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WHISTLE-BLOWING

Whistle-blowing is an old concept but relatively new term. There have


always been informers or snitches who reveal information to enrich
them or to get back at others.
The term “whistle-blower” was first applied to government employees
who “go public” with complaints of corruption or mismanagement in
the public or government organizations. It is now used in connection
with similar activities in the private business sector as well. Business
history is replete with the cases of corruption and mismanagement
and, in turn, cases of whistle blowing. For example, the three
whistleblowers-

all women and the Time Magazine’s ‘Persons of the Year 2002’ –
Sherron Walkin (who warned Enron’s accounting scandals), Coleen
Rowley (who pointed out how the bureau had ignored important clues
to the September 11 bombing of the World Trade Centre), and Cynthia
Cooper (who alerted the WorldCom board about accounting
irregularities) are well known whistle-blowers world over.

Satyendra Dubey is one nationally known whistle-blower in India. The


whistle-blowers take great personal risks and most of them, like above
four, lose their lives. The fact remains that the whistleblowers’ courage
makes invaluable contribution to the good of the society.
Nonetheless, while there are plethora of cases of corruptions and
mismanagement prevalent every here and there, there are only a few
whistle-blowers. As such, some obvious questions crop up in the mind
are: (i) Is whistle blowing ethical? (ii) Why do people not blow whistle
informing about corruptions rampant in many of the organizations? (iii)
Are whistle blowers safe and protected? (iv) How to protect the whistle
blowers? The present paper attempts to address to these issues.

Whistle-blowing is an old concept but relatively new term. History is


witness that there has always been informers, or snitches, who reveal
inside information to others.
Business world is not exception to it. It will not be less than correct to
mention that unethical practices, or say, wrongdoings in business and
whistle-blowing have been coeval since long time. Only the extent and
nature of the two have changed over the period. Along with increase in
unethical business practices, instances of whistle-blowing are also on
increase though not on pari passu. As regards what is whistle-blowing,
like other ethical driven human behaviour, it has also been understood
and defined differently by different people, practioners, and ethicists.
For some, whistle-blowing may mean the disclosure of wrong doings,
for some others protest against unethical doings, and for some yet
others reporting untoward things to others.
It’s a cliché to mention that there have been plethora of misconducts,
wrongdoings, and unethical practices in business, yet there have been
only a few whistleblowers, but unfortunately that is the case. The
reason is not difficult to seek. Cases of whistle-blowing are so
wrenching precisely because they involve very sharp and strong
conflicts and serious implications. Business history bears evidences to
confirm that whistle-blowers often pay a high price in many forms –
from poor evaluation and demotion to dismissal to loss of life (Dalal
2003). Given such backdrop, then, certain obvious but vexing questions
arise: Should employees violate their obligation to be loyal
to their employer? Is disclosing the confidential matters of one’s
organization to outsiders ethical? Should people be really encouraged
to blow the whistle? Is the whistle-blowing
the only way to correct wrongdoingsin business? Are there not other
better ways to correct the wrongdoings without requiring employees to
make high, of course, heroic personal sacrifices? Should the whistle-
blower be protected? How can this best be done?
The present paper makes a presumptuous attempt to address to all
these questions. We shall begin with defining the term ‘whistle-
blowing.’
WHAT IS WHISTLE-BLOWING?
The term whistle-blowing probably arises by analogy with the referee
or umpire who draws public attention to a foul in a game by blowing a
whistle, as in soccer. Some trace out its emergence from the practice
of English Bobbies who would blow their whistle when they noticed the
commission of a crime. The blowing of the whistle would alert
both law enforcement officers and the general public of danger. In
simple words, whistle blowing is an act by a member or former member
of an organization to disclose wrongdoing in or by the organization. Let
us also consider some important definitions of
whistle-blowing.

According to Boatright (2003:104), “Whistle-blowing is the release of


information by a member or former member of an organization that is
evidence of illegal and/or immoral conduct in the organization that is
not in the public interest.”
Sekhar (2002:179) defines whistle-blowing as “an attempt by an
employee or a former employee of an organizationto disclose what he
proclaims to be a wrongdoing in
or by that organization.”

