January 26, 2022

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Role of whistleblowers in corporate governance : concept of whistleblowing in India

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This article is written by Vidur Thanawala from School of Law, Bennett University and the article is edited by Khushi Sharma (Trainee Associate, Blog iPleaders).

This article has been published by Rachit Garg.

Table of Contents

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The corporate sector in India has been through several progressive changes over the last decade. This change in the sector has constantly been overpowered by many controversial corporate scandals. These scandals not only adversely impact the reputation of the company but also hamper’s the interest of various investors and stakeholders of the company. Over the years controversial scandals like the Satyam Computer scandal, the Kingfisher scandal, the Enron Corporation Scandal have created a chain of corporate failure. A scandal like this shed light on the need for the company to have a strong corporate governance structure.

Corporate governance is essentially the ethical code upon which a company operates. The backbone of corporate governance is determining the best method and mechanism to establish effectiveness, efficiency, and transparency within the company. This would enable the company to take constructive strategic decisions keeping the interest of the shareholders in mind. Corporate whistleblowing plays a pivotal role in corporate governance.

The murder of Satyendra Dubey, who exposed corruption in the golden quadrilateral project carried out by the National Highway Authority of India, led the parliament to bring about legislation that would protect whistleblowers who expose corruption or any wrongdoing of the company, the concept of whistleblowing is still in the nascent stages in India.

This article would decipher the concept of corporate whistleblowing, the article would analyze the legislative framework for corporate whistleblowing in India along with the legislative framework of the United Kingdom and the United Nations of America. Further, the paper delves into the pitfall of the Whistleblowing Protection Act, 2014. The article would end with the author providing some suggestions that the government could enact to ensure a more efficient implementation of the Act.    

The corporate sector of India over the last few years has been in the spotlight for the various controversial scandals that were exposed by various whistleblowers. The Infosys debacle was the latest scandal that shook the corporate sector. The whistleblower policy is still developing in India. In many cases, employees or people outside the company who are privy to any wrongdoing of the company are afraid to come forward and expose the corruption and the wrongdoing due to fear. 

One of the most prominent pitfalls of the whistleblowing policy in India is that the Whistleblower Protection Act, 2014 while ignoring the recommendation made by the law commission in its 174th report also ignored the recommendation made by second administrative reforms in its fourth report which was published in the year 2007 excluded the private sector from the scope of the Whistleblower Protection Act, 2011. In furtherance to this, the Whistleblower Protection Act was amended in the year 2014, this amendment restricted any person from reporting the disclosure of any corruption activity if it falls under any of the 10 categories which mainly relate to:

  • Economic, scientific interest, and the national security of India.
  • Cabinet Proceeding.
  • Intellectual property.
  • Disclosures are not permitted, if the same is prohibited. under the Official Secrets Act, 1923.

This amendment is modeled around Section 8 clause 1 of the Right to Information Act, 2005, this amendment would nullify the intent of the whistleblower protection act as it would discourage the people to come forward and expose corruption within a company. 

Corporate Governance can be understood as the best ethical code upon which a company or an organization operates. Corporate Governance acts as a set of guiding principles in taking strategic decisions that are effective, efficient, and transparent keeping in mind the interest of the stakeholders.

In an organization, company stakeholders could comprise the board of directors, management, shareholders, employees, clients, etc. Corporate Governance has a direct impact on the growth and stability of an organization, company, it also has bearing on the integrity and reputation of the company. Corporate Governance ensures that the board of directors, the management of the company are transparent and disclose all the business activity of the company to gain the trust of the investors.

Corporate Governance has emerged as an important concept not only in India, with the rising number of corporate scandals it is even more important than the organization, companies implement the practices of corporate governance most strictly, i.e.

  • Implement strict regulations to govern the day-to-day operation of the company.
  • The company, an organization shall maintain full transparency while disclosing all its dealing.
  • Implement effective and efficient practices that require the management and the board of directors to be held accountable for their actions and that they take responsibility for their actions.
  • To implement strategies to ensure that the top-level management along with the other employees are socially responsible and have maintained good relations with other stakeholders of the company.

Corporate whistleblowing plays a pivotal role in corporate governance that is adopted by an organization or a company.

“The purpose of whistleblowing is to expose secret and wrongful acts by those in power to enable reform.”

