Mohandas Pai on dealing with whistleblower complaints

When a whistleblower goes to the market, whether right or wrong, the news gets reflected in the price.

ETMarkets.com
Society has accepted that whistleblowers are a very important component of the checks and balances on enterprises in the world, says TV Mohandas Pai, Former Director, Infosys. Excerpts from an interview with Uttkarsh Chaturvedi of ETNOW.

How should whistle-blower complaints be handled?
See the norms are very well laid down. What the norms say is there could be whistle-blowing complaint from within the enterprise or from outside the enterprise. If it comes, it has to go to an independent board, maybe an independent person outside the company, maybe to the chairman of the audit committee.

As soon as the complaint comes in, the board must sit down, evaluate and decide if an inquiry is required. An independent body must do the inquiry. There is a process and they are very well laid down norms. The whistleblower issues must be reported to the regulator. Now, they must decide what is material, what is not material, not anybody else. Only if it is material, they must report as otherwise the regulator will be swamped by thousands and thousands of whistle-blowers.


As it is, regulators are swamped by many people write to the regulator. There is a limit to how much time they can spend on each person. The key issue which has to be addressed is if the whistleblower goes to the media, especially social media and the whole thing blows up. How should companies react because the market will immediately react to certain whistleblower complaints as the market will evaluate and react and the market reaction could be adverse.

In case the market reacts, how should enterprise react is something the boards have to think through and come out with the response and the companies in my view have to address the basic issue that came out of the whistleblower complaint. One has to be very careful in the communication because damage will be done if they do not address the core issue.

The role of the whistleblower is being questioned. What is your view on that?
Whistleblowers can be anybody, they can be employees, they can be outsiders, they can be anybody. You cannot prevent whistleblowers. Society has accepted that whistleblowers are a very important component of the checks and balances on enterprises in the world.
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It has happened because today a company like Enron was doing wrong things and they were manipulating and the regulator did not know. All the media, everybody was going gung-ho over them. It was a whistleblower who brought it down. So, they respect whistleblowers.
In the process of impeachment of a President in the US, there are whistleblowers. Without whistleblowers, nobody would have known what happened. So society respects whistleblowers. The process is in place. Society has put in rules and regulations and so that is not the issue of the debate.

The process that you mentioned once a whistleblower complaint goes out, is it something that companies normally do? Is that a standard response?
That is a problem because today we are seeing that when a whistleblower goes to the market, whether right or wrong, the news gets reflected in the price. It has happened to many companies in the recent past.
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