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Whistleblower Protection: A Comparative Analysis of India and the USA

A robust whistleblower protection system is crucial for detecting and preventing fraudulent activities within organizations. In this article, we will compare the whistleblower protection laws in India with those in the United States to highlight the strengths and weaknesses of each country’s approach.

Anonymous Complaints: A Key Difference

In the USA, whistleblowers can submit complaints anonymously through an attorney, who will provide relevant documents and proof to the investigating authority while maintaining the whistleblower’s identity confidentially. In contrast, India’s Whistleblowers Protection Act does not allow for anonymous complaints, which may discourage individuals from reporting fraudulent activities.

Independent Investigation: A Crucial Factor

The US has separate offices established under different laws with neutral investigators who investigate whistleblower complaints. These offices receive and investigate claims submitted by whistleblowers. In India, on the other hand, whistleblower complaints must be submitted to the Competent Authority, which is usually a senior official in the same hierarchy as the person against whom the complaint is made. This lack of neutrality may lead to biased investigations and findings.

Rewards for Whistleblowers

The US rewards system for whistleblowers is unique and provides financial incentives for those whose claims are validated. The reward amount varies between 10% to 30% of the monetary sanctions collected, with no cap on the amount. In contrast, India’s Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 allows for rewards at a rate of 10% of the monetary sanctions, but caps it at Rs. 10 crores.

Penalties for False Information

The US also has penalties in place for false information, with fines ranging from $23,331 to three times the amount of damages sustained by the government. In India, the Whistleblowers Protection Act provides for imprisonment up to two years and a fine of up to thirty thousand rupees.

Recommendations for Improvement

To ensure that genuine whistleblower complaints are received, India should amend its Whistleblowers Protection Act to incorporate features similar to those in the US, such as:

• Anonymous reporting
• Independent investigation
• Rewards for whistleblowers

Without these measures, the Act may fail to attract whistleblowers and prevent fraudulent activities from taking place.