Whistle blowingWhistle blowing

""Our lives begin to end the day we become Our lives begin to end the day we become silent about things that matter." silent about things that matter."

-Martin Luther King, Jr.-Martin Luther King, Jr.

OverviewOverview

What is Whistle blowing?What is Whistle blowing? Stages involvedStages involved History of whistle blowingHistory of whistle blowing Few instancesFew instances Laws in IndiaLaws in India Protection of whistleblowersProtection of whistleblowers Managing whistle blowingManaging whistle blowing Whistle blowing in U.S.AWhistle blowing in U.S.A

What is Whistleblowing?What is Whistleblowing?

Whistle blowing is…Whistle blowing is… 'Raising concerns about misconduct within an organization or 'Raising concerns about misconduct within an organization or

within an independent structure associated with it' within an independent structure associated with it'

(nolan committee on standards in public life)(nolan committee on standards in public life)

'Bringing an activity to a sharp conclusion as if by the blast of 'Bringing an activity to a sharp conclusion as if by the blast of a whistle' a whistle'

(oxford english dictionary)(oxford english dictionary)

'Giving information (usually to the authorities) about illegal 'Giving information (usually to the authorities) about illegal and underhand practices‘ and underhand practices‘

(Chambers Dictionary)(Chambers Dictionary)

Stages involved in the processStages involved in the process

There is a misdeed or illegal activity in the organizationThere is a misdeed or illegal activity in the organization A perception that either the management can prevent it or that A perception that either the management can prevent it or that

it has been initiated by management or certain employees.it has been initiated by management or certain employees. The presence of an individual or group of people who view The presence of an individual or group of people who view

that some action should be taken against the illegal activity.that some action should be taken against the illegal activity. Finally, there is a process by which the individuals or group Finally, there is a process by which the individuals or group

try to expose the problem to the authorities who can take try to expose the problem to the authorities who can take actionaction

ILLEGAL ACTIVITY

Concerned individuals or groups

Rumours

Stake holders

Whistle blowing

Organizational response

History of whistle blowingHistory of whistle blowing

Hughes microelectronics case in 1980s.Hughes microelectronics case in 1980s.

A series of environmental tests were specified by the A series of environmental tests were specified by the government contract. But pressure to ship chips out on time to government contract. But pressure to ship chips out on time to customers got in the way of complete testing. "Hot" chips, customers got in the way of complete testing. "Hot" chips, those needed right away for shipmentthose needed right away for shipment

This case is about what happened when employees of Hughes This case is about what happened when employees of Hughes Microelectronics noticed that these tests were being skipped. Microelectronics noticed that these tests were being skipped. The decisions they made to report this makes this one of the The decisions they made to report this makes this one of the classic cases in the history of classic cases in the history of whistle blowing..

WhistleblowersWhistleblowers Vijay Bahadur SinghVijay Bahadur Singh, a Superintendent of Customs at the , a Superintendent of Customs at the

Vigilance Directorate of Customs & Central Excise in Vigilance Directorate of Customs & Central Excise in Mumbai, sent an email dated 28th February 2003 to the Mumbai, sent an email dated 28th February 2003 to the APJ Abdul Kalam President of India when he observed that when he observed that manipulation was being committed by senior officers of the manipulation was being committed by senior officers of the Finance Ministry and Senior Counsel.Finance Ministry and Senior Counsel.

Satyendra Dubey, who accused employer , who accused employer NHAI of corruption of corruption in highway construction projects in in highway construction projects in India, in letter to Prime , in letter to Prime Minister Minister Atal Behari Vajpayee. Assassinated on . Assassinated on November 27, 2003

S. Manjunath, a formerly manager at , a formerly manager at Indian Oil Corporation Ltd (IOCL), and crusader against adulteration of petrol. He Ltd (IOCL), and crusader against adulteration of petrol. He was shot dead on November 19, 2005, allegedly by a petrol was shot dead on November 19, 2005, allegedly by a petrol pump owner from pump owner from Uttar Pradesh..

Amit Jethwa Amit Jethwa was an environmentalist and social worker and was an environmentalist and social worker and an RTI activist was murdered on 20an RTI activist was murdered on 20thth July 2010, for filing a July 2010, for filing a PIL against illegal mining lobby.PIL against illegal mining lobby.

Laws in IndiaLaws in India

India does not have a whistleblowers protection law yet.India does not have a whistleblowers protection law yet.

However since the Public Interest Disclosure and Protection of However since the Public Interest Disclosure and Protection of Informers Bill, 2002 is still being examined, the centre agreed Informers Bill, 2002 is still being examined, the centre agreed to making the Central Vigilance Commission, the sole to making the Central Vigilance Commission, the sole authority in protecting future whistleblowers.authority in protecting future whistleblowers.

Like whistle blowing law, a properly implemented witness Like whistle blowing law, a properly implemented witness protection program would also help get at powerful evil doers.protection program would also help get at powerful evil doers.

continuedcontinued

India neither has any witness protection programmed like the India neither has any witness protection programmed like the one in the USA nor does our criminal penal code carry any one in the USA nor does our criminal penal code carry any provision concerning this.provision concerning this.

A short while ago  a preliminary analysis of the A short while ago  a preliminary analysis of the Public Interest Public Interest Disclosure and Protection of Persons Making Disclosure Bill, Disclosure and Protection of Persons Making Disclosure Bill, 20102010 (the Whistleblower Bill) has been tabled in the Lok (the Whistleblower Bill) has been tabled in the Lok Sabha.Sabha.

Whistle-blower policy in IndiaWhistle-blower policy in India

While the government still has to bring out a comprehensive While the government still has to bring out a comprehensive whistle-blower policy, the Securities and Exchange Board of whistle-blower policy, the Securities and Exchange Board of India (Sebi), the market regulator, included guidelines for India (Sebi), the market regulator, included guidelines for companies in an amendment to Clause 49 of the listing companies in an amendment to Clause 49 of the listing agreement in August 2003. Under the guidelinesagreement in August 2003. Under the guidelines

• • An employee wanting to report a fraud or malpractice in his An employee wanting to report a fraud or malpractice in his organization has direct access to his company’s audit organization has direct access to his company’s audit committee and can approach it without seeking the consent of committee and can approach it without seeking the consent of his superiors his superiors

The company will send a circular or other correspondence to The company will send a circular or other correspondence to all its employees informing them that they enjoy this right; it all its employees informing them that they enjoy this right; it will also protect them from harassment such as termination of will also protect them from harassment such as termination of services or otherwise discriminate against themservices or otherwise discriminate against them

• • The company will confirm that it has adhered to the above The company will confirm that it has adhered to the above

practice in its annual report, in the Board report on Corporate practice in its annual report, in the Board report on Corporate Governance Governance

Protection of whistle blowersProtection of whistle blowers

From the management point of view the important aspect From the management point of view the important aspect would be keeping the issue from getting out of control, would be keeping the issue from getting out of control, avoiding criticism from public and preventing image loss.avoiding criticism from public and preventing image loss.

HR is considered a neutral department in organizations and HR is considered a neutral department in organizations and

can play a critical role in hearing the voice of employeescan play a critical role in hearing the voice of employees

Assigning accountability officers and providing special Assigning accountability officers and providing special

telephone numbers and e-mail accounts encourage employees telephone numbers and e-mail accounts encourage employees to bring out issues and will help in maintaining anonymity. to bring out issues and will help in maintaining anonymity.

Ms jayashree’s attempt to save her husband M.N Ms jayashree’s attempt to save her husband M.N Vijayakumar, a bureaucrat in the southern state of Karnataka, Vijayakumar, a bureaucrat in the southern state of Karnataka, is trying hard to protect whistleblowers like her husband is is trying hard to protect whistleblowers like her husband is path breaking.path breaking.

Managing whistleblowingManaging whistleblowing

Legal History of U.SLegal History of U.S The first U.S. law adopted specifically to protect whistleblowers The first U.S. law adopted specifically to protect whistleblowers

was the was the Lloyd-La Follette Act of 1912. It guaranteed the right of of 1912. It guaranteed the right of federal employees to furnish information to the United States federal employees to furnish information to the United States Congress. Congress.

The first U.S. environmental law to include an employee protection The first U.S. environmental law to include an employee protection was the was the Water Pollution Control Act of 1972, also called the of 1972, also called the Clean Water Act. Similar protections were included in subsequent . Similar protections were included in subsequent federal environmental laws including the federal environmental laws including the Safe Drinking Water Act (1974), (1974), Resource Conservation and Recovery Act (also called the (also called the Solid Waste Disposal Act) (1976), Toxic Substances Control Act Solid Waste Disposal Act) (1976), Toxic Substances Control Act (1976), Energy Reorganization Act of 1974 (through 1978 (1976), Energy Reorganization Act of 1974 (through 1978 amendment to protect nuclear whistleblowers), Comprehensive amendment to protect nuclear whistleblowers), Comprehensive Environmental Response, Compensation, and Liability Act Environmental Response, Compensation, and Liability Act (CERCLA, or the Superfund Law) (1980), and the Clean Air Act (CERCLA, or the Superfund Law) (1980), and the Clean Air Act (1990). (1990).