According to Koehn (2003:4567), “Whistle-blowing occurs when an


employee informs the public of inappropriate activities going on inside
the organization.”
R. M. Green (1994: 145-146) has given a simpler definition of whistle-
blowing: “A whistle-blower is an employee who, perceiving an
organizational practice that he believes to be illegal or unethical, seeks
to stop this practice by alerting top management, or,
failing that, by notifying authorities outside the organization.”
Considering the above definitions together, whistle-blowing can now be
defined in a long-winded manner as the voluntarily disclosure of non-
public information, as a moral protest by a member or former member
of an organization outside the normal channels of
communications to outsiders who can correct the wrongdoing opposed
to the public interest.
Following are some salient characteristics to observe in above
definitions of whistle blowing:

1. There must be real information to


release to be called ‘whistle-blowing.’
That is merely to dissent publicly with an employer without the real
information is not in itself to blow the whistle. Whistle-blowing
necessarily involves the release of misdemeanor to the public. Thus,
whistle-blowing is different from sounding the alarm in
the sense that the former releases the information that the public do
not know because it has been kept secret, while the latter tries to get
people alarmed about the facts that are
already known to the public.

2. The information is an evidence of


wrongdoing on the part of organization.
The matters that cause harm to the public interest usually fall under
the purview of whistle-blowing. Thus, the matters that merely influence
the course of action but are not contrary to the public interest are not
commonly treated as ‘whistle-blowing.’

3. Whistle must be blown with moral


motive to correct some wrongdoing.
At times, members of an organization may go public for all sorts of
reasons. Therefore, information released to public with a motive to take
revenge does not constitute whistle blowing.
4. Whistle against wrongdoing of an
organization can be blown only by its
member or former member.
Information about wrongdoings informed or snitched by
an internal member of an organization is called “whistle-blowing.” It,
then, means blowing whistle about wrongdoings of an organization by
outsiders like a journalist, social activitist, political leader, etc. is not
considered whistle-blowing. The reason is that such informers have
incriminating information about the organizational wrongdoings and
no obligation prevents them from making it public. But, the situation is
different for employees who, of course, are aware of wrongdoings in
their organizations, but, at the same time, they also have obligations to
their organizations. That is employees are expected to work as per pre-
determined and agreed directives, go through the defined
procedures, and act in manner that benefits the organization. Whistle-
blowing is, thus, an action that takes place within an organization.

5. It must be clear to whom the whistle


regarding wrongdoing is to be blown.
Only then a desired change or correction can be brought about. Merely
revealing information about wrongdoing to an outside party does not
necessarily constitute whistle blowing but simply an instance of
ordinary snitching.

6. The information about the wrongdoing


in the organization must be released
outside through normal channels of
communication prescribed by the
organization.
In many organizations, an established procedure is to be followed by
the employees to report instances of wrongdoings to their immediate
superiors or to the designated officials, like ombudsman in the Life
Insurance Corporation of India. However, following an established
procedure for reporting wrongdoings is not called ‘Whistle-blowing.’
Though, whistle-blowing does not necessarily involve “going public”
and releasing wrongdoing outside the organization, “going public” is
found often effective because the information ultimately reaches the
appropriate authorities who can Correct the wrongdoing.

7. Information about wrongdoing must be


released voluntarily.
However, there has not been clear distinction between information
released voluntarily and forced
Legally or when subpoenaed constitute whistle-blowing or not.
Philosopher Norman Bowie (1980) contends that the following
characteristics justify the whistle-blowing:
1. It is done based on an appropriate moral motive.
2. The individual has exhausted all internal channels of dissent.
3. The individual’s belief regarding the inappropriate conduct is based
on evidence that would persuade a responsible person.
4. The individual has carefully analysed the situation to determine the
serious nature of the violation, the immediacy of the violation.
5. The individual’s action is commensurate with responsibility for
avoiding and / or exposing moral violation.

TYPES OF WHISTLE-BLOWING
Depending on who and whom the wrongdoing is disclosed, researchers
have
classified whistle-blowing into several types (James 1993). These are:
Internal: When the whistle-blower reports the wrongdoing to the
officials at higher position in the organization, it is called ‘internal
whistle-blowing.’ In this 7 case, the very purpose of whistle is to get the
wrongdoings investigated as per the procedures of the organization in
this regard. The usual subjects of internal whistle-blowing are
disloyalty, improper conduct, indiscipline, insubordination,
disobedience, etc.

