers for it gave the government the
ammunition to both fire the employee in retaliation for breaking confidentiality and to
bring charges upon the whistleblower for leaking confidential classified information.

The National Federation of Federal Employees filed a lawsuit on August 17, 1987,
challenging the constitutionality of the secrecy pledge.157 In May 1988, a U.S. District
Court ruled in National Federation of Federal Employees v. United States 158 that
Standard Form 189 was constitutional. The National Federation of Federal Employees
and other plaintiffs appealed to the U.S. Supreme Court. In July 1988, the District
Court further held in National Federation of Federal Employees v. United States159
that certain terms in Standard Form 189 needed additional clarification by the
executive branch. NFFE appealed this ruling to the U.S. Court of Appeals for the
District of Columbia Circuit.160 Meanwhile, in September 1988, the federal
government issued Standard Form 312 as a replacement for Standard Form 189.
Whistleblowers usually have documentation to support the allegations of wrongdoing
that they have reported. Therefore, the whistleblower may be exposed to charges of

156
Ibid.
157
See, "Labor Suit Widens Drive on Secrecy Pledge," Associated Press, September 3, 1987.
158
(688 F. Supp. 671)
159
(695 F. Supp. 1196)
160
See, Information Security Oversight Office, 1990 Report to the President, 1990.

[50]
 theft, violation(s) of confidential information, or misusing “classified information” as
mentioned in violation of Standard Form 189. The new form expunged much of the
objectionable language which had so deeply concerned NFFE and other unions. On
April 18, 1989, the Supreme Court held in American Foreign Service Association v.
Garfinkel161, that the issuance of Standard Form 312 may have resolved the conflict.

Whistleblowers usually have documentation to support the allegations of wrongdoing

that they have reported. Therefore, the whistleblower may be exposed to charges of
theft, violation(s) of confidential information, or misusing “classified information” as
mentioned in violation of Standard Form 189. Thereafter, Bill 508 was introduced in
1988 to eliminate two other impediments that made it externally difficult for
whistleblowers and other victims of prohibited personnel policies to win their cases
for redress. Firstly, the Bill was to modify or overturn all inappropriate administrative
and judicial determinations in an effort to make it more probable that whistleblowers
could win their cases. Secondly, the Office of Special Counsel was appointed as the
advocate for whistleblowers or other victims of prohibited personnel practices. The
OSC would no longer act to defend and protect the merit system in the government.

This Bill was resoundingly passed by 418 votes to ni1 in the House of Representatives
and by voice vote in the Senate, only to be vetoed by President Reagan on October 27.
1988. There was no opportunity for Congress to override the President's veto since the
veto had occurred after the end of the Congressional session. The Democrats argued
that President Reagan was fearful of the ramifications this Bill may have had for him
in regards to his conduct in office. In 1989, the Attorney General negotiated
Whistleblower Protection Act (hereinafter referred as ‘WPA’), which was at that time
seen as a compromise between Congress and the Bush administration. The Civil
Service Reform Act was amended by the Whistleblower Protection Act. Public
Law 101-12, on April 10, 1989. Whistleblower Protection Actwas introduced
for the same reasons as Bill §508.

The Whistleblower Protection Act States: “The purpose of this Act is to

strengthen and improve protection for the rights of federal employees, to prevent

161
On April 18, 1989, the Supreme Court held in American Foreign Service Association v. Garfinkel(490 U.S.
153) that the issuance of Standard Form 312 was expected to resolve the conflict.

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 reprisals, and to help eliminate wrongdoing within the government by: Mandating
that employees should not suffer adverse consequences as a result of prohibited
personnel practices: and Establishing: that the primary role of the Office of Special
Counsel is to protect employees, especially whistleblowers, from prohibited personnel
practices:that the Office of Special Counsel shall act in the interests of employees
who seek assistance from the Office of Special Counsel; and that while disciplining
those who commit prohibited personnel practices may be used as a means by which to
help accomplish that goal, the protection of individuals which are the subject of the
prohibited personnel practices remains the paramount consideration. 162

This Act encourages civil servants to report the abuses of trust and illegality while
protecting the person from the retaliations within their own agencies. 163The intention
of the Act was to provide a ‘positive climate for whistleblowing.’164An individual
being retaliated against because he or she blew the whistle on their agency often uses
Whistleblower Protection Act. The employer must prove that its actions were
legitimate on independent grounds against said employee. When the whistleblower
files a reprisal complaint, the allegations of wrongdoing are simultaneously forwarded
to both the law enforcement and federal agencies.

First result of Whistleblower Protection Act was that the Office of Special
Counsel was created as an independent agency instead of a rather than a branch of
Merit Systems Protection Board.

Second result of Whistleblower Protection Act is that the Special Counsel is

required to maintain the anonymity of the whistleblower unless the individual
consents to the disclosure of his or her identity or “unless the Special Counsel
determines that the disclosure of the individual's identity is necessary because of the
162
Ibid.
163
See, United States, Whistleblower Protection Act, Washington, D.C.: Congressional Record, April 1989, §2.
164
Mesmer-Magnus, Jessica R., and ChockalingamViswesvaran."Whistleblowing in organizations: An
examination of correlates of whistleblowing intentions, actions, and retaliation." Journal of Business Ethics 62.3
(2005): 277-297. Chiu, Randy K. "Ethical judgement, locus of control, and whistleblowing intention: A case
study of mainland Chinese MBA students." Managerial Auditing Journal 17.9 (2002): 581-587. Lewis, David.
"Whistleblowing in a changing legal climate: is it time to revisit our approach to trust and loyalty at the
workplace?." Business Ethics: A European Review 20.1 (2011): 71-87. Zhang, Julia, Randy Chiu, and Li-Qun
Wei."On whistleblowing judgment and intention: The roles of positive mood and organizational ethical
culture."Journal of Managerial Psychology 24.7 (2009): 627-649. Chiu, Randy K. "Ethical judgment and
whistleblowing intention: Examining the moderating role of locus of control." Journal of Business Ethics 43.1-2
(2003): 65-74. Mizutani, H. (2007). Whistleblower protection act.Japan labor review, 4(3), 95.

[52]
 imminent danger to public health or safety or the imminent violation of any criminal
law.”165The Civil Service Reform Act could disclose the whistleblower's identity if it
was "necessary to carry out the functions of the Special Counsel." The changes in
Whistleblower Protection Act were made to alleviate the fear of retaliation and
identity for the whistleblower exposing the wrongdoing.

Third result was that the Whistleblower Protection Act lowered the burden of
proof for reprisal for whistleblowers while increasing the burden of proof for federal
agencies defending the specific personnel decisions. The whistleblower has to prove
by a preponderance of evidence that the whistleblowing was the contributing factor in
the reprisal they experienced from their employer. The employer has to provide 'clear
and convincing' evidence that the organization would have taken the same course of
action towards the person in the absence of whistleblowing.

[c.] The Sarbanes-Oxley Act of 2002.

In the wake of scandals involving Enron, Tyco International, Adelphia, Peregrine

Systems and WorldCom, scandals which cost investors billions of dollars when the
share prices of affected companies collapsed, shook public confidence in the nation's
securitiesmarkets, Congress enacted the landmark Sarbanes-Oxley Act of 2002166, the
Corporate and Criminal Fraud Accountability Act of 2002. The Sarbanes–Oxley Act
of 2002 is a United States federal law enacted on July 30, 2002, which set new or
enhanced standards for all U.S. public company boards, management and public
accounting firms.

It provides for sweeping reforms in the way that publicly held corporations account
for and make public disclosures under federal securities laws.167It is named after
165
5 U.S.C.A., § 1213(h).The Act appears at 5 U.S.C.A., §§. 1201-1222 and 2302. Portions of the following
summary of the Act are based on the discussion in: Ontario, Law Reform Commission, Report on Political
Activity, Public Comment and Disclosure by Crown Employees, 1987, at pp. 235-242.
166
The Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204 , 116 Stat. 745 (codified at 15 U.S.C.A. s. 7201 et seq.;
29 U.S.C.A. 1021; 29 U.S.C.A. 1132; 15 U.S.C.A. 7245 et seq.; 15 U.S.C.A. s. 78a et seq.; 18 U.S.C.A. s. 1501
et seq. (2002) [hereinafter the “Act” or Sarbanes-Oxley].
167
The Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745, 745. Generally, Sarbanes-Oxley
creates a new federal agency, the Public Accounting Oversight Board, alters the way accounting and consulting
firms are permitted to practice, alters corporate governance practices (in requiring all public companies to have
independent audit committees); and imposes broader and more severe criminal penalties in the accounting and
securities fraud areas. Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (codified at 15 U.S.C.A.
s. 7201 et seq.; 29 U.S.C.A. 1021; 29 U.S.C.A. 1132; 15 U.S.C.A. 7245 et seq.; 15 U.S.C.A. s. 78a et seq.; 18

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 sponsors U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G.
Oxley (R-OH). The bill was enacted as a reaction to a number of major corporate and
accounting scandals including those affecting as it was enacted in the midst of anti-
corporate environment, corporate whistleblowers favored it enormously.Prior to the
Sarbanes-Oxley Act, the protections for private 168corporate whistleblowers varied
depending upon state law. Because of these varied protections, senior officers and
managers had to worry about the fact that, in some states, they held their jobs at will.
Therefore, they could be fired at any time for no reason. Forty-two states and the
District of Columbia, however, now recognize a cause of action for retaliatory
discharge. These statutes and rulings protect at-will employees who "blow the
whistle" on important public policy issues. Therefore, an employee who is terminated
for refusing to violate the law or for reporting a violation of the law can bring an
action for wrongful discharge against her employer. Upon successful litigation of her
suit, the "wronged" employee can get damages and reinstatement to her job.

It was designed to promote investor confidence by ensuring that the public receives
more information about possible corporate fraud. Such disclosures would ensure that
the markets have perfect information so that investors could make informed
investment choices. It prohibits any public company from discriminating against any
employee who lawfully provides information or otherwise assists in an investigation
of conduct that the employee "reasonably believes" constitutes a violation of the
federal securities laws.169Senator Leahy reported that the Act is designed to “include
all good faith and reasonable' reporting of fraud, and there should be no presumption
that reporting is otherwise, absent specific evidence.”170

Section 802 of Sarbanes-Oxley contains the three rules that affect the management of
electronic records. The first rule deals with the destruction, alteration or falsification
of records, and the resulting penalties. The second rule defines the retention period for
records storage. Best practices indicate that corporations securely store all business

U.S.C.A. s. 1501 et seq. (2002)).

