Wednesday, August 11, 2010


The first part of this article was published on 14th March 2010. To read the full article Click Here.
Public Interest Disclosure (Protection of Information) Bill - 2010

It is heartening to know, after a long wait of around seven years of the first brutal killing of an engineer Mr. Satyendra Dubey in November 2003, who had blew the whistle in the case of unbridled corruption in NHAI’s Golden Quadrilateral project, and two years later by atrocious killing of an IOC officer Mr. Manjunath Shanmugam and to present many other Right to Information activists by anti-socials and vested interests; that the Cabinet has recently cleared the Public Interest Disclosure (Protection of Information) Bill - 2010, and is likely to be tabled during ongoing session of the Parliament.

India all these years does not have any law to protect and reward whistleblowers. Several countries worldwide have already put in place laws to protect whistleblowers. However, the level of protection and the way in which the law operates differs from country to country. For instance, the US was one of the earliest to have the Whistleblower Protection Act of 1989, while the UK has the Public Interest Disclosure Act of 1998, and Norway has a similar law in place since January 2007.

Shockingly, the issue of protection of whistleblower in India had been dragging for all these years, as the country leisurely debated and struggled with the problem of resolving the contradiction of a whistleblower’s law with the provisions of the Official Secrets Act; unfortunately the whistleblowers continued to be atrociously coerced, intimidated, threatened, victimized, and being cruelly killed in retaliation by the perpetuators of frauds, powerful, imperious and Machiavellians individuals and company heads/CEOs, mafias, to satiate their unbridled greed. In the latest incident of last month, activist Mr. Amit Jethwa was shot outside the high court in Ahmedabad, while he had exposed illegal mining in the Gir forest area in the state of Gujarat.

The proposed law has provisions to prevent victimization or disciplinary action against those who expose corruption in the government and will cover central, state and public sector employees. As per the bill, the onus will be on the Central Vigilance Commission (CVC), who would be designated as the competent authority for complaints, would have the powers of a civil court, including powers to summon anybody, order police investigation and provide security to the whistleblower and to protect the identity of the citizens who provide information about the misuse of governmental authority and funds. It is expected to encourage disclosure of information in public interest. According to the bill, if a person making a disclosure is victimized and his or her identity is revealed, the whistleblower’s superiors will be held liable. There are provisions for a fine and other penalties — a punishment is set at up to 3 years in prison or a fine of up to Rs. 50,000 or both; if a whistleblower is found to be “punished” for exposing wrongdoing. These penalties and imprisonments could possibly have been higher so as to have efficacy of high deterrence, along the lines of the Sarbanes-Oxley Act (SOX) and Dodd- Frank Act-2010.

However, the proposed law neither has provisions for encouraging whistle blowing by providing for financial incentives; nor deals with corporate whistleblowers and does not extend its jurisdiction to the private sector. India Inc ought to have learned lessons after the experience of the massive fraud at Satyam as was outlined in my article: “Satyam Lessons and Corporate Governance Reforms”. To read the full article Click here.

“Dodd-Frank Wall Street Reform and Consumer Protection Act -2010”

The recently enacted “Dodd-Frank Wall Street Reform and Consumer Protection Act -2010” in USA, however, creates an elaborate new system of financial incentives to encourage whistleblowers to come forward to the SEC with information about securities law violations.

The new incentive offered to whistleblowers in this Act is the opportunity to obtain a substantial cash reward in the event that information they provide leads to an enforcement action in which the SEC obtains a monetary sanction (defined to include penalties, disgorgement and interest) totaling at least $1 million. The Section 922 provides that the SEC “shall pay an award” to the whistleblower of between 10 and 30 percent of the monetary sanctions imposed in the SEC enforcement action

Awards payments are to be made from a newly created “Securities and Exchange Commission Investor Protection Fund.” The Fund is to be built up (to a ceiling of $300 million) by depositing monetary sanctions obtained by the Commission in its enforcement actions generally, to the extent that those funds are not distributed to victims. In addition to paying awards to whistleblowers, this $300 million will also be available to fund the activities of the SEC’s Inspector General.

The Section 922 also provides significantly enhanced remedies for whistleblowers who believe they have suffered retaliation by their employers, including expanded private rights of action and the ability to obtain awards of back pay. In view of these provisions, the Act will allow as most effective deterrent for companies to prevent any mistreatment of whistleblowers. Strong protections for whistleblowers will be more important than ever, in light of the anti-retaliation provisions of Section 922.

In the post-Enron era, whistle blowing – the act of exposing fraud, waste, abuse or other misbehavior in a company or organization – is on the rise. In the United States, for example, more than US $8 billion has been recovered as a direct result of whistleblowers’ actions. Whistle blowing can be an effective tool to deter and detect corruption both in the private and public sectors and it provides better information flows, which increase the chances of successful prosecutions in corruption cases. But in order for whistle blowing to be an effective tool to fight corruption, legislation and clear processes are essential.

The whistle blowing, as an internal control mechanism is yet to come of age in our country. Whistle blowing, in India, still continues to be perceived by many as acts; which are not constructive, a matter of personal vendetta or revenge, intention to embarrass the organization, and so on so forth. On the other hand, the whistleblowers have often faced reprisal, greatly suffered and endured, often for many years, after the complaints have gone unheeded. One of the reasons attributable to this is poor levels of confidence in the ability of the legal and regulatory environment to ensure promised protection against retaliation.

For developing a better governance practices in the country, it is imperative to empower and encourage the whistle blowers, the policy concerning them need to be comprehensive rather than applicable to one set of people only and be made mandatory for one and all, with clear guidelines for prosecuting intimidation of or retaliation against the complainants, including imposition of fines/ penalties for frivolous or mischievous complaints and fast-track disposal of cases.

References: Whistleblower Bill 2010


D.MALLICK said...

Please post a copy of the whistle blower's bill o this blog. We are eager to know the contents of this bill...

I have a feeling that govt. will delay this bill on different pretexts.. Will somebody take a lead to create a movement for passing and implementation of the bill...

Anonymous said...

A very good article. Environment is to be created so that the whistle blower act provides protection and have teeth. Else it may just be for the sake of publicity (if passed) and may become toothless tiger.

Pushkar Raj Chandna said...

Dear Mr. D Mallick,
The government's information on the subject is now available at the following links:



P R Chandna