| Pub. Date | : April, 2023 |
|---|---|
| Product Name | : The IUP Journal of Corporate Governance |
| Product Type | : Article |
| Product Code | : IJCG030423 |
| Author Name | : Ankit Kesharwani, Sudeepta Pradhan, Drishya Sunilkumar and Varsha Mamidi |
| Availability | : YES |
| Subject/Domain | : Management |
| Download Format | : PDF Format |
| No. of Pages | : 15 |
The Sarbanes-Oxley (SOX) Act of 2002 reinforced the need for accountability and due diligence in corporate disclosures. It focused on one of the less spoken issues, i.e., whistleblower protection. Similarly, in India, the Whistleblower Protection Act of 2014 made several recommendations for the protection of whistleblowers. The issue has been receiving increasing attention in India, given the rise in highprofile scandals exposed by whistleblowers. This study focuses on the relevant literature pertaining to whistleblowers, legal imperatives, disadvantages for whistleblowers, and their impact on corporate governance. The issue has been discussed using relevant cases of whistleblowing in the Indian context. The cases underscore the need for protecting whistleblowers for better corporate governance.
On July 30, 2002, US President George W Bush signed the Sarbanes-Oxley (SOX) Act, reinforcing the need for accountability and due diligence in corporate disclosures. The Act focused on establishment of public company accounting oversight board; conflict of interest (Auditors); audit committee; rotation of auditors; whistleblowers; accountability of CEOs and CFOs; loans to directors; and penalties thereafter. It intended to provide redress to an employee wronged under the Act or by wrongful acts of the employer. The employee is entitