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Protection For Whistleblowers: Analysing the Need for Legislation in India
by Abhinav Chandrachud†
Cite as : (2004) 6 SCC (Jour) 91
I. Introduction
Constitutional law in India recognises that a public office imposes on the holder of the office, an obligation of trust, and a fiduciary duty towards the people.1 Yet, constitutional principle does not always reflect social reality. Corruption is omnipresent.2
Hence, there has to be a mechanism to make erring public authorities accountable for corruption, malpractice and maladministration. This role is performed by whistleblowers. There is thus an exigent need to introduce legislation in India which would provide suitable protection for disclosures made in public interest.
This paper seeks to delve into the broader aspects of the question as regards the need and justification for adequate whistleblower legislation in India, on the model of the legislation that has already been introduced in several countries worldwide.
II. Who is a whistleblower?
There are people who will not stay mute in the face of glaring injustice, choosing rather to voice their complaints before the appropriate authorities. They may include employees inadvertently exposed to injustices perpetrated in the workplace. Such persons seem to be “blowing the whistle” on the improper, fraudulent or unethical dealings of bodies whose duty it is to work in the interest of the public. Such persons are known as “whistleblowers”.
Thus “whistleblowing” can be defined as:
(1) bringing an activity to a sharp conclusion as if by the blast of a whistle.3
(2) raising a concern about malpractice within an organisation or through an independent structure associated with it.4
(3) giving information (usually to the authorities) about illegal or underhand practices.5
(4) exposing to the press, a malpractice or cover-up, in the business of a government office.6
(5) (origins) police officer summoning public help to apprehend a criminal, referee stopping play after a foul in football.7
Whistleblowing has three stages.8 In the first stage, known as causation, a person perceives an activity as illegal, unethical or immoral. The second stage is disclosure, in which the person concerned chooses to disclose controversial information to the relevant authorities. The third stage, retaliation, is where the employer, by virtue of knowing the informant’s identity, takes retaliatory measures against him, such as dismissal, intimidation, harassment, etc.
The current developments9 have precipitated the need for introducing legislation in this regard:
(1) The officials of the European Commission failed to respond to the internal whistleblowing of an auditor, resulting in public disclosure of the information, and the dismissal of the said whistleblower.10
(2) The Bingham Inquiry in the UK into corruption at the Bank of Credit and Commerce International revealed that there was an autocratic environment, where neither employees nor firms were willing to voice concerns.11
(3) The victims of the HIV-contaminated blood products in France complained that the ministers and officials had known of the problem, but had said nothing and done nothing.12
(4) Eleven chemical factory workers in South Africa lost their lives as a result of blowing the whistle on working conditions in the factory.13
(5) Workers, together with a local journalist, had raised concerns regarding the dealings of Union Carbide India Ltd. The gas leak thereafter resulted in 3800 deaths, 40 disabilities and 2800 partial disabilities.14
(6) Satyendra Dubey, an IIT alumnus working on the Golden Quadrilateral Project, lost his life when he reported instances of corruption, and was denied confidentiality even when asked by him.15
The Law Commission’s 179th Report on Public Interest Disclosures and the Protection of Informers, prepared by Justice B.P. Jeevan Reddy states thus:
“Good-faith whistleblowers represent the highest ideals of public service and challenge abuses of power. They test loyalty with the highest moral principles but place the country above loyalties to persons, parties or Governments.”16
The Nolan Committee Report17 applauded the role of whistleblowers in ensuring high standards of morality in public life, and their part in upholding the seven principles of public life: selflessness, integrity, objectivity, accountability, openness, honesty and leadership.
III. Statutory provisions in USA, UK, Australia, New Zealand and South Africa
Legislation has been enacted affording protection to disclosures made in public interest in different countries such as the United States of America18, UK19, Australia20 and New Zealand21. Amongst the developing countries, South Africa22 has recently enacted legislation in this regard. Following are the primary and significant provisions of these statutes:
1. UK
The Public Interest Disclosure Act, 1998 (hereinafter the UK Act), resulted from the deliberations of the Nolan Committee Report.23 The Act substantially amended certain provisions of the Employment Rights Act, 1996, and in particular, inserted Part IV-A, which deals with protected disclosures. In addition to this, the Act also amended the Trade Union and Labour Relations (Consolidation) Act, 1992.
A distinctive feature of the UK Act is that it lays more emphasis on the information that is being provided, rather than the person who provides such information. This is in stark contrast to the WPA Act of USA24, which focuses more on the whistleblower. As such, there is no mention in the UK Act of a “whistleblower”. The UK Act covers all employees in the public, private and voluntary sectors, and certain workers, including contractors, trainees, agency staff, etc., all of whom may make disclosures. It does not cover the army and the police.
Section 43-A deals with “protected disclosures” and Section 43-B enumerates the “qualifying disclosures” which, in essence, “qualify” for protection under the UK Act. As per Section 43-B, disclosures providing the following information are entitled to be protected:
(1) commission of a criminal offence,
(2) failure of a person to comply with any legal obligation,
(3) occurrence of a miscarriage of justice,
(4) threat to the health or safety of an individual,
(5) damage to the environment,
(6) likelihood of the information mentioned above being concealed.
The worker making the disclosure, however, has to have a “reasonable belief”25 that his disclosure tends to show the abovementioned information. The belief need not be correct. It is sufficient if the worker held a belief and it was reasonable for him to do so.
It has been subsequently held that “failure to comply with a legal obligation”26 includes a breach of any statutory requirement, a contractual obligation, a common law obligation (e.g. defamation, negligence), etc. “Miscarriage of justice”27 includes matters likely to lead to a wrongful conviction, such as reliance on unsound forensic techniques, failure to disclose evidence to the defence, perjury, etc.28 However, it must be noted that if the disclosure of the information is in itself a crime (e.g. if it breaches the Official Secrets Act, 1989), such a disclosure will not qualify for protection under the UK Act.
As per the scheme of the UK Act, there are primarily three types of qualifying disclosures. These are:
(1) Internal disclosure (43-C).—These cover disclosures made to employers or other responsible persons (including managers or directors). The disclosure must be made in good faith, when the worker reasonably believes that the relevant information relates to the conduct of a person other than his employer, or any other matter for which a person other than his employer has legal responsibility. According to Lord Borrie, Q.C., this provision is “absolutely at the heart” of the UK Act.29
(2) Regulatory disclosure (43-F).—A regulatory disclosure is one which is made to a prescribed person. The person is so prescribed by the Secretary of State and may include the Health and Safety Executive, the Inland Revenue and Financial Services Authority, the environmental agencies, etc. A worker making such a disclosure must also honestly and reasonably believe that the information and allegations are substantially true.30
(3) Wider disclosure (43-G).—A wider disclosure is one which is generally made to the police, the media, Members of Parliament, etc. However, there is a strict requirement for making such a disclosure. In addition to the conditions prescribed above, there are three tests which must be satisfied:
Firstly, he must either (i) reasonably believe that he will be subjected to a detriment if he makes the disclosure in accordance with Section 43-C or 43-F mentioned above; or (ii) if there is no prescribed person under Section 43-F, he reasonably believes that the evidence is likely to be destroyed if shown to his employer; or (iii) if the worker has already made a disclosure to his employer in accordance with Section 43-C or 43-F.
Secondly, the motive of the whistleblower must be taken into consideration, and the disclosure should not be made for any personal gain.
Lastly, certain criteria must be taken into consideration such as the identity of the person to whom the disclosure is made,31 the seriousness of the relevant failure, if there is any breach of a duty of confidentiality32, etc.
The tests mentioned above, such as reasonable belief, good faith, etc. constitute the mechanism that has been established by the Act to prevent frivolous complaints. “Gagging clauses” or agreements made with the employer are declared void under Section 43-J, insofar as they preclude the worker from making a protected disclosure.
According to Section 47-B, “a worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that the worker has made a protected disclosure.” It has been held that detriment also includes the threat of a detriment.33 If a worker finds that he has been subjected to any detriment, he may present a complaint to an employment tribunal.
Compensation is generally granted to a whistleblower. Where victimisation falls short of dismissal, the UK Act provides that the awards will be uncapped and based on losses. Where the whistleblower is an employee and has been sacked, he may seek interim relief so that his employment continues or is deemed to continue, until the entire hearing.
2. USA
Perhaps the most significant efforts towards affording protection to whistleblowers have been made in USA. The first of such efforts found expression in the form of the Civil Service Reform Act of 1978 (hereinafter CSRA), which prohibited as many as eleven personnel practices. CSRA created the Federal Office of the Special Counsel (OSC or Special Counsel), which was to provide adequate redress for disgruntled whistleblowers before the US Merit Systems Protection Board (MSPB).34 The relation between the two was that of a prosecutor and judge respectively.
However, the agency’s approach ranged from neglect to overt hostility,35 as throughout this period, the Special Counsel conducted only one hearing to restore a whistleblower’s employment. Further, CSRA could not remedy reprisals such as transfers to “bureaucratic Siberia”, career paralysis, elimination of duties, etc. Apart from CSRA, the Congress had also enacted anti-retaliation measures in the False Claims Act36 in 1986, under which a whistleblowers could receive a percentage of the money recovered, or damages suffered by the Government in the fraud cases they exposed.
The Whistleblower Protection Act (hereinafter the WPA Act) is based on four primary principles. These are:
(1) Giving whistleblowers control of their cases through an individual right of action (IRA) before MSPB.
(2) Elimination of the discretionary powers possessed by the Special Counsel so as to make the agency a risk-free option.
(3) Expanding the stage of protection by eliminating prior loopholes, broadening the shield for protected conduct and expanding the scope of illegal employer conduct.
(4) Creating more realistic burdens of proof.
The disclosure must be made to either the Special Counsel, the Inspector General of an agency, another employee designated by an agency head to receive such disclosures, or any other individual or organisation i.e. a congressional committee or the media, provided the disclosure is not specifically prohibited by law and the information does not have to be kept secret in the interest of national defence or the conduct of foreign affairs.
As before, the Special Counsel and MSPB are charged with upholding the WPA Act, and both serve the function of an appellate organisation. However, the discretionary powers that were earlier possessed by the Special Counsel, by which the initiation of legal proceedings was entirely at the behest of the Special Counsel, have now been done away with. The employee can seek interim relief. Procedures have been prescribed for the protection of witnesses and for the non-disclosure of the identity of the complainant,37 a feature which is lacking in the UK Act.
A substantial and significant feature of the WPA Act is the creation of more realistic burdens of proof. This feature is based on three principles:
(1) Eliminating the relevance of employer motives.
(2) Easing the standard to establish a prima facie case.38
(3) Reversing the burden of proof for agencies, which must then prove legitimate, independent justification for the personnel action by “clear and convincing evidence”.
Another unique and commendable provision in the WPA Act, one which is not seen in any other, is the ability of whistleblowers to opt for a transfer. After the litigation is complete, whistleblowers often find the work environment to be hostile, where employers constantly find faults in their work in order to remove them from employment. This situation is remedied by the WPA Act, which enables whistleblowers to petition for transfer. This provision can also be invoked during the interim stage.
The legal position in USA has not been stagnant ever since the enactment of the WPA Act in 1989. In 1994, 20 far-reaching amendments were made to the WPA Act in order to strengthen the protection given to whistleblowers. Provisions were made for the protection of whistleblowers in statutes such as the Family and Medical Leave Act39, the Labour Management Relations Act40 and the Uniformed Services Employment and Re-employment Rights Act41.
The most recent and perhaps most significant of these statutes is the Sarbanes-Oxley Act42 (hereinafter the SB Act), which was enacted by the Congress in 2002. Following the misconduct of companies such as Arthur Anderson, Enron and World.Com, the need was felt to introduce substantial legislation providing protection to whistleblowers who report, on the basis of a reasonable belief, that a company subject to the Securities and Exchange Commission’s Regulations has engaged in any number of fraudulent activities, including federal mail fraud, wire fraud, securities law fraud, etc.43 A provision to this effect if made in the securities law in India would, no doubt, strengthen the position of the same, given the quantum of securities fraud that has taken place in the recent past.
3. Australia
The need for suitable whistleblower legislation in Australia was first pointed out by the Fitzgerald Report in relation to investigation into public misfeasance in Queensland. The said report had stressed on the requirement for an “accessible, independent body to which disclosures can be made confidentially”. This was followed by the recommendation made by the Gibbs Committee (on criminal law). As of today, all five States of Australia have enacted whistleblower legislation. There is, however, no statute of national pertinence. The following is a review of the Whistleblowers Protection Act of 2001 (hereinafter the Australian Act), as was enacted in Victoria.
Part 2 of the Australian Act deals with “disclosures of improper conduct” wherein adequate specifications have been given as to who can make a disclosure, to whom such a disclosure can be made, etc. Under the said provisions, a natural person who believes on reasonable grounds that a public officer or public body:
(a) has or is likely to engage in improper conduct in their capacity as a public officer or public body; or
(b) has taken, is taking or is proposing to take detrimental action in contravention of Section 18—
may disclose such improper conduct or detrimental action as per the provisions of the Australian Act.
Detrimental action has been defined in Part 1 as:
(1) action causing injury, loss or damage; and
(2) intimidation or harassment; and
(3) discrimination, disadvantage or adverse treatment in relation to a person’s employment, career, profession, trade or business, including the taking of disciplinary action.