168
In contrast, government whistleblowers were afforded a variety of statutory protections under the Civil
Service Reform Act, 5 U.S.C. § 2302(b), and the Whistleblower Protection Act, 5 U.S.C. § 1201, and its 1994
amendments. 140 CONG. REC. S14668-70, H11419-22 (Oct. 7, 1994).
169
Sarbanes-Oxley Act of 2002 §806(a), Pub. L. No. 107-204, 116 Stat. 745, 802 (to be codified at 18 U.S.C. §
1514A(a)(1)).
170
Legislative History of Title viii of h.r. 2673: the Sarbanes-Oxley Act of 2002, 148 cong. Rec. S7420
(statement of Sen. Leahy).

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 records using the same guidelines set for public accountants. The third rule refers to
the type of business records that need to be stored, including all business records and
communications, including electronic communications.

The Sarbanes-Oxley Act prohibits a corporation from “discharg[ing], demot [ing],

suspend[ing], threaten[ing], harass[ing], or in any other manner discriminat[ing]
against an employee(s) in the terms and conditions of employment” because they
blew the whistle.171 It provides redress to an employee wronged under the Act in that
an employee may bring an enforcement action by filing a complaint with the
Department of Labor within 90 days of the alleged wrongful action that includes any
negative employment action will satisfy this element of a whistleblower claim “if it is
reasonably likely to deter employees from making protected disclosures.”172A
complainant need not prove termination or suspension from the job, or even a
reduction in salary or responsibilities.”173 For example, even being placed on a
possible “lay-off” list has been said to qualify as adverse employment action, even
where the employee was not ultimately laid off174 by the employer.175The employee, if
successful, is entitled to such relief as is necessary to make him whole, including back
pay, reinstatement, and compensatory damages.176

3.5. Conclusion
171
Sarbanes-Oxley Act § 806(a) (to be codified at § 1514A(a)).
172
The Office of Administrative Law Judges has held however, that a company’s filing of a lawsuit against an
employee is not “protected activity” under the Act. See Vodicka v. Dobi Med. Int’l, Inc., Case No. 2005-SOX-
00111, at 11 (ALJ Dec. 23, 2005).
173
Halloum v. Intel Corp., 2003-SOX-7, at 10.
174
Hendrix v. American Airlines, Inc., 2004-AIR-10, 2004-SOX-23 (ALJ Dec. 9, 2003); see Anderson, ARB
Case No. 05-011 at 3 (discussing “blacklisting” by a supervisor, or disseminating adverse information that
affirmatively prevents a person from finding employment, as a possible adverse employment action and noting
that the lower tribunal had held such conduct to be adverse action within the meaning of the STAA).
175
18 U.S.C. § 1514A(b). The Department of labor has at times broadly construed the Act to meet its remedial
purpose, allowing in appropriate cases, the equitable tolling of the 90-day period that a complainant has to file
his claim for relief. See Lerbs v. Buca Di Beppo, Inc., Case No. 2004-SOX-8 at 4 (ALJ Dec. 30, 2003). On the
other hand, the Department of Labor has at times strictly construed the Act, requiring that the “named person”
(the employer) be a “publicly traded company” within the meaning of the statute, and disallowing a claim where
the respondent employer had initially filed a registration statement, but had not later been required to file public
financial reports pursuant to federal securities laws. See 18 U.S.C. § 1514A(b); Flake v. New World Pasta Co.,
Case No. 2003-SOX-00018, at 5 (ALJ July 7, 2003) (holding that respondent employer was not a “publicly
traded company” within Sarbanes-Oxley since it had not filed certain public financial reports). Likewise, the
Department of Labor has consistently held that Sarbanes-Oxley will not be retroactively applied where the
“protected activity” and “adverse employment action” were taken prior to the effective date of the Act. Gilmore
v. Parametric Tech., Case No. 2003-SOX 00001 at 6 (ALJ Feb. 6, 2003); Greenwald v. UBS Paine Webber,
Inc., Case No. 2003-SOX-2, at 1 (ALJ April 17, 2003); 18 U.S.C. § 1514A(b).
176
18 U.S.C. § 1514A(c).See, Watnick, Valerie. "Whistleblower protections under the Sarbanes-Oxley Act: A
primer and a critique."Fordham Journal of Corporate & Financial Law, 12 (2007): 831:838-839.

[55]
 The Ethics of government Act was specifically geared towards situations in which there
was illegal behavior in the public sector. However, many abuses of the public office do not
involve criminal or illegal activity. The Ethics of government Act did not solve the
potential credibility crisis in the public's eye because non-criminal conduct can damage the
public trust as much as criminal conduct. But, there is much public and judicial support for
whistleblowing in cases where criminal laws are being broken. It is much harder to
determine if whistleblowing was appropriate in cases where officials used their position in
ways that are not clearly illegal, but rather immoral. Most of the legislation excludes the
protection for whistleblowers when they expose immoral or unethical activities. The
legislation does not include immoral and unethical activities because immoral and unethical
behavior is rather subjective in nature.

The Civil Service Reform Act provided a great deal of protection for whistleblowers.
However, the Act needed to establish the Office of Special Counsel as an independent
agency rather than an arm of a government branch, Merit Systems Protection Board,to
conduct the investigations into the allegations. It is unclear as to whether the Office of
Special Counsel acts as an arm of the government. Especially, when there is need for
checks against the abuses that are possible by the government. The mechanisms for
investigation and prosecution of official abuse of such powers lie within the same agencies
that may have abused power.177

Some critics argue that having a dollar incentive for whistleblowers under the False Claims
Act could lead to bounty hunting and profiteering by employees in certain situations. It is
true that there may be a large settlement for the whistleblower and the person may be
protected if there is reasonable belief of retaliation in the work environment. However, the
process of blowing the whistle puts immense strain on the whistleblower’s family, career,
health and finances (for example. paying lawyer fees). While there is a chance that the
whistleblower will receive a large settlement, there is an equal chance that the person will
lose almost everything in their life. Losing almost everything would include their career,
possessions due to bankruptcy, marriage, family life, etc. This is the reason why people
rarely blow the whistle without carefully weighing all the variables in the situation.

177
See, Thiessen at n. 36.

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 The False Claim Act, has also ken criticized as being counterproductive to the
Whistleblower Protection Actbecause to provides incentive for employees to bypass
internal reporting systems. The Federal Sentencing guidelines require corporations to set up
these internal reporting systems. Furthermore, many internal reporting systems are
ineffective and can actually help to cover up the indiscretions and illegal behavior of the
company.178 These may be particularly true when a wrongdoer in a private organization has
an accomplice in a government department. One of the biggest stumbling blocks is that the
whistleblowing legislation has evolved inconsistently. There is no coherent body of law that
protects all whistleblowers at the state, municipal, federal and corporate levels.179 The
United States needs to standardize the definition; procedures and compensation for
whistleblowers between all federal laws with clauses for whistleblowing. Statutes of
limitation should be equal instead of ranging from one month to one year.

Furthermore, there should be one agency that receives all the allegations from
whistleblowers and has the responsibility for investigating the claims. Each federal law
usually names a different agency for reporting the wrongdoing, and this agency has
changed over the years. There needs to be a permanent implementation of the federal Anti-
Gag statue that would ensure that Whistleblower Protection Actand other related
statutes would supersede any statutes regarding provision for non-disclosure or other
secrecy and confidentiality contracts. Nondisclosure agreements create work environments
that leave the employees helpless to expose the violations, fraud or illegality they are
witnessing.

The American form of whistleblowing system isn’t perfect though is capable of providing
an ideal protection for whistleblowers. As, the legislations have continued to evolve over
time and will continue to evolve. There is much insight the Indian government can gain
from examining the evolution of the whistleblowing legislation with the American
government. The American government has been struggling with the issue of
whistleblowing for over three decade’s years.180

178
See, Thiessen at n. 36.
179
Ibid.
180
See, Thiessen at n. 36.

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 CHAPTER 4
COMPARATIVE ANALYSIS: AMERICAN MODEL VS. INDIAN MODEL OF
WHISTLEBLOWING

4.1. Scope of Whistleblowing

[58]
 American Whistleblowing system provides protection for the disclosure under The
Civil Service Reform Act abolished the old Civil Service Commission and replaced
it with the Office of Personnel Management. It created a Merit Systems Protection
Board that hears complaints from federal employees, regarding any retaliation or
reprisal that may have been directed toward the individual in his or her agency or
organization.

False Claims Act181provides protection for disclosure where the wrongdoing involves
conduct that cheats the U.S. Government or causes the wrongful expenditure of U.S
Government funds, a whistleblower may be entitled to bring suit under the Act, or
where the conduct cheats state or city governments out of money or deprives them of
the products and services that they contracted to buy, the whistleblower have a right
of action under state or municipal false claims acts. The act also has the provision to
pay rewards to those who report fraud against the federal government and are not
convicted of a crime related to the fraud, in an amount of between 15% and 25% (but
up to 30 % in some cases 182) of what it recovers based upon the whistleblower's
report.183
Whistleblower Protection Act184 for any violation of any “law, rule, or regulation;
orgross mismanagement, a gross waste of funds, an abuse of authority, or a
substantial and specific danger to public health or safety” 185; to serve the public
interest by assisting in the elimination of fraud, waste, abuse, and unnecessary

181
31 U.S.C. §§ 3729–3733.
182
See, For e.g. In May 2004, Warner-Lambert agreed to settle claims brought in Franklin v. Parke-Davis by
whistleblower David Franklin under the False Claims Act that the company had engaged in off-label promotion
of the drug Neurontin. At the time, the $430 million settlement was one of the largest pharmaceutical
settlements in history and the first off-label promotion case successfully brought under the False Claims Act.
(Vide; Melody Petersen, Our Daily Meds: How the Pharmaceutical Companies Transformed Themselves into
Slick Marketing Machines and Hooked the Nation on Prescription Drugs, available at,
http://www.businessweek.com/news/2011-10-20/franklin -settles-whistle-blower-suit-over-neurontin-
marketing.html.
183
See, For e.g. In April 2009, the medical lab company Quest Diagnostics agreed to pay a $302 million
settlement, the largest ever paid by a medical lab company for a faulty product. A subsidiary of Quest, Nichols
Institute Diagnostics Inc., was charged with marketing and selling faulty blood test kits to medical testing lab
companies over a period of six years, despite substantial evidence that the product obtained inaccurate results.
The “qui tam” case, which was brought under the False Claims Act by a California biochemist, launched a
large-scale federal investigation and resulted in the record-setting resolution. The whistleblower was awarded
18% of the $253 million civil settlement (Vide; "Businessman exposed problems with Quest subsidiary's blood
test kits; led to $302 million settlement", Phillips & Cohen LLP Press Release.)
184
103 Statue 16.
185
§ 1213, “Provisions relating to disclosures of violations of law, gross mismanagement, and certain other
matters” of Whistleblower Protection Act of 1989.

