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U.S. Whistleblower Law Can Help Hold Infosys Accountable Where Indian Law Cannot
Thursday, January 30, 2020

For at least the third time in the past two years, Indian IT giant Infosys has been the subject of whistleblower complaints claiming corporate misconduct, including visa misuse, unethical severance payments as “hush money,” and conflicts of interest within company leadership.

Given the lack of corporate accountability over these past events, spectators may wonder why the current whistleblower complaints are any different. The answer: because the whistleblowers filed them with the U.S. Securities and Exchange Commission (SEC).

The most recent allegations specifically concern the inflation of profits in Infosys’ reports to investors as well as claims relating to the CEO’s international travel to the U.S. and Mumbai. This activity brings the action squarely within SEC jurisdiction, which means not only will U.S. law enforcement have the power to investigate, but the whistleblowers will have protection under U.S. law. In fact, on October 24, 2019, the SEC announced a probe into these allegations, reported to U.S. agencies by the anonymous whistleblowers.

While India has passed a national whistleblower law, the Whistleblower Protection Act of 2014, it does not make provisions for corporate whistleblowers, does not provide sufficient protection for whistleblowers, and, most importantly, has yet to be operationalized. The SEC provisions on whistleblowers, on the other hand, encourage corporate whistleblowers, have stringent rules protecting anonymous complaints, and allow whistleblowers to receive awards for their information, incentivizing insider reports of credible information on legal violations. Moreover, these provisions are not limited to U.S. whistleblowers; they reach any individual who reports a violation of U.S. securities laws. In fact, as of 2014, over 1,000 whistleblowers from 82 countries have filed claims in the United States, and international whistleblowers have obtained over $30 million in awards. In this very real way, the U.S. can be a champion of whistleblowers worldwide.

The SEC whistleblower program may become particularly relevant in the Indian context because according to the Economic Times: “About a third of the 50 companies of National Stock Exchange of India’s Nifty index said in their last financial year annual reports that they together received 3,508 whistleblower complaints in 2018, up from 3,139 complaints the previous year. While Wipro led the list with 1,526 cases (see chart), Infosys said it saw 1,168 cases related to disciplinary issues but did not specify how many of those were whistleblower complaints. Such complaints, reportedly, are mainly about corruption allegations and improper conduct at the workplace.” There is bound to be some overlap amongst these companies and U.S. interests, and the U.S. could serve as a meaningful forum through which these whistleblowers’ voices could be heard, and through which corrupt multinational companies could finally be held accountable.

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