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Corporate governance

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April 19, 2018

Discuss the role of whistle blowers in ensuring good corporate governance practices. Also discuss the problems faced by them in the Indian context. (200 words)

Refer – Business Standard

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IAS Parliament 6 years

KEY POINTS

·        Whistle blowing is when an employee, contractor or supplier goes outside the normal management channels to report suspected wrongdoing at work, i.e. speaking out in a confidential manner.

Role of Whistle blowing

·        It is an indispensable tool of ensuring good Corporate Governance Practices in Spirit.

·        Unlike the array of agencies that monitor corporate performance within expected paradigms, the whistle-blower is an unpredictable entity.

·        She can emerge from within as a conscientious employee or from outside the organisation as a stakeholder, a supplier, say, or an investor.

·        If this tool is used in true letter and spirit, it can be effective tool in curbing and reporting corporate frauds, which earlier used to go unreported.

·        It can be saviour for protecting the stakeholders and the larger public interest.

·        It can be success factor for survival of corporates, build their brand image, which will support in raising funds.

·        Whistle blowing has the capability to make corporate governance more accountable in India.

·        In recent times, the power of the whistle-blower has been acknowledged in the governance structures of the more enlightened corporations.

·        Most of the larger Indian IT firms and banks have incorporated whistle-blower policies in their codes of conduct for employees.

Problems faced by Whistle blowers

·        In India, Whistle blowers face

ü  Administrative harassment

ü  Unemployment

ü  Risk to personal safety

ü  Criminal charges

ü  Social stigma

·        In order to protect the whistle blowers from the above risks, a whistle-blower protection Act has been passed by Parliament but it is yet to be operationalised.

·        Its steady dilution also suggests that anyone who decides to be a conscientious objector is unlikely to enjoy any rewards.

·        Meanwhile, business in India remains overwhelmingly family-managed - a structure that scarcely encourages employees to speak truth to power.

·        It may be too much to expect voluntary transparency from India Inc when government-owned companies itself remain closed to public scrutiny.

 

 

 

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