Mechnism for Whistle Blowing: Safegaurds & Reach


Published on

Published in: Business, Economy & Finance
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Mechnism for Whistle Blowing: Safegaurds & Reach

  1. 1. A tool to good corporate governance Mechanism for Whistle Blowing Safeguards & Reach
  2. 2. “ Corporate governance is… <ul><li>… the application of </li></ul><ul><li>best management practices , </li></ul><ul><li>compliance of law in letter and spirit and </li></ul><ul><li>adherence to ethical standards </li></ul><ul><li>for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders” </li></ul><ul><li>Institute of Company Secretaries of India </li></ul>
  3. 3. Corporate Governance - The basic Framework Output – Input = Wealth Created ? Sustainability Happiness and Prosperity of all Stakeholders Reinvestment Distribu- tion <ul><li>Research and </li></ul><ul><li>Development </li></ul><ul><li>HR Development </li></ul><ul><li>Infrastructure </li></ul><ul><li>Risk Management </li></ul><ul><li>SUPPLIERS </li></ul><ul><li>Adequate Returns </li></ul><ul><li>HUMAN ASSETS </li></ul><ul><li>Adequate </li></ul><ul><li>Remuneration </li></ul><ul><li>CUSTOMERS </li></ul><ul><li>Affordable Prices </li></ul><ul><li>PUBLIC </li></ul><ul><li>Payment of Taxes and Partnership in National Development Projects </li></ul>Wealth Creation Wealth Management Wealth Sharing Enhanced Capabilities Best Management Practices are Vital Here Law and Ethics are Vital Here
  4. 4. Corporate Governance Value Chain “ Corporate Governance is not related to investors only, though they are most important Beneficiary.” The Stakeholders
  5. 5. The Stakeholders’ Value Chain SUPPLIERS CUSTOMERS HUMAN RESOURCE Supply Funds, Materials and Services Value Addition and Management of Resources Give Opportunity to Co. to Satisfy their Needs Adequate Returns for Funds, Material and Services Supplied Adequate Salary and Security for leading a Happy Life Best Quality Products and Customer Care at Minimum Prices ROLE OF STAKEHOLDERS EXPECTATIONS OF STAKEHOLDERS Potential Suppliers, Human Resources and Customers Biological, Economic and Cultural Environment PUBLIC PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT
  6. 6. An indispensible ingredient of ensuring Good Corporate Governance in Spirits <ul><li>Whistle Blowing </li></ul><ul><li>The Internal Regulator </li></ul>
  7. 7. Whistle Blowing … the key concerns <ul><li>Reporting and investigation of allegations of suspected improper activities/unethical practices by a Whistle Blower. </li></ul><ul><li>A whistle-blower is a member or former member of an organization and not an outsider. </li></ul><ul><li>The information revealed is non-public and not already known . </li></ul><ul><li>The information concerns significant misconduct by the organization or some of its members. </li></ul>Cont…
  8. 8. Whistle Blowing … the key concerns <ul><li>The information is revealed outside the normal channels of corporate communication with the organization, to a designated Independent person . </li></ul><ul><li>The information is revealed voluntarily and not by a legal mandate . </li></ul><ul><li>The information is revealed as a moral act or protest in order to correct some perceived wrong. </li></ul><ul><li>Maintaining confidentiality in identity of Whistle Blower and his security are the key areas of concern and encouragement. </li></ul>
  9. 9. Area of Whistle Blowing Whistleblowers may make their allegations
  10. 10. Area of Whistle Blowing The Subjects of Concern
  11. 11. Focal Areas for a person before whistle Blowing? <ul><li>1. Is the situation of sufficient moral importance to justify whistle-blowing? </li></ul><ul><li>2. Do you have all the facts and do you properly understand their significance ? </li></ul><ul><li>3. Have all internal channels and steps short of whistle-blowing been exhausted? </li></ul><ul><li>4. What is the best way to blow the whistle ? </li></ul><ul><li>5. What is my responsibility in view of my role within the organization ? </li></ul><ul><li>6. What are the chances for success ? </li></ul>
  12. 12. Legal Provisions governing Whistle Blower in India <ul><li>The law that a government enacts to protect such persons who help expose corruption is called a whistleblower protection law . </li></ul><ul><li>At present India Statues does not make the Establishment of Whistle Blower Mechanism Mandatory nor is there any law for protection of whistleblowers in India. </li></ul>
  13. 13. Initiatives towards Whistle Blowing
  14. 14. Reference of Whistle Blower in Indian Statues
  15. 15. Committees recommending Whistle Blowing as an element of Corporate Governance Committee Year Confederation of Indian Industry code on corporate governance 1998 Kumar Mangalam Birla Committee 1999 Naresh Chandra Committee 2002 N. R Narayana Murthy 2003
