WHISTLE-BLOWINGWhistle-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 loyalto 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-blowingthe 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 alertboth 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 ofwhistle-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 inor 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 ofcommunications 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 inthe 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 arealready 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 byan 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 definedprocedures, 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 forcedLegally 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-BLOWINGDepending on who and whom the wrongdoing is disclosed, researchers haveclassified 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-BLOWINGBe that as it may be, whistle-blowing by disclosing wrongdoings of anorganization 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 thanreactive 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 Dandekar1993) 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-BLOWINGGiven 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 bedisloyal 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-BLOWINGIt 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 ofuniversal 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 theutilitarian 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 startedproceedings 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 committedin 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. TheBSE 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 PROTECTIONIt 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 REMARKSThere 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.