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 Government expenditures; and protecting employees who disclose Government
illegality, waste, and corruption is a major step toward a more effective civil
service186. These disclosure(s) can be made to the Office of Special Counsel, who
investigates federal whistleblower complaints or Merit Systems Protection Board, a
quasi-judicial agency that adjudicates whistleblower complaints187.

The Sarbanes-Oxley Act188, 2002 (often shortened to SOX) protects shareholders and
the general public from accounting errors and fraudulent practices in the enterprise, as
well as improves the accuracy of corporate disclosures. It provides for sweeping
reforms in the way that publicly held corporations account for and make public
disclosures under federal securities laws.189
Hence, the American whistleblowing system covers whistleblowing by federal
employees against their superiors in the government, any information orconduct that
has the tendency to defraud government, public whistleblowing against any wrong-
doings and lastly covers corporate frauds.

Whereas under the Indian Whistleblowing system, the Whistleblower Protection

Act, 2011, is very limited to offence under the Prevention of Corruption Act, 1988;
(ii) willful misuse of power or willful misuse of discretion by virtue of which
demonstrable loss is caused to the Government or demonstrable wrongful gain
accrues to the public servant or to any third party; (iii) attempt to commit or
commission of a criminal offence by a public servant, and that acts of ‘willful
maladministration’, 'human rights violations' and wrongdoings that may have adverse
effect on 'public health, safety or environment’ have been deleted despite the law
commission recommendation, because according to government of India “such

186
5 U.S. E. 1201, § 2. Findings and purpose of Whistleblower Protection Act of 1989, [US].
187
5 U.S. E. 1201, §3 Merit Systems Protection Board (MSPB); Office of Special Counsel (OSC); Individual
Right of Action, of Whistleblower Protection Act of 1989, [US].
188
Public Law, 107–204, 116 Stat. 745, enacted July 30, 2002. Also known as the "Public Company Accounting
Reform and Investor Protection Act" (in the Senate) and "Corporate and Auditing Accountability and
Responsibility Act" (in the House) and more commonly called Sarbanes–Oxley, Sarbox or SOX.
189
The Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745, 745. Generally, Sarbanes-Oxley
creates a new federal agency, the Public Accounting Oversight Board, alters the way accounting and consulting
firms are permitted to practice, alters corporate governance practices (in requiring all public companies to have
independent audit committees); and imposes broader and more severe criminal penalties in the accounting and
securities fraud areas. Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (codified at 15 U.S.C.A.
s. 7201 et seq.; 29 U.S.C.A. 1021; 29 U.S.C.A. 1132; 15 U.S.C.A. 7245 et seq.; 15 U.S.C.A. s. 78a et seq.; 18
U.S.C.A. s. 1501 et seq. (2002)).

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 stringent clauses would hamper smooth functioning of Government servants. Hence,
the present grounds enunciated in the Bill would suffice.”190

Hence the definition of Public interest disclosure doesn’t include – “abuse or misuse
of power or discretion”, “mal-administration” which includes any action taken or
purporting to have been taken or being taken or proposed to be taken in the exercise
of administrative or statutory power or discretion, (i) where such action is
unreasonable, unjust, oppressive or discriminatory; (ii) where there has been
negligence or undue delay in taking such action; (iii) where there has been reckless,
excessive or unauthorized use of power in taking such action; (iv) where such action
amounts to breach of trust; (v) where such action involves the conduct of a public
servant which would result in wastage of public funds or causes loss or prejudice to
the State or is prejudicial to public interest in any manner; or (vi) where such action is
outside the authority of law or amounts to violation of systems and
procedures.191Further the suggestion to include violation of any law operational in the
country that has been or is intended to be, committed by public servants. A suggestion
also came that the scope of disclosure should be widened to include complaints
relating to illegal acts performed by contractors/ suppliers directly or through their
employees and/ or hired persons, was also sidelined for the following reasons “this
will increase the ambit of the Bill considerably and Central Vigilance Commission
may not be able to handle complaints on such a large scale.”

It can be safely said that the whistleblower act doesn’t cover a lot of ground when it
comes to the subject-matter or situations where whistleblowing can be done in the
public sector leave alone the private sector that is totally excluded from the Act.

4.2. Reporting Procedure and Enforcement Authority

American Whistleblowing system provides Enforcement Authority–under False

Claims Act to be Federal District Court192.It contains perhaps the oldest
190
Forty Sixth Report on the Public Interest Disclosure & Protection to Persons Making the disclosures Bill,
2010, Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and
Justice, Parliament of India, Rajya Sabha, on 9th June, 2011, ¶5.8, p.20.
191
Law Commission of India, One Hundred and Seventy Ninth Report – Part II- On the Public Interest
Disclosure & Protection of Informers,§ 2, sub-section, (c),(d),(e), p. 2, December 2001.
192
31 U.S.C. § 3730(h).

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whistleblowing protection on the books; and was most recently updated in
conjunction with the Fraud Enforcement and Recovery Act of 2009 and the Patient
Protection and Affordable Care Act. The False Claims Act primarily does two things:
First, it subjects those who defraud the United States government (contractors,
primarily) to liability for damages. Under the False Claims Act, the federal
government, through proceedings brought by the Department of Justice, can recover
treble damages, plus additional fines from convicted contractors.

Second, and more relevantly, it establishes Qui-Tam protections which empower and
incentivize citizens to sue on behalf of the government to recover stolen funds. One
who brings the claim is referred to as a qui tam relator, and is generally a current or
former employee of the contractor who has decided to reveal the contractor’s
misconduct. Whistleblowers that bring cases under the False Claims Act must file
their Complaints under seal in a United States District Court, and provide a copy of
the complaint, as well as a written statement of all material evidence supporting their
allegations to the Attorney General of the United States and the local United States
Attorney. Because the Complaint is filed under seal, neither the defendants nor the
public are aware that a Complaint has been filed. The Complaint remains under seal
for 60 days, while the government investigates the whistleblowers allegations. This
seal is frequently extended for months or years.

Before the whistleblower’s Complaint becomes public, the government notifies the
whistleblower and the Court of whether it will intervene, or become formally
involved, in the case. If the government intervenes, it assumes the lead role in
litigating the case against the defendant. The whistleblower and his or her attorney
remain involved in the case, and often prove to be critical partners to the
government’s prosecution of the case. If the government declines to intervene, the
whistleblower may continue to litigate the case on their own on behalf of the
government. As a reward for reporting fraud, the whistleblower is awarded a share of
15% to 30% of any recovery that the government receives under the False Claims
Act.

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 Whistleblower Protection Act to be Office of Special Counsel (OSC), OSC's
primary mission is the safeguarding of the merit system in federal employment by
protecting employees and applicants from prohibited personnel practices (PPPs),
especially reprisal for "whistleblowing." The agency also operates a secure channel
for federal whistleblower disclosures of violations of law, rule, or regulation; gross
mismanagement; gross waste of funds; abuse of authority; and substantial and specific
danger to public health and safety. In addition, OSC issues advice on the Hatch Act
and enforces its restrictions on partisan political activity by government employees.
Finally, OSC protects the civilian employment and reemployment rights of military
service members under USERRA. OSC has around 120 staff, and the Special Counsel
is an ex officio member of Council of Inspectors General on Integrity and Efficiency
(CIGIE), an association of Inspectors General charged with the regulation of good
governance within the federal government. Its annual budget in2014was US$20.639
million.

The OSC, within 240 days of receipt of a complaint, the OSC must make a
determination as to whether there are reasonable grounds to believe that a prohibited
personnel practice has occurred, exists, or is to be taken. 193 If a positive determination
is made and the information was sent to the Special Counsel by an employee, former
employee, applicant for employment, or an employee who obtained the information
acting within the scope of employment,194 the Special Counsel must transmit the
information to the appropriate agency head and require that the agency head conduct
an investigation and submit a written report.195

The identity of the complaining employee may not be disclosed without such
individual’s consent, unless the Special Counsel determines that disclosure is
necessary to avoid imminent danger to health and safety or an imminent criminal
violation.196 The Special Counsel then reviews the reports as to their completeness and

193
5 U.S.C. § 1214(b)(2)(A)(i).
194
5 U.S.C. § 1213(c)(2).
195
5 U.S.C. § 1213(c)(1).
196
5 U.S.C. § 1213(h).

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 the reasonableness of the findings197 and submits the reports to Congress, the
President, the Comptroller General,198 and the complainant.199

If in any investigation the Special Counsel determines that there are “reasonable
grounds to believe” a prohibited personnel practice exists or has occurred, the Special
Counsel must report findings to the MSPB, the agency involved, the Office of
Personnel Management and, optionally, to the President.200

The Special Counsel need only prove by a preponderance of the evidence that the
disclosure was a “contributing factor” in the personnel action, instead of a “significant
factor.”201 Once the complainant’s prima facie case of reprisal has been established by
showing that the whistleblowing was a contributing factor in the personnel action, the
government is required to demonstrate by “clear and convincing evidence” that it
would have taken the same personnel action even in the absent of such disclosure.202
“Clear and convincing evidence,” although a lesser standard than the criminal
standard of “beyond a reasonable doubt,” is greater than “preponderance of the
evidence.” The WPA provides that an employee, former employee, or applicant for
employment has the independent right to seek review of whistleblower reprisal cases
by the MSPB 60 days after the OSC closes an investigation or 120 days after filing a
complaint with the OSC.203

The Sarbanes Oxley Act to be Occupational Safety and Health Administration

(OSHA) /DOL204. OSHA is an agency of the United States Department of Labor; its
annual budget in2015 is $552 million. Congress established the agency under the
Occupational Safety and Health Act, which President Richard M. Nixon signed into
law on December 29, 1970. OSHA's mission is to "assure safe and healthful working
conditions for working men and women by setting and enforcing standards and by
providing training, outreach, education and assistance". 205OSHA is charged with the
197
5 U.S.C. § 1213(e)(2).
198
5 U.S.C. § 1213(e)(3).
199
5 U.S.C. § 1213(e)(1).
200
5 U.S.C. § 1214(b)(2)(B).
201
5 U.S.C. §1214(b)(4)(i)
202
5 U.S.C. § 1214(b)(4)(B).
203
5 U.S.C. § 1214(b)(1)(D).
204
2 U.S.C. § 6971, 29 C.F.R. Part 24
205
OSHA, About OSHA, U.S. Department of Labor, available at https://www.osha.gov/about.html.

