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April 6th, 2003
FinePrint: Legislating for Whistle-blowers

The choice of the Competition panel chairman rests on what we think its nature is.

Ranjeev C. Dubey

On 12 March 2004, the Division Bench of the Supreme Court, comprising Justices Ruma Pal and P.V. Reddy, issued notice on yet another petition pertaining to the Satyendra Dubey's murder, this time filed by his father and the NGO Parivartan. What makes this petition different is that it specifically asks for the enactment of a whistle-blower law. But do we really need such a whistle-blower law?

Let us understand the issue in relation to the facts

Satyendra Dubey was a 31-year-old civil engineer from IIT, Kanpur. He was posted as deputy general manager, National Highways Authority of India (NHAI) to the Aurangabad-Barachatti sector of the PM's beloved Golden Quadrilateral Project. Dubey was gunned down in broad daylight in Gaya, allegedly because he wrote a confidential communication dated 11 November 2002 to the PMO claiming that transnational Korean, Russian and Chinese companies collared road-building contracts through pay-offs and then farmed out the jobs to local contractors at knock-down prices, pocketing hefty margins.
It does not matter if this information is correct. What does matter is that around 22 November, the letter containing this 'insider information' was sent to the Ministry of Surface Transport (MOST), where eight officials knocked the letter around before sending it off on 4 December 2002 to NHAI, along with a copy to its Chief Vigilance Officer. The letter was buried there.

After Dubey's death on 27 November last year, MOST stated in a 12 December press release that Dubey also regularly wrote similar letters to NHAI and its consultants without seeking confidentiality. Presumably, this means it was therefore 'okay' for him to get shot. The Bihar police later claimed that he was mugged, not shot, for whistle-blowing. The muggers were arrested and one committed suicide because he couldn't stand the torture. The matter is sub-judice.

Meanwhile, IIT alumni have been incensed and have demanded a whistle-blower law. The Chief Vigilance Commissioner is reported to be sympathetic. Now Parivartan has filed a petition seeking whistle-blower legislation. But will the legislation help?

As far as I am aware, the US is about the only country that has sought to systematically establish a whistle-blower protection regime. As an extension of labour welfare, the movement has been fairly successful and this explains some provisions of the Toxic Substances Control Act, Water Pollution Act, Fair Labor Standards Act, Occupational Safety & Health Act, and so forth. Also, the US has substantive protection for those who blow the whistle in government matters. The major protections the US has are the False Claims Amendment Act, which rewards exposure of a financial fraud against the government with a share of the amount recovered, and the Inspector General Act, which provides immunity to employees if they complain against federal agencies. The US came close to even more success in 1988 when both the Senate and the House passed the Whistle-blowers Protection Bill, but Ronald Reagan vetoed it. No one has made a second attempt since.

It is easy to see why not. If you think about it, whistle-blowing and governance are inextricably interlinked. Both the government and corporate world confront the same conflict. The US Sarbanes-Oxley Act was a reactionary piece of legislative overkill which emerged out of the ashes of the crooked Enron fiasco, but large segments of the American establishment now fear that it must be diluted so business will not be driven out of the country.

In India, the governance issue was substantively addressed in the Companies (Amendment Bill) 2003. Based on the recommendations of the Narayana Murthy committee, the Securities and Exchange Board of India (Sebi) issued a circular on 26 August 2003 revising clause 49 of the listing agreement. An obligation to adopt a whistle-blower policy was part of the amendment.

In the face of industry hostility to the amendment, on 21 October 2003, the Union Cabinet returned the Companies (Amendment) Bill 2003, asking for a redraft. The next day, industry chambers asked the government to amend clause 49 of the listing agreement as well, arguing it would negate growth. The Cabinet rejection of the Bill made large parts of clause 49 'infructuous' anyway, but Sebi has requested Murthy himself to judge whether clause 49 captures the essence of his recommendations!

Whatever be the fate of clause 49, the fact is that if we cannot have truly independent boards, we cannot have truly independent audit committees to whom a whistle-blower can appeal.

Corporate India does have legitimate fears: for one, cohesion, mutual faith and team play are the key to productivity, and institutionalised Orwellian squealing is its antithesis. Second, there are a thousand ways to victimise squealing employees, but such laws only encourage the incompetent to become whistle-blowers to avoid being sacked. Third, whistle-blowing settles extraneous scores, promotes 'political' subgroups, institutionalises internal and external blackmail, and adds to the predatory powers of our predatory state. Lastly, whistle-blowing results in defensive management, proliferates mindless procedures, and ultimately destroys initiative and risk-taking.

The key point here is that what applies to corporate India also applies to the government of India: a whistleblower law may only work to paralyse whatever still functions in the government. Let's face it, the whole corruption racket works on mutual benefits and fair distribution. What you probably will have with a whistle-blower law is a little benefit and a lot of problems.

So why do we need whistle-blower legislation? Laws don't automatically mean law-abiding societies. That apart, what will the law say that is not already covered under existing fair labour practice legislation ('thou shall not victimise') or, as in Dubey's case, the Indian Penal Code ('thou shall not kill')? So let me put it bluntly: to save a life such as Dubey's all you really need is appropriate and sensitive government response to credible information of corruption in high places, and an effective witness protection programme. These are administrative issues, not legislative ones.

This is not an argument for a whistle-blower law. This is only an argument for effective, responsible government. So let us focus on working towards responsible liberal governance and forget about the symbolism inherent in enacting a grand law we cannot and will not implement.

The author is managing partner of N South, and can be contacted at

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