Whistle Blowers Policy Challenges and Solutions for India with Special Reference to Corporate Governance

Abstract

Issue of 'whistle blowing' is one of the important areas of discussion while discussing corporate governance. In relation to corporate governance, whistle-blower is a person inside the company who blows a whistle (informs the superior management or the person concerned) against any actual or potential violation of law or established code of conduct which may pose a threat to the company or public interest in general. Whistle Blower's Policy is the policy to provide adequate safeguard to the whistleblower against unfair treatment by the alleged violator, which can even lead to death of whistleblower. Here I am referring to Satyendra Dubey, who was killed because he blowed the whistle against corruption. Based on Narayana Murthy Committee Report on Corporate Governance, Government tried to have a mandatory Whistle Blower Policy in Indian Corporate Governance for Listed Companies. This was sought to be effected as a mandatory recommendation of 'whistleblower policy' in Clause 49 of the Listing Agreement, which was severely objected by the corporates. Result was converting this mandatory recommendation to a non-mandatory one. When I proceeded to write this paper, I was posed with the question of whether corporate India requires the policy under issue to be featuring as a mandatory requirement under the CG reports. I had not to wait longer as all answers were given by the Satyam fiasco which raised several issues relating to corporate governance, 'effectiveness of whistleblower policy' being the one. Whistleblowers are not new to the society. Their role in putting a check on corruption is well recognized. Around the world, there are various legislations, statutes, codes of conduct, and code of best practices to protect the whistleblowers from reprisal and victimization. However, in relation to corporate governance, there are many issues which need to be sorted out. The present paper analyzes the nature, definition, and requirements of whistle blower's policy in Indian Corporate Governance. A comparative review of whistleblower policies in key countries have been discussed. Paper tries to find out whether there should be a common whistleblower policy for all the sectors of the society or a specific one for corporate sector. In light of the salient features of the Whistle Blowers (Protection in Public Interest Disclosures) Bill, 2006 (WBPID Bill of 2006) the future of whistleblower policy in Indian corporate governance is predicted.