A whistleblower policy is a vital aspect of an organization's internal control systems, ethics, and compliance framework. The idea of whistleblowing is not a new one and has been present for centuries. In fact, India's famous scholar Chanakya wrote about a similar concept in his classic treatise on polity, the Arthashastra, during the fourth century BCE. Although the term "whistleblowing" is a recent addition to the dictionary, the practice is not. Chanakya's approach was akin to a vigil mechanism.

According to Chanakya's Arthashastra, any informant (suchaka) who provided information about financial wrongdoing was entitled to a reward of one-sixth of the amount in question. However, if the informant happened to be a government servant (bhritaka), they were only entitled to one-twelfth of the total amount. The former's share was greater because exposing corruption while being outside the system was more challenging. In the case of bhritakas, striving for a corruption-free administration was considered more of a duty that was ideally expected of them.

Who are whistleblowers? 

Under the Whistleblower Protection Act of 2014, a whistleblower is referred to as a "complainant" and is defined as an individual who reports:

• the commission of an offense or an attempt to commit an offense by a public servant under the Prevention of Corruption Act 1988;
• willful misuse of power or discretion resulting in demonstrable loss to the government or demonstrable wrongful gain to the public servant or a third party;
• the commission of a criminal offense or an attempt to commit a criminal offense by a public servant.

While the Companies Act does not provide a definition of a "whistleblower," it is widely understood to be a person with prima facie knowledge of fraud, misconduct, unethical behavior, or other wrongdoing within an organization, who reports it in the best interests of the corporation and its stakeholders.

How can companies ensure protection and eliminate risks?

Implementing a whistleblower policy in your organization assures the entire workforce that those ready to blow the whistle on workplace malfeasance will be fully protected. Here are some industry best practices that you can incorporate into your policy:

• 1) Create an open communication channel: Explicitly communicate that your organization is committed to treating whistleblower allegations seriously. Emphasize that workers have the right to report any wrongdoing they observe or experience, remain anonymous, and not face reprisal for reporting misconduct. Explain how wrongdoing harms the entire business and how whistleblowing is vital in preventing issues.

• 2) Outline the reporting method: An effective whistleblower policy offers workers several ways to make a disclosure. Incorporate anonymous hotlines, emails, or tech-based whistleblowing tools in your policy. Ensure these reporting systems are well-known within the company. 

• 3) Define the parameters: Your whistleblower policy should specify the forms of misbehavior that employees are permitted to disclose. While some occurrences, like discrimination, harassment, theft, and fraud, may be obvious, others, such as personal encounters, may require a lengthy description and illustrations to assist whistleblowers in understanding them. 

• 4) Mention the scope of your policy: Properly assess the scope of your policy and who is covered under it. Include previous workers, contractors, partners, vendors, volunteers, consumers, or even members of the general public. Be aware that if someone is excluded from the policy, they could potentially cause damage by blowing the whistle on social media or in public.

• 5) Ensure proper staff training: Imparting knowledge and awareness through training materials can assist in educating and informing employees on various elements of whistleblowing. This will guarantee they are able to voice any concerns about any type of misbehavior that occurs inside the firm openly and safely.

• 6) Make your policy credible: Establish a detailed investigative mechanism to increase the credibility of your policy among individuals whom you wish to report the violations. You can boost your credibility by outlining your investigation process, including the interview and following action.

• 7) Focus on maintaining anonymity: Anonymity is a critical component of any whistleblower policy. It allows employees to report without fear of punishment and leads to the development of a long-term speak-up culture. Explain to your workers that their identities will be entirely safeguarded and that they will not suffer reprisal for doing the right thing.

• 8) Zero tolerance for retaliation: Employees should be encouraged and empowered to raise ethical problems as soon as possible without fear of retaliation, harassment, or discrimination. Ensure that your employees are aware that if they do encounter retaliation, they should report it since retaliation is a form of misconduct.

What does the future hold?

Despite being recognized as one of the most effective techniques for safeguarding corporate governance, whistleblowing has struggled to gain traction in India. Furthermore, there is no obligatory provision for private companies. As a result, only a few private enterprises have set up a vigil mechanism at their discretion, depriving private company employees of a whistleblower policy and increasing the likelihood of unjust treatment if they act as whistleblowers in the absence of a vigil system. This diminishes the sense of security within the company and creates unmanageable loopholes in the internal management system.

Enhancing the organization's whistleblower protection mechanism will help guarantee that its integrity is preserved, valued, and upheld. Companies must always strive to create a more robust policy framework to protect whistleblowers to maintain this balance.

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