Framing of whistle-blower policy is not yet mandatory for India Inc

Source: The Economic Times

MUMBAI: Dinesh Thakur, the whistle blower of Indian origin, would not have succeeded in India as people like him could only at best escalate their grievances up to the top brass of the firm.

Leading lights of a few Indian companies told ET that Thakur is a man who understood the intricacies of the US laws that encourage citizens to expose wrongdoings by corporates and get handsomely rewarded once their tip-offs are proven right.

In India, typically, a whistle blower is governed by an internal company policy where cases of wrong doing of any kind are brought to the notice of the top management. In the case of Ranbaxy, Thakur exposed the wrongdoings of the management to an external government agency in the US.

For his efforts, Thakur, the former Ranbaxy director, took home $48.6 million after uncovering the unsafe practices and violations at Ranbaxy, but many corporate captains do not believe that he fit the role of a whistle blower's profile in India.

Clause 49 states that every company should disclose in the corporate governance section of its annual report whether a whistle blower policy is in effect or not, and whether all the employees are granted access to it or not. This disclosure in the annual report is mandatory, but framing a whistle blower policy itself is non-mandatory in India.

Says Adi Godrej, chairman of Godrej group, "whistle blowing primarily means alerting the senior management of an organisation to wrongdoings in a company. I do not want to comment on the Ranbaxy case, but it does not really fit the profile of a whistle blower since it involves complaints to an external agency."

"There are no statistics to say how clearly it works in India where usually anonymous letters are sent. So one should not over-react to it, but ensure that you do look into the matter to ensure the genuineness of the case," he added.

Godrej says the whistle blower policy acts as a pre-emptive tool to prevent wrongdoings in an organisation and ensure that people are careful about their acts.

Legal experts say it is surprising that the official's name in Ranbaxy was made public since the Witness Protection Programme in the US ensures complete secrecy and protection to the whistleblower. "Many times, people are taking a big risk and such cases pose a threat to life and liberty. Usually, most whistle-blower cases involve pharma companies or financial irregularities. Even in the US, whistle-blowers tend to get impacted adversely," says Vijaya Sampath, former group general counsel at Bharti and now ombudsman in the same organisation.

Within Bharti, Sampath says, whistle blowers were bringing to the notice of the senior management mostly stray financial irregularities at a lower or mid level.

Harsh Mariwala, CMD of Marico, says whistle-blowing has not taken deep roots in corporate India yet. There is a lot of fear about exposing wrongdoings in organisations since confidentiality is not guaranteed.

"The success of whistle-blowing to a large extent depends on an organisation's culture. If the leadership is authoritative there is fear and the culture is closed to whistle-blowers. The top management of companies has to encourage whistle-blowers and an independent body needs to examine the case and offer enough support to the whistle-blowers. So it is gaining traction very selectively and will progress as our overall governance picks up," he said