-Glenn Greenwald

While analyzing the scenario of corporate governance in India, one can find many cases of good corporate governance and also find cases where organizations have failed to implement good corporate governance. Over the last couple of years, the number of corporate frauds and failures has steeply increased forcing the regulators and the governments to implement stringent regulations and policies to curb such corporate frauds. The concept of corporate whistleblowing is relatively a newer concept within corporate governance.

The concept of whistleblowing essentially means when a particular organization or the company is given a warning beforehand about any kind of corruption or any illegal activity happening within the organization, company. According to Ahern, McDonald, Katharyn, Sally. (2002). Whistleblowing can be elucidated as an endeavour made by an existing or former member of an association to declaim a forewarning to a higher authority of that association or the public regarding perilous misconduct or any misconduct engendered or concealed by the organization.  

Whistleblowing could also be understood as the process that reveals any kind of unethical activity happening within an organization, company by an employee, or any person privy to such activities. The International Labour Organization (ILO) defines Whistleblowing as “Reporting by employees or former employees of illegal, irregular, dangerous or unethical practices by employers.” Michael Davis in his “The Complicit Theory” believes whistleblowing is a morally ethical practice that is adopted by those employees who dissent or do not wish to be part of any malpractice or wrongdoing that takes place within the organization, company.

The term “Whistleblower” is not defined yet in any statutory legislation; thus, it could be understood that the legislation wanted the term to have a broad extent. In general terms, a whistleblower could be understood as a person or an employee of an organization who is privy to any kind of insider information about any kind of corruption, fraud, abuse of power by the top-level management which happen within the company. 

In many cases of corporate whistleblowing, it was observed that the employees of the organization are generally the first ones who have sustainable information in regards to any wrongdoing or any kind of unethical practice happening in the organization, company but due to fear that they would be suspended or that they would be fired from their jobs speak about such activities in the last. This makes it even more important that every organization or company should have a whistleblowing policy that protects the identity of the whistleblower along with this there should also be a legislative statute that gives protection to such employees.

Furthermore, by adopting an efficacious whistleblowing structure an organization or company can ensure to dissuade employees from indulging in unlawful activities, it would also enable the organization or the company to detect any wrongdoing in advance. An efficient whistleblowing structure would also enable the whistleblower to expose any kind of wrongdoing without any fear. 

“Whistleblower protection policies are also an imperative element of in-house controls, ethics and compliance program, which could exhibit to shareholders and law enforcement authorities that an organization has made efforts to thwart, detect and deal with dishonest behavior.”

It has been established that having a sound and efficacious corporate governance structure is an important aspect in the day-to-day operation of an organization, company. In recent years scandals like the murder of Satyendra Dubey, the Satyam Computer Scandal, the Infosys Scandal, the Ranbaxy Scandal have shed light on the problems faced by whistleblowers in India due to lack of legislation.

In the light of these controversial scandals companies like “The Heritage Food (India) Ltd”, “Wipro”, “Infosys” and “Tata Motors, Reliance Industries” in recent years have adopted the whistleblower policy to protect the identity of any employee who wishes to expose any kind of wrongdoing that might be happening in the company.

The Heritage Food (India) Ltd limited adopted the whistleblower policy , with the principal intention of providing all their employees with a chance to elevate their apprehensions regarding any unethical and improper practices that may be going on with the company. According to the whistleblower policy of the company all the communications made by the whistleblower would be presumed as communications done in good faith, all the communication would have to be done in written form and the disclosures such made must indicate evidence of any unethical or improper activity. 

Unless required by the law the company would take all reasonable measures to protect the identity of the whistleblower so as safeguard the whistleblower from any kind of harassment or victimization. Once the company receives any complaints of any wrongdoing the management board would take reasonable steps to conduct a thorough investigation, and if required would authorize an independent individual to conduct the investigation.

Wipro Limited had formally adopted its whistleblower policy (also known as the Ombuds Policy) on the 15th of April 2003 to strengthen the company’s corporate governance and discourage any of its employees from indulging in any malpractice or any kind of impropriety. 

Upon receiving any complaint, the matter would be investigated by a designated Ombudsperson. All the information communicated to the Ombudsperson would be in written form and the company would presume that all the communication made by the complainant is made in good faith. The company would ensure that the identity of the complaint is kept confidential to protect the complainant from facing any kind of retribution or victimization.

The whistleblower policy of Wipro Ltd provides a limitation on the period within which a complainant can raise their concerns, the policy states that the complainant shall pass all the relevant information not later than 3 months from the time when they knew of the wrongdoing.

The Vigil Mechanism and the Whistleblower Policy adopted by Reliance Industries Limited lays out the procedure that the whistleblower the complainant needs to follow while making any disclosures. The policy further mandates the constitution of an Ethics and Compliance Task Force that would investigate all the complaints made by the whistleblower or the complainant under the supervision of the Audit Committee.   

On the analysis of the whistleblower policy adopted by these companies, one can observe that all these companies have set up various platforms for the employees to raise their concerns. In comparison, it can be noted that many international companies such as Delloite and KPMG International encourage their employees to be anonymous complainants whereas Indian Companies do not encourage anonymous complaints. It can also be analyzed that all the companies have a unique structure and procedure for the whistleblower to raise their concerns. 

The legislative framework in India about the protection of a whistleblower is still in a nascent stage as compared to the legislative framework adopted by countries like the United Kingdom and the United States of America. 

Several pieces of legislation lay down provisions governing the process of whistleblowing and granting protection to the whistleblower. The following are the laws,

  • The Whistleblowing Protection Act, 2014.
  • The Companies Act, 2013 read along with “The Companies (Meeting Board and its Power) Rules 2014.
  • The SEBI’s Equity Listing Agreement.

The Whistleblowing Protection Act, 2014

Whistleblower’s protection is a policy that all government leaders support in public but few in power tolerate in private

Thomas M. Devine

Shri N. Vittal the then Central Vigilance Commissioner (CVC) addressed a letter to the Law Commission of India on the 24th of August 1999 addressing his concerns on the protection of innocent people who risk their lives to expose any kind of corruption or wrongdoing by any public functionaries. In his letter to the Law Commission of India, he referred to a speech made by the then Prime Minister Shri. Atal Bihari Vajpayee condemned the unchecked and uncontrolled rise in corruption. While requesting the Law Commission of India to formulate a bill to protect the identities of whistleblowers he highlighted the principle of zero tolerance that needed to be adopted not only from the public but also from the government officials.

In pursuance of this letter the Law Commission of India in its 179th report formulated the ‘Public Interest Disclosure and Protection of Informers), Bill 2002, while referring to the provisions laid down by the UK Public Interest Disclosure Act, 1998, the Australian Public Interest Disclosure Act, 1994, the New Zealand Protected Disclosures Act, 2000 and the US (Federal) Whistle Blower’s Protection Act, 1989.

The Second Administrative Reforms Commission in its 4th report on ‘Ethics in Governance’ also reiterated the need to formulate legislation for the protection of whistleblowers. The Ministry of Personnel vides notification on April 2006 authorized the Chief Vigilance Commission (CVC) as a competent authority to receive all complaints that alleged corruption that involves any government official or employee and initiate any preliminary investigation into the complaint. 

The government finally in the light of the murder of Satyendra Dubey introduced the “Public Interest Disclosure and Protection to Persons Making the Disclosures Bill, 2010 which was passed by the Lok Sabha in December 2011 and was also renamed as the Whistleblower Protection Bill, the Rajya Sabha after a lot of deliberation finally approved the bill on 21st February 2014, the bill received the president assent on the 9th of May 2014 yet the Act is not enforced. An Amendment to Act was introduced in the Lok Shaba in the year 2015 through “The Whistleblowers Protection (Amendment) Bill, 2015.”. 

The intention of the parliament while formulating this legislation was to set up an efficacious and efficient mechanism to protect the identity of the whistleblower along with setting up an efficient mechanism to receive complainants. The scope of the Act is only limited to the public sector thus excluding the private sector. The act lays down to safeguard the identity of the whistleblower thus safeguarding them from any kind of victimization or harassment, thus encouraging employees to raise their concerns against any kind of wronging, fraud, or corruption.

The Whistleblower Protection Act, 2014 has certain flaws one of which is that the Act, does not lay down a procedure in case the complainant wants to appeal the order passed by the concerned authorities. In the 2015 amendments, it was proposed made mandatory for the complainant or the whistleblower to reveal their names which meant that under this Act no anonymous complainants would be entertained. It can be understood that the proposed amendment is based on section 8 (1) of the right to information act, 2005. The last amendment as proposed restricted disclosures that fell under certain categories.   

The Companies Act, 2013

Section 179 (9)

Section 179 (9) of the Companies Act, 2013 when read along with the Regulation 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, makes it compulsory for all the public listed companies to set ‘vigil mechanism’, thus enabling all the directors and employees to elevate their concerns to the competent authorities.

Clause 10 mandates the vigil mechanism to take all reasonable steps to protect the complainant or the whistleblower from any kind of harassment or victimization, the clause further lays down the procedure for any complainant who wishes to raise their concerns directly before the chairperson of the Audit Committee in exceptional cases. The Act further mandates all the list companies to publish an updated report of any such mechanism as adopted by them on their official website.

Section 177 while mandating the setting up of an Audit Committee also lays provisions governing the Audit Committee. Section 177 of the Companies Act was amended in the year 2017, wherein the phrase “every listed company” was amended to “every publicly listed company.” Setting up a vigil mechanism is beneficial for the company as it provides the whistleblower a platform to expose any illegal practices, fraud, or any kind of wrongdoing that is adopted inside the company. 

Section 208 and Section 210

Section 208 and Section 210 of the Companies Act, 2013 give the Registrar or the Inspector additional power to investigate the records of the companies and upon doing so submit a report to the central government. If further required they need to provide the government with all the relevant documents and also provide them with any suggestions that they may have to pertain to the investigation.

Section 210 of the Act, lays down the procedure that needs to follow by the registrar or the inspector while investigating the affairs of a company.

Clause 49 of the SEBI’s Equity Listing Agreement

The Security Exchange Board of India through clause 49 of the SEBI’s equity listing has made it compulsory for every listed company to set up its vigil mechanism and adopt a whistleblower policy. The clause further makes it mandatory for all the companies to ensure that the employees are aware of the policy in case they need to report any act of wrongdoing, fraud, corruption, and make the company aware of any kind of information that is sensitive. The clause also mandates the companies to take all reasonable measures possible to protect the directors and the complainant from any kind of harassment and victimization. To encourage the employees to raise their concerns the SEBI has started a reward mechanism.

Companies (Auditor’s Report) Order 2020 [CARO 2020]

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The ministry of corporate affairs to strengthen the practice of corporate governance among the Indian Companies issued an order making it mandatory for all the listed companies to reveal all the whistleblower complaints to the auditor and the same shall be mentioned in the report published by the auditor.   

Legislative Framework supplementing the Whistleblowing Policy in the United States of America

The United States of America was the first country in the world to recognize the concept of whistleblowing in the world. In the year 1863, the United States of America becomes the first country to pass legislation on the whistleblowing policy, the legislation was named the United States False Claim Act, 1863.

The U.S. has one of the inclusive legislations that offer protection to whistleblowers some of the legislations are:

  • The Sarbanes Oxley Act, 2002
  • Occupational Safety and Health Act 1970.
  • Wall Street Reform and Consumer Protection Act 2010.

The securities exchange commission in the U.S. has also taken steps to encourage the employees to inform the regulator of any wrongdoing that a company may be indulging in, the regulator in furtherance also promotes the practice of full disclosures and transparency.

The Sarbanes Oxley Act, (SOX) 2002

Controversial scandals like the Enron Scandal and the WorldCom scandal shed the light on the malpractices that are being practised by companies in the corporate and the finance sector. The Sarbanes Oxley Act, (SOX) 2002 is considered to be one of the most prominent statutes that grant immunity to any employee who in good faith offers any information relating to any kind of insider trading, any kind of fraud, or corruption. The Act was enforced on the 30th of July 2002. This act brings into its ambit more than 40 million employees of publicly traded corporations in the US. 

The enactment of this Act made it compulsory for all public companies to establish audit committees as mandated by Section 301 of the Act. The Audit Committees were responsible for establishing procedural safeguards to protect the identity of the whistleblower. The Act also encourages the employees to become internal whistleblowers against their employers or customers before the stock exchange commission and to carry the wrongdoing to the audit committee’s notice. The Act also states that in the case an employee fears any kind of retaliation from the employer the employee can file a report directly with the labor department within 90 days of the retaliation. Upon receiving the complaint, the labor department shall initiate an investigation and once it completes its investigation it should refer it to the Occupational Safety and Health Administration for review, upon reviewing the OSHA should issue the finding and compliance order.

The Act has laid down statutory provisions making any act of retaliation against a whistleblower as a federal offense which is punishable with a fine or imprisonment for ten years or both.

The Dodd-Frank Wall Street Reform and Consumer Protection Act 2010.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010 was enacted as an extension to the Sarbanes Oxley Act, (SOX) 2002 and extends its protection to the whistleblowers who raise their apprehension on any kind of malpractices or, fraud or provide any kind of confidential information that may prove that the company has indulged in any wrongdoing can communicate such apprehensions to the Stock Exchange Commission or the Commodities Future Trade Commission.

The Acts also grants immunity to any person who is an employee of subsidiary companies as well as the parent company, the Act further extends the period to lodge any complaints against kind of retaliation from 90 days to 180 days.

The Act also lays down a provision that ensures that the whistleblower is rewarded for the information as provided by them, in case the whistleblower reports any actions that proves that the company benefitted for an amount of one million and more from any wrongdoing then the whistleblower is entitled to receive a sum that is not less than 10% and not more than 30%.   

Legislative Framework supplementing the Whistleblowing Policy in the United Kingdom

The United Kingdom during the period of 1980-1990 was constantly in the headlights of the scandals surrounding its corporate sector with the collapse of the BCCI Bank and the Herald of Free Enterprise, the parliament decided to formulate legislation to protect the whistleblower and grant them immunity. The United Kingdom formally enacted the Public Interest Disclosure Act, 1988 in the year 1999. The PIDA was formulated based on the recommendation of the Nolan Committee Report, 1995. It further allows these individuals to claim compensation for victimization following such disclosures. 

The provisions as laid down by this Act lay down explicitly define “workers” in both the private sector and the public sector and while extending immunity to them also extends its immunity to contractors and suppliers. “In 2014, the UK Supreme Court established that even members of an LLP Partnership are “workers” under the Act.” 

While comparing legislation from all the countries one distinctive feature of the PIDA is that this Act focuses more on the quality of the information that is provided, whether the information provided by the whistleblower is genuine, rather than focusing on the whistleblower. Over the years many political leaders along with several experts have criticized this legislation and have demanded that this legislation be replaced by a new Act, that primarily focuses on setting up a proper safeguard mechanism that encourages people to elevate their apprehensions and ensure that once a complaint is received the concerned authority thoroughly investigates the complaint while protecting the identity of the whistleblower.  

When honest employees detect any wrongdoing or any malpractice being adopted by their organization, they generally tend to raise their apprehension knowing that being a whistleblower is dangerous as it could harm their employment, there are chances that they would be harassed or victimized but they still risk everything to expose any such wrongdoing.  

Satyendra Dubey 

Satyendra Dubey was a young project manager who worked for the National Highway Authority of India was appointed as the project director for the Golden Quadrilateral Corridor Project. During the ongoing project Satyendra Dubey noticed uncertain irregularities in the financial department as a result of which he suspended three engineers who were associated with the irregularities. He also uncovered that the NHAI was openly disregarding the guidelines and were allowing sub-contracting which led to the engineers using low-grade materials.

Satyendra Dubey was then transferred to another project at Gaya which was also undertaken by the NHAI, Dubey realized that the scam is not restricted to one place but is ongoing in many places and involved many high-level officials along with many powerful politicians. Satyendra Dubey being an honest employee addressed a letter to the then Prime Minister Shri Atal Bihari Vajpayee raising his concerns in regards to the financial discrepancies and many other irregularities that he found such as using of low-grade material, subcontracting, etc. In his letter to the prime minister, he explicitly requested to keep his identity protected. 

The letter written by him along with all the documentation was forwarded to the Ministry of Transport and Highways, as a result of which he received an earful criticism from the vigilance officer of the NHAI. On the 27th of November when Satyendra Dubey was found dead, even though the reason for his death could not be linked to the scam and it was suspected that he was killed when he attempted to resist a robbery.  

Manjunath Shanmugam

Manjunath Shanmugam was an employee of the Indian Oil Corporation who worked as a marketing manager. During his employment, he had issued an order to seal two petrol pumps at Lakhimpur Kheri located in Lucknow when he found out that both the petrol pumps were selling adulterated fuel. He has issued the order to seal the petrol pumps for 3 months, but when he found out that they are started operation again within a month time he went to shut those pumps during a surprise raid but was instead brutally murdered by the owner of the petrol pump and some other members of the local mafia.