External: Where the wrongdoings are reported to the people outside


the organization like media, public interest groups or enforcement
agencies, it is called ‘external whistle-blowing. ’While some favour
outside whistle blowing, others oppose on the ground of morality and
loyalty on the part of the employee toward his/her organization.

Alumni: When the whistle-blowing is done by the former employee of


the organization, it is called ‘alumni whistle-blowing.’
Open: When the identity of the whistle-blower is revealed, it is called
‘open whistle-blowing.’

Anonymous: When the identity of the whistle-blower is not revealed, it


is called ‘anonymous whistle-blowing.’

Personal: Where the organizational wrongdoings are to harm one


personally, disclosing such wrongdoings is called ‘personal whistle-
blowing.’ Though this is not justified morally, it is desirable only when
there is danger to one’s freedom or dignity or esteem.

Impersonal: When the wrongdoing is to harm others, it is called


‘impersonal whistle-blowing.’

Government: Where a disclosure is made about wrongdoings or


unethical practices adopted by the officials of the Government, it is
called ‘government whistle- blowing.’
Corporate: When a disclosure is made about the wrongdoings in a
business corporation, it is called ‘corporate whistle-blowing..

CAUSES OF WHISTLE-BLOWING
Be that as it may be, whistle-blowing by disclosing wrongdoings of an
organization to outsiders causes harm of one type or other to the
organization. Hence, whistle-blowing is not welcome. This, then, means
that organizations need to avoid whistle-blowing to take place. It is
always better for an organization to be proactive than
reactive in the matters of whistle-blowing. Because, prevention is
cheaper and better than cure. One way to be proactive in this regard is
to have the knowledge about what actually causes whistle-blowing in
an organization. Researchers (Nader et.al. 1972 and Dandekar
1993) have listed the following as the usual causes of whistle-blowing
in organizations:
1. Misuse of official funds for private purposes.
2. Official powers used for private gain.
3. Discrimination by age, race, or sex.
4. Corruption.
5. Dumping of industrial pollutants causing harm to public.
6. Deceptive advertising.
7. Non-enforcement of laws.
8. Adulteration.
9. Sexual harassment.
10. Monopolist price-rigging.
11. Use of official funds for political campaign. In case of India, items 2,
4, 9 and 11 are the more common causes of whistle-blowing.

WHETHER OR NOT WHISTLE-


BLOWING?
Whistle-blowing is essentially an ethical work. Hence, it involves both
costs for some and benefits for other. Besides, given the principle of
loyal agency and maintaining confidentiality in the matters of
organization by the agent, i.e. employee, on the one hand, and
internally prescribed procedure, wherever exists, to deal with
wrongdoings in the organization, on the other, underline the need for
and necessity of whistle-blowing in the organization. As such, there has
been a debate, however, inconclusive on whether or whistle-blowing. It
is hoped that an examination of arguments against and justifications in
favour of whistle-blowing will help us make an opinion whether whistle-
blowing should take place in the organization or not. The same follows
in the subsequent paragraphs.

