This document discusses corporate governance and the importance of whistleblowing mechanisms. It provides context around corporate governance, outlines stakeholders' expectations, and examines the value chain between a company and its investors, customers, employees, and other stakeholders. It then focuses on whistleblowing as a key aspect of ensuring good corporate governance and internal regulation. It defines whistleblowing and the concerns around reporting improper practices. It also discusses legal provisions in India regarding whistleblowing and initiatives to protect whistleblowers both in India and internationally.

1. A tool to good corporate governance
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Mechanism for Whistle Blowing
Safeguards & Reach

2. “Corporate governance is…
…the application of
best management practices,
compliance of law in letter and spirit and
adherence to ethical standards
for effective management and distribution of wealth and
discharge of social responsibility for sustainable
development of all stakeholders”
Institute of Company Secretaries of India
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3. Corporate Governance -
The basic Framework
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Output – Input
= Wealth Created
?
Sustainability
Happiness and
Prosperity of all
Stakeholders
Reinvestment
Distribu-
tion
Research and
Development
HR Development
Infrastructure
Risk Management
SUPPLIERS
Adequate Returns
HUMAN ASSETS
Adequate
Remuneration
CUSTOMERS
Affordable Prices
PUBLIC
Payment of Taxes and
Partnership in National
Development Projects
Wealth Creation Wealth Management Wealth Sharing
Enhanced
Capabilities
Best Management Practices are Vital Here Law and Ethics are Vital
Here

4. Corporate Governance Value Chain
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Investors
Lenders
Customers
Suppliers
Employees
Government
Regulator
“Corporate Governance is not related to investors only,
though they are most important Beneficiary.”
The Stakeholders

5. The Stakeholders’ Value Chain
5
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 EnvironmentPUBLIC
PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT

6. An indispensible ingredient of ensuring
Good Corporate Governance in Spirits
Whistle Blowing
The Internal Regulator
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7. Whistle Blowing … the key concerns
• Reporting and investigation of allegations of suspected
improper activities/unethical practices by a Whistle
Blower.
• A whistle-blower is a member or former member of an
organization and not an outsider.
• The information revealed is non-public and not already
known.
• The information concerns significant misconduct by the
organization or some of its members.
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Cont…

8. Whistle Blowing … the key concerns
• The information is revealed outside the normal channels of
corporate communication with the organization, to a
designated Independent person .
• The information is revealed voluntarily and not by a legal
mandate.
• The information is revealed as a moral act or protest in order
to correct some perceived wrong.
• Maintaining confidentiality in identity of Whistle Blower and
his security are the key areas of concern and encouragement.

9. Area of Whistle Blowing
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• Internally
(to other people
within the accused
organization)
Internal Whistle
Blowing
• Externally
(to regulators, law
enforcement agencies,
to the media or to
groups concerned with
the issues).
External Whistle
Blowing
Whistleblowers may make their allegations

10. Area of Whistle Blowing
The Board &
Senior
Management The Executor Staff
The Subjects of Concern

11. Focal Areas for a person before whistle Blowing?
1. Is the situation of sufficient moral importance to justify whistle-blowing?
2. Do you have all the facts and do you properly understand their significance?
3. Have all internal channels and steps short of whistle-blowing been exhausted?
4. What is the best way to blow the whistle?
5. What is my responsibility in view of my role within the organization?
6. What are the chances for success?
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12. Legal Provisions governing Whistle Blower in
India
The law that a government enacts to protect such persons who
help expose corruption is called a whistleblower protection
law.
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.
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13. Initiatives towards Whistle Blowing
IN INDIA INTERNATIONALLY

14. Reference of Whistle Blower in
Indian Statues
Committee Reports
Listing Agreement
Voluntary Guidelines
to Corporate
Governance

15. Committees recommending Whistle Blowing as an
element of Corporate Governance
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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. What does the Listing Agreement provides for
Whistle Blowing?
• Provides for establishment of mechanism of whistle blowing
• Adequate safeguards to be established
• Proper communication of mechanism
• Power of audit committee to ensure proper functioning
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17. RECOMMENDATIONS ON WHISTLE BLOWER BY
THE CORPORATE GOVERNANCE
VOLUNTARY GUIDELINES
2009
• Institution of a mechanism for employees
• Establishment of adequate safeguards against victimization of
employees
• Direct access to the Chairperson of the Audit Committee
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18. Do other countries have similar laws to protect whistle
blowers?
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.
Some of the Countries which have formulated such law are:-
• US
• UK
• Norway
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19. Instrument of effecting Whistle
Blowing
An effective Whistle
Blower Policy
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20. The Aims of the Policy
• To raise confidence of Stakeholder.
• To pluck the in ethical/improper practices misconduct,
• To lay proper mechanism of systems
• To establish confidentiality/security maintenance system
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21. Whistle Blowing in India Inc.
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22. Components of an effective whistle-blowing policy
A clearly laid Whistle Blower Policy.
Effectively communicated statement of responsibility
A clearly-defined procedure for reporting.
Trained personnel to receive and investigate reports.
A commitment to take appropriate action.
An effective Safeguard of the Whistle Blower
Specifying steps toward Abused protection by
false whistle blowing

23. Procedural
Aspects of
Whistle
Blowing
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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 security 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. How to encourage Whistle Blowing
• Management addressing to organization to provide confidence
• Ensuring confidentiality of Whistle Blower by Providing
anonymous Telephone facility for communication or e-mail ID.
• Providing Security of the whistle blower.
• Management positive participation.
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25. Risks involved in the process
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May contribute to an
environment of mistrust
and uncertainty
Administrative time and
cost may increase
May bind employers to
treat small misconduct
issues more extensively
than is warranted

26. BENEFITS
May avoid public
disclosure by
allowing the
misconduct to be
solved internally
Can help insure
that reports are
investigated,
action taken, and
retaliation
prevented
Can identify
problems early
before they
escalate
Consistent with
an ethical
corporate climate

27. Some of the Biggest Corporate Collapse
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International
The fall of Arthur
Anderson –
Chicago
The Enron Corp –
Houston
Bank of Credit and
Commerce
International
National
The Satyam Defeat
The Subhiksha fall
The fate of millions to stakeholders
could have been protected if the
Whistle Blower was effective…

28. Whistle Blower…
The Actual Reward!!!
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29. The Satyendra Dubey Fate …
(2003)
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.
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30. History Repeated in the Manjunath Shanmugham
Incident (2005)
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.
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31. Other Setbacks to Whistle Blowing
The Jayaraman,
Incident…
(2008)
The mark sheet
forgery racket in
Pondicherry
University was found
murdered on May 20,
2008.
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The Bombay Stock
Exchange Scandal…
(2001)

32. Whistle Blowing -
The missing links
• Ineffective mechanism
• Failure to Impart Proper confidence
• Lack of Independent ombudsmen
• Non maintainability of whistle blower confidentiality
• Ineffective Security of whistle blower
• Improper Inquiry and investigation procedure
• Inappropriate punishment
• The Fear of Isolation
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33. Recommendations
• Whistleblower policy be made mandatory, with clear cut guidelines
for prosecuting intimidation of or retaliation against the complainant
• Inclusion of other stakeholders, such as vendors, shareholders and
customers, in the list of eligible complainants
• Strict assurance on maintenance of confidentiality
• Fast and Time bound disposal of cases
• Imposition of fines/ penalties for frivolous or mischievous complaints
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34. Thank You !!!
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