Dinesh Thakur and the Ranbaxy Debacle  

Dinesh Thakur joined Ranbaxy, a pharmaceutical company in the year 2003 and he was forced to leave the company in the year 2005 when he informed his seniors and the top-level management about the suspicious manufacturing practices that were undertaken by the company. Dinesh Thakur successfully provided the U.S. regulators and authorities with evidence that proved that Ranbaxy had indulged in malpractices such as falsifying drug data and was also guilty of violating good management practices. Dinesh Thakur to expose the malpractices that were undertaken by Ranbaxy also provided the authorities and regulators with evidence proving that Ranbaxy had engaged in manufacturing and distribution of adulterated drugs.

The pharmaceutical company pleaded guilty to all the felony charges and agreed to pay an amount of 500 million dollars to settle the case. Dinesh Thakur was awarded an amount of 48 million dollars.

Infosys Whistleblower Case 

The Chairman of Infosys on the 21st of October 2019 revealed that the audit committee after a thorough investigation did not find any merit to the allegation that was leveled against, CEO Salil Parekh and CEO Nilanjan Roy. Chairman Nandan Nilekani in a press release said that the company upon receiving complainants from a group of employees who call themselves as the “Ethical Employees” levied charges against both the executives for having indulged in financial impropriety and using unethical methods to increase the profits of the company. The chairman in his statement further mentioned that upon the complaint the audit committee along with an independent legal counsel conducted an investigation and issued the finding. According to them, there was no proof of any kind of financial impropriety and the evidence provided to them which were video recordings and emails were without merit.

A nation can’t accomplish a great corporate governance structure by setting up numerous regulators, and yet excluding a particular sector outside its amid and making it non-mandatory for them to adopt the framework. For any law to be effective, the scope and the ambit should be unambiguous.  

The legal framework encompassing whistleblowing is at an exceptionally developing stage in India. Having a whistleblowing strategy in the company will do nothing but bad to the company. Significantly, it was implemented in an efficient and efficacious manner. 

Trust is the bedrock of execution of the whistleblowing policy. companies should have such an environment where they are encouraged to raise their concerns regarding any kind of wrongdoing to the appropriate authority. There are many difficulties like trust, ignorance of the whistleblower policy, misguided judgments of the systems, and so on that the organizations need to implement the policy efficiently to ensure that it can deter any wrongdoing in the early stage itself.

One of the major drawbacks of the Whistleblower Protection Act, 2014 is that it excludes the private companies from its ambit which means that clause 49 of the SEBI Equity Listing Agreement is non-mandatory for them. The Whistleblower Protection Act is only applicable to companies that are listed on the stock exchanges. The Act does not lay down the provision that governs the internal procedure to investigate the complaint. The further amendment that was proposed and passed by the parliament further mandates the whistleblower to reveal their identity. This would leave the whistleblower venerable to victimization and harassment, thus discouraging employees to raise their concerns. The Act further does not have any specific provision that deals with the compensation in case the whistleblower is subjected to any kind of harassment or victimization.

The scope for whistleblowing looks encouraging in India. In the past several years with a lot of scandals coming to light more and more companies are encouraged to implement an efficacious and efficient whistleblower policy. Whistleblower Policy is an integral part of the corporate framework of the coming, if the companies are successful in implementing a strong whistleblowing framework it could help detect any kind of wrongdoing and would also discourage the employees from indulging in any kind of malpractices.

The company while adopting a whistleblowing framework should ensure that the framework has adequate safeguards to keep the identity of the complainant hidden along with this the company shall also adopt an incentive mechanism wherein if the complainant raises their apprehension for any kind of wrongdoing or proves that the company is indulging in any kind of malpractice and communicates evidence that proves the allegation then in such case the complainant shall be rewarded. Some of the other suggestions are as follows:

  • The scope of the Act needs to be changed and it needs to include the private sector companies within its ambit, as under the current Act only covers those whistleblowers only who expose corruption, fraud, irregularities in the government sector.
  • The Regulators and Concerned Authorities should take all reasonable steps to implement an efficient whistleblower policy to protect the identities of the whistleblower to prevent them from being subjected to victimization or harassment.
  • The legislation is an effort to strengthen the whistleblower policy should insert whistleblowing provisions within specific Acts. 
  • The top-level management shall ensure that every employee must be aware of the whistleblowing policy and there shall be workshops that are conducted to make all the employees aware of the same.
  •  The companies shall also make the complainants liable in case they file a frivolous complaint.

