Corporate lobbying


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Corporate lobbying

  1. 1. Corporate Lobbying: Do We Need a Law to Regulate Whistle Blowing?"It takes courage to stand up and challenge the corrupt.But courage isn’t always enough”BACK IN 1971, Daniel Ellsberg — a former Marine and Vietnam War veteran, who was working as ananalyst at the Rand Corporation — `blew the whistle on a top-secret Defence Department document onthe Vietnam War, which came to be known as the Pentagon Papers. Claiming to be driven by hisconscience, Ellsberg revealed to the New York Times and the Washington Post how successive U.S.Presidents had dragged the country into an immoral and unwinnable war, and had lied to Americansabout its course and outcomes. His disclosure played a major part in turning the tide of public opinionagainst the Vietnam War. The U.S. Government responded by prosecuting Ellsberg on 12 charges,leading to a total sentence of 115 years if convicted. That was not all. The dirty tricks department at theNixon White House launched a smear campaign against Ellsberg; engaged the Watergate burglars tobreak into his psychiatrists office in the hope of finding something defamatory; tapped his telephones;engaged thugs to physically attack him; and tried to influence the trial judge with the offer of the post ofFBI Director. When these plots were exposed, the judge had to abandon the trial and acquit Ellsberg.Nixons machinations against Ellsberg formed the basis of two of the three articles of impeachmentagainst him. The Guardian recently named Daniel Ellsberg "the most important whistleblower of thepast half century." Powerful individuals and organisations can retaliate against whistleblowers,threatening their jobs, their families or even their lives. In trying to protect whistleblowers, we areactually trying to protect ourselves. Many employees may be afraid to speak out even with the legalprotection, but its very existence will deter government and corporate wrongdoings to a considerableextent.Corporate LobbyingLobbying is the intention of influencing decisions made by legislators and officials in the government byindividuals, other legislators, constituents, or advocacy groups. A lobbyist is a person who tries to
  2. 2. influence legislation on behalf of a special interest or a member of a lobby. Governments often defineand regulate organized group lobbying that has become influential. Corporate lobbying is when thecorporations and the firms in the country try to take actions and influence the government in some wayin order to get interest.Lobbying and DemocracyGaining political influence in India was once a simple affair: You handed over a suitcase of cash, in nonsequential notes. But now in India, as elsewhere in the developing world, the old business of corruptionis meeting a new rival: the Washington-style business of persuasion, in which companies garnerinfluence through golf games, planted news stories and PowerPoint presentations. As globalcorporations woo a billion customers, there are tax breaks and contracts to be wrested from Indianofficialdom. Some companies still get them by corrupt means, covering their tracks with middlemen, assome foreign managers acknowledge in private and as high-profile Indian media investigations havealleged. But many companies, according to experts on Indias corporate landscape, are turning tolobbyists who use subtler tools of influence, partly out of fear of anti-bribery laws like the U.S. ForeignCorrupt Practices Act, which threatens jail time even for chief executives if they let workers pay bribesoverseas.In Washington, lobbying is a huge, established industry and, of late, a source of controversy. But in India,where there is a long tradition of outright corruption, lobbying is regarded by many as a lesser evil.Supporters say lobbyists are helping to pry open closed industries. They are praised for introducing fact-based analysis into the debate over liberalization, and for creating a cheaper alternative to bribery.Unlike in the West, lobbying is virtually unregulated in India, as in many other developing countries.Defenders of the lobbying say it signals a new partnership between the state and business in India. Inthe decades after independence in 1947, India was a socialist republic notorious for its "License Raj" -the lumbering bureaucracy that parceled out permissions needed to start, operate and close businesses.The economic stimulus packages initiated in several countries have given fresh momentum to corporatelobbying, in which powerful companies spend tens of millions of dollars ensuring that legislation and
  3. 3. policy are drafted to favour their area of business. Enormous sums are spent on this and oncontributions to campaign funds. Though lobbying has become a part of life, the scale of the effort hasdrawn attention. For example, the Pharmaceutical Research and Manufacturers of America (PhRMA)doubled its spending to nearly $7 million in the first quarter of 2009, followed by Pfizer, with more than$6 million.In India, corporate lobbying, in the form of intensive briefings and presentations to ministers and seniorcivil servants, is expanding; the current political climate also makes ministers, officials, and legislatorsmore receptive to it. Published research shows a significant positive correlation between lobbying andfinancial performance, and lobbying by firms or by lobbying agencies often produces policies tailored totheir own requirements. In 2005, U.S. Senator Dick Durbin’s attempt to tighten the law on mortgagesfailed after intensive lobbying by lenders. Almost no major countries require oversight, transparency, oraccountability in lobbying. It has even been said that in India the paucity of high-quality research centersmakes officials vulnerable to slick lobbying and instant publicity countering allegations, for example,environmental and other activists. There are, however, signs of concern about lobbying. Although somemajor corporations are coming under shareholder pressure to provide detailed information on theirlobbying, an early change in the lobbying culture is unlikely. Critics say that what is called lobbying in thewest is called corruption in developing countries and though corruption stinks it is at least a stink thateveryone knows. There can be no doubt that lobbying will continue to pose a serious threat todemocratic processes around the world.Large multinational corporations play as much for power as for market share. Lobbying by MNCs is seennot only at a national level but also to bring pressure on nations when they make their decisions on aninternational or regional plane. The USAs insistence on the new patent regime was down, to a largeextent, to the intense lobbying by PRMA in the lead-up to the Doha round of the WTO, and similarly,there is a lot of industry lobbying happening currently in relation to the proposed AIFM directive in theEU. MNCs have the financial backing necessary to make a powerful statement to politicians, somethingother lobby groups, like NGOs, cannot fight.
  4. 4. No business runs with a rule-book since the rules are applicable only to the ideal contexts. No matterhow many times we criticize, democracy there is no pure and simple rules of human interaction. Yes, theloudest voice is the one that gets heard. Theres nothing right or wrong in it and whether we like it ornot, thats how it is. And it is everywhere. The production line of a business has its own rules, tomaintain supremacy of products/ services, and those rules needs to be bent or by-passed as needed. Itsan open truth that every product has at least one defect. Similarly, the sales and marketing depends notonly on the power of the product but also on the skills of presentation and advertisement. A humanmind can never be unbiased. As long as people are moved by relations, contacts, pressure, greed, fear,etc the lobbying and grouping are going to play a significant role in determining favoritism. Whethermoney should be involved or not is a different aspect, but money will be involved as long as there areno better alternatives to it. Whether its corruption or madness, every game has its own rules.Lobbying Is Integral To Policy- MakingThere is another question that arises, which is – That can a further reduction in discretionary powers ofgovernment help reduce the role of lobbyists? The answer to this question is that the cornerstone ofIndian economic reforms is the gradual removal of the discretionary powers of government throughclearly laid down policies that favour none and do away with the need for corporates to beg for specialtreatment. Unfortunately, even after more than a decade-and-a-half of reforms, the government retainssubstantial discretionary powers. Discretion with respect to quick or slow clearance of files, speed oflicence awards, higher or lower tax imposition, smoother or slower loan sanction, and includingrewriting of policy for entire industries.The Indian economy, by and large, functions around the government’s discretionary powers. Whenevergovernment changes, the wielders of these discretionary powers also change, making matters worse forcorporate lobbyists. In most cases, businessmen hate political instability and would prefer continuity.However, reform has the ability to effectively dilute the discretionary powers of government throughthe establishment of independent regulators and a clear policy, as witnessed in the telecom sector.Irrespective of the level of reform, it is an accepted fact that corporate lobbying is a necessary evil. Itremains an integral part of the policymaking process of government at all times; only its manifestationsvary. In the last few days, India has witnessed a raging debate on lobbying as it was raked up in the
  5. 5. aftermath of a corporate feud that reached the corridors of power at the Delhi Durbar. Lobbyists oneither side have been trying hard to tilt the government’s petroleum policy to their advantage.Lobbying goes on all the time, mainly because the state retains so much discretionary power. But even amuch-reformed state will offer scope for lobbying. Therefore, it is pertinent to ask, “Why not encouragean ethos that discourages behind-the-doors lobbying?” The American experience in this regard shouldbe an eye-opener, as lobbyists in America are registered legal firms. Now, it is for Indian society todecide whether we should allow covert backdoor lobbying or open transparent lobbying as practised inthe developed world.Lobbying in India is at a nascent stage. Until recently, it was rated equivalent to influencing governmentpolicy with money. With increased transparency in governance, corporate entities realised that a morelegitimate method is needed to influence policymakers. Certainly, religion and caste play an importantrole in Indian politics and are used to influence policy as more and more politicians resort to vote-bankpolitics. Being politically savvy is considered an obvious prerequisite to lobbying government effectively.Winning a contract is one thing, but becoming a savvy local corporation in India is quite another. Asuccessful lobbyist needs to know how to make representations to government, what tools andtechniques can be effectively used to communicate with MPs, MLAs, ministers, etc. These are both theobvious and arcane bits of knowledge that empower lobbyist to understand better the working of thegovernment. Since the reforms cannot ensure substantial reduction in the discretionary powers ofgovernment, it is time that Indian corporates start hiring professional lobbyists. Necessary safeguardsneed to be taken to ensure that lobbyists should not double up as MPs and get free access to ministerswho formulate important policies. Moreover, a realisation should emerge within the social and politicalspectrum that the Indian democracy has reasonably matured and lobbying needs to be recognised as anintegral part of the policymaking process. It needs to be regulated and professionally managed for thebetterment of everyone.Political LobbyingLobbying is the intention of influencing decisions made by legislators and officials in the government byindividuals, other legislators, constituents, or advocacy groups. In the United States, the Internal