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protection of whistleblowers who report legal violations under the OSH Act and 19
other federal statutes. §11(c) of the OSH Act expressly prohibits retaliation against
whistleblowers who report safety and health-related workplace or environmental
violations by an employer. Similar to other anti-retaliation provisions, an employee
will prevail on a retaliation claim only if he or she can show that: He or she engaged
in protected activity; the employer knew of the activity; the employer subjected him
or her to adverse action; and the protected activity was a contributing reason for the
adverse action.

"Adverse action" is any action "that would dissuade a reasonable employee from
engaging in protected activity," and includes, among other actions, firing, demoting,
disciplining, intimidating, making threats, or reducing the pay or hours of an
employee. The OSH Act’s broad definition of "employee" includes any current or
former employee, as well as any job applicant and "individual whose employment
could be affected by a company or company representative."

Whereas under the Indian Whistleblowing system, the Whistleblower Protection

Act, 2011 makes the reporting and investigation of a public interest disclosure
extremely complex and a closed doors affair coupled with multiple agencies playing
different roles for one simple purpose.

According to the act there are multiple Competent Authorities. For e.g. if the
disclosure is to be made against a Member of the Union Council of Ministers, the
Prime Minister is the Competent Authority in such case. If the disclosure is to be
made against an any Judge (except a Judge of the Supreme Court or of a High Court)
including any person empowered by law to discharge, whether by himself or as a
member of any body of persons, any adjudicatory functions; or (B) any person
authorized by a court of justice to perform any duty, in connection with the
administration of justice, including a liquidator, receiver or commissioner appointed
by such court; or (C) any arbitrator or other person to whom any cause or matter has
been referred for decision or report by a court of justice or by a competent public
authority the High Court is the Competent Authority in such cases. Likewise, there are
seven Competent Authorities under §3 under the act.

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 There are two relevant authorities first is ‘competent authority’ and other ‘public
authority’ under the act. The former, i.e. Competent Authority has the authority to
receive public interest disclosures from any person. There are certain qualifications
provided in the act itself, for a disclosure to qualify as a ‘disclosure in public interest’
for the purpose of commencement of an inquiry under the Act. The Competent
Authority has the following role to play:

Firstly, it has to determine the correct identity of the complainant or the public servant
making the public interest disclosure to the Competent Authority.206 In case the
identity of complaint or public servant making the public interest disclosure has not
been provided i.e. it’s an anonymous complaint or if the identity of complaint or
public servant making the public interest disclosure is found to be incorrect (as
correctness of identity of the complaint or public servant making the public interest
disclosure is a condition precedent for taking any action under the Act), then
Competent Authority is incompetent to take any action, irrespective of the nature of
the allegations leveled against the public servant207.No discretion has been granted in
this aspect to the Competent Authority.208

Secondly, it has the duty to concealing the identity of the complainant, who made the
public interest disclosure. The Competent Authority is thought bound to conceal the
identity of the complainant but if the complainant himself has revealed his identity to
any other office or authority while making public interest disclosure or in his
complaintor otherwise, then the of the Competent Authority not bound to conceal the
identity209.It is interesting to note that according to the act a disclosure has to be made

206
§5 Powers and functions of Competent Authority on receipt of public interest disclosure: (1) Subject to the
provisions of this Act, the Competent Authority shall, on receipt of a public interest disclosure under section 4,
—
(a) ascertain from the complainant or the public servant whether he was the person or the public servant
who made the disclosure or not;
(b) conceal the identity of the complainant unless the complainant himself has revealed his identity to any
other office or authority while making public interest disclosure or in his complaint or otherwise.
207
§4 Requirement of public interest disclosure:(6) No action shall be taken on public interest disclosure by the
Competent Authority if the disclosure does not indicate the identity of the complainant or public servant making
public interest disclosure or the identity of the complainant or public servant is found incorrect or false.
208
Ibid.
209
Supra note 21, clause (b).

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 in writing210or by electronic mail211or electronic mail message212(though the procedure
for making the disclosure will be provided later 213via rules to be made by Central or
State Government214),but as the act makes it mandatory under §4(6)215that the
complainant while making a public interest disclosure has to provide his correct
identity in order to allow the Competent Authority to take any action under the Act.
Hence, the act makes it mandatory for the complainant to make a public interest
disclosure duly providing its identity and simultaneously doesn’t makes it mandatory
for the Competent Authority to conceal it identity because the Competent Authority is
not bound to conceal him as himself revealed his identity in his complaint.216

Thirdly, it shall upon receiving the complaint the Competent Authority shall make a
discreet inquiry for ascertaining that, Whether there is any basis for proceeding
further to investigate the disclosure?.217 The procedure and the time frame for
conducting for making such discreet inquiry shall be made, according to the rules to
be made by Central or State Government 218 Then, irrespective of the result of discreet
inquiry conducted by Competent Authority, if the Competent Authority has reached
the opinion that the disclosure requires to be investigated, then only it shall seek
comments or explanation or report from the Head of the Department of the
210
§3(d) "disclosure" means a complaint relating to,—
(i) an attempt to commit or commission of an offence under the Prevention of Corruption Act,
1988;
(ii) wilful misuse of power or wilful misuse of discretion by virtue of which demonstrable loss is
caused to the Government or demonstrable wrongful gain accrues to the public servant or to
any third party;
(iii) attempt to commit or commission of a criminal offence by a public servant,

made in writing or by electronic mail or electronic mail message, against the public servant and
includes public interest disclosure referred to in sub-section (2) of section 4;
211
Infra note at 26.
212
§3(e) "electronic mail" or "electronic mail message" means a message or information created or transmitted
or received on any computer, computer system, computer resource or communication device including
attachments in text, image, audio, video and any other electronic record, which may be transmitted with the
message;
213
§4. Requirement of public interest disclosure: (4) Every disclosure shall be made in writing or by electronic
mail or electronic mail message in accordance with the procedure as may be prescribed and contain full
particulars and be accompanied by supporting documents, or other materials, if any.
214
§3(j) "prescribed" means prescribed by rules made by the Central Government and the State Government, as
the case may be, under this Act.
215
Supra note at 21.
216
This conclusion may be rebutted if the Central or State Government provides in its rules that the identity of
the complainant is not required to be provided in the complainant itself and is to be provided separately.
217
§5 Powers and functions of Competent Authority on receipt of public interest disclosure: (2) The Competent
Authority shall, upon receipt of the complaint and concealing the identity of the complainant, or the public
servant in the first instance, make discreet inquiry, in such manner and within such time as may be prescribed,
to ascertain whether there is any basis for proceeding further to investigate the disclosure.
218
Supra note at 28.

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 organization or authority, board or corporation concerned or office concerned within
such time as may be specified by it.219

Fourthly, the Competent Authorityafter conducting an inquiry is of the opinion that

the facts and allegations contained in the disclosure are frivolous or vexatious;orthere
are no sufficient grounds for proceeding with the inquiry,it is bound by the Act to
close such cases.220 And if it’s not such opinion and it reveals disclosable conduct then
it can only recommend the Public Authority to take any action within three months
but that period is extendable if the Competent Authority has accepted the request of
Public Authority. The Competent Authority cannot take any further action except
recommending it to Public Authority.221 Further, the discretion has been granted to
Public Authority to reject the recommendation given by the Competent Authority for
the reasons to be recorded.

Hence, under the present the act the role Competent Authority is merely advisory in
nature and has not granted the jurisdiction for particularly redressing the public
interest disclosure. The Public Authority has been granted the jurisdiction and wide
discretion, to take any action upon such disclosure, recommending by the Competent
Authority. The duty to provide protection to the Whistleblower has been levied solely
upon the Central Government.

The American Model of whistleblowing has created a separate agency, under each
Statue that is competent and capable enough for redressing the disclosure, especially
where separate budget has been allotted to them. The agencies are empowered from
receiving the disclosure and protecting the whistleblower to take action upon such

219
§5 Powers and functions of Competent Authority on receipt of public interest disclosure: (3) If the Competent
Authority, either as a result of the discreet inquiry, or on the basisof the disclosure itself without any inquiry, is
of the opinion that the disclosure requires to beinvestigated, it shall seek comments or explanation or report
from the Head of the Departmentof the organisation or authority, board or corporation concerned or office
concerned withinsuch time as may be specified by it.
220
§5 Powers and functions of Competent Authority on receipt of public interest disclosure:(6) The Competent
Authority, if after conducting an inquiry, is of the opinion that—(a) the facts and allegations contained in the
disclosure are frivolous or vexatious;or(b) there are no sufficient grounds for proceeding with the inquiry,it
shall close the matter.
221
§5 Powers and functions of Competent Authority on receipt of public interest disclosure:(7) After receipt of
the comments or explanations or report referred to in sub-section (3), if the Competent Authority is of the
opinion that such comments or explanations or report reveals either willful misuse of power or willful misuse of
discretion or substantiates allegations of corruption, it shall recommend to the public authority to take any one
or more of the following measures

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 disclosures till the end. It required to be remembered that action upon disclosure and
protection to the whistleblower should be simultaneous in order to make the process
swift; the Indian Model fails to so by dividing these function separately between
‘Competent authority’, ‘Public Authority’ and Central Government.

4.3. Types of Protections to Whistleblower

American Whistleblowing - Protection from “prohibited personnel practices” (not

defined in the Act but separately).The WPA protects employees from reprisals in the
form of an agency taking or failing to take a “personnel action.” This encompasses a
broad range of actions by an agency having a negative or adverse impact on the
employee. The statute specifically defines the term “personnel action” to include 11
areas of agency activity: “personnel action” covers appointment, promotion,
disciplinary or corrective action, a transfer, or reassignment, a reinstatement, a
restoration, a reemployment, a performance evaluation, a decision concerning pay,
benefits, or awards, or concerning education or training if the education or training
may reasonably be expected to lead to an appointment, promotion, performance
evaluation, or other action described in this subparagraph, a decision to order
psychiatric testing or examination; and any other significant change in duties,
responsibilities, or working conditions; with respect to an employee in, or applicant
for, a covered position in an agency222

The final categoryof covered personnel actions is intended to embrace significant

actions or changes that, in relation to an employee’s overall duties, responsibilities, or
working conditions, are inconsistent with his or her professional qualifications,
training, grade, or rank. Thus, for example, if an individual is currently employed and
assigned duties or responsibilities consistent with the individual’s professional
training or qualifications for the job, it would constitute a personnel action if the
individual were detailed, transferred, or reassigned so that the employee’s new overall
duties or responsibilities were inconsistent with the individual’s professional training
or qualifications. Or, if an individual holding decision making responsibilities or
supervisory authority found that such responsibilities or authority were reduced so
that the employee’s responsibilities were inconsistent with his or her salary or grade
222
5 U.S.C. § 2302(a)(2)(A).

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 level, such an action could constitute a personnel action within the meaning of this
subsection.

It prohibits reprisals against whistleblowers in such a manner that personnel actions

taken “because of” protected conduct are prohibited, rather than personnel actions
taken “as a reprisal for” protected conduct as it was under Civil Reforms Act. The
amendment was made because the phrase, “as a reprisal for” had been interpreted to
require a showing of an improper, retaliatory motive on the part of the acting
official.223 Indeed, in disciplinary action cases required employees to show proof of
the acting official’s state of mind. Hence, reprisal will not be found even if an
agency’s actions against an employee were based on factors arising from protected
whistleblowing activities, so long as the agency officials were motivated by valid
management reasons and not by any intent to “punish” the employee. 224 With the
definition of “because of,” Congress intended that a showing of the official’s state of
mind is no longer required. Therefore, “regardless of the official’s motives, personnel
actions against employees should quite simply not be based on protected activities
such as whistleblowing.”225

Whereas the Indian counterpart, The Whistleblower Protection Act, 2011 provides
vaguely that the Central government shall ensure that, no person is victimized (though
it is not defined in the Act as to what amounts to victimization) but how it will ensure
that the whistleblower is not being victimized, is up to the Central government to
decide. A huge concern is that the proviso to §11(2) provides that the burden of proof
that the alleged action on the part of the public authority is not victimization, shall lie
on the public authority, but as the act doesn’t define what actually constitutes
victimization. Hence, any explanation given by the public authority would easily
discharge this burden.

Further, there is no mention as to how the Central government will single handedly,
ensure the protection of millions prospective whistleblowers (considering any person
can be whistleblower under the Act) and in case Central government is unable to
provide protection or provides it but not swiftly, then what will be remedy in such
223
S.Rept. 100-13 (1988).
224
S.Rept. 100-413 (1988) at 15.
225
Id. at 16.

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 cases to the whistleblowers. The American System clearly provides solutions to these
questions.

4.4. Risk vs. Reward

“It’s difficult to get a man to understand something when his salary depends on his
not understanding it.”
Upton Sinclair

“Being right will not feed your family or pay the mortgage.”
Anonymous

If a person became aware of unethical or illegal practices, would that person consider
‘blowing the whistle?’ This question is a daunting proposition filled with very real
risks that should be measured against potential rewards. Exposing fraud takes courage
and integrity. And becoming a whistleblower is no easy decision. Many
whistleblowers file suit only as a last resort, after they have tried and failed to get the
company or fraudster to do the right thing. Incentive is extremely huge factor in
whistleblowing. It increases the probability of detecting criminal or quasi-criminal
conduct by corporations If, as the economics literature suggests, penalties set for
corporate wrongdoing are based on the social consequences of the impugned
behaviour divided by the probability of detection, the total social costs of corporate
regulation and wrongdoing should be minimized - which consequently maximizes
social welfare.

In U.S., SEC Whistleblower Program provides significant financial rewards, complete

anonymity and truly exceptional concern for protection of whistleblowers. Not only
this, SEC Whistleblower Program offers eligible whistleblowers the ability to report
anonymously, robust employment protections and the opportunity to earn substantial
monetary awards – regardless of nationality.Whistleblowers who report wrongdoing
to the Securities and Exchange Commission (SEC) and the Commodity Futures
Trading Commission (CFTC) may receive a reward if the SEC or the CFTC recovers
more than $1 million as a result of the whistleblower's information. SEC and CFTC
whistleblowers also are entitled to job protection. Under the False Claims Act, a
whistleblower can receive up to 30 % of what the government recovers from the
defendant in a whistleblower or “qui tam” lawsuit. Depending on the extent of the

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 fraud and the whistleblower’s role in exposing it, that could result in a sizeable
financial reward.

This is in stark comparison to the Indian Whistleblower Protection Act of 2011, which
provides no financial incentive to India’s potential whistleblowers, left alone to deal
with the potential repercussions of their well-intentioned disclosures on behalf of their
fellow citizens. Indian citizens can root out corruption locally if there is a system
based on model of ‘SEC Whistleblower Program’, which offers rewards for Indian
nationals who bring information about bribery committed by multinational companies
in India.

4.5. Specific Provisions for Private Sector Whistleblower Protection

In 2001 and 2002, corporate scandals exploded in the United States as the public
learned about massive fraud at large companies such as Enron and WorldCom. 226 The
fraud involved complicated accounting schemes that artificially inflated the
companies' value, resulting in the largest bankruptcies in U.S. history.227 Thousands of
people lost jobs and billions of dollars in shareholder value disappeared, seemingly
overnight.228The importance of whistleblower protection in the private sector was
realized in the United States following these corporate scandals.229

226
See, e.g., Kathleen F. Brickey, From Enron to WorldCom and Beyond: Life and Crime After Sarbanes-
Oxley,Washington University Law Quarterly, Vol. 81, 357, 357-73 (2003) (discussing the whistleblowers in
both scandals); Richard A. Oppel, Jr. & Kurt Eichenwald, Enron 's Collapse: The Overview; Arthur Andersen
Fires an Executive for Enron Orders, New York Times, Jan. 16, 2002, at Al (outlining key events in the Enron
scandal and Arthur Andersen's involvement); Simon Romero & Riva D. Atlas, WorldCom's Collapse: The
Overview; WorldCom Files for Bankruptcy; Largest U.S. Case, New York Times, July 22, 2002, at Al
(discussing WorldCom's bankruptcy and future financial outlook).
227
See, e.g., Troy A. Paredes, Enron: The Board, Corporate Governance, and Some Thoughts on the Role of
Congress, in Enron: Corporate Fiascos and their Implications 495, 503 (Nancy B. Rapoport & Bala G. Dharan
eds., 2004) [hereinafter Enron: Corporate Fiascos] ("In short, Enron's collapse boiled down to massive
accounting fraud and irregularities, a principal feature of which was the use of structured finance techniques
designed to get debt off Enron's balance sheet and inflate Enron's profits."); Charles J. Tabb, The Enron
Bankruptcy, in Enron: Corporate Fiascos, supra, at 303, 303 & note 53 ("At the time, Enron was the largest
bankruptcy filing in history." However, "[s]ix months later, WorldCom surpassed this record.").
228
See, e.g., Robert G. Vaughn, America's First Comprehensive Statute Protecting Corporate Whistleblowers,
Administrative Law review, 57 (2005) 2; Jeffrey D. Van Niel & Nancy B. Rapoport, Dr. Jekyll & Mr. Skilling:
How Enron's Public Image Morphed from the Most Innovative Company in the Fortune 500 to the Most
Notorious Company Ever, in Enron: Corporate Fiascos, supra note 53, at 77, 83 ("Enron seemed to go from
'most admired' status to 'most despised' status in record time, once the revelations about the company's behavior
became public."). See generally Oppel & Eichenwald, supra note 53 (discussing the Enron collapse); Romero &
Atlas, supra note 5 (discussing the WorldCom bankruptcy).
229
Moberly, Richard, “Sarbanes-Oxley's Whistleblower Provisions - Ten Years Later”, 64,South Carolina Law
Review 1 (2012). Available at SSRN: http://ssrn.com/abstract=2064061

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 In the aftermath, Congress held hearings to investigate how the country's corporate
governance system and law enforcement agencies failed to detect the deceptions
earlier.230 The hearings revealed that, although some employees reported the fraud to
company supervisors and officers, many employees who knew about the wrongdoing
simply kept quiet.231 Encouraging these employees to report corporate misconduct
would help address the "corporate code of silence"232 that Congress determined had
contributed to the fraud's concealment.

As a result the Sarbanes-Oxley Act 2002 233, was enacted focuses on financial fraud
and false accounting und contains different provisions providing whistleblower
protection for employees. §§ 301, 806 and 1107 of the Sarbanes-Oxley Act address
various aspects of whistleblower protection. The focus within these sections is on the
establishment of internal whistleblowing procedures within the company as well as
civil remedies and criminal penalties in case of retaliatory action against the employee
whistleblower. The Act mandates the establishment of internal disclosure channels
through audit committees as well as providing wide-ranging anti-retaliation measures
and criminal penalties that are intended to act as a deterrent against reprisals.234

Sarbanes-Oxley Act created an environment that promotes strong marketplace

integrity, and investors considered its enactment favorably. As more compliant firms
with better corporate governance, reliable and transparent financial reports, and more
credible audit functions prior to the act were affected more positively than other firms,
and it is a wealth increasing, on average, and the market reaction is more positive for
companies that were closer to compliance (measured by their corporate governance,
230
At least ten different Congressional committees held over forty-five different hearings related to the Enron
collapse. See Library of Congress, Guide to Law Online: Enron Hearings, Law Libraryof Congress,
http://www.loc.gov/law/help/guide/federal/enronhrgs.php (providing access to hearing transcripts). Congress
also investigated WorldCom and other corporate scandals. See, e.g., Wrong Numbers: The Accounting
Problems at WorldCom: Hearing Before the H. Comm. on Fin. Servs., 107th Cong. 91-92 (2002) (questioning
WorldCom and Arthur Andersen executives about the accounting practices that led to WorldCom's collapse).
231
See Richard E. Moberly, Sarbanes-Oxley's Structural Model to Encourage Corporate Whistleblowers,
Brigham Young University Law Review, Vol. 2006, 1107, 1117-25. See also, Richard E. Moberly, Unfulfilled
Expectations: An Empirical Analysis of Why Sarbanes-Oxley Whistleblowers Rarely Win, 49,William & Mary
Law Review, 65, 74-75 (2007).
232
See S. REP. No. 107-146, at 4-5 (2002).
233
Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (codified in scattered sections of 15 & 18
U.S.C.).
234
For a discussion, see Janine Pascoe “Corporate sector whistleblowing in USA: Ethics and corporate
culture”,Company and Securities Law Journal, Vol. 27, (2009), 524 at 533.

