Why India & India Inc need whistle-blowers

India cannot globalise, leave alone become a global economic power, while putting up with abysmal standards of performance in large swathes of the domestic economy. This is the clear lesson from the Ranbaxy fraud settlement and serious breach of an Indian company’s security systems as part of a multi-nation $45-million bank heist. India has a frightening quantity of spurious drugs being bought and sold in the less reputed segments of its fragmented pharma industry. These kill people or increase morbidity. But the systems failure — of intra-firm controls, general administration, factory inspection and law enforcement — that allows such a large proportion of domestic drugs to be fake also kills jobs and reputations. Ranbaxy hopes to put this half-a-billion-dollar pain behind it. But the reputational damage to India Inc lingers on, particularly in these protectionist times.

The hacking of the security system at a card processing company in Pune led, to the best of our knowledge, to uncapping the stored value of a limited number of prepaid cards issued by amiddle-eastern bank. The electronic data of these cards were reproduced on a number of ATM cards that were distributed across the world to rapidly withdraw $5 million. A much larger amount was taken out of bank ATMs in a similar fashion by hacking into a card-processing company in New York later. The Indian company was not a lone victim, in other words. But this is little consolation. Both the penalised malpractice at Ranbaxy and the hacking of the card processing company create collateral damage for India Inc.

There are no easy solutions. An effective law to encourage and protect whistle-blowers, swift justice delivery and efficient administration are generic requirements to improve standards. These cannot happen in a political culture where patronage of any crime can be bought with impunity. Cleaning up politics is the first step towards successful globalisation. That alone will allow the administration to turn efficient, clean and system-oriented. Political reform cannot be put off, in short.