Improper conduct has thereafter been defined as:
(1) corrupt conduct; or
(2) a substantial mismanagement of public resources; or
(3) conduct involving substantial risk to public health or safety; or
(4) conduct involving substantial risk to the environment — that would, if proved, constitute—
(5) a criminal offence; or
(6) reasonable grounds for dismissing or dispensing with, or otherwise terminating, the services of a public officer who was, or is, engaged in that conduct.
It is important to note that both the UK and the US statutes deal only with workers, employees and persons of a similar nature. However, the Australian statute widens the definition of a complainant to a “natural person”. Still, the requirement of “reasonable belief” as seen in the aforementioned Acts is included in the Australian Act. A disclosure may be made to the Ombudsman, a public body (if the disclosure relates to a member, officer or employee of that body), the President of the Legislative Council or the Speaker or the Legislative Committee (as the case may be). It must also be noted that unlike the UK Act, the Australian Act permits the disclosure of information relating to police officers, which may be made to the Ombudsman, the Deputy Ombudsman, etc. Confidential disclosures can also be made under the Australian Act.
Part 3 of the Australian Act gives protection to whistleblowers who make protected disclosures in accordance with Part 2 (mentioned above), absolving them from civil or criminal liability arising by way of administrative process (including disciplinary action). A person who takes detrimental action against another in reprisal for a protected disclosure can be subject to 240 penalty units, 2 years’ imprisonment, or both. Under Section 18 of the Australian Act, a person takes such detrimental action if:
(1) the person has made or intends to make a protected disclosure; or
(2) he believes that a person has made or intends to make such a disclosure; or
(3) he incites or permits another to take the action for either of the abovementioned reasons.
Under Part 4, the person or body to whom the disclosure is made, is required to determine if the disclosure which has been made, is a public interest disclosure or not, and then take the necessary action thereafter. Section 106 of the Australian Act deals with the punishment for making false disclosures, prescribing 240 penalty units, 2 years’ imprisonment, or both. Thus the penalty for making false or frivolous disclosures is the same as the penalty for taking detrimental action.
4. New Zealand
The Protected Disclosures Act of New Zealand (hereinafter the NZ Act) came into force on 1-1-2001. The provisions of the NZ Act are more or less similar to the Australian Act. Disclosures can be made to a prescribed number of persons by employees, the definition of which has been adequately provided.
However, a striking feature of the Act is seen in Section 18(1). The section states that the disclosure will be protected “despite any prohibition of or restriction on the disclosure of information under any enactment, rule of law, contract, oath or practice”. This essentially means that the Act overrides any other law in New Zealand which deals with official secrets; a feature which is not seen in the UK Act.
Section 19 requires the identity of the informant to be kept secret unless the informant concerned consents to revealing his identity, or is required to reveal it for the purpose of effective investigation, to prevent a risk to public health, etc.44
Section 20 deals with “false allegations” and states that protection will not be granted to a person if he discloses any information, knowing it to be false.
5. South Africa
Whistleblowers in South Africa had acquired a bad reputation by virtue of the “impimpis” — apartheid era informants who betrayed their comrades often with devastating consequences. Growing concerns as regards adequate protection for whistleblowers, culminating in the Lenasia incident45 resulted in the enactment of the Protected Disclosures Act in 2000 (hereinafter the SA Act). The Act reaches out to employees both of the public and private sectors who disclose information of unlawful or corrupt conduct by their fellow employers or fellow employees, shielding them from “occupational detriment”.
Occupational detriment includes disciplinary action, suspension, dismissal, demotion, harassment, intimidation, transfer, etc. Richard Calland, Executive Chair of the new Open Democracy Advice Centre has said: “at the heart of the Act is the notion that prevention is better than cure”.
A unique feature of the SA Act is that it calls for the establishment of confidential hotlines facilitating the disclosure of crucial information. Such hotlines might effectively encourage prospective whistleblowers to make disclosures. However, anonymous disclosures of this sort are hard to corroborate, difficult to investigate and often impossible to remedy.46 Thus, although setting up a centre of this sort might not help in realising the longterm objective of developing an atmosphere of transparency, openness and accountability, it might serve as a provisional measure to encourage whistleblowers in making disclosures in public interest.
IV. Prevention of frivolous disclosures
The landmark decision of the US Supreme Court in New York Times v. Sullivan47 established the axiom that a public official cannot recover damages for defamation unless he proves that the statement was made with “actual malice” i.e. with knowledge of the fact that it was false, or with reckless disregard of whether it was false or not. This decision was followed in several decisions worldwide, including in the decision of the Supreme Court of India in S. Rangarajan v. P. Jagjivan Ram48. Thus, it is now a renowned principle in public law, that officials in the public eye are not entitled to as sacrosanct a right to privacy, as others who are not constantly under the public gaze.
The abovementioned principle has been followed by most of the statutes mentioned above. In UK, the worker has to have a “reasonable belief” as to the fact that the information he is disclosing is correct. It is irrelevant if the information turns out to be false, as long as he bears no malice to the employer (or person concerned). However, as mentioned above, in some instances, as long as the disclosure was made to a suitable authority, even the existence of malice did not amount to punishment for the whistleblower.49 The same provisions are seen in the WPA Act of USA.
In Australia, punishment for disclosing false information entails a punishment equivalent to the punishment for improper conduct or detrimental action on the part of the employer. Thus, Australia adopts a somewhat harsher approach. However, both Australia and New Zealand have taken note of the important principle mentioned above.
V. Importance of public interest in the Indian context
Over the past few decades, public interest has played a pivotal role in the decision-making process of the courts. The judicial ethos of the country roots itself firmly in the welfare of the people. It has been held in the past, that the interest of the public must necessarily outweigh all other interests.50
It is in furtherance of this very principle that the Supreme Court heralded the “right to information” of voters in the path-breaking decisions of Association of Democratic Reforms51 and Peoples Union for Civil Liberties52 where it was categorically held that the voters in a democracy have the “right to know” the dealings and financial position of the candidates for whom they will be voting. This right was extended and given statutory recognition in the Freedom of Information Act.53 Under the said Act, all citizens have freedom of information as regards any material in any form relating to the administration, operations or decisions of a public authority.
An immense amount of emphasis has been placed on the application of special procedure for the procurement of critical information. In particular, leave has been given by the Supreme Court in withholding the identity of the witness under extraordinary circumstances. Thus in Kartar Singh54 it was held: (SCC pp. 686-87, para 281)
“281. Notwithstanding the provisions of the Evidence Act and the procedure prescribed under the Code, there is no imposition of constitutional or statutory constraint against keeping the identity and address of any witness secret if some extraordinary circumstances or imperative situations warrant such non-disclosure of identity and address of the witnesses.”
Similarly, in Naresh Shridhar Mirajkar55 the Supreme Court contemplated the validity of holding an in-camera trial. The Apex Court was of the opinion that in certain circumstances, the identity of the witness could be saved from the public gaze by holding an in-camera trial.
An exceptionally pertinent finding of the Supreme Court can be seen in A.K. Roy56 where it was held that:
“[T]he disclosure of the identity of the informant may abort the very process of preventive detention because, no one will be willing to come forward to give information of any prejudicial activity if his identity is going to be disclosed, which may have to be done under the stress of cross-examination.”57
Thus as far back as 1982, the Supreme Court acknowledged the need to afford some sort of protection (in the form of non-disclosure of identity) to persons who would give information about the malpractices of public authorities. The persons the Supreme Court referred to are now known as whistleblowers.
VI. Conclusion
The above discussion indicates that India is in desperate need of a general Act affording protection to whistleblowers. A legislation should embrace both the public and private sectors. Clear-cut definitions as to what disclosures will be protected, as well as the persons to whom such disclosures shall be made must be adequately given therein. The punishment for false disclosures should not be too harsh, as it should not deter the conviction of good-faith whistleblowers. The position adopted in UK as regards frivolous disclosures best suits this purpose. Provisions for strict confidentiality must also be inserted within the Act in order to encourage disclosures which entail dangerous consequences. Call centres, such as those in South Africa, would be preferable for short-term results.
After the enactment of a general Act, suitable amendments can be made to various statutes making them whistleblower-friendly, as has been done in US.58 Amongst others, amendments of this kind can be made to the Securities Act, to prevent the frauds that have taken place in the past; as well as general medical law, such that disclosures that have been made in the past where the interest of the general public has been involved (e.g. X v. Hospital “Z”59) will be protected. The problem of “match-fixing” in cricket as was faced in 1997 might also have been averted had whistleblower legislation been in place.
Provisional measures have already been taken, and as of now, the Central Vigilance Commission has been empowered to receive public interest disclosures. However, these disclosures can only be made by employees of the Central Government. These are not adequate.
The world has acknowledged the importance of whistleblowers in deracinating the otherwise cancerous effects of corruption in society. It is time India did the same.
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