Similar employee protections enforced through OSHA are Similar employee protections enforced through OSHA are included in the Surface Transportation Assistance Act (1982) included in the Surface Transportation Assistance Act (1982) to protect truck drivers, the Pipeline Safety Improvement Act to protect truck drivers, the Pipeline Safety Improvement Act (PSIA) of 2002, the Wendell H. Ford Aviation Investment and (PSIA) of 2002, the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century ("AIR 21"), and the Reform Act for the 21st Century ("AIR 21"), and the Sarbanes-Oxley ActSarbanes-Oxley Act, enacted on July 30, 2002 (for corporate , enacted on July 30, 2002 (for corporate fraud whistleblowers). fraud whistleblowers).

2002: Year of the Whistleblower 2002: Year of the Whistleblower in U.S.Ain U.S.A

Cynthia Cooper Cynthia Cooper

WorldComWorldCom

Coleen RowleyColeen Rowley

FBIFBI

Sherron WatkinsSherron Watkins

EnronEnron

ISSUESISSUES

PROTECTION OF WHISTLE BLOWERSPROTECTION OF WHISTLE BLOWERS ROLE OF WHISTLE BLOWER IN A ROLE OF WHISTLE BLOWER IN A

CORPORATE SCAMCORPORATE SCAM WHISTLE BLOWING POLICY AND THE WHISTLE BLOWING POLICY AND THE

POSITION IN INDIAPOSITION IN INDIA

PROTECTION OF WHISTLE PROTECTION OF WHISTLE BLOWERSBLOWERS

Why protection is necessary?Why protection is necessary?

"If you must sin, sin against God, not against the "If you must sin, sin against God, not against the bureaucracy. God may forgive you, but the bureaucracy never bureaucracy. God may forgive you, but the bureaucracy never will!" will!"

— — U.S. Admiral Hyman Rickover U.S. Admiral Hyman Rickover The high cost of `going public’The high cost of `going public’

fired, demoted or punishedfired, demoted or punished

PROTECTION INITIATIVESPROTECTION INITIATIVES The sarbanes-oxley act of 2002(US)The sarbanes-oxley act of 2002(US)

Public interest disclosure act of 1998 (u.K.)Public interest disclosure act of 1998 (u.K.)

Protected disclosures act of 2000(south africa )Protected disclosures act of 2000(south africa )

A number of countries such as australia, canada, south A number of countries such as australia, canada, south korea, argentina, russia, slovakia, mexico and nigeria korea, argentina, russia, slovakia, mexico and nigeria have enacted or are in the process of enacting have enacted or are in the process of enacting whistleblowers protection legislation (but only to whistleblowers protection legislation (but only to government employees).government employees).

PROTECTING WHISTLEBLOWERS IN PROTECTING WHISTLEBLOWERS IN INDIAINDIA

There is NO act for protection of whistle blowers in India There is NO act for protection of whistle blowers in India

After a long wait, a legislation aimed at protecting After a long wait, a legislation aimed at protecting whistleblowers will be taken up by the cabinet on Thursday, whistleblowers will be taken up by the cabinet on Thursday, 22ndnd dec 2010. dec 2010.

Once the Cabinet approves the draft, government intends to Once the Cabinet approves the draft, government intends to introduce it in the current session of Parliament.introduce it in the current session of Parliament.

The bill has provisions to prevent victimization or disciplinary The bill has provisions to prevent victimization or disciplinary action against those who expose corruption in government.action against those who expose corruption in government.

The legislation makes central vigilance commission (CVC) the The legislation makes central vigilance commission (CVC) the nodal authoritynodal authority

CVC will have powers to ensure all steps are taken to protect CVC will have powers to ensure all steps are taken to protect the whistleblower & to punishment.the whistleblower & to punishment.

Role of Whistle Blower in a Role of Whistle Blower in a Corporate ScamCorporate Scam

To make the wrong doings of the scamsters public.To make the wrong doings of the scamsters public.

To check the irregularities within any corporate body.To check the irregularities within any corporate body.

No personal vendettaNo personal vendetta

Good faithGood faith

Whistleblower Protection Act of Whistleblower Protection Act of 20072007

The U.S. Supreme Court dealt a major blow to government whistleblowers The U.S. Supreme Court dealt a major blow to government whistleblowers when, in the case of Garcetti v. Ceballos, it ruled that government when, in the case of Garcetti v. Ceballos, it ruled that government employees did not have protection from retaliation by their employers employees did not have protection from retaliation by their employers under the First Amendment of the Constitution.under the First Amendment of the Constitution.

The free speech protections of the First Amendment have long been used The free speech protections of the First Amendment have long been used to shield whistleblowers from retaliation by whistleblower attorneys. In to shield whistleblowers from retaliation by whistleblower attorneys. In response to the Supreme Court decision, the House of Representatives response to the Supreme Court decision, the House of Representatives passed H.R. 985, the Whistleblower Protection Act of 2007. President passed H.R. 985, the Whistleblower Protection Act of 2007. President George W. Bush, citing national security concerns, promised to veto the George W. Bush, citing national security concerns, promised to veto the bill should it be enacted into law by Congress. The Senate's version of the bill should it be enacted into law by Congress. The Senate's version of the Whistleblower Protection Act (S. 274), which has significant bipartisan Whistleblower Protection Act (S. 274), which has significant bipartisan support, was approved by the Senate Committee on Homeland Security support, was approved by the Senate Committee on Homeland Security and Governmental Affairs on June 13, 2007. However, it has yet to reach a and Governmental Affairs on June 13, 2007. However, it has yet to reach a vote by Senate as a hold has been placed on the bill by Senator Tom vote by Senate as a hold has been placed on the bill by Senator Tom Coburn (R-OK). According to the National Whistleblower Center, Coburn (R-OK). According to the National Whistleblower Center, Coburn's hold on S. 274 has been done to further President Bush's agenda.Coburn's hold on S. 274 has been done to further President Bush's agenda.

To make the wrong doings of To make the wrong doings of the scamsters public.the scamsters public.

What makes some employees blow the whistle against wrong What makes some employees blow the whistle against wrong practices and corruption in the organization.practices and corruption in the organization.

How it impacts the organization and the whistle blower, and How it impacts the organization and the whistle blower, and

what organizations can do to create an environment which what organizations can do to create an environment which helps employees to prevent organizationally and socially helps employees to prevent organizationally and socially undesirable practices. undesirable practices.

To check the irregularities To check the irregularities within any corporate body.within any corporate body.

To check illegal, immoral or illegitimate practices under the control To check illegal, immoral or illegitimate practices under the control of their employers, to persons or organizations that may be able to of their employers, to persons or organizations that may be able to affect action. affect action.

While the reporting of sensitive issues may be part of the While the reporting of sensitive issues may be part of the individual's role within the organization (e.g., internal auditors, individual's role within the organization (e.g., internal auditors, inspectors), when the individual finds it necessary to reveal such inspectors), when the individual finds it necessary to reveal such findings to organizational members outside the normal chain of findings to organizational members outside the normal chain of command, it is also considered whistle-blowing through internal command, it is also considered whistle-blowing through internal channels.channels.

Whistle blowing also encompasses situations where individuals go Whistle blowing also encompasses situations where individuals go out of the organizational hierarchy and make information available out of the organizational hierarchy and make information available to public or other external authorities to get a positive action. to public or other external authorities to get a positive action.

No personal vendettaNo personal vendetta

Not out of business rivalry or the Not out of business rivalry or the vengeance vengeance

Not between the people who are on Not between the people who are on inimical terms with each otherinimical terms with each other

Within the territorial limits of the lawWithin the territorial limits of the law

Inquiries made in Good FaithInquiries made in Good Faith

To expose the illegal conduct of the To expose the illegal conduct of the employees and the irregularitiesemployees and the irregularities

The sensitive information must be well The sensitive information must be well reasoned with understanding among the reasoned with understanding among the employeesemployees

The issue of conformity The issue of conformity

Satyam case and the Swarna Satyam case and the Swarna Telecom scamTelecom scam

  A software company, touted as a success story, A software company, touted as a success story, the 4th largest software company in India and one the 4th largest software company in India and one that services around 1/3rd of the Fortune 500 that services around 1/3rd of the Fortune 500 companies, has come as a shock for the general companies, has come as a shock for the general masses.masses.

The huge estimated surplus of more than $1.2 The huge estimated surplus of more than $1.2 billion to buy companies related to the promoter billion to buy companies related to the promoter (especially when the promoter held only 8% (especially when the promoter held only 8% shareholding in the company) was a huge blow to shareholding in the company) was a huge blow to all norms of corporate governance and met with all norms of corporate governance and met with huge resistance all over.huge resistance all over.

Contd….Contd….

