14 December 2011

Is Your Workplace Whistle-Blower Friendly?

Indian corporate offices do not provide a conducive environment to Whistle-blowers, as opposed to Western nations. Though a couple of Indian corporates foster the policy of whistle-blowing, majority of the corporates still treat this phenomenon as a taboo.

The government of India had introduced the Whistle-blower Law in the year 2009 under the Right to Information (RTI) Act and is planning to introduce an ombudsman to sustain and upgrade this law. However, whistle-blowing already existed in the Public Interest Litigation (PIL) and Clause 49 of the Listing Agreement recognizes whistle-blowing as a non-mandatory requirement.

Securities and Exchange Board of India (SEBI) has laid down a few guidelines for corporates to follow the practice of whistle-blowing. These guidelines pertaining to whistle-blowing were mandatory in the beginning but have been changed to a non-mandatory requirement now. SEBI talks of how having a whistle-blowing policy would constitute a mechanism for the employees of an organization to inform about any wrong-doing or misconduct on the part of the members of the organization. This mechanism can also make way for employees to directly approach their Chairman of the Audit Committee in grave cases.

There are various Indian organizations which have embraced the concept of whistle-blowing such as Wipro, Infosys, Dabur, ICICI, Tata Motors, DLF and Maruti Suzuki India. Whistle-blowing is regarded as a managerial tool to check unethical activities in an organization. Tata Group states the following in its Whistle-blower Policy, “Every employee of a Tata Company shall promptly report to the management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of his or any other Tata Company.” This policy is based on the Tata Code of Conduct.

The whistle-blowing policy of DLF is read as, “The Company seeks to maintain the highest ethical and business standards in the course of conduct of its business. In doing so, the Company has articulated and published its Code of Conduct, which is applicable to all employees of the Company, to regulate and build a strong culture of corporate governance, by promoting transparency and ethical conduct in its business operations, along with providing the framework within which the Company expects its business operations to be carried out. The Whistleblower policy is an extension of the Company's Code of Conduct through which the Company seeks to provide a mechanism for its Employees, Directors, vendors or customers to disclose any unethical and/or improper practice(s) taking place in the Company for appropriate action and reporting. Through this policy, the Company provides the necessary safeguards to all Whistle Blowers for making disclosures in good faith.”

Maruti Suzuki India mentions the following in the case of whistle-blowing, “The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, and integrity and ethical behaviour.” Their whistle-blowing policy states how employees must “report to the management instances of unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy.” Also, “The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It protects employees wishing to raise a concern about serious irregularities within the Company.”

Despite such big corporate houses endorsing whistle-blowing, not much momentum is observed in this regard. Employees are still frightened to report of wrong-doings and misconduct lest they lose their job. Anonymity is another big question mark in our country because secrecy of information is of the least priority. Safety of whistle-blowers also ceases to exist beyond corporate grounds and such informers seem to be on their own in the outside world. Alienation and dislike at workplace are other deterrents for whistle-blowing. An employee can also never be sure if his/ her organization believes in whistle-blowing because very few organizations familiarize their employees with the guidelines pertaining to whistle-blowing.

Indian organizations are still in the embryonic stage when it comes to whistle-blowing because the proper framework of law regarding whistle-blowing is missing. They will have to walk a long way to match the Western standards because corruption and delay in passing a law are tediously long and taxing.