2014 was a very exciting time for the Indian economy: with the world’s second-largest workforce, low wages, a burgeoning number of well-educated and tech savvy young people, and an ostensibly populist government committed to economic growth, India is much like the China of the late 20th century — one of the premiere destinations for global investment and business development. With so much money flowing in from around the world, and a legal and regulatory system unequipped to police it all, it’s unsurprising that India ranked 94th out of 177 countries in a 2013 Transparency International survey on global corruption. Though the Indian government has begun to take commendable strides in combating corruption, the fact of the matter is that this developing nation is overwhelmed by the scope of the problem. For the short term, it will largely be up to the governments of investor nations to police the conduct of their multinational corporations in India. In the U.S., this means that violations of the Foreign Corrupt Practices Act, the law prohibiting the bribery of foreign officials, may very well be synonymous with India in the coming years.
Prior to 1991, the Indian economy was closed, euphemistically called the “License Raj”. The centralized control of business also centralized corruption, which can be good or bad in certain situations. Cracking down on corruption is easier to do in a centralized economy, if the government makes it a priority. However, like most centralized economies, this was not the case by any means in India. Bureaucrats and politicians benefitted from the arrangement, as bribery was how business was transacted. This arrangement favored large and established businesses able to pay bribes rather than smaller, nimble businesses trying to get a leg up by actually running a better business.
As the Indian economy opened to the world and caught fire in the past two decades, public pressure, with the help of civic organizations and grassroots movements, has resulted in meaningful government action. In 2005, India passed the Right to Information Act (RTI). Similar to the U.S. Freedom of Information Act (FOIA), the RTI allows Indian citizens to make written requests for information from the government. Obviously, certain state secrets, matters of defense and other private matters are excluded, but the statute is intentionally broad. While the RTI is a powerful tool in theory, and does help to keep public officials more honest, corruption and graft are still endemic. Just as with U.S. FOIA requests, the responses are often incomplete and the process far from perfect, but it is indeed a start.
While the RTI and FOIA are very similar – at least on paper – Indian and U.S. law diverge quite a bit over the treatment and protection of whistleblowers. U.S. law has moved increasingly since the late 1970’s to strengthen protections against retaliation for whistleblowers, and recent legislation and regulations have increased the number of whistleblower programs under which whistleblowers in the United States can be financially rewarded. Most whistle blower programs offer between 10 and 30 percent of the settlement proceeds as a whistleblower’s reward, which can result in some very large multi-million dollar paydays that help make the frustration, anxiety, and risks of becoming a whistleblower more palatable.
In India, with whistle blower protection in its infancy, the Whistleblowers Protection Act of 2011 would seem on its surface, at least based on its namesake, to be an encouraging beginning. However, the impact on the willingness of Indian whistleblowers to come forward and report fraud to the Central Vigilance Commission is one which will take years to judge. If India is serious about whistleblowers becoming part of the culture of the country, to help remedy the general perception shared by 96% of Indians, who feel that “corruption is holding India back”, then the Whistleblowers Protection Act of 2011 is certainly a mixed bag.
Perhaps the most encouraging aspect of the law is that any person who negligently or intentionally discloses the identity of a whistleblower can be imprisoned for up to 3 years. Sadly, the fine that could accompany such a blatant violation of the act, and create significant damage to a whistleblower on many different levels, is limited to at most 50,000 rupees, or less than $1,000. While the prison time may be a strong enough incentive, the oddly diminutive maximum fine is certainly disconcerting.
The law took almost 4 years to pass, as it was first introduced on August 26, 2010, and finally fully ratified on May 12, 2014, leaving one to question the government’s commitment to its very existence. U.S. whistleblower laws have evolved for more than 150 years, increasing protections for whistleblowers with numerous amendments to various aspects of the portfolio of whistleblower laws that exist. If India is to be successful in using the power of whistleblower rewards to fight corruption, we expect that the Indian Whistleblower Protection Act of 2011 will need to be greatly strengthened over time.
Indian citizens can root out corruption locally through the SEC Whistleblower Program, which offers rewards for Indian nationals who bring information to the United States Securities and Exchange Commission about bribery committed by multinational companies in India. The SEC Whistleblower Program provides significant financial rewards, complete anonymity and truly exceptional concern for protection of whistleblowers. This is in stark comparison to the Indian Whistleblower Protection Act of 2011, which provides no financial incentive to India’s potential whistleblowers, left alone to deal with the potential repercussions of their well-intentioned disclosures on behalf of their fellow citizens.
The focus of India’s Whistleblowers Protection Act of 2011 is far too narrow, as it only seeks to address “corruption or wilful misuse of power or wilful misuse of discretion against any public servant”. The vast majority of U.S. whistleblowers help to protect the U.S. government, and each of its citizens, from those who seek to defraud the U.S. government. The False Claims Act dating back to 1863, the IRS Whistleblower Program introduced in 2006, the SEC Whistleblower Program and CFTC Whistleblower Programs created in 2010, represent a unique set of whistleblower programs that provide enormous incentives and protections for whistleblowers who report a wide array of fraud committed by companies against the U.S. government. The aggregate effect of these laws has resulted in 10s of billions of dollars being returned to the U.S. government from the companies who whistleblowers brought to justice. Sadly, in 4 years of deliberation, the Indian Whistleblower Protection Act of 2011 offers no such similar hope.
Whistleblower Justice Network Can Help You
Whistleblower Justice Network partners with whistleblowers worldwide to expose bribery schemes that violate the Foreign Corrupt Practices Act. We work with Indian whistleblowers to help them report violation of the FCPA, while maintaining their anonymity and ensuring they file their best possible whistleblower action. Utilizing the SEC Whistleblower Program, we aid whistleblowers in bringing corporations that expand their business interests through bribery to justice.
If you have meaningful information regarding corporate bribery in India, or anywhere else around the world, that you believe is in violation of the FCPA, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at www.whistleblowerjustice.net, or call us at 844-WJN-4ALL, to learn if we can help you.