  6. 6. Revenue Service makes a clear distinction for nonprofit organizations between lobbying and advocacylimiting the former to "asking policymakers to take a specific position on a specific piece of legislation, orthat ask others to ask the same"; in common language, the definition of lobbying is normally broader.Other activities that seek to influence policies, possibly including public demonstrations and the filing of"friend of the court briefs", are termed as "advocacy".The House of Commons Public Administration Select Committee argued that while there areshortcomings in the regulation of the lobbying industry in the United Kingdom, "The practice of lobbyingin order to influence political decisions is a legitimate and necessary part of the democratic process.Individuals and organizations reasonably want to influence decisions that may affect them, those aroundthem, and their environment. Government in turn needs access to the knowledge and views thatlobbying can bring. Governments often define and regulate organized group lobbying. EconomistThomas Sowell defends corporate lobbying as simply an example of a group having better knowledge ofits interests than the people at large do of theirs. Lobby groups may concentrate their efforts on thelegislatures, where laws are created, but may also use the judicial branch to advance their causes.Lobbying in United Kingdom:Recently, many recent MPs and in particular Ministers are recruited by lobby firms and lobbyists havebeen recruited by ministers as special advisors using what is termed the Revolving door of influence. In2009 the House of Commons Public Administration Select Committee recommended that a statutoryregister of lobbying activity and lobbyists would improve transparency to the dealings betweenWhitehall decision makers and outside interests. Parliament controversially responded to thisrecommendation by saying that self-regulation was more practical. The Conservative leader, DavidCameron, predicted that it was "the next big scandal waiting to happen" and was one that had "taintedour politics for too long, an issue that exposes the far-too-cozy relationship between politics,government, business and money.Lobbying in United States:
  7. 7. The ability of individuals, groups, and corporations to lobby the government is protected by the right topetition in the First Amendment to the United States Constitution. Lobbyists use time spent withlegislators to explain the goals of the organizations they represent and the obstacles elected officialsface when dealing with issues, to clients. Lobbying activities are also performed at the state level, andlobbyists try to influence legislation in the state legislatures in each of the 50 states. At the localmunicipal level, some lobbying activities occur with city council members and county commissioners,especially in the larger cities and more populous counties. The Lobbying Disclosure Act of 1995 andHonest Leadership and Open Government Act of 2007 increased regulation and transparency. In 2009U.S. President Barack Obama signed two related executive orders and three presidential memoranda onhis first day in office.WHISTLE BLOWER PROTECTION AND PROPOSALSBackground on Whistle Blowing law in India and update on current proposalIt has often been said that no culture is immune from corruption. Sadly, there are individuals in allsocieties who improperly leverage their positions of authority, demanding money or personal favours inorder to do work which they are supposed to do by virtue of their authority. Irrespective of the degreeof coercion involved, the fact remains that bribery fosters a culture of impunity and rampant corruptionundermines the functioning of public institutions. The ripple effect of such culture is then felt across theboard, in both public and private life.Whistle-blowing or the act of exposing wrongdoing, fraud or corrupt practices in an organization orsituation, has been seen as one of the few strong measures to combat corruption. The social censurethat such whistle-blowing entails seemingly operates as a check or deterrent for future improperconduct. A whistleblower can be a person who works for the government and reports misconduct withinthe government or it can be an employee of a private company reporting corrupt practices within thecompany. Despite a strong lobby in this field, India does not yet have legislation for whistleblowers whonormally face a lot of problems while reporting acts of corruption. By exposing corruption among theirsuperiors, they face the possibility of direct or indirect punishment. This could be in the form of lack ofadvancement and promotions ultimately leading to weak career graph.
  8. 8. Proposals and Past EffortsTaking note of the harassment and victimization suffered by whistleblowers in India, especially bysuperiors in their very own organizations, on account of disclosing improper conduct / malpractices inthe system, the paramount importance of protecting whistleblowers was felt. Consequently, upon therequest of the then Central Vigilance Commissioner, Mr. N. Vittal, in August 1999, the Law Commissionof India prepared a report on “Public Interest Disclosure Bill” *179th Report of the Law Commission ofIndia]. A draft Public Interest Disclosure (Protection of Informers) Bill, 2002 was then circulated inJanuary 2003. There was no further progress on the matter till November 2003, when one Mr.Satyendra Dubey, was murdered after he exposed corrupt practices prevalent in the National HighwaysAuthority of India (NHAI). The incident led to widespread media outrage and impetus for the enactmentof a whistleblowers bill.In May 2004, the Government of India, vide a Resolution on Public Interest Disclosure & Protection ofInformers, authorized the Central Vigilance Commission (CVC) as the ‘Designated Authority’ to receivewritten complaints for disclosure of any allegation of corruption or misuse of office and to recommendappropriate action. The CVC then issued a Public Notice (through an Office Order) in relation to the saidResolution. This Public Notice provided that the jurisdiction of the CVC in this behalf would be restrictedto any employee of the Central Government or of any corporation established by or under a Central Act,government companies, societies or local authorities owned or controlled by the Central Government.This would mean that personnel employed by the State Governments and activities of the StateGovernments or its Corporations etc. will not come under the purview of the CVC. It also stated that theCVC will have the responsibility of keeping the identity of the complainant secret. The general public wasalso informed that any complaint, which is to be made, under the Resolution, should comply with thoseaspects that were mentioned in the Notice.Current Proposal
  9. 9. The Office Order and the Public Notice are still in force. In 2006, however, the erstwhile draft PublicInterest Disclosure Bill was updated and the same was renamed as “The Whistleblowers Bill, 2006. Thesaid Bill was introduced in the Rajya Sabha (Upper House of the Parliament of India) on March 3, 2006.Over the last few years, the Bill has undergone several changes based on comments and suggestionsreceived. The latest version of the Bill, styled as “The Public Interest Disclosure and Protection toPersons Making the Disclosures Bill, 2010” (“the Bill”), was introduced in the Lok Sabha (House of thePeople), Parliament of India on August 26, 2010. The revised Bill has several new provisions which wereadded with a view to make a robust legislation on the subject. The Bill is yet to be notified as a statute.A Brief Summary Of The Bill And Its ProposalThe Purpose of the Bill is (a) to establish a mechanism to receive complaints relating to disclosure on anyallegations of corruption or wilful misuse of power or wilful misuse of discretion against any publicservant; (b) to inquire / cause an inquiry into such disclosure; (c) to provide adequate safeguards againstvictimization of the person making such complaint and for matters connected therewith or incidentalthereto.What Is Public Interest Disclosure?A Public Interest Disclosure is a complaint made by any person relating to – (a) an attempt to commit orcommission of an offence under the Prevention of Corruption Act, 1988; (b) wilful misuse of power orwilful misuse of discretion by virtue of which demonstrable loss is caused to the Government ordemonstrable gain accrues to a public servant; (c) an attempt to commit or commission of a criminaloffences by a public servant.Who Is A Public Servant?A Public Servant is any employee of the Central or State Governments, or any corporations establishedby or under any Central / State Act, any government companies, societies or local authorities owned or
  10. 10. controlled by the Central / State Governments and such other categories of employees as may benotified by the Central / State Governments from time to time.Who Can Make A Public Interest Disclosure & To Whom?Any public servant or any other person including any non-governmental organization may make a publicinterest disclosure before the Competent Authority. The Competent Authority, in relation to any publicservant employed with the Central Government or any Central Government Authority, is the CentralVigilance Commission or any such authority that the Central Government specifies by way of aNotification. In the case of State Government employees, the Competent Authority is the State VigilanceCommissioner or any other authority as specified by the State Government by way of a Notification.Requirements of DisclosureIt is necessary that any disclosure made under the Act is made in good faith and the person making thedisclosure is required to make a personal declaration stating that he / she has reasonable belief that theinformation disclosed by him / her and the allegation contained therein is substantially true.Furthermore, in order that action is taken on a public interest disclosure, it is necessary that the identityof the complainant / public servant is accurately mentioned in the complaint.Inquiry In Relation To Public Interest DisclosureAfter ascertaining from the complainant / public servant whether he / she was the person / publicservant who made the complaint, the Competent Authority shall conceal the identity of the complainantunless the complainant has himself / herself revealed his / her identity to any other office or authoritywhile making the disclosure in the complaint or otherwise. Thereafter, an inquiry into the disclosureshall be made by the Competent Authority.Powers of the Competent Authority
  11. 11. # For the purposes of an inquiry under the Act, the Competent Authority has been granted the powersof a civil court (while trying a suit) in respect of the following matters:# Summoning and enforcing the attendance of any person and examining him / her on oath;# Requiring the discovery and production of any document;# Receiving evidence on affidavits;# Requisitioning any public record or copy of it from any court / office;# Issuing commissions for the examination of witnesses or documents;# Such other matters as may be prescribed.# Proceedings before the Competent Authority shall be deemed to be judicial proceedings. Whileexercising powers of a Civil Court, the Competent Authority has to take such steps as to ensure that theidentity of the complainant is not revealed or compromised.# Protection To The Persons Making The Disclosure# The Central Government shall ensure that no person / public servant who makes a disclosure underthe Act is victimized by initiation of any proceeding or otherwise merely on the ground that such person/ public servant has made a disclosure or rendered assistance in an inquiry under the Act. If any personis being victimized or is likely to be victimized, he / she may file an application to the CompetentAuthority seeking redress in the matter. The Competent Authority may then issue suitable directions forprotection of such person. Such directions can be issued to the concerned public servant, or publicauthority, any other government authority including the police.Offences and PenaltiesIf the officials who are required to aid / assist an inquiry into the public interest disclosure upon therequest of the Competent Authority, obstruct the inquiry by delaying the furnishing of a report on thematter which is requested for by the Competent Authority, such official(s) shall be liable to pay a penaltywhich may extend to Rupees Two Hundred and Fifty for each day of delay. However, the total amount ofthe penalty shall not exceed Rupees Fifty Thousand.
  12. 12. The act of negligently revealing the identity of a complainant is punishable with imprisonment for a termwhich may extend up to three years and also to fine which may extend to Rupees Fifty Thousand.Making a mala fide, incorrect, false or misleading disclosure is punishable with imprisonment for a termwhich may extend up to Fifty Thousand Rupees.The apex anti-corruption body, Central Vigilance Committee (CVC), has been given power to protect theidentity of whistleblowers. The government decided to bring a law through Public Interest Disclosureand Protection for Persons Making Disclosure Bill 2010 after the murder of Right to Information activistAmit Jethwa in Gujarat.SEBI Guidelines Regarding Whistle BlowingBowing to intense pressure from India, the market regulator has diluted its stand on the whistle-blowerpolicy and the tenure of independent directors on company boards.In a major departure from its earlier plan, the Securities and Exchange Board of India has said that thereporting requirement for listed firm for independent directors and the whistle-blower policy is nolonger mandatory. The revised Clause 49 has also specified various other reporting requirements forcompanies.SEBI had earlier said that independent directors might have a tenure not exceeding, in the aggregate, aperiod of nine years on the board of a company. SEBI has now made this reporting requirement a non-mandatory requirement of the listing agreement.Another mandatory requirement for the corporates was to have the whistle blower policy. SEBI circularmentioned that the whistle-blower policy through which company might establish a mechanism foremployees to report to the management concerns about unethical behaviour, actual or suspected fraudor violation of the company’s code of conduct or ethics policy. This mechanism could also provide fordirect access to the chairman of the audit committee in exceptional cases. Once established, the
  13. 13. existence of the mechanism may be appropriately communicated within the organisation. The provisionof having whistle-blower policy too has been made a non-mandatory requirement. SEBI-watchers saythis will benefit some promoters, who have been lobbying against the whistle-blower policy as it doesn’tsuit their working style.Whistle Blowing- Basic ConceptThe term `whistle blowing is a relatively recent entry into the vocabulary of public and corporate affairs,although the phenomenon itself is not new. It refers to the process by which insiders `go public withtheir claims of malpractices by, or within, organisations — usually after failing to remedy the mattersfrom the inside, and often at great personal risk to themselves. It is this willingness to stand up for aprinciple and court risk openly that distinguishes whistle blowing from such related practices as in-housecriticism, anonymous leaks, and the like. The whistle blower is considered a hero or a traitor, a do-gooder or a crank, a role model or a non-conformist troublemaker — depending on ones point of view.Whistle blowing is a universal phenomenon. India has also had its share of prominent whistleblowersfrom V. P. Singh to Manoj Prabhakar to P. Dinakar.It is true that under normal circumstances, an organisation is entitled to total loyalty and confidentialityfrom its employees. But when there is serious malpractice or when peoples lives are at stake as incorruption and fraud in defence procurement; deaths in `encounter of innocent persons; toxic leaksfrom a chemical factory; non-adherence to flight safety standards by an airline; creative accounting andfalse declarations by a company; cheating and plagiarism in scientific research, for example — theoverriding public interest may lie in protecting the publics right to be told, and the whistle blowers rightnot to be punished for doing so. Without whistleblowers, we may not get to learn about problems untilit is time to mourn the consequences.No doubt, audit, ombudsman, vigilance commissions, regulating agencies, the media, civil society, andcourts all play a role in deterring government and corporate transgressions to some extent. However,formidable their investigative skills, that initial inside information provided by a whistle blower is crucial.
  14. 14. Even a powerful Freedom of Information Act, which discloses information without the need for leaking,offers only a partial solution.Protecting Whistle Blowers in IndiaDuring the past decade, scams, swindles, and rip-offs have become a regular feature of the Indianpolitical and corporate landscape, costing taxpayers, investors and banks thousands of crores of rupees.Enactment of a Whistleblowers Protection Act is even more necessary for India than it was for the U.K.and the U.S. Together with the Freedom of Information Act, it can be a potent tool for promoting goodgovernance in the country. What we lack at the moment are public interest groups.It was the Veerappa Moily Commission on Administrative Reforms II that had recommended the systemof whistleblowers. It advocates that an honest and conscientious public servant, privy to informationrelating to gross corruption, abuse of authority or grave injustice, should be encouraged to disclose it inpublic interest without fear of retribution. In conjunction with the Freedom of Information Act, aWhistleblowers Protection Act can indeed be a potent tool for promoting good and transparentgovernance in the country.Endorsing the right to information as a fundamental right, Ex- Chief Justice Y K Sabharwal hasemphasised that ‘public accountability’ is a facet of administrative efficiency, information serving as aninstrument for the oversight of citizens.Suggestions on Whistle Blowing LegislationBased on the experiences of other countries, here are a few suggestions and a set of general principles,which could usefully underpin any effective Indian legislation on the subject:· With the consent of the required number of State governments, Parliament should try to enact a singleAct for all employees working in any tier of government, and also for employees working in any form oforganisation in the private and voluntary sectors. Employees of contractors, sub-contractors and agents