ARGUMENTS AGAINST WHISTLE-


BLOWING
Given the great harm whistle-blowing does and can cause to both
individual, i.e. whistle-blower and organization, it is decried by some.
They oppose whistle-blowing mainly on the grounds of loyalty and
confidentiality. According to them, as per the Law of Agency, an
employee is the agent of his/her employer / organization. Who is an
agent?
According to one expert on the subject (Powell 1965: 7), “an agent is a
person who is authorized to act for a person (called ‘principal’) and has
agreed so to act, and who has power to affect the legal relations of his
principal with a third party.” In practice, people hire agents to carry out
the tasks that the principal are either not willing or able to carry out by
themselves. For example, we hire a lawyer under a contract to
represent ourselves in legal matters where we lack the required
expertise to present our matter effectively.
The agent is expected to act as the principal would himself / herself.
The agent is paid (i.e. fee) for the task done by him for principal. The
main obligation of an agent is to act in the interest of the principal.
In the similar vein, an employee is also an agent of his / her
organization employer. Therefore, an employee as an agent has an
obligation to work for the benefit of his / her employer as per directions
by protecting the confidential information. In nutshell, the employee
has to work just like a loyal agent. Since whistle-blowing violates the
law of agency, i.e., loyalty, hence it is condemned. Whistle-blowing by
violating the law of agency seems to some as disloyalty, i.e., “to bite
the hand that feeds one.” Here is a vigorous condemnation of whistle-
blowing by James Roche, the former Chairman of the Board of General
Motors Corporation:
“Since critics are now busy eroding another support of free enterprises
the loyalty of a management team, with its unifying valued co-
operation.
Some of the enemies of business now encourage an employee to be
disloyal to the enterprise. They want to create suspicion and
disharmony and pry into the proprietary interests of the business. This
may be whistle-blowing … but it is another tactic of spreading disunity
…. Whistle-blowing is not courageous and not deserving of gratitude
and protection; it is corrosive and impermissible (Roche 1971: 445).”
A more temperate statement of typical condemnation of whistle-
blowing along the same lines of Roche comes from Sissela Bok as
quoted by Boatright (2003: 106- 107). That is:
“Furthermore, the whistle-blower hopes to stop the game, but since he
is neither referee nor coach, his act is seen as a violation of loyalty. In
holding his position, he has assumed certain obligations to his
colleagues and clients. He may even have subscribed to a loyalty oath
or a promise of confidentiality. Loyalty to colleagues and clients comes
to be pitted against loyalty to the public interest, to those who may be
injured unless the revelation is made.”
Milton Friedman (1962:133) has made a manager’s obligation to the
stockholders, i.e. owners imperiously clear. He says, “In a free-
enterprise, private property system, a corporate executive is an
employee of the owners of the business. He has direct responsibility to
his employers. That responsibility is to conduct the business in
accordance with their desires, which generally will be to make as much
money as possible while confirming to the basic rules of the society,
both those embodied in law and those embodied in ethical custom.”

JUSTIFICATIONS IN FAVOUR OF
WHISTLE-BLOWING
It is important to mention that the supporters of whistle-blowing do not
disagree with the law of agency, i.e., the obligation of whistle-blower
toward his / her organization. They also admit that the employees have
obligation of loyalty toward their organization, but the obligation is not
without limitation. The limitation is to obey all reasonable directives of
the principal, i.e. employer-organization. For example, an employee is
hired as an agent with a purpose to sell life insurance policies on
commission. Then, it would be ludicrous to assume that the agent has
also committed himself to washing dogs, cleaning vehicles, or doing
anything else that happened to give his principal pleasure. The
supporters of whistle-blowing also maintain that whistle blowing is not
something to be done without adequate justification. But at the same
time, it is not something that can never be justified. The major
justification forwarded in favor of whistle blower is that he / she has
obligation not only toward the employer organization, but to the society
as well. They, therefore, view that if the act of whistle blower brings
more benefit to the society at large than to for the organization by not
blowing the whistle against its wrongdoings, whistle-blowing is well
justified. Duska (1990) expresses his disagreement with the opponents
of whistle-blowing in the same vein in these words: “Isn’t time it to stop
viewing corporate machinations as games. The activities not only affect
the players but everyone … the appeal to loyalty though
understandable is misleading; in the moral sphere competition is not
the prevailing virtue …. Whistle-blowing is not only permissible but
expected when company is harming society. The issue is not of
disloyalty to the company, but of whether the whistle-blower has an
obligation o society and if blowing the whistle will bring retaliation.”

The condemnation of whistle-blowing at the personal, often high, cost


of the whistle-blower is also not justified. If the whistle-blower follows
the principle of
universal ethic, the last ‘deontological’ stage of one’s moral
development (Kohelberg 1981), it is good even at one’s personal
sacrifice. This is also justifiable based on the
utilitarian approach of ethics, i.e. ‘the greatest good for greatest
number.’ Chakraborty (1986) also in the similar vein, justifies and
supports whistle-blowing even at the high self-sacrifice of whistle-
blower. He says whistle-blowing is justifiable in business where
individuals in organization undertake intense effort at great deprivation
to themselves by yielding immense social benefits. He goes to cite
exemplary cases of self-sacrifice.
Yellapragada Rao could never have given the world Aureomycon if he
had not had the willingness to sacrifice. The Indian chemist P. C. Roy
lived an austere life but developed the basic pharmaceutical and
chemical industry in India.
To conclude, the major argument of loyalty of an employee given
against whistle blowing does not prove that whistle-blowing can never
be justified. There is no denying the fact that employees as agents
have obligations toward their principals, but at the same time they do
also have limits. Blowing whistle against the violation of the law of
agency by the principal is, therefore, justifiable even at the great self-
sacrifice of the whistleblower.
History is replete with such justifications.

