Sound legal basis key to facilitate whistle blowing

By Samar Srivastava

Recent news on Ranbaxy has prominently featured the role of Dinesh Thakur, a whistleblower. Thakur, who worked at Ranbaxy for four months was responsible for blowing the lid on the company’s falsification of certification documents submitted to drug controllers around the world. The fraud took place over years and top management was complicit.

While Thakur, received $48.6 million (Rs 262.4 crore) for his efforts the case leads to an important question: Why are there such few instances of whistle blowing in India? Is there something in our legal system that makes it harder for whistleblowers? Does the law not accord them the protection they deserve? Or is it just that they don’t have faith that their claims will be heard?

The answer lies in all three. First, the Companies Act does not contain a provision that makes it mandatory for companies to have whistle blowing policies in India. According to a lawyer who has worked in this area, all his clients have been multinational companies. Indian companies don’t show any desire to have a whistle blowing policy in place. “I suspect they don’t know how to handle such cases,” he says.

With multinationals, he says, there are clear rules on how the case has to be handled, how many levels the matter has to be escalated and what is to be done with the employee for the duration of the investigation. Plus, he adds, over the years they have worked to show that each case will be looked into fairly. Even then our research shows that it is most often former employees who resort to ratting on their employers. Few have the faith to complain while they are still working. Indian companies are far behind on this one.

In India, there have been innumerable instances of whistle blowers being killed. So it’s hardly a surprise that such few people come forward with instances of wrong doing. According to a story on salon.com, some 150 whistle blowers have been harassed or jailed while 20 have been killed. What’s important to note is that whistle blowers exposing government corruption face a particularly uphill task in India. Their cases often wind slowly up the judicial chain and are only resolved decades later.

According to Rabindra Jhunjhunwala, a partner at Khaitan and Co, the lack of whistle blowing has to do with the evolution of corporate law in the country. He says that eight years ago there was a move by the Ministry of Corporate Affairs to insert a provision in the Companies Act to enable whistle blowing. It never saw the light of day and has not been heard of since.

So what can companies do? Lawyers and ombudsman point to three measures. First, legislate so that whistle blowing has a sound legal basis. Two, companies must ensure that those who come forward are not persecuted and the matters are investigated promptly. Similarly, the government must also set up mechanisms to ensure speedy disposal of claims. (If they could set up information officers under the Right to Information Act they can do the same in this case as well.) And, lastly companies must ensure that whistle blowers aren’t persecuted.

Samar Srivastava writes for Forbes India