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Whistleblowing and India's giant corporations

The case of an employee speaking out against a major IT firm has triggered calls for tougher legislation.

Last updated: 10 Jan 2014 11:32
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Anti-corruption movements have gained momentum in the past few years [Reuters]

When in October last year, one of India’s largest IT companies, Infosys, reached a $35m settlement with US authorities for an alleged visa fraud, a former employee Jack Palmer made instant headlines in India.

Jack Palmer, the then IT manager with the Indian outsourcing giant, had filed a whistleblower lawsuit against the company alleging that it was deliberately flouting the US visa rules to facilitate visits of its Indian employees on short-term B1 visas back in February 2011.

B1 visas are essentially meant for employees who are traveling to consult with associates, or attending a training or convention. They do not allow full-time employment in the US.

Accusing Infosys of harassment, Palmer alleged that he was sidelined and victimised by the company’s top bosses after he refused an internal settlement offer.

The US federal court, hearing the case, subsequently dismissed Palmer’s lawsuit, but the allegations did spur a federal investigation into the visa practices at Infosys.

While the Indian software company hotly contested the allegations, it did however agree to the settlement subsequently.

Palmer is now slated to receive up to $8m from the settlement amount as reward for bringing the transgression into the open.

Empowering whistleblowers

Visa transgressions are not isolated to Nannygate alone that caused a major diplomatic row between India and the US. Private individuals exposing major corporations is also emerging.

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For corporate India, the Infosys incident was a rare brush with private individuals exposing large establishments and stringent American laws that call for employees to expose internal corruption.

It is something that is relatively unheard in India despite the country’s often-dismal track record with corruption.

But the matter has nonetheless resonated well in India’s policy circles and renewed demands for adequate protection for whistleblowers in India, including those employed in the private sector.

Currently, there is no legal protection for such individuals in India. The Whistleblower Protection Bill, which was introduced in 2011, is still waiting for approval from lawmakers in the Upper House of Indian parliament.

The much talked about 'Jan Lok Pal' (public ombudsman) bill was finally passed in December last year paving the way for the creation of a public watchdog in India to independently probe corruption cases.

But legal experts maintain that a strong protection law which would expose corruption in the first place is of the utmost importance.

"I strongly feel that the parliament should have passed the whistleblower protection bill first," said Siddharth Barua, a senior corporate lawyer based in New Delhi.

"Also, the provisions of the bill should be revised to include adequate safeguards for private sector whistleblowers," he told Al Jazeera.

Under the current provisions of India's whistleblowers protection bill, legal safeguards to individuals are guaranteed only in cases pertaining to government establishments or where substantial public money is involved.

But critics point out that the proposed law completely overlooks growing corruption in the private sector, where several high-profile fraud cases have come to light in recent years. 

"It is imperative that whistleblowers from [the] private sector be encouraged actively and given adequate protection," says Aditi Gupta, a Delhi based civil rights activist.

Corruption in private sector

It is imperative that whistleblowers from private sector be encouraged actively and given adequate protection

Aditi Gupta, Delhi based civil rights activist

In February 2012, India’s Supreme Court quashed 122 telecom licenses awarded to 16 Indian companies after it was found that a number of them had bribed senior government officials, including the then federal telecom minister A Raja to secure telecom licenses.

Estimated to be worth $27bn, a number of senior officials from the government as well as private sector were jailed in the aftermath of the scam, which became widely known as the 2G-spectrum scam.

Incidentally, the 2G-spectrum scam was listed by Time magazine among the top ten abuses of power just below the 'Watergate scandal'.

Similarly, allegations of corruption surfaced against several top Indian companies in 2012 over allocation of captive coal blocks to them by the government.

It was alleged that the coal blocks, valued at billions of rupees, were given away almost free to a few private companies without any proper evaluation of their end use.

Many companies are known to have simply sold the free coal in the open market earning windfall profits.

"There is often a clear nexus between government employees and private sector in many of these cases and it makes perfect sense to encourage employees of private companies to speak out," Aditi Gupta told Al Jazeera.

But in the absence of legal safeguards there is little incentive for anyone to speak out, Gupta said.

Also, management accountability in India is often viewed as problematic as many Indian businesses are still owned and managed by families.

"There are instances where exposing or asking questions has led to punitive action by company management and very often the job of the whistleblower is at stake," said Arnab Das, a Mumbai-based management consultant.

High stakes

But the stakes can be even higher. There have been multiple instances of threatening, harassment and even murder of whistleblowers in India.

In 2003, Satyendra Dubey, an engineer employed with National Highways Authority of India was murdered after he exposed corruption in road projects under his watch.

Two years later, an Indian Oil Corporation officer, Shanmugam Manjunath, was shot dead for acting against petrol adulterers in the northern state of Uttar Pradesh.

Both cases evoked widespread concerns over safety of whistleblowers in India and activists believe they still aren't properly protected by the law. 

In light of abuses, anti-corruption movements have gained momentum in the past few years. One series of street protests caught the public's imagination especially after social activist Anna Hazare went on a hunger strike in April 2011 to force the government to pass a strong anti-corruption law.

Hazare's one-time confidant, Arvind Kejriwal, who launched a political outfit named Aam Aadmi Party (common man) or AAP a year ago, was elected as the Chief Minister of Delhi after an emphatic victory in the recently held Assembly elections.

"Clearly, there is growing realisation that exposing corruption from the grass roots level should be the top most priority," Barua said.

"And as the footprint of Indian companies grows across the globe they will have no choice but to become more transparent in their dealings," he told Al Jazeera.

Experts say that the strong anti-bribery laws in many countries are gradually making many Indian companies take note. Laws like US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act are now becoming increasingly relevant for Indian companies as they expand overseas.

As such even without a law in place, Indian companies will have to improve their internal reporting standards or they risk huge penalties like Infosys did in the US.

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Source:
Al Jazeera
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