[73]
 financial reporting, and audit functions) prior to the act's enactment. Overall, the
effect of the Sarbanes-Oxley Act is that the more precise financial statements are now
being prepared for public companies and the shareholders have greater confidence in
their investments as a result of Sarbanes – Oxley.235

Whereas the Indian Act is, limited to public sector only.

4.6. Conclusion

The Whistleblower Protection Act, 2011 took almost 4 years to pass, as it was first
introduced on August 26, 2010, and finally fully ratified on May 12, 2014, leaving
one to question the government’s commitment to its very existence. U.S.
whistleblower laws have evolved for more than 150 years, increasing protections for
whistleblowers with numerous amendments to various aspects of the portfolio of
whistleblower laws that exist. If India is to be successful in using the power of
whistleblower rewards to fight corruption, then the Indian Whistleblower Protection
Act of 2011 is not the answer as in its present form.

The vast majority of U.S. whistleblowers help to protect the U.S. government, and
each of its citizens, from those who seek to defraud the U.S. government. The False
Claims Act dating back to 1863, the IRS Whistleblower Program introduced in 2006,
the SEC Whistleblower Program and CFTC Whistleblower Programs created in 2010,
represent a unique set of whistleblower programs that provide enormous incentives
and protections for whistleblowers who report a wide array of fraud committed by
companies against the U.S. government. The aggregate effect of these laws has
resulted in 10s of billions of dollars being returned to the U.S. government from the
companies who whistleblowers brought to justice. Sadly, in 4 years of deliberation,
the Indian Whistleblower Protection Act of 2011 offers no such similar hope.

235
See, Li, Haidan, Morton Pincus, and Sonja Olhoft Rego,“Market reaction to events surrounding the Sarbanes‐
Oxley Act of 2002 and earnings management”,Journal of law and Economics 51.1 (2008): 111-134. Jain,
Pankaj K., and Zabihollah Rezaee, “The Sarbanes‐Oxley Act of 2002 and Capital‐Market Behavior: Early
Evidence”, Contemporary Accounting Research, 23.3 (2006): 629-654. Zhang, Ivy Xiying, “Economic
consequences of the Sarbanes–Oxley Act of 2002”,Journal of Accounting and Economics 44.1 (2007): 74-115.
Coates, John C, “The goals and promise of the Sarbanes-Oxley Act”,The Journal of Economic Perspectives
(2007): 91-116. Jain, Pankaj K., Jang‐Chul Kim, and Zabihollah Rezaee,“The Sarbanes‐Oxley Act of 2002 and
Market Liquidity”,Financial Review, 43.3 (2008): 361-382.

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 The structural difference would directly have effect on the propensity to blow the
whistle in a country. Americans may be more willing to blow the whistle as they
would view themselves as having equal rights vis-à-vis the persons involved in the
illegal, immoral or illegitimate practices. They would also feel more secure and
therefore would be less cautious in blowing the whistle. By contrast, Indian
counterpart may be less likely to blow to whistle as they would be more likely to
follow the lead of the organization in tolerating the illegal, immoral or illegitimate
practice.

The focus of India’s Whistleblowers Protection Act of 2011 is far too narrow, as it
only seeks to address “corruption or wilful misuse of power or wilful misuse of
discretion against any public servant”. While the bill vows to act against those
“victimizing” complainants, but fails to define it, allowing plenty of room for
interpretation and subsequent misuse of the proposed law.236

In the US, Whistleblowers protection is offered through constitutional provisions as

well as other statutes. The US Supreme Court has limited the constitutional
protections guaranteed to Americans to the areas of national defence and government
employment. For dealing with instances of misuse of power and unfair practices, there
are statutory laws and regulations that enable whistleblower disclosures. 237In India,
with whistle blower protection in its infancy, the Whistleblowers Protection Act of
2011 would seem on its surface, at least based on its namesake, to be an encouraging
beginning. However, the impact on the willingness of Indian whistleblowers to come
forward and report fraud is one of the major concerns. If India is serious about
whistleblowers becoming part of the culture of the country, to help remedy the
general perception shared by 96% of Indians, who feel that “corruption is holding
India back”, then the Whistleblowers Protection Act of 2011 is certainly beyond the
definition of solution for it.238

236
Preetika Rana ,Fact Sheet: Whistleblowers Bill, The Wall Street Journal, accessed from
http://blogs.wsj.com/indiarealtime/2012/11/23/fact-sheet-whistleblowers-bill/ (last visited on 7 March 2015)
237
Kumkum Sen, Whistleblowers' Protection Bill: the new kid on the block, accessed from http://www.business-
standard.com/article/opinion/whistleblowers-protection-bill-the-new-kid-on-the-block-114030900548_1.html.
238
Whistleblower Justice Network (WJN), India’s Whistleblower Protection Act: Progress or
Pandering?,accessed from https://whistleblowerjustice.net/indias-whistleblower-protection-act-progress-or-
pandering/.

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 CHAPTER 5
INDIAN WHISTLEBLOWER PROTECTION MODEL – A PROPOSAL

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 “You must be the change you wish to see in the world”239
Mahatma Gandhi

“The world is a dangerous place, not because of those who do evil, but because of those who
look on and do nothing.”
Albert Einstein
5.1. Introduction

In 2011, after India ratified the United Nations Convention against Corruption, the UNODC
started two initiatives aiming at encouraging corporate integrity and probity in public
procurement. To this end, UNODC commissioned two studies: (i) Incentives for corporate
integrity in accordance with the United Nations Convention against Corruption (UNCAC)
and (ii) Transparency, objectivity and competition in private public partnership projects. Both
studies assessed the compliance of existing and proposed legislation with the UNCAC. They
also identified current practices and challenges at the grassroots level for both corporate
integrity and probity in procurement as perceived by the public and private sector as well as
by law enforcement officials.

While both studies acknowledge that important legislation exists in India, under which
corruption can currently be prevented and investigated, the Indian legal framework could be
substantially strengthened by the enactment of a series of new bills, including: The Public
Procurement Bill 2012240 and The Prevention of Bribery of Foreign Public Officials and
Officials of Public International Organisations Bill, 2011241.

As well as the amendment to existing laws to include bribery in the private sector as a
punishable offence in line with U.K. Bribery Act, 2010242, which provides punishment for the
crimes of bribery, being bribed, the bribery of foreign public officials, and the failure of a
commercial organisation to prevent bribery on its behalf. Therefore, it is submitted that it is
virtually impossible to make a meaningful assault on corruption in this country unless we
mount a simultaneous attack on everyone/everything privy to it.

239
Chang, L., Wisdom for the Soul: Five Millennia of Prescriptions for Spiritual Healing, p.113, Gnosophia
Publishers, 2006
240
Current Status: Bill Lapsed as on 21 April 2015. Vide; PRS Legislative Research (PRS).
241
Current Status: Lapsed as on 21 April 2015. Vide; PRS Legislative Research (PRS).
242
U.K. Bribery Act, 2010, last accessed from http://www.legislation.gov.uk/id?title=Bribery+Act+2010.

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5.2. Whistleblower Protection Act in Public Sector

The Act should provide for specific and exhaustive definition of the term “Victimisation”.
The protection against victimization should be more specific and exhaustive. The Clause
detailing punishment for frivolous disclosures ought to be removed. This clause is a clear
deterrent to those making Public Interest Disclosures and the human rights defenders,
specifically. The Act does not provide an adequate definition of "frivolous disclosures" which
leaves things open to manipulation. The Act should provide for cash rewards. The term
"Complainant" should not be used as it reflects narrow thinking and prejudice against a
person making the disclosure. Instead, the term “Whistle Blower” may be used.

The names of the whistle blowers should not be revealed even to the head of Government
Department. By seeking to make the identity of the whistleblower a secret, the Act
inadvertently creates conditions wherein anybody with that privileged information. Thus, the
Act perversely endangers the Whistleblowers and sets the stage for various kinds of attacks
and retributions.

There should be a specific mechanism for moving trials on a fast track. The action taken by
the Competent Authority should be put in public domain. On receiving complaints, the
Competent Authority should give a complaint number. The complainant should be apprised
of the development and action completed at each stage so that he may be able to point out the
deficiencies. The time limit as provided in Clause 5(3) of the Bill should be removed. The
scope of disclosure should be widened to include complaints relating to illegal acts performed
by contractors/suppliers directly or through their employees and/or hired persons. In Clause
10(1) of the Bill after the words “Central Government” and before the word “shall” the words
"and the State Governments" may be inserted. The Bill should cover the corporate sector
also,if the allegations are substantiated in the preliminary enquiry, the accused should be
suspended forthwith. Provide retrospective operation to the Bill/Act to enable earlier
Whistleblowers to get justice. The Bill does not provide any protection to a private
whistleblower (e.g. RTI activist).

The CVC is not suitable to be the Competent Body under this Bill for the following reasons:-
 It has to seek permission to initiate enquiries.

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  It does not have jurisdiction over politicians.
 It does not have resources and thus will need to outsource investigation.
 Itonlyhas advisory powers &thuscannot mandate enforcement of its own
recommendation.
 The Appointment procedure for a CVC is non-transparent, and as seen from the past
controversy over the present incumbent’s appointment, may also lack moral authority.
 There are no provisions for transparency and accountability of the CVC in the CVC Act,
or for the Competent Authority in this Bill.

Lack of timeline for investigation may be used to shield corrupt public servants. Further, long
drawn investigation will render whistleblower protection (if needed) irrelevant.The burden of
proof to prove victimization is on the whistleblower. In case of grievous hurt to the
whistleblower, a special task force under the Competent Authority should investigate issues
being probed by the whistleblower. Whistleblower must be provided an opportunity for
rebuttal in case a complaint is closed based on preliminary investigation.Moreover the Act
does not specify as to who will be ‘Public Authority’under the act, who is responsible for
taking action the complaint of the whistleblower.

5.3. Anonymity

Under the act,all anonymous whistleblower complaints or complaints that don’t indicate the
identity of the public servant (accused) will be treated as garbage. Anonymity can protect
unpopular individuals from retaliation — and their ideas from suppression — at the hand of
an intolerant society.