  16. 16. What does the Listing Agreement provides for Whistle Blowing? <ul><li>Provides for establishment of mechanism of whistle blowing </li></ul><ul><li>Adequate safeguards to be established </li></ul><ul><li>Proper communication of mechanism </li></ul><ul><li>Power of audit committee to ensure proper functioning </li></ul>
  17. 17. RECOMMENDATIONS ON WHISTLE BLOWER BY THE CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009 <ul><li>Institution of a mechanism for employees </li></ul><ul><li>Establishment of adequate safeguards against victimization of employees </li></ul><ul><li>Direct access to the Chairperson of the Audit Committee </li></ul>
  18. 18. Do other countries have similar laws to protect whistle blowers? <ul><li>Several Countries have initiated towards or are initiating towards WHISTLE BLOWER PROTECTION LAW. The Level of Whistle Blower Protection however, differ from Country to Country. </li></ul><ul><li>Some of the Countries which have formulated such law are:- </li></ul><ul><li>US </li></ul><ul><li>UK </li></ul><ul><li>Norway </li></ul>
  19. 19. Instrument of effecting Whistle Blowing <ul><li>An effective Whistle </li></ul><ul><li>Blower Policy </li></ul>
  20. 20. The Aims of the Policy <ul><li>To raise confidence of Stakeholder. </li></ul><ul><li>To pluck the in ethical/improper practices misconduct , </li></ul><ul><li>To lay proper mechanism of systems </li></ul><ul><li>To establish confidentiality/security maintenance system </li></ul>
  21. 21. Whistle Blowing in India Inc.
  22. 22. Components of an effective whistle-blowing policy
  23. 23. Procedural Aspects of Whistle Blowing Providing confidence to person to blow the whistle Mechanism to aid anonymous reporting - email, telephone numbers. Independent Ombudsman or Chairman of Audit Committee for handling such information Whistle Blower need not inform the supervisors Ensuring confidentiality and securit y of the Whistle Blower Specifying specific flow of work to Audit teams –internal and external Review and affirmation of process by Board/Audit Committee
  24. 24. How to encourage Whistle Blowing <ul><li>Management addressing to organization to provide confidence </li></ul><ul><li>Ensuring confidentiality of Whistle Blower by Providing anonymous Telephone facility for communication or e-mail ID. </li></ul><ul><li>Providing Security of the whistle blower. </li></ul><ul><li>Management positive participation. </li></ul>
  25. 25. Risks involved in the process
  26. 27. Some of the Biggest Corporate Collapse The fate of millions to stakeholders could have been protected if the Whistle Blower was effective…
  27. 28. <ul><li>Whistle Blower… </li></ul><ul><li>The Actual Reward!!! </li></ul>
  28. 29. The Satyendra Dubey Fate … (2003) <ul><li>The National Highways Authority of India (NHAI) engineer Satyendra Dubey was killed after he wrote a letter to the office of then PM A B Vajpayee detailing corruption in the construction of highways. </li></ul>
  29. 30. History Repeated in the Manjunath Shanmugham Incident (2005) <ul><li>Manjunath Shanmugham, an IIM graduate and a sales manager of the IOC, was murdered on Nov 19, 2005 for exposing the racket of adulteration of petrol and the mafia behind it. </li></ul>
  30. 31. Other Setbacks to Whistle Blowing <ul><li>The Jayaraman, Incident… (2008) </li></ul><ul><li>The mark sheet forgery racket in Pondicherry University was found murdered on May 20, 2008. </li></ul>The Bombay Stock Exchange Scandal … (2001)
  31. 32. Whistle Blowing - The missing links <ul><li>Ineffective mechanism </li></ul><ul><li>Failure to Impart Proper confidence </li></ul><ul><li>Lack of Independent ombudsmen </li></ul><ul><li>Non maintainability of whistle blower confidentiality </li></ul><ul><li>Ineffective Security of whistle blower </li></ul><ul><li>Improper Inquiry and investigation procedure </li></ul><ul><li>Inappropriate punishment </li></ul><ul><li>The Fear of Isolation </li></ul>
  32. 33. Recommendations <ul><li>Whistleblower policy be made mandatory , with clear cut guidelines for prosecuting intimidation of or retaliation against the complainant </li></ul><ul><li>Inclusion of other stakeholders , such as vendors, shareholders and customers, in the list of eligible complainants </li></ul><ul><li>Strict assurance on maintenance of confidentiality </li></ul><ul><li>Fast and Time bound disposal of cases </li></ul><ul><li>Imposition of fines/ penalties for frivolous or mischievous complaints </li></ul>
  33. 34. <ul><li>Our services </li></ul><ul><li>Investment Banking </li></ul><ul><li>Corporate Restructuring </li></ul><ul><li>Forex & Overseas Transaction </li></ul><ul><li>Stock Exchange Services </li></ul><ul><li>Global Business Set up </li></ul><ul><li>Securities law and capital market advisory </li></ul><ul><li>Corporate Compliance & Due Diligence </li></ul><ul><li>Corporate Finance </li></ul><ul><li>Corporate Taxation </li></ul>Thank You Pavan Kumar Vijay Managing Director Corporate Professionals (India) Pvt. Ltd. D – 28, South Ext- I, New Delhi 1100049 Tel: +91.11.40622200, Fax: +91.11.40622201 Email: Visit us at: