The term Whistleblower policy is derived from the term whistleblower which refers to a person who raises a concern about alleged wrongdoing occurring in an organization. The term whistleblower is derived from the practice of British police officers, who would blow their whistles when they noticed the commission of a crime. The whistle would alert other law enforcement officers and the general public of danger. A whistleblower is generally from the same organization. The alleged misconduct may be classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption. Whistleblowers may make their allegations internally (for example, to other people within the organization) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues). Whistleblowers are generally selfless individuals who place public interest and organizational accountability higher than personal interest. On the other hand some so-called Whistleblowers may be involved solely in pursuing personal glory and fame at the cost of others.
In the modern corporate scenario where the number of corporate scandals and frauds are on the rise, a necessity is felt to have a policy for the encouragement and protection to whistleblowers. While laws relating to whistleblowers are common in the USA and other western countries, India currently does not have a law to regulate and protect whistleblowers. Requirements to have whistleblower policies and providing protection to whistleblowers are, if at all existing, recommendatory in nature. Certain statutory regulations refer to whistleblower policies in a subtle manner
1. One of the non-mandatory requirements of the Listing Agreement is to have a whistleblower mechanism for employees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policy One of the functions of the Audit Committee as per Clause 49 of the Listing agreement is to review the functioning of the Whistle Blower mechanism, in case the same is existing.
2. In terms of the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by the Government in 2007, which are voluntary in nature, CPSEs may establish a mechanism for employees to report to the management concerns about unethical behaviour, actual or suspected fraud, or violation of the company’s General guidelines on conduct or ethics policy.
3. Recently the Central Vigilance Commission of India has launched online registration of complaints against wrongdoings affecting public interest in organizations.
Regards,
CA Rahul Joglekar
Partner
Gokhale & Sathe
Chartered Accountants
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