Anonymity has practical consequences for the whistleblower. It may encourage unreliable
disclosures that would not otherwise be received. Anonymity protects the weak that are
unable to protect themselves from powerful institutions and encourages the exposure of
wrongdoing. The acceptance of anonymous disclosures rejects a 'heroic vision' of
whistleblowing. Anonymity thus encourages disclosures of wrongdoing and the protection of
whistleblowers.

[79]
John Paul Stevens, a former justice of the U.S. Supreme Court wrote, by evoking J.S. Mill’s
On Liberty243, in his majority opinion in McIntyre v. Ohio Elections Commission244,
anonymity can be “a shield from the tyranny of the majority.” It can “protect unpopular
individuals from retaliation — and their ideas from suppression — at the hand of an
intolerant society.” The question presented [was] whether an Ohio statute that prohibits the
distribution of anonymous campaign literature is a "law……abridging the freedom of speech"
within the meaning of the First Amendment245.

In striking down Ohio Rev. Code Ann. § 3599.09(A) (1988)which forbade "the distribution
of campaign literature that does not contain the name and address of the person or campaign
official issuing the literature.246” the court considered some important reasons to allow
anonymous speech that weighed in their decision. Firstly, Enhance authority - "Anonymity
thereby provides a way for a writer who may be personally unpopular to ensure that readers
will not prejudge her message simply because they do not like its proponent." 247 Secondly,
Encourage open discourse - "The interest in having anonymous works enter the marketplace
of ideas unquestionably outweighs any public interest in requiring disclosure as a condition
of entry."248 Thirdly, Safety from retaliation - "The decision in favor of anonymity may be
motivated by fear of economic of official retaliation, by concern about social ostracism, or
merely by a desire to preserve as much of one's privacy as possible." 249No doubt Mr. Stevens’
views were expressed in the context of protecting political speech under the First Amendment
of the U.S. Constitution. But the basis for such right to anonymity equally applies to whistle-
blowers. To accord them such freedom would provide them a protection from retaliation.

In 1972, the Supreme Court of the United States ruled in Branzburg v Hayes250 that it was
only permissible to compel the disclosure of an informant’s identity when the “government
shows a substantial relation between information sought and a subject of overriding and
compelling state interest.” On June 19th, 2014, in Lane v Franks251, the US Supreme Court

243
Mill, John Stuart. On Liberty. London: Longman, Roberts & Green, 1869.
244
McIntyre v. Ohio Elections Commission, 514 U.S. 334.
245
Ibid. at335.
246
Ibid. at 334.
247
Ibid. at 342.
248
Ibid. at374.
249
Ibid. at 341.
250
408 U.S. 665 (1972).
251
134 S. Ct. 2369 (2014).

[80]
 ruled in favour of whistleblower protection. The court held that such leaks are “a
quintessential example of citizen speech” and must not be suppressed in any manner.

The importance of protecting the identity of a whistleblower was also appreciated in the case
of Manjeet Singh Khera v. State of Maharashtra252, the apex court observed;

“[T]here are many cases, where certain persons do not want to disclose the identity as well
as the information/complaint passed on them to the Anti-Corruption Bureau. If the names of
the persons, as well as the copy of the complaint sent by them are disclosed, that may cause
embarrassment to them and sometimes threat to their life253.”

As observed in Indirect Tax Practitioners Association254;

“One of the most interesting questions with respect to internal whistleblowers is why and
under what circumstances people will either act on the spot to stop illegal and otherwise
unacceptable behavior or report it. There is some reason to believe that people are more
likely to take action with respect to unacceptable behavior, within an organization, if there
are complaint systems that offer not just options dictated by the planning and controlling
organization, but a choice of options for individuals, including an option that offers near
absolute confidentiality. However, external whistleblowers report misconduct on outside
persons or entities. In these cases, depending on the information's severity and nature,
whistleblowers may report the misconduct to lawyers, the media, law enforcement or
watchdog agencies, or other local, state, or federal agencies.”

The Hon’ble Supreme Court has legitimized the practice of anonymous whistleblowing
which is a great boon for anonymous whistleblowers in India, with its 20 th November, 2014
order255.

5.4. Whistleblower Protection Act in Private Sector

252
Manjeet Singh Khera v. State of Maharashtra, (2013) 9 SCC 276
253
Ibid.
254
Supra note 28.
255
Center for PIL. v. Union of India, (2015)2SCC362.

[81]
A study called 'Early Warning Signals of Corporate Frauds 256', conducted by the Pune-based
India forensic Consultancy Services, a forensic accounting and education firm, from January
2008 to August 2008 has come out with shocking revelations about corporate frauds. The
study has revealed that at least 1,200 companies out of 4,867 companies listed on the
Bombay Stock Exchange and 1,288 companies listed on the National Stock Exchange as on
March 31, 2007, including 25-30 companies in the benchmark Sensex and Nifty indices, have
massaged their financial statements. The study investigated 11 sectors. The manufacturing
sector, which contributes about 28 per cent of India's gross domestic product, is the one most
ridden with fraud mainly due to the peculiar nature of the business and the procedural
complexities inherent in this sector.

The Real estate and public sector undertakings came second. Corporate Fraud in India is
rising, 45% of the 1,000 respondents from leading Indian businesses declared that fraud had
increased within their organization257. Nearly one in every 13 corporate houses in India had
suffered losses between Rs 40 lakh and Rs. 4 crore due to corporate frauds while nearly half
had faced such frauds in the last three years. About one in two corporate believes that at
present corporate fraud is much more prevalent in India than three years ago. New
technologies, new inventions and expansions into new markets have opened the door to
various forms of fraud, while the threat has increased mainly because of high attrition. These
were some of the major findings of a report on fraud perception among top corporates around
the globe by Economist Intelligence Unit (EIU) for Kroll Inc.

The Whistleblower Bill, 2011 is obsessed about public servants, who stray away from the
straight and narrow, so much so that it forgets what the Vohra Committee of the yore
tellingly observed -- corruption in this country takes place thanks to the unholy nexus among
politicians-bureaucrats-industrialists. Private sector is considered to be too sophisticated to
be bracketed with khadi clad politicians or a government servant. Corruption in public life is
often triggered at the behest of rapacious industrialists. It is amazing that while government
and its functionaries are caught by the pincer of Right to Information Act, (RTI) and the
whistleblower law, private sector would continue to be left severely alone with neither of
these two laws applicable to it. It is possible for a vigilant citizen to bring about the

256
W. Chris, Drafting and Implementing Whistleblower Protection Laws, ADB/OECD, Anti-Corruption
Initiative for Asia and the Pacific; pp. 127-147.
257
KPMG- Study, April, 2010.

[82]
comeuppance of a bureaucrat or politicians by first making an innocent-looking RTI
application only to later on use the same to blow the whistle.

Indeed the two can be used one after other if not in tandem to cleanse the system or clobber a
politician258. To be sure, RTI cannot be made applicable to a private sector company unless it
can be proved that it is bankrolled by substantial public money. Indeed a private sector
company is not answerable to the public except to a sub-set of it -- shareholders. But pray
what is wrong in empowering a vigilant citizen to blow the whistle when he comes across a
private sector shenanigan? It would be idle to contend that the auditor of the company is
powerful and competent enough to address this problem though admittedly the government
has not said so in so many words. However it can be discerned from the Companies Act,
2012 that makes the auditor the lynchpin for ensuring financial and accounting probity and
the supreme whistleblower. In fact, the new Companies Act visits the auditor with heavy
penalty including incarceration for being slack in blowing the whistle. But this in itself is no
justification for reposing complete faith on auditors insofar as reigning in private sector
avarice is concerned.

While the auditor is privy to accounting as well as inside information and is eminently in a
position to blow the whistle, there may be situations 259 where others can steal a march over
him. The point is auditors of private sector companies have right from the inception of
company form of organization never acquitted themselves creditably. In fact they are in the
distinguished company of rating agencies in suffering from credibility crisis for aeon. In the
event, it may be too much to expect the private sector auditor to morph into a conscientious
whistleblower overnight because at the end of the day he might not be unduly deterred by the
heavy penalties if he can plead that he in fact brought about the requisite amount of skills and
exactitude into his work -- the standard of care argument de rigueur among professionals
when arraigned.

258
S Murlidharan, Why the whistleblower law doesn’t extend to the private sector,FirstPost-India, Aug 17, 2013
09:40 IST, accessible from http://www.firstpost.com/india/why-the-whistleblower-law-doesnt-extend-to-the-
private-sector-1040889.html.
259
For e.g. Sherron Watkins courted immortality when she blew the whistle against Enron Corporation of the
USA way back in 2002 when its Chairman Kenneth Lay cooked up the books of accounts in cahoots with the
company’s auditors Arthur Anderson and Co. Arthur Anderson was in the doghouse and ultimately blacklisted
for performing the ignominious fence-eating-the-crop role.

[83]
In contrast, public sector auditors including the CAG come out smelling of roses with their
bold reports. The CAG functioned like the archetypal whistleblower in all the recent scams,
be it 2G, commonwealth, coal or what have you. The leitmotif of all these scams is the same
– “exchequer being short-changed with corresponding benefit to private pockets”. It is time
we replicated the lessons imbibed from public sector in disciplining the private sector though
it is common for market fundamentalists to exhort public sector to take a lesson or two from
the more nimble-footed private sector. One of them is never to let management appoint its
own auditor which is what is happening now. The new law contemplates rotation of auditors
periodically but still the appointment of auditors would be the management’s prerogative
though technically shareholders have to approve. Compounding the folly of vesting
appointment rights with management is the vesting of right to fix auditors’ remuneration. The
two combine to make the auditor supremely supine.