Swarna telecom scam exposure includesSwarna telecom scam exposure includes the names  the names “Barkha Dutt” and “Vir Sanghvi” in connection with “Barkha Dutt” and “Vir Sanghvi” in connection with lobbying the Congress on behalf of DMK’s lobbying the Congress on behalf of DMK’s Kanimozhi for Ministerial berths. Kanimozhi for Ministerial berths. The references seem The references seem to follow a report from a website called Whispers in to follow a report from a website called Whispers in Corridors and based on what appear to be notes in an Corridors and based on what appear to be notes in an “Internal Report” summarizing telephone intercept “Internal Report” summarizing telephone intercept conversations.conversations.The Swarna Telecom acted as the frontrunner for the bid The Swarna Telecom acted as the frontrunner for the bid on behalf of the Reliance Telecom and the latter had a on behalf of the Reliance Telecom and the latter had a 10% stake in the former company.10% stake in the former company.

Goes against the business ethicsGoes against the business ethics

WHISTLE BLOWING POLICY WHISTLE BLOWING POLICY AND THE POSITION IN INDIAAND THE POSITION IN INDIA

AN INSIGHT INTO THE SANCTITY OF AN INSIGHT INTO THE SANCTITY OF THE PROCESSTHE PROCESS

THE RIDERTHE RIDER

IT SHOULD BE IMPLEMENTED IN IT SHOULD BE IMPLEMENTED IN SPIRIT, AND NOT JUST IN FORMSPIRIT, AND NOT JUST IN FORM

What is whistle blowing?What is whistle blowing?

A SNEAK-PEAK INTO THE MODUS-OPERANDI A SNEAK-PEAK INTO THE MODUS-OPERANDI La’ AFFAIRE’ COMPANIE’ La’ AFFAIRE’ COMPANIE’

Formulated to provide an opportunity to Formulated to provide an opportunity to employees or any outsider to access to employees or any outsider to access to the audit of the company.the audit of the company.

Someone blows the whistle when they tell Someone blows the whistle when they tell their employer, a regulator, customers, the their employer, a regulator, customers, the police or the media about a dangerous or police or the media about a dangerous or illegal activity that they are aware of illegal activity that they are aware of through their work.through their work.

APPLICABILITY OF THE APPLICABILITY OF THE POLICYPOLICY

THIS POLICY APPLIES TO ALL THE THIS POLICY APPLIES TO ALL THE EMPLOYEES AND MANAGERS OF EMPLOYEES AND MANAGERS OF COMPANY AND ITS CONCERNS IN INDIA.COMPANY AND ITS CONCERNS IN INDIA.

NO ADVERSE PERSONNEL ACTION MAY NO ADVERSE PERSONNEL ACTION MAY BE TAKEN AGAINST THE EMPLOYEE IN BE TAKEN AGAINST THE EMPLOYEE IN RELATION TO HIS “DISCLOSURE’’ IN RELATION TO HIS “DISCLOSURE’’ IN GOOD FAITH OF ANY UNETHICAL AND GOOD FAITH OF ANY UNETHICAL AND IMPROPER PRACTICE OR WRONGFUL IMPROPER PRACTICE OR WRONGFUL CONDUCT.CONDUCT.

PROCEDUREPROCEDURE

WHISTLE BLOWER COLLECTS THE DATAWHISTLE BLOWER COLLECTS THE DATA REPORT SENT TO “COMPLIANCE OFFICER.”REPORT SENT TO “COMPLIANCE OFFICER.” PROMPT ACTION BY THE “AUDIT PROMPT ACTION BY THE “AUDIT

COMMITTEE”COMMITTEE” INTERNAL POLICIES OF THE COMPANY INTERNAL POLICIES OF THE COMPANY FALSE ALLEGATION THREATFALSE ALLEGATION THREAT CORROBORATION OF EVIDENCECORROBORATION OF EVIDENCE NOTIFICATION – BY THE DEPARMENTAL NOTIFICATION – BY THE DEPARMENTAL

HEADSHEADS

CONCLUSIONCONCLUSION

““WHISTLE BLOWER POLICY IS THE WHISTLE BLOWER POLICY IS THE BEST WAY TO CHECK CORPORATE BEST WAY TO CHECK CORPORATE FRAUDS”- MARK DUCHVETFRAUDS”- MARK DUCHVET

POST SATYAM SCANDAL EXPERTS POST SATYAM SCANDAL EXPERTS SAY IT IS THE BEST WAY TO PREVENT SAY IT IS THE BEST WAY TO PREVENT CORPORATE FROM BLOWING AND TO CORPORATE FROM BLOWING AND TO STRENGTHEN THE CORPORATE STRENGTHEN THE CORPORATE GOVERNANCE FRAMEWORK FOR THE GOVERNANCE FRAMEWORK FOR THE LISTED COMPANIES.LISTED COMPANIES.

THANK YOUTHANK YOU