This article is written by Ruchi Raina, a law graduate from GJ Advani Law College, Mumbai during her internship at LeDroit India.
ABSTRACT
A whistleblower is a person exposing fraudulent or illegal activity. In a corporate setup, whistleblowers play a very crucial role in promoting transparency accountability and ethical conduct. This article explores the importance of whistleblowers in maintaining integrity in a corporation by analyzing cases and current regulations.
INTRODUCTION
Corporate governance is the system by which companies are directed and controlled, this involves a set of relationships between a company’s management, its board, the shareholders, and other stakeholders. Effective corporate governance. ensures that a company operates with integrity, transparency, and accountability.
This article examines the role of whistleblowing in enhancing corporate governance, the legal protections for whistleblowers, and the organizational measures necessary to support whistleblowers.
CURRENT REGULATIONS:
WHISTLEBLOWERS PROTECTION ACT 2011
Objective And Key Provisions:
- Provides protection against retaliation
Whistleblowers are prone to harassment and retaliation in companies.The act protects whistleblowers against all forms of harassment and prohibits companies from taking adverse actions against them.
- Safeguards the identity of whistleblowers
Whistleblowers Protection Act safeguards and encourages individuals to come forward and make anonymous disclosures to authorities without any fear of reprisal.
- Establishes a robust redressal mechanism
The Central Vigilance Commission has the power to investigate whistleblower matters. CVC plays an important role in implementing appropriate courses of action against all individuals found responsible for wrongdoings and suggest measures to prevent such instances from happening in the future.
- Creates awareness among the public
Whistleblowing creates awareness in people encourages cultural integrity and holds people accountable for wrongdoings.
Challenges:
Despite effective implementation, the Whistleblowers Protection Act continues to remain a major challenge in India.
Whistleblowers face severe harassment and retaliation despite all the legal protection being in place. It is time we bring in new reforms to strengthen the existing mechanism.
THE COMPANIES ACT 2013
- Provides a comprehensive framework for conducting inquiry, investigation and inspection.
- Protects confidentiality, Safeguards the interest of whistleblowers and prevents companies from retaliation.
THE SECURITIES AND EXCHANGE BOARD OF INDIA REGULATIONS 2015
- Listed Companies Under 21A are required to establish a whistleblower mechanism to report any potential security law violation.
- Companies have the responsibility to protect and safeguard the interests of whistleblowers from victimization.
- SEBI is authorized to investigate complaints and take appropriate courses of action in case of noncompliance.
LANDMARK CASES
Satyendra Dubey’s Case:
On hearing Writ Petition (C) No. 539 of 2003, The Supreme Court desired that pending enactment of suitable legislation, suitable machinery should be in place for acting on complaints from whistleblowers
In 2011, under the direction of the Supreme Court, The Whistleblowers Protection Bill was introduced. The main objective of introducing the bill was to establish a comprehensive mechanism to receive and investigate complaints of corruption and wrongdoings.
Volkswagen Emissions Scandal: The U.S. Department of Justice Imposed a fine of $4.3 billion on Volkswagen. Many top executives at the company faced criminal charges.
IDEAL PRACTICES FOR WHISTLEBLOWING
- Based on the inferences drawn from the policy A robust mechanism must be established to protect the rights of whistleblowers. These policies must describe the confidentiality and reporting process. To make the process more effective all policies must be communicated through training sessions.
- A person irrespective of their position in the pyramid of hierarchy must have the right to report violations in policy. Companies should invest in reporting avenues to make sure that all employees have the option to report their concerns on confidentiality.
- In the event of reporting the senior management should take immediate action and carry out an investigation. Strict actions must be taken against false reporting and misleading evidence.
- A company must maintain full confidentiality on the whereabouts of the whistleblower. Any kind of abuse or harassment should not be tolerated. At the time of investigation, all protocols must be sincerely followed to ensure that individuals feel safe while raising their concerns.
CONCLUSION
Whistleblowers play a very crucial role in upholding corporate governance standards and promoting ethical conduct within an organisation
To maintain integrity organizations must adopt a whistleblowing policy. This will enable the companies to recognize the contributions of whistleblowers, strengthen their internal controls, build trust among stakeholders, and, foster a culture of integrity and ethical leadership.
References
