{"id":195613,"date":"2022-07-14T17:26:44","date_gmt":"2022-07-14T11:56:44","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=195613"},"modified":"2022-07-14T17:28:34","modified_gmt":"2022-07-14T11:58:34","slug":"india-incs-missing-whistle-blowers","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/india-incs-missing-whistle-blowers\/","title":{"rendered":"India Inc’s missing whistle-blowers"},"content":{"rendered":"\n

Source<\/strong>: The post is based on an article \u201cIndia Inc\u2019s missing whistle-blowers\u201d published in the Business Standard on 14th<\/sup> Jul 2022.<\/p>\n

Syllabus<\/strong>: GS2 – Governance<\/p>\n

Relevance<\/strong>: Whistle Blower Protection<\/p>\n

News:<\/strong> In the recent past, there have been insider revelations in western corporations like Uber, Facebook, Apple, Amazon, Netflix, Google. It raises uncomfortable questions about what is happening in India Inc.<\/p>\n

What are the issues in the Indian Inc.?<\/strong><\/h5>\n

There have been a number of corporate scandals in India in the recent past, such as Global Trust, Satyam, IL&FS\u00a0or YES Bank.<\/p>\n

There is a lack of whistle-blowers<\/strong> in Indian corporations<\/strong>. Most of the exposure of Indian corporate scandals have been the result of implosions<\/strong> rather than employee revelations<\/strong>.<\/p>\n

Few cases in which India Inc. faced whistle-blower incidents were related to Infosys and Ranbaxy. However, these revelations were either managed or were executed by the United States citizen.<\/p>\n

Legal Regime for Whistle-Blowers in Indian Inc.<\/strong><\/h5>\n

Internal Mechanism<\/strong><\/p>\n

As per the Companies Act<\/strong>, every listed company that has borrowed more than Rs 50 crore from banks or public financial institutions has to set up an internal<\/strong> vigil mechanism <\/strong>like Auditing Committee. Employees\/ directors can report \u201cgenuine\u201d concerns and grievances to such committees.<\/p>\n

Further, it also mandates that \u201cadequate\u201d safeguards<\/strong> be provided against victimising the whistle-blower. For example, keeping the identity of the concerned employee confidential.<\/p>\n

External Mechanism<\/strong><\/h5>\n

In 2019, the Securities and Exchange Board of India (SEBI) <\/strong>allowed employees to report insider trading violations<\/strong> directly to it instead of via the company\u2019s internal mechanism.<\/strong> In 2021, it raised the reward payable to whistle-blowers generously from Rs 1 crore to Rs 10 crore.<\/p>\n

What are the reasons for lack of whistleblower activities in India?<\/strong><\/p>\n

Both the Companies Ac<\/strong>t and the SEBI<\/strong> rules cover listed companies<\/strong>. Unlisted companies<\/strong> such as Unicorns <\/strong>and the small and medium enterprise sector\u00a0 remain outside the purview of any whistle-blower rules.<\/p>\n

The whistle-blowers in India<\/strong> do not enjoy similar protections<\/strong> for insider revelations as they do in the US. Therefore, a number of whistle-blowers in the public sector in India have lost their lives for doing insider revelations, for example, Satyendra Dubey,<\/strong> and Shanmugam Manjunath<\/strong><\/p>\n

Parliament have passed a Whistle Blowers Protection Act 2014<\/strong>. But it is limited to public servants, not private companies.<\/p>\n

The internal mechanism<\/strong> mandated under the Company Act remains subordinate to the management of the company. A whistle-blower will remain completely prey to the management\u2019s whims.<\/p>\n

Way Forward<\/strong><\/h5>\n

The government should enact a law<\/strong> to provide universal protection<\/strong> to the whistle-blowers<\/strong> in India.<\/p>\n

The Whistle-blower protection<\/strong> can go a long way to enable good corporate governance<\/strong> and provide check and balance<\/strong> and an early warning system<\/strong> for potential crises, such as the one at IL&FS in India<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article \u201cIndia Inc\u2019s missing whistle-blowers\u201d published in the Business Standard on 14th Jul 2022. Syllabus: GS2 – Governance Relevance: Whistle Blower Protection News: In the recent past, there have been insider revelations in western corporations like Uber, Facebook, Apple, Amazon, Netflix, Google. It raises uncomfortable questions about what… Continue reading India Inc’s missing whistle-blowers<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,212],"class_list":["post-195613","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-2","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704868898},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/195613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=195613"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/195613\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=195613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=195613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=195613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}