  15. 15. of an organisation; applicants for employment, former employees and overseas employees; attorneysand auditors should also be covered.· The Official Secrets Act should be overridden to provide for a public interest defence and the `gaggingclauses in employment or severance contracts should be declared void in respect of public interestdisclosures.· It should be subject to the condition that the disclosures shall not jeopardise operations or endangerthe lives of personnel. The judiciary may have to remain outside its purview unless the Contempt ofCourts Act is first amended to provide for a public interest defence.· What constitute `public interest disclosures need to be clearly defined, the protection should apply tospecific disclosures only involving an illegality, criminality, breach of regulatory law, miscarriage ofjustice, danger to public health or safety and damage to environment, including attempts to cover upsuch malpractices.· The whistleblower must reasonably believe that his information about a malpractice is substantiallytrue, and must act in good faith. Those caught making anonymous or pseudonymous leaks should not beprotected. The period of limitation for filing a complaint must be sufficiently long.· The Act must encourage employees to raise the matter internally in the first instance and mandateorganisations to establish suitable mechanisms for this purpose. Where it is not reasonable to raise thematter internally, or where attempts to remedy the matter from the inside have been unsuccessful,employees who make an external disclosure in a specified way should also be protected.Whistleblower protection measures are gathering a momentum of their own around the world, aidedpartly by spectacular government and corporate scandals. It is just a question of time before we shiftfrom our present culture of zero tolerance of whistle blowing to a culture of zero tolerance ofwhistleblower retaliation. For Example- Americas Watchdog Corporate Whistle Blower Center is anInitiative focused on assisting whistle blowers to step up to the plate to report corporate fraud, wasteand abuse. The corporate fraud could relate to consumers, to the shareholder, and or to US taxpayer.Substantial proof, of corporate, or shareholder fraud, that is original, substantial, and easy to see couldresult in the hero-whistle blower getting a significant reward for their information. The Corporate
  16. 16. Whistle Blower Initiative is devoted to helping insiders step forward with valuable information aboutcorporate wrong doing, fraud, or dishonesty.The Whistle Blowers Hall of FameWhistle Blowing refers to the process by which insiders go public with their claims of malpractices by, orwithin, organisations usually after failing to remedy the matters from the inside, and often at greatpersonal risk to them. Sometimes the cost of such valiant efforts is just too high to pay.Satyendra Dubey was one of those rare young men who was completely and uncomplicatedly honest.He didnt know he was a hero. An engineer from Indian Institute of Technology, Kanpur and working forNational Highway Authority of India probably never knew the word but died for simply doing the rightthing. He was gunned down by the mafia in Gaya on early morning of November 27th, nearly a yearafter he had complained of corruption on the Golden Quadrilateral project to the Prime Ministersoffice. Knowing the dangers that surround honest people bucking the whole corrupt system, in hisletter, Dubey had requested that his name be kept secret, a request that wasnt honoured, the letterwas sent from the PMO to the Ministry of Road, Transport and Highways and then to the NationalHighway Authority of India, with which Dubey was working as Deputy General Manager. His deathspeaks volumes about the growing nexus between politicians and mafia and also highlights the illegalprocedures/ways involved in awarding contracts and also the allegedly fraudulent pre-qualification bidsin connection to big development projects.Corruption exists all over the world and thrives at all layers of government. Officers who refuse to enterthe bandwagon are victimized. In India, the Tehelka expose involving defence deals had not onlyvictimized the reporters involved in the undercover operation but also harassed virtually anybodyassociated with the portal.A management graduate from Indian Institute of Management, Lucknow, Manjunath Shanmugham,who was working as a sales officer with the Indian Oil Corporation, was shot dead on November 19,
  17. 17. 2005, when he tried to expose an adulteration racket at an IOC petrol pump in Lakhimpur Kheri. While atrial court awarded death sentence to the main accused and life sentence to seven others, last year theAllahabad High Court Bench in Lucknow commuted the death penalty to life sentence and acquitted twoof the other seven convicts.If Manjunaths assassination raised questions about the effectiveness of the whistle-blower protectionregime in India, the series of murders of RTI activists across the country only underlines the urgency of asuitable law.The government has not made any attempt to place the Bill in the public domain before it reachesParliament an instance of its obsession with secrecy. This is a violation of the Right to Information Act,2005, which requires that every public authority shall publish all relevant facts while formulatingimportant policies or announcing decisions that affect the public.Meanwhile, there is considerable concern whether the new Bill will at all be an improvement over thePIDPI resolution. This was clear when Justice R.C. Lahoti, a former Chief Justice of India and a member ofthe Executive Committee of the India Rejuvenation Initiative, pointed out that according to reports in anewspaper, referred to two shocking instances of the CVC not protecting whistle-blowers. In the firstcase, the former Deputy Chairman of the Kandla Port Trust, Manoranjan Kumar, reported grosswrongdoings to the CVC in 2007 and ended up losing his job, while the guilty went unpunished. In thesecond case, Raj Kumar, a stenographer in the Sports Authority of India, faced a departmental inquiryafter he filed a petition in the Punjab and Haryana High Court alleging corruption in his department.The PIDPI resolution brought under its purview only complaints against employees of the CentralGovernment or public sector companies. Personnel employed by State governments could not becomplained against under it. The resolution suffers from other limitations as well.The Central Vigilance Commission announced that it had the responsibility of keeping the identity of thecomplainant secret, even though it could not stop the complainant himself from disclosing his identity or