It is submitted that we demonize politicians completely which may be fine but

correspondingly turning a blind eye to the shenanigans of the private sector which is not fine.
That is why the 2G scam in public perception is all about the then Communications Minister
Raja who incidentally pleads that he is not the sinner but sinned against. That the Unitech
group and ADAG are also in the dock is known to very few. The government department and
companies in the event have the RTI activist, the auditor and the putative whistleblower
keeping a hawkish eye but sadly none of them have been authorised or empowered to tame
private sector greed that was possible in America but not in India. 260In August 2013, Ashok
Khemka, has blown the whistle also against DLF, the private sector real estate major though
both the media and opposition are gunning for Robert Vadra alone, little realising that public
servants often rise to the bait thrown by private sector companies. Would the Karnataka
mining scam have taken place but for the alleged lead taken by an industrial group? Political
heads did roll politically and otherwise but the corporate group seems to be unfazed, same is
applicable to coal scam. The whistleblower protection law in the making may not be great
shakes insofar as rewarding or protecting the whistleblower is concerned. It expects the
whistleblower to be armed with documentary evidence at the risk of being cast to the wolves

260
Two examples of private sector whistle-blowers relate to the USA which sadly cannot be replicated in India
unless the whistleblower protection law is extended to it as well. The spunky Enron woman Sherron Watkins
was its finance head whose conscience was sufficiently troubled to expose her employer as well as auditor of the
company. Dinesh Thakur was a former employee of Ranbaxy Laboratories who exposed his ex-employer not in
India but in the USA perhaps enticed by the irresistible prospect of hitting the pay dirt -- he got $48.5 million
from out of the $500 million Ranbaxy had to fork out to the US government for endangering the lives of its
people through production of drugs in India in unhygienic conditions.

[84]
 i.e. his name being made public. Just the same, Khemkas of the world must be allowed to
blow the whistle against private sector misdeeds as well.

5.5. Office of Independent Counsel

A concrete suggestion is an addition of the concept of “Independent Counsel 261” is

recommended which is the addition of the new chapter containing the provision for creation
of the post. The independent counsel as the name itself suggests shall be independent and not
under control of the government (just as judiciary) as the investigation is against their ex-
offio because the pressure from the political master is inevitable. Further, the investigation
part should be conducted by Lokpal and Lokayukats Act, 2014. As the CBI i.e. premier
investigation agency, which recently has come under the line of fire for acting as “caged
parrot” this was observed in the hearing in the coal block allocation cases.262

This clearly outlines the need, to not only to provide autonomy to CBI but also an
independent and fearless agency that doesn’tbow to the political pressure, hence, the concept
of independent counsel, it will ensure effective implementation of whistleblower legislation,
people or institutions that receive disclosures must be trained in dealing with
whistleblowers263.The law relating to OSC, originally passed in 1978, is a foundation stone
for the trust between the Government and our citizens. The Act provides the procedures for
beginning, operating, and concluding an investigation by an independent counsel.

In, U.S. the most famous Independent Counsel was Kenneth Starr, whose report led to the
impeachment of President Bill Clinton. The most recently appointed Independent Counsel
was created to investigate the death of Vincent Foster, Whitewater and Monica Lewinsky
261
The Watergate Affair was the inception point that inspired the creation of a permanent statutory scheme for
appointing an officer, independent from the supervision and control of the President, to investigate and
prosecute crimes by high-level federal officials. The outcome was the Ethics in Government Act of 1978, which
established an independent officer- first called a “special prosecutor,” then renamed an “independent counsel” in
future scandals.
262
For e.g. CBI took nine years to convict the Chautalas in the junior basic teacher (JBT) recruitment scam.
Cases involving politicians have gone on for years, only to result in their acquittal. In fodder scam the charges
were finally framed by a special CBI court in March 2012, nearly 16 years after the CBI was handed the case.
Those who were named in the charge sheet include RJD leader Lalu Prasad Yadav, former Bihar CM Jagannath
Mishra and 32 others. Of the total 44 accused, six have died, two have turned approvers, and two others are
evading arrest. On 18 December 2006, a special CBI court acquitted Lalu Yadav in a disproportionate assets
case filed against him by the agency in August 1998. The CBI didn’t appeal against this verdict in the high
court.
263
Costa, Antonio, Whistleblower Protection, United Nations Office on Drugs and Crime, The Global
Programme Against Corruption, Vienna, September 2004.

[85]
scandals, among other prosecutions. This clearly proves that even the president of the USA is
answerable for his actions. In USA, an independent counsel has “full power and independent
authority to exercise all investigative and prosecutorial functions and powers of” Department
of Justice (hereinafter referred as “DOJ”) and the Attorney General. The Act’s list of powers
includes convening grand juries, granting immunity, prosecuting, litigating, and appealing in
federal court, reviewing evidence and contesting privilege assertions, obtaining security
clearances, and other powers. An independent counsel also may dismiss matters within his or
her jurisdiction before prosecution or even without investigation. The independent counsel is
“separate from and independent of” DOJ. DOJ must cease any investigations of matters
within the jurisdiction of the independent counsel.

CHAPERT 6
CONCLUSION

[86]
The national motto - 'SatyamevaJayate264' drawn from the Mundaka Upanishad is a noble
principle anyone can aspire to be, but the irony is people of this country don't feel sufficiently
emboldened to speak out, and those who did speak out have paid with their lives.

The Government and their agencies are duty bound to respect this motto. The conclusion is
whistleblower law assure the people of this country, that high-placed government officials do
not abuse the power of their positions would be major breakthrough if the concept of
independent counsel is included as a special prosecutor position, which could be used to
investigate individuals holding or formerly holding certain high positions in the government
and rich businessmen, industrialist. Effective whistleblowing arrangements are a key part of
good governance. Significant informer incentives and fraud deterrence insure whistleblower
continued vitality. Thus far, history has shown this to be a dynamic combination in
combating fraudulent business activities against the government.

Whistleblowers are regarded as heroes – people who place a very high value on honesty and
ethical behavior within their organizations. The women who exposed the criminal activities
of the senior executives of Enron and World.Com, or Coleen Rowley of the FBI, who stated
publicly that her agency’s testimony to a Senate hearing on the September 11 disaster was
seriously flawed, were feted nationally, placed on the front cover of TIME magazine and
proclaimed Persons of the Year. Reality is far different. Country after country in the world,
and every nation, has been forced to pass legislation that protects whistleblowers from
reprisals from their colleagues or superiors.

The analysis above would suggest that more effort and attention could go into whistleblower
legislation of our country. Nevertheless, the analysis does conclude that the Indian legislation
may not be as effective as it appears to be. It is suggested that whistleblowers need help in
submitting their complaints, in gathering and providing evidence that supports those
complaints, and in protecting themselves from reprisals. These actions are currently the
responsibility of the whistleblower. For many, however, protection should be the task of the
state Ombudsman offices. It is reasonable to assume that an agency of government would be
more effective at preventing reprisals than would be a largely powerless individual. It would

264
Mantra no. 3.1.6, available at http://sanskritdocuments.org/all_pdf/mundaka.pdf

[87]
also be more effective than a voluntary whistleblower support agency. This is to the benefit
of organizations, individuals and society as a whole265.

A strong whistle-blower protection law in India, where the conviction rate in corruption cases
is just 30%266 a 4.3% drop as compared to 2012 267, would expose corruption, illegal and
unethical activities in a way that reinforces faith in the system and also in ethical business
practices268.The addition of concept of independent council will ensures that no matter what
party forms the government or the executive branch, an independent, nonpartisan process will
be in place to guarantee the integrity of public officials and ensure that no one is above the
law.

Hence, to sum up the conclusion of this dissertation by using the words the great Abraham
Lincoln, metaphorically, “that the people [can] save their [nation], if the government will
allow them”.

BIBLIOGRAPHY

265
Sergeant, C., Chair, Public Concern at Work, The Whistleblowing Commission, Report on the effectiveness
of existing arrangements for workplace whistleblowing in the UK, November 2013.
http://www.pcaw.org.uk/files/WBC%20Report%20Final.pdf
266
Crime in India 2013, Statistics, National Crime Records Bureau (NCRB), Table 9.2, p 495.
267
Crime in India 2012, Statistics, National Crime Records Bureau (NCRB),Table 9.2, p 493.
268
Lakshman , Narayan , No Country For Whistle-Blowers, The Hindu, http://www.thehindu.com/opinion/op-
ed/no-country-for-whistleblowers/article5916037.ece

[88]
1. STATUTES

 African Union Convention on Combating Corruption

 African Union Convention on Preventing and Combating Corruption
 Australian Capital Territory Public Interest Disclosures Act
 Civil Law Convention on Corruption
 Convention on Combating Bribery of Foreign Public Officials in IBT’s.
 Council of Europe Civil Law Convention on Corruption
 Council of Europe Criminal Law Convention on Corruption
 Employment Rights Act of 1996.
 Inter-American Convention against Corruption
 Protected Disclosures Act of 2000.
 Protected Disclosures Act of 2000.
 Protected Disclosures Act, 1994 (NSW)
 Protected Disclosures Act, 2000 (NZ)
 Protection of Public Interest Whistleblowers, 2011.
 Public Interest Disclosure Act 1994
 Public Interest Disclosure Act, 1998.
 Public Interest Disclosure Bill, 2007
 Public Servants Disclosure Protection Act, 2005.
 Public Servants Disclosure Protection Act, SC 2005, c 46
 Queensland Whistleblowers Protection Act of 1993
 Tasmania Public Interest Disclosures Act of 2002
 The New South Wales Protected Disclosures Act of 1994
 The Northern territory Public Interest Disclosures Act of 2008
 The Whistle Blowers Protection Act, 2011, NO. 17 OF 2014
 UN Convention on Anti-Corruption
 United Nations Convention against Corruption (2003)
 United Nations Convention against Transnational Organized Crime (2000)
 Victoria Whistleblowers Protection Act of 2001
 Western Australia Public Interest Disclosures Act, 2003.

[89]
  Whistleblower Act (Act 720) of 2006
 Whistleblower Protection Act (Law 571) of 2004.
 Whistleblower Protection Act of 1989.
 Whistleblowers Protection Act 1994

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4. RESOLUTIONS/ REPORTS

 Crime in India 2012, Statistics, National Crime Records Bureau (NCRB)

 Crime in India 2013, Statistics, National Crime Records Bureau (NCRB)
 LAW COMMISSION OF INDIA, One Hundred and Seventy Ninth Report – Part I - On
the Public Interest Disclosure & Protection of Informers, December 2001.
 LAW COMMISSION OF INDIA, One Hundred and Seventy Ninth Report – Part II- On
the Public Interest Disclosure & Protection of Informers, December 2001.
 Parliament of India, Rajya Sabha, Department Related Parliamentary Standing
Committee on Personnel, Public Grievances, Law &Justice, Forty Sixth Report on the
public interest disclosure and protection to persons making the disclosures bill, 2010.
 UN Resolution 55/61 of 4 December 2000.
 UN Resolution 58/4 of 31 October 2003.

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