India’s lack of protection for whistleblowers leaves it vulnerable to large-scale corporate fraud. Ben Frumin reports
Start a discussion about whistle blowing in India and it won’t be long before Satyendra Dubey’s name comes up.
Dubey was a government engineer working for the National Highways Authority of India (NHAI). In 2002 he blew the whistle on widespread irregularities and corruption that NHAI officials and contractors were engaged in on the flagship Golden Quadrilateral roads project. Dubey disclosed the corruption in a November 2002 letter to the prime minister’s office. He asked that his identity be kept secret.
“Not only did the government do nothing concrete to stop corruption,” says Bhumesh Verma, a partner at Khaitan & Co, “but Dubey’s request for anonymity was ignored and his identity was revealed to all concerned.”
“This was like issuing a public contract for his life,” say Sukhpreet Singh and Anindita Roy Chowdhury, associates at Delhi-based law firm LexCounsel. “A year later, on 27 November 2003, Satyendra was murdered by the contractor mafia in Gaya, the town where he lived and worked for NHAI.”
“No other incident has brought the demand for whistleblowers legislation into such a sharp focus,” says Verma.
Dubey is not the only employee of an Indian company to have paid a terrible price for taking a stand against corruption. Shanmugam Manjunath, a marketing manager at Indian Oil Corporation, was murdered in 2005 after preventing a corrupt petrol station manager from selling adulterated fuel.
Both cases received prominent media attention. Dubey’s death also provided the impetus for a draft law in parliament intended to protect whistleblowers. Unfortunately, the bill has been stalled there for years – a sad illustration of the Indian government’s apparent lack of will to introduce strict and enforceable whistle blowing protections (see Whistle blowing around the world, page 47).
In recent months the debate has been reignited by the startling disclosures of financial fraud at Satyam, one of India’s largest outsourcing companies. “The magnitude of the fraud ought to have been detected,” say Singh and Roy Chowdhury. “A more proactive whistleblower protection policy, which would form a part of the internal best practices of the company, may have encouraged personnel to alert the authorities and regulators in advance.”
“In the case of Satyam, there was no company policy on whistle blowing,” explain Arti Narsana, a senior associate, and Ann Jose, an associate, at Vaish Associates. “The situation could have probably been avoided had such a policy been in place.”
Nobody knows whether the severity of this scandal would have been reduced by better whistleblower protections, which may have encouraged earlier disclosure by a Satyam insider. What is not disputed is that India’s whistle blowing mechanisms are feeble, when they exist at all. How the case of Satyam will change this critical aspect of corporate governance remains to be seen.
Turning a blind eye
Ketan Kothari, a senior consultant with Thakker & Thakker in Mumbai, believes that employees’ typical reactions to discovering unethical or illegal behaviour within their companies fall into three general categories. “It’s one thing to really blow the whistle,” he says. “The second thing is to not participate in something that’s wrong and to leave it alone. And the third is to participate.”