Preventing behaviour that conflicts with the organisation’s objectives and public interest is a matter of governance and a top business priority. Wrongdoing within companies is often clandestine and only somebody within the system would have knowledge of the unethical practice. This is why whistle-blowing can be a very effective tool to fight corporate fraud.
The recent Ranbaxy case highlighted the role of former employee Dinesh Thakur as responsible for exposing the company’s falsification of important documents. While Thakur has won the case and been compensated with $48.6 million (Rs 262.4 crore) for his efforts, the question is why are there so few occasions of whistle-blowing in India?
In India, there are two main regulatory issues that make the case for whistle-blowing weak. On the one hand, the Companies Act does not have a provision that makes a whistle-blowing policy mandatory. Having a policy does not necessarily mean employees are encouraged to speak up. A case in point is Satyam, which had a whistle-blower policy since 2005. But, companies need to have a policy that protects whistle-blowers at the workplace and also have a culture that encourages employees to feel empowered and safe to disclose wrongdoing.
On the other hand, there is no legislation in India that protects the whistle-blower and insures him/her against disciplinary action from the employer. The Whistleblower’s Protection Bill 2011, which was passed by the Lok Sabha in 2011 and yet to be cleared by the Rajya Sabha, does not provide financial incentives to encourage whistle-blowing. Most importantly, it does not deal with corporate whistle-blowers as it does not extend its jurisdiction to private employees and private corporates (given the $1.47 billion Satyam scandal, this is a strange omission indeed). Then there are the psychological and sociological variables that affect how amenable employees are to blowing the whistle on their peers and seniors within the company.
Our cover story this issue, Break the Silence, explores what companies (and HR professionals) can do to leverage the power of whistle-blowing and build a framework (policy, process and culture) to encourage employees to speak up and strengthen transparency in organisations. For this issue, we reached out to captains of industry and thought leaders like Anand Mahindra, CMD of Mahindra and Mahindra; Rajiv Kumar, former secretary general of FICCI; K. Ramkumar, Executive Director, HR, Customer Service and Operations; L.Gurunathan, Professor of HRM and IR at XLRI; Abhijeet Vadera, Assistant Professor of Organisation Behaviour at ISB; Ed Cohen, EVP, Nelson Cohen Global Consulting and V. Raghunathan, author of Games Indians Play and Ganesha on the Dashboard, to garner their opinions on different aspects of corporate ethics and why a culture of being ethical is essential for long-term success.
They’ve shared insightful perspectives on subjects as diverse as the psychological underpinnings of leniency towards lapsed corporate ethics, creating an example of integrity, the scourge of short-term thinking that encourages moral lapses and a game-theoretic view of how perpetrators of corporate malpractice should be treated. We hope this edition of People Matters helps you reflect about the issue of fraud in the workplace and gives you an opportunity to assess your organisation’s readiness to encourage employees reporting wrongdoing. As always, we welcome your inputs, your participation and engagement. Email us at email@example.com to share your feedback and suggestions.
We look forward to hearing from you. Happy reading.
Esther Martinez Hernandez