  18. 18. making the complaint public. According to the resolution, only if the commission is of the opinion thateither the complainant or the witnesses need protection, it shall issue appropriate directions to theauthorities concerned. In other words, the commission has to be “convinced” about the whistle-blowers need for protection, which falls short of civil societys expectations. One major lacuna in theresolution is that it does not make the recommendation of the commission binding on the government.The CVC, either as a result of his discreet inquiry or on the basis of the complaint itself, may findsubstance in the allegations of corruption. It could use the CBI or the police authorities to investigate thecomplaint. In that event, the CVC could only “recommend appropriate action” to the governmentdepartment or the organisation concerned against the guilty official. The punitive action could includeredress of the loss caused to the government, initiation of criminal proceedings, and correctivemeasures to prevent the recurrence of such cases. The former CVC, P. Shankar, had deplored this aspectof the resolution, as, in his view, the CVC needed sanction before he could order prosecution.The CVCs annual reports claim that the commission has established a well-defined internal procedurefor processing complaints received under the PIDPI resolution in order to ensure that the complainantsidentity is not disclosed. The Joint Secretary (Home), Ministry of Home Affairs, has been made the nodalauthority to arrange for protection to the complainants wherever required and as directed by thecommission. The commission has formed a screening committee headed by the Secretary to the CVC toexamine these complaints and decide the further course of action.The commission received 276 complaints from whistle-blowers in 2008. Of these, 83 complaints weresent to Chief Vigilance Officers or the CBI for investigation/discreet verification of facts/comments, 144were sent for necessary action and 46 were found to be without a vigilance angle, having been filed byanonymous complainants. This left a pendency of three complaints. The commission has noted thatdespite its best efforts, complainants under the PIDPI resolution forward copies of the same complaintor lodge separate complaints containing similar allegations with other authorities concerned, thusrevealing their identity. The commission has issued guidelines asking the organisations not to subjectany complainant to any kind of harassment because of his/her having lodged a complaint, even if, at anytime, the identity of the complainant gets revealed through any source.
  19. 19. A study of data carried in the commissions annual reports shows that the number of complaints underthe PIDPI resolution has declined steadily since 2004. There is considerable suspense, therefore,whether the new Bill to replace the resolution can inspire potential whistle-blowers.2G SCAM in IndiaThe world is gripped by the ‘drip-drip-drip’ of cable internal communication shared by Wikileaks throughtheir website. Apart from gauging the impact to international relations and politics these candidrevelations also put the focus firmly on the power of transparency in internal communication.Interestingly, the India diplomatic corps have looked at the positive side of the issue – requesting theirForeign Services Institute (FSI) to adapt and outdo brevity and the style of writing if possible.Similarly, leakage of private conversations between corporate heads and a lobbyist (Radia tapes) as wellas corporate espionage in a supposed telecom scam in India has also put immense pressure on thegovernment and companies to re-look at processes, policies and measures. For leaders andorganizations social media has only compounded the issue with rising credibility challenges anddwindling trust ratings.The gap between what leaders and governments say and do has always been a topic of debate. Theseleaks and tapes have cast a shadow over their intentions and it will make it even more difficult toimprove their standing. The 2G spectrum scam involved officials and ministers in the Government ofIndia illegally undercharging mobile telephony companies for frequency allocation licenses, which theywould use to create 2G subscriptions for cell phones.According to a report submitted by the Comptroller and Auditor General based on money collected from3G licenses, the loss to the exchequer was 176,379 crore (US$39.16 billion). The issuing of the 2Glicenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department
  20. 20. investigated political lobbyist Niira Radia and the Supreme Court of India took Subramaniam Swamyscomplaints on record. Former Telecom Minister of the NDA government Arun Shourie was thewhistleblower who helped uncover the scam and also exposed many loopholes in the UPA governmentspolicy towards issuing telecom licences.In 2008, the Income Tax department, after orders from the ministry of Home and the PMO, begantapping the phones of Nira Radia. This was done to help in an ongoing investigation into a case where itwas alleged that Niira Radia had acted as a spy. Some of the many conversations recorded over 300 dayswere leaked to the media. The intense controversy around the leaked tapes became known in the mediaas the Radia tapes controversy. The tapes featured some conversations between politicians, journalistsand corporations. Politicians like Karunanidhi, journalists like Barkha Dutt and Vir Sanghvi and industrialgroups like the Tata Group were either participants or mentioned in these tapes.Parties InvolvedThe selling of the licenses brought attention to four groups of entities - politicians who had the authorityto sell licenses, bureaucrats who implemented and influenced policy decisions, corporations who werebuying the licenses, and media professionals who mediated between the politicians and thecorporations on behalf of one or the other interest group.Shortfall of MoneyA. Raja arranged the sale of the 2G spectrum licenses below their market value. Swan Telecom, a newcompany with few assets, bought a license for 1,537 crore. Shortly thereafter, the board sold 45% of thecompany to Etisalat for 4,200 crore. Similarly, a company formerly invested in real estate and nottelecom, the Unitech Group, purchased a license for 1,661 crore and the company board soon after solda 60% stake in their wireless division for 6,200 crore to Telenor.
  21. 21. The nature of the selling of the licenses was that licenses were to be sold at market value, and the factthat the licenses were quickly resold at a huge profit indicates that the selling agents issued the licensesbelow market value. Nine companies purchased licenses and collectively they paid the Ministry ofCommunications and Information Technologys telecommunications division 10,772 crore. The amountof money expected for this licensing by the Comptroller and Auditor General of India was 176,700 crore.Relationship between Media and Government:Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir Sanghvi knew thatcorporate lobbyist Nira Radia was influencing the decisions of A. Raja. The critics alleged that Dutt andSanghvi knew about corruption between the government and the media industry, supported thiscorrupt activity, and suppressed news reporting the discovery of the corruption.Response to the ScamIn early November 2010 Jayalalithaa accused the Tamil Nadu state chief minister M Karunanidhi ofprotecting A. Raja from corruption charges and called for A. Rajas resignation. In mid November thecomptroller Vinod Rai issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon),and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did nothave the up-front capital required at the time of the application and were in other ways illegal.In response to the various allegations, the Govt of India has replaced the then incumbent Telecomminister, A Raja with Kapil Sibal who has taken up this charge in addition to being the Union minister forHuman Resources Development. Mr Sibal contends that the "notional" losses quoted are a result oferroneous calculations and insists that the actual losses are nil. The CBI conducted raids on Raja and fourother telecom officials - former telecom secretary Siddharth Behura, Rajas personal secretary R KChandolia, member telecom K Sridhar and DoT deputy director general A K Srivastava on 8 December2010. Raja, Behura and Chandolia were arrested on Feb 2nd 2011.
  22. 22. ConclusionWhile the Bill regarding Whistle Blowing is a big leap forward in relation to protection of whistle blowersin India, there still are some ambiguities that require mending. For instance, while the Bill proposes toprotect the identities of those who make a public interest disclosure, protection to such complainants isproposed to be provided only after a complaint or a query is filed under the Right to Information Act,2005 in which the complainant / applicant must disclose his / her identity. Such protection may not onlybe too belated but also no protection at all since the risk of information leak may be high. It would beinteresting to see how the Competent Authority handles this issue. It is also felt that there aren’t manyrobust provisions to deal with the issue of accountability of the Competent Authority in the process ofconducting an inquiry.Whistle blowing is considered to be a self regulating mechanism within organizations. Unfortunately,such individuals aren’t seen in a positive light considering the exposures that leaders and organizationsface. However within organizations ethics committees and internal audit teams are tasked withinvestigating and recommending action if there are misdemeanours. Unless ethical violations andinformation security breaches are linked to performance and ongoing feedback there are limitations forwhistle blowing to get institutionalized. The need and urgency of a whistle blowing act cannot beoveremphasized even as Satyendra Dubeys death sparked off widespread public protest. Both inunlettered societies with meagre resources as also in the developed world, there is an urgent need bothfor access to information by the public along with an act that would provide protection to all those whoblew the whistle.It is time that the authorities took cognizance of the fact that money associated with developmentworks that usually comes from the tax payers pocket lands up in corrupt hands. In the processdevelopment takes the back seat. India cannot afford to lose its money nor its resources. The realheroes of todays world are honest people. They are few and far between. They are the ones society islonging to follow. But everywhere it sees them fail. Yet the world and developing countries especiallycannot afford to lose its honest officers who stand up against all odds and risk their lives. It is time thegovernment thinks about cleaning its system by providing protection to all those ordinary people whodares to bare open facts and has a stake at countrys future. Mere assurance from the Prime Minister
  23. 23. that the guilty wouldnt be spared is not enough either to the citizens or to Dubeys family. If thegovernment really means business it has to go about demonstrating that there are systems in place forgood people to rely on.We need a fast and efficient judiciary to handover judgments in fair and impartial manner with orwithout political and social pressure, and a clean and unbiased police that will come to the aid of thoseworking on the right side of the law; we also need public knowledge about the constitution and rule oflaw; and laws that will encourage people in both urban and rural areas to come forward without anyfear to usher in an era of transparency, accountability and participation in the governance of thecountry. We need a system, a society where a person can do its duty without fear and the head heldhigh. If the government really intends to deliver such a nation, then it is time the government pulled upits sleeves and makes concrete efforts to pass a whistleblowers act. To conclude it may be said withabsolute certainty that no measure to curb government and corporate transgressions in India orelsewhere will bear fruit unless legal immunity and protection against retaliation is given to responsibleand conscientious whistle blowers.