Whistleblowing and laws in India - how does it work?

The Indian system of whistleblowers protection stands out in the South Asian region for a few reasons: Indians have a brand-new law and the largest democracy where it is supposed to function well. Even though India can't be a leading example in supporting freedom of speech and anti-corruption programs, it is gradually improving its positions in the world rank of transparency. 

What laws India has in place in 2020?

With no history in public servants protection, as it was in the UK, India had to look up to other countries and borrow their strategy or pave its own way. As a result, several laws currently form the Indian system of whistleblower protection in different sectors. This is not a unique situation, since many countries have legislation which protects whistleblowers in a scattered manner, and different pieces don't form a robust system.

In India there is one dedicated law for the public sector and non-dedicated for others: they are The Whistle Blower Act of 2014, The Companies Act of 2013, and the Companies Order 2020 which is not yet enforced.

The Companies Act was the first law to combat corruption and targeted only listed companies, which obviously left a room for undocumented misconduct in other units. To be listed, the companies have to be governmental or have public importance, or use money from governmental banks to run. The Act is not about whistleblowing, but it directly mentions the obligation for listed companies to have a vigil mechanism to process the reports from genuinely concerned persons. Whistleblowers should be adequately protected from retaliation; however, both the reporting procedures and protective measures from victimization aren't specified. The Act further developed into the Companies Order.

The Companies Order of 2020 is supplementary to the Companies Act and has its goal of widening the scope of action of the latter together with strengthening it. The Order is recent and not fully implemented, though it is perspective since more companies will be included and obliged to have whistleblowing mechanisms and effective compliance guidance. Both the Companies Act and the Companies Order cover more possible violations and have a wider scope than the Whistle Blowers Act. But only the Whistle Blowers Act is a dedicated law and resembles worldwide standards of legislation.

The Whistle Blowers Act of 2014 targets public servants and is intended to prevent corruption, asset misappropriation and misuse of power. The law applies only to the public sector. Since the law is the dedicated one for whistleblower protection, more details need to be discussed. The Act's essentials are the following:

•  Not only a public servant, but any other person, can file a complaint and make a public interest disclosure. All the disclosures, consequently, are treated as public disclosures, and Competent Authority considers them.
• The report must be submitted in good faith. The good faith requirement exempts the whistleblower from defamation claims and prosecution in case the information he or she provided was incorrect.
• The whistleblower should act immediately after the act of misconduct was observed.
• The whistleblower is obliged to identify himself. Otherwise, his report will not be considered. In case a false identity is provided, or the whistleblower doesn't identify himself, the report will not be considered. The Competent Authority should conceal the identity of the whistleblower and forward the complaint to the Head of the Department. The whistleblower may choose to reveal the identity to the Head of the Department or provide the necessary evidence to the Authority. 
• The whistleblower can't report on matters which may harm the sovereignty of India or directly damage its national security. 
• The whistleblower shouldn't be victimized, and when it happens, the Competent Authority must be informed. The burden of proof lies on the public authority. 

 The Whistleblower Act is imposing surprisingly low penalties for violating a whistleblower’s rights, such as confidentiality of his identity. The accused person can face up to 3 years in jail and fine in the amount of 50,000 rupees (which is 680 dollars approximately). The whistleblower, in contrast, can be imprisoned up to 2 years for providing false information. Way more severe penalties were introduced in France where for public disclosure of identity with up to EUR 150,000. The CEO of Barclays Group was fined for EUR 720,000 for making attempts to disclose the whistleblower's identity. In India, it's far from getting that severe. 

The Whistle Blowers Act certainly has a lot of pros, but its cons are evident:

• No obligation to follow up for whistleblower and exact terms of the investigation. 
• No list of retaliation types and possible remedies for whistleblowers.
• No anonymity option.
• The list of persons to whom the identity of the whistleblower will be disclosed isn’t specified.

Similar flaws can be observed in the Companies Act, which doesn't specify the procedure of reporting and its mechanisms. Data protection, as a crucial part of whistleblower protection, is also not mentioned explicitly. The exclusion of private companies from the Whistle Blowers Act and partial protection provided by the Companies Act leaves no chance for implementing robust whistleblower protection. The criticism is valid since not only local experts evaluate the law as insufficient, but the comparison with the EU Directive on Whistleblowers Protection shows how many things are yet to be considered.

Still, Indian progress is rapid and visible — the Companies Auditor's Report Order of 2020 is a step towards broader anti-corruption restrictions. To improve the protection of whistleblowers, India still has to amend the laws, so whistleblowers could report without fear of disclosure and had proper compensation of damage.

The pictures credits belong to:

•  Smartworks Coworking on Unsplash
• Tejj on Unsplash