The laws enabling corporate whistle-blowing in India are quite loosely drafted
On the face of it, the market cap destruction of over ₹50,000 crore suffered by Infosys after it revealed whistle-blower complaints about unethical management conduct from a group of anonymous employees may seem a little excessive. But the string of governance scandals that have rocked India Inc in recent years have left such an indelible mark on the investor psyche, that investors are today inclined to shoot and then ask questions, when governance allegations surface about any firm. Given that this is not the first time that Infosys is dealing with whistle-blower complaints, it has a well-established process to deal with them. Its audit committee, shorn of its CEO and CFO (who figure in the complaint), is now investigating the matter. However, the same cannot be said for much of India Inc. Though whistle-blower complaints have been critical to blowing the lid off many a corporate scandal in India — from the conflict of interest allegations that claimed the career of ICICI Bank’s CEO to the dubious lending at PMC Bank — the legal system does little to nurture a culture of insiders calling out corporate fraud.
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