Corporate Governance is considered to be sin non qua for any company to operate, if a company has a strong corporate governance framework, then the company can conduct its operation with full transparency and can promote the policy of full disclosures to strengthen their relationship with all the stakeholders and their employees. Having a good corporate governance framework will ensure stability and growth for the company.

A strong Whistleblowing Framework helps a company to implement the practice of accountability efficiently, it could further encourage the employees to elevate their concerns to the concerned authorities and prevent any wrongdoing or malpractice, corruption, or fraud in the early stages thus maintaining their reputation.

The world over the last couple of decades has witnessed scandals like the Harshad Mehta Scam, the Satyam Computer Scam, the Satyendra Dubey murder Scam, the Ranbaxy Scandal, these scandals harm many people’s lives, thus the companies must protect ordinary people from being victims to such scams.   

Committee Reports:

  • Law Commission of India, 179th Report, “The Public Interest Disclosure and Protection of Informer.”
  • Department of Administrative Reforms and Public Grievances, Ministry of Personnel, Public Grievances and Pensions, Government of India, “Administrative Reforms commission’s 4th Report titled ‘Ethics in Governance.”
  • Securities Exchange Board of India, Report titled “Shri N.R. Narayana Murthy Committee on Corporate Governance”.

Newsletters/Reports:

  • Jochelle Mendonca & AyanPramanik, Whistleblower accuses Infosys of ‘unethical’ practices to boost numbers, The Economic Times, (Oct 21, 2019) 
  • Abhyuday Agarwal, whistleblowing norms in India, everything you need to know about whistleblowing in India beyond Infosys, SCC (October 29, 2019).
  • “Infosys faces another whistleblower complaint, CEO accused of misdeeds”, The Economic      Times, Published on November 12th, 2019.
  • “Infosys whistleblower complaint: Audit panel finds no financial impropriety”, The Business Standard, Published on 10th January 2020.
  • Amit Mudgil, Will clean chit to CEO in whistleblower case reverse Infosys stock’s underperformance, The Economic Times.
  • Anonymous, Infosys gets clean chit from SEC on whistleblower complaint; stock rallies 10%, CNBC TV (18 March 24, 2020.
  • Rahul Singh, A tribute to the whistleblower, risking job and even life, The Tribune, Jan 05, 2020.
  • Shishir Tripathi, the case of Whistleblowers and their protection, Governance Now, Let’s Make it work, published on July 11, 2015.

Acts/Legislations:

  • The Whistleblowing Protection Act, 2014.
  • The Companies Act, 2013 read along with “The Companies (Meeting Board and its Power) Rules 2014.
  • The SEBI’s Listing Equity Agreement
  • Companies (Auditor’s Report) Order 2020 [CARO 2020]
  • The Sarbanes Oxley Act, 2002
  • Occupational Safety and Health Act 1970.
  • Wall Street Reform and Consumer Protection Act 2010.
  • Public Interest Disclosure Act, 1988.

Articles:

  • Ahern, Kathryn & McDonald, Sally. (2002). The beliefs of nurses who were involved in a whistleblowing event. Journal of Advanced Nursing, 38(3), 303-309. Journal of advanced nursing. 
  • Sharma, Ajay, Law relating to whistleblowing in India a critical study, Department of Law, Panjab University, 2019.  
  • Karn Marwaha, ‘exclusion of private sector from the ambit of Whistle Blower Protection Act, 2011: critical analysis (2015) 1 Law and Society 270.
  • The Whistleblowers Protection Act, 1989: Foundation for the Modern Law of Employment Dissent’ by Thomas M. Devine, vol. 51, Washington College of Law, Administrative Law Review (1999), p. 533.  
  • Neha Jain and Sindhu V. Reddy, Effective Implementation of Whistleblower Policy vis – vis the Leniency Approach, Journal on Governance, Vol. 1 No. 5, 2012.
  •  Pratima Vishnu Barde, Whistleblowing Mechanism: A Positive Step towards Enhancing Corporate Governance, International Journal of Law Management and Humanities, Volume 4 Issue 1.
  • Redeveloping Whistleblowing Policy in India: A fight for Better Corporate Governance, International Journal of Law Management and Humanities, Volume 4 Issue 1.
  • Karn Marwaha, (2017),” Corporate governance and whistleblowing in India: promises or reality? “, International Journal of Law and Management, Volume. 59 Issue 3 pp. 

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