S Murlidharan

Protect whistleblowers, but also pay them

S. Murlidharan | Updated on June 27, 2013

The law blows hot and cold -- N. Sridharan.

The Companies Bill is cold water on an enthusiastic whistle blower.

Money makes the mare go.

In the latter half of the eighties, the then Finance Minister V. P. Singh set the cat among the pigeons when he let loose his tax officers to maximise revenue to the exchequer, especially from the corporate sector.

Tax employees rose to the call of duty and applied themselves assiduously to the task — enticed by the promise of incentives that directly varied with the results produced by the team.

While the strong-arm tactics adopted by the tax collectors did produce results, the industry rose as a phalanx to condemn the regime as undemocratic, and it had to be given up soon.

Singh however left behind a cardinal message — people, including employees, work with zeal when they are promised monetary incentives for their efforts. Revenue officials, cutting across all forms of taxation, are known to resort to high-pitched assessments to worm their way into the hearts of their superiors, and to be in the good books of auditors.

But that hasn’t produced the kind of results the commission-based reward system produced while it lasted.

Beyond Commitment

Be that as it may. But for the whistle blown by a disgruntled employee, Dinesh Thakur, Ranbaxy perhaps would not have had to fork out $500 million to the US government for selling spurious drugs in the US market, manufactured in its plants in India.

Without belittling his daring expose, it must, however, be said that he might perhaps not have carried out his crusade against Ranbaxy, had there been no reward in store.

That the US system rewarded him with a hefty $48.5 million, a sizeable chunk of what it won from the derelict company, holds out an important lesson for our policy wonks — protection alone is not enough to make wannabe whistleblowers comes out of their cocoons; incentives too are required.

It is here that the whistleblower law in the anvil before the Indian Parliament leaves much to be desired. In its single-minded obsession to protect the whistleblowers from bodily and other harms that were brutally inflicted on the few who put their lives on the line, the law forbids the competent authorities from making public the name of the complainant.

While whistleblower protection is as important as witness protection, it would be idle to expect people to come forward to expose the shenanigans of public servants in a spirit of esprit de corps.

True, there are people who are public-spirited, but their tribe is dwindling by the day.


The Companies Bill, 2011, before Parliament, makes the auditor of a company the prime and compulsive whistleblower, as it were. It proposes to impose heavy penalties on him if he fails in his job as whistleblower, without proposing simultaneously to reward him for his efforts; it does not provide for prevention of his removal by a vindictive management.

Auditors can be counted upon to cover themselves suitably by hiking fees, like doctors in the US. But that is not the point. Parliament, which thought it fit to haul the auditor over the coals for failing to blow the whistle, ought to have provided for incentives as well.

As a sequel to incentivising whistle blowing, the penalty for lodging frivolous complaints must in all fairness be doubled.

A person who lodges a complaint out of spite, or for other extraneous considerations, must not be let off with a slap on the wrist.

He must be made to serve time in prison, so that the laudable objectives of whistle blowing are not misused.

One must, however, hasten to add that any unnecessary rigour imposed on a wannabe whistleblower would make the law a non-starter. That is why the provision in the Bill to the effect that the complainant must provide documentary evidence, if he wants his identity to be kept anonymous, is scary.

A member of the public must be distinguished from auditor of a company. The latter, while examining documents, might stumble upon something sinister, and hence he should be able to back up his complaints with documentary support. But a layperson should not be expected to adhere to this rigour. More often than not, hearsay and strong circumstantial evidence trigger whistle blowing.

Therefore, the ‘either-you-produce-documents-or-be-exposed’ stance of the Bill will pour cold water on the enthusiasm of wannabe whistleblowers.

Every complaint that does not result in conviction should not be treated as frivolous. The judicial system is wise enough to sift the grain from the chaff.

In sum, the whistleblower law must do the fine balancing act — reward and protect genuine whistle-blowing even while coming down heavily on frivolous and vexatious complaints.

(The author is a Delhi-based chartered accountant.)

Published on June 27, 2013

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