EVIDENCES OF WHISTLE-BLOWING:-
The term whistle-blowing is a relatively recent entry into the
vocabulary of public and corporate affairs, although the phenomenon
itself is not new. Of late, whistle-blowing has become common from
government agencies to business corporations worldover. There has
been heroic whistle-blowers worldover. Let us recapitulate a few of the
more prominent whistle-blowers as illustrative ones.

Frank Serpico: He is the legendary ex-cop of the New York Police


Department (NYPD) whose story was the subject of a best-selling book,
and a film starring Al Pacino
– both titled ‘Serpico.’ When he became a cop in 1960, payoffs,
kickbacks and protection rackets were rampant in NYPD. Refusing to
look the other way, Serpico complained to the Police Commissioner and
the Mayor, but they ignored him. Frustated, Serpico revealed NYPD’s
dirty laundry to the New York Times in 1971, after which the cops as
well as the criminals started gunning for him. Matters came to a head
when he was shot in the face during a raid; his colleagues did not come
to his help. Serpico quit NYPD in 1972 but NYPD has become a more
honest force since his time.

DR. STEPHEN BOLSIN: He is a former anesthetist at the U.K.’s Bristol


Royal Infirmary (1988-95) who blew the whistle on a large number of
unnecessary deaths of children occurring during heart surgeries due to
the incompetence of the hospital’s surgeons. Ostracised by other
doctors, Dr. Boslin was forced to emigrate to Australia in 1995. But his
disclosure led to enquiries by the General Medical Council and the
Government; the department from future practice of two surgeons and
the hospital chief in 1989; and also several far-reaching reforms in the
National Health Service (NHS). It also acted as a catalyst for the
enactment of the U.K.’s Public Interest Disclosure Act of 1998.

Cynthia Cooper of Worldcom; Sherron Watkins of Enrons who


exposed corporate financial scandals, and Coleen Rowley of the FBI
who later outlined the agency’s slow action prior to the September 11,
2001 attacks. All three women were selected by the Time Magazine as
its ‘Persons of the Year 2002.’ All three lost their lives.

SATYENDRA KUMAR DUBEY: Satyendra Kumar Dubey was a 31-


year-old IITKanpur civil engineering graduate working with the National
Highways Authority of India (NHAI) and assigned to former Prime
Minister Vajpayee’s pet and ambitious project, the Golden
Quadrilateral, to connect the four corners of India. He was posted at
Koderma, Jharkhand. On discovering rampant corruption and poor
implementation of work in the section where he had been posted,
Dubey wrote to the Prime Minister exposing the irregularities. In the
letter, received by the Prime Minister’s Office (PMO) on 11 November,
2002, he had named some companies. Fearing retribution, he had
requested that his name be kept as secret.
But the PMO officials circulated his letter along with details of his
identity among the bureaucracy. The number of notings on the file
bears witness to this (The Indian Express, 30 November, 2003). While
the file was making rounds, not one official thought about the threat
Dubey was being exposed to. Why officials in the PMO did not heed .
Dubey’s request for anonymity is not known. But just over a year later,
on 27 November, 2003, he was murdered in Gaya, Bihar.

