Assignment 1 Corporate Governance Gulisha Vijayvergia 2018PBM5270

Assignment 1
Corporate Governance
Gulisha Vijayvergia
2018PBM5270
Ans. 1) Whistle-blowing- means when an employee makes fraud, corruption, and wrongdoing in an
organization made known to the public. It is the act of telling the authorities or the public that the
organization one is working for is doing something immoral or illegal. It generally involves a conflict
between two competing duties, to protect interest of public and being loyal and serve the purpose of
organization in whatever it is doing. The person who takes initiative to disclose such information is
known as whistle blower.
Reason for protection of whistle blower-

 To protect interest of general public-Whistle blower works as a main source of information to
the public, who courageously disclose the ill intentions of people and organization authorities,
which makes investors and general public to act and invest carefully.
 To protect interest of whistle blower- history has been evidence that whistle blower had to
face a hard time while performing their duties. Just the case of Satyendra Dubey, where whistle
blowing cost him his life. Whistle blowers generally have to face harsh treatment such as
workplace harassment, work isolation, threats to death and so on. These are the reason why
they should be protected.
 To encourage good governance behavior- people sometimes do not raise voice against wrong
doing due to power exerted by people who did wrong and due to above mentioned reason.
Assuring due protection to whistle blower helps to encourage such people to come forward
without any fear and raise their voice against void.
 To protect economy as whole- protecting whistle blowers may awake the public and other
govt. authority in due time so that default occurring by the ill intentions of organizational
executives can be minimized and handled in due time.
How to protect whistle blowers-

Company specific-
 Leadership commitment- Chief executives and boards of directors must take the lead in
implementing a whistleblower-protection and anti-retaliation system that includes
training in how to identify retaliation, carry out independent and thorough
investigations, and, as necessary, undertake corrective actions. Eg. Making whistle
blowing policy and code of conduct.
 A true “speak up” organizational culture that is the basis of a prevention-oriented
program that encourages raising and fair resolution of issues.
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 Independent, protected resolution systems for allegations of retaliation.
 Specific training to teach workers their rights and about available internal and external
protection programs, and for managers to learn these along with related skills, behaviors and
obligations to act.
 Monitoring and measurements that don’t contribute to suppression of reporting and
which measure the effort and effectiveness of inputs to a speak-up and non-retaliation
culture.
 Independent auditing to determine if the program is actually working.
Legal perspective-
 Protection by way of law- in India the whistle blowing protection act (amendment),
2015. Provides mechanism to investigate alleged corruption and protect the rights of
whistle blower.
Ans. -2) Brief summary of case-

Satyendra Dubey was an Indian Engineering Service Officer. he was the project director in the
National Highways Authority of India NHAI. In 2002 he joined Indian Engineering Services and
went on deputation to the National Highway Authority of India NHAI. He became a Project
Director and responsible manger of the highway part of “Aurangabad- Barachatti” section of
NH 2 (The Grand Trunk Road). This highway was a part of Golden Quadrilateral Corridor
Project. When Satyendra Dubey joined in he saw many irregularities in the financial department
and these were some serious irregularities. He got the contractor of the project to suspend his
three engineers. He exposed this scam. He even made the contractor to rebuild the Six
Kilometer road. This scam getting reviled and roads getting rebuild were proving to be huge
loss for the Road Contract Mafia. In his more investigation he found out the Companies are
bending the rules for their profit. After few weeks he was transferred to Gaya but he opposed.
Even at Gaya he found many irregularities and large scale scam and use of worst quality
material. He understood that the scam is not limited to one place and there are many big
people including politicians are involved. As he dug deep he found that this whole system is
behind the scam. He then thought to write a letter to Prime Minster Atal Bihari
Vajpayee detailing the financial and contractual irregularities in the project. While the letter
was not signed, he attached a separate bio-data so that the matter would be taken more
seriously. Despite a direct request that his identity be kept secret and despite the letter’s
sensitive content, accusing some of Dubey’s superiors, the letter along with bio-data was
forwarded immediately to the Ministry of Road Transport and Highways. Dubey also sent the
same letter to the Chairman of the NHAI. Soon Dubey received a reprimand: the vigilance office
of NHAI officially cautioned Dubey for the impropriety of writing a letter directly to the Prime
minister. After all this Satyendra Dubey was under huge threat and constantly afraid of his
death. After exposing the scam he became the number one target for the local road mafia and
big politicians. On 27Nov. 2003, He was returning from a wedding in Varanasi, he called his
driver to be at station at 3am in morning. He reached Gaya Railway Station at 3am but his
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driver was not there. Dubey took a rickshaw. After few hours he was found dead by the side of
the road. He had been shot. After this many blame games have been played around by the
government of Bihar and NHAI but still no conclusion was made. This case has led to creation
of whistle blower protection act.
Alternate ways-
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Ans. 3) Tangible benefit to project and nation as whole-
In the wake of Dubey’s murder, the CBI registered a case against a project director of the NHAI
about whom Satyendra Dubey had leveled allegations of bungling.
Nearly two years after Dubey’s murder in September 2005, his organization the NHAI admitted
to the truth substance in his charges. Apart from constituting several in-house enquiries, the
NHAI claimed that it had carried out radical reforms in the selection and contract procedures
for highway projects. The reforms included-
Peer review of detailed project reports.
Appoint independent experts for consultation and review of process.
Modification of system for sanctioning mobilization & equipment advances to contractors.
Sanction of fund linked to project progress.
 Of the three Golden Quadrilateral contractors against whom Dubey made specific
allegations, the NHAI cancelled contract of one (China Coal Construction) for ‘tardy
progress’ and listed the progress of the other two as 42 per cent (Centrodorstroy) and
61 per cent (Progressive Construction), respectively.
 The NHAI then insisted on end-use certificates, issued judiciously, for consultants.
 For nation this case was the landmark for creating a legal mechanism to protect such a
trustworthy and patriotic whistle-blower like Dubey and to paves a way for whistle-
blowing process & to correct the mistake and carelessness which have been made by
higher authorities such as PMO and NHAI in protection of Dubey.
 Whistle Blower Protection Act have been paased by the law in awake of this case. The
act has been amended by time to time to enhance the effectiveness of the mechanism
created.
 The case also brought the awareness on the part of employees and the executive
authorities of organizations about the processes to be adopted for whistle blowing.
Organizations now-a-days make separate policy and code of conduct regarding whistle
blowing. Some companies have also formed whistle blowing committee in their internal
management system.
Ans. 4)
Suggestion to get rid of corruption and bribery- though it should be internally
generated values and ethics not to indulge in such malpractices but here are some suggestions-
 Establishing a fair & unambiguous code of conduct to be followed by the organization
and forming a separate authority to regulate the actions of organizations and impose
sever penal actions for non conformity.
 Making more stringent rules and regulation both on micro and macro level regarding
corporate governance discloser.
 Enhancing the purview of existing laws and acts to protect the innocent and punish the
criminal.
 Swift complaint resolution system should be adopted and reduce information
asymmetry with the help of technologies available.
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 Increasing direct contact between government & the governed. Reducing layers in the
system can increase transparency in the system and swift action can be taken thus
reducing red-tapism.
 Bringing political funding under RTI, Independent CBI, RBI and other regulatory
institutions, Increase police to people ratio, Increase judges to people ratio.
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Assignment 1

Reason for protection of whistle blower-

How to protect whistle blowers-

Ans. -2) Brief summary of case-

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