SHANMUGAM MANJUNATH: S. Munjunath, a 27-year-old IIM-Lucknow


graduate working as a sales officer with Indian Oil Corporation paid
with his life for attempting to ensure that people did not get
adulterated fuel. Munjunath had reportedly started
proceedings against the owner of Mittal Automobiles in Gola
Gorakhnath in the state of Uttar Pradesh, after the outlet was found
committing mass irregularities in supply of fuel.
Munjunath’s killing in November 2005 is another case of silencing a
whistleblower in a large scam of petrol adulteration. He had unearthed
gross irregularities being committed
in supply of petrol at the filling station during surprise inspection in
September and recommended strict penal action against the owner.
ATUL TIRODKAR: Atul Tirodkar was a man who, during the Ketan
Parekh scam of 2001, exposed how the Bombay Stock Exchange’s high
profile President, Anand Rathi, had been assessing sensitive market
information from the surveillance department. The
BSE immediately suspended him and made enormous efforts to
terminate his services.
The BSE fabricated charges against him. They accused him of
dereliction of duty, absenteeism and even having links with the
underworld. These fabricated charges were leaked to CNBC and played
every hour as an exclusive report. Later an independent enquiry by a
single judge was instituted.
The single-judge enquiry exonerated him completely. But some
influential BSE directors again prevailed on the judge to give the
exchange an exit option by offering him a honourable discharge with
compensation. Then the Joint Parliamentary Committee (JMC) began to
hear the matter and heard his testimony. Stunningly enough, MPs
cutting across party lines supported him. They condemned Tirodkar’s
suspension in the strongest terms and asked that he be reinstated.
Unlike other whistle-blowers as mentioned earlier, Tirodkar’s story had
a unique happy ending.
WHISTLE-BLOWERS NEED
PROTECTION
It is quite clear from the above anecdotes that whistle-blowers bear big
costs in the forms of demotion, punishment, suspension, retaliation,
and eve forfeit to their lives for the good of the society. This calls for
protection to whistle blowers. The U.S. enacted ‘Whistle-blowing
Protection Act’ way back in 1989 (amended in 1994) to protect the
federal employees and Sarbanes-Oxley Act in 2002 for granting legal
protection to whistle-blowers in publicly traded companies. The U.K.
has enacted ‘Public Interest Disclosure Act’ in 1998 to protect its
whistle-blowers. South Africa follows the UK example in providing
protection to whistle-blowers in all organizations. By now, many
countries such as United States, Australia, Canada, South Korea,
Russia, Mexico, and more have already enacted whistle-blowers
protection legislation to protect them.
As regards protection to whistle-blowers in India, it has so far no
legislative protection to the whistle-blowers. The existing provisions in
the form of vigilance officer and ombudsman do not seem effective in
protecting whistle-blowers. But, India needs more than other countries,
the whistle-blowing protection act without delay. This need for strong
protection to whistle-blowers was also echoed by the

‘Narayana Murthy Committee on Corporate Governance’ set up by the


Securities and Exchange Board of India (SEBI). India made attempts as
well but failed to make legal protection available to the whistle-
blowers. ‘Public Interest Disclosure (Protection of Informers) Bill (PIDB)’
to provide protection to whistle-blowers was mooted at the same time
when the Prevention of Terrorism Act (POTA) was mooted. Both POTA
and PIDB were drafted by the same man at the same time. POTA was
enacted, but PIDB went to the usual dusty shelf for political reasons.
Yes, it the PIDB had been made into law, Satyendra Dubey might still
have been alive today.
Based on the experiences of other countries, a few general principles
are suggested to provide protection to whistle-blowers in India.

• With the consent of the required number of state governments,


Parliament should try to enact a single Act for all employees
working in all kinds of organizations.
• ‘The Official Secrets Act’ should be overridden to provide for a
public interest defence and the ‘gagging clauses’ in employment
or severance contracts should be declared void in respect of
public interest disclosures.
• What constitute ‘public interest disclosure’ need to be clearly
defined?
• Only the genuine and reasonable whistle-blowers must be
protected. Those caught making anonymous or pseudonymous
leaks should not be protected.
• There should be ‘fast track mechanism’ for adjudication of cases
on the lines of the ‘Sarbanes-Oxley Act 2002’ of U.S.

CONCLUDING REMARKS
There is no denying the fact that whistle-blowers do a great service to
the society at their great risk and cost, even at the loss of life. Hence,
whistle-blowers need to be protected to ensure the good governance of
organizations. The fact is that while trying to protect whistle-blowers,
we are actually trying to protect ourselves. Many employees may be
afraid to speak out even when legal protection exists. But, its very
existence will deter government and corporate wrongdoings to a
considerable extent and, in turn, will ensure good governance. As the
type of scenario exists today in India, the chances of enacting
legislation for protection to whistle-blowers seems remote. But, given
the growing corporate and government scandals in the country, the
need for legal protection to whistle-blowers is gathering momentum
day-by-day. It seems just a matter of time before we shift from our
present culture of zero tolerance of whistle-blowing to a culture of zero
tolerance of whistle-blower retaliation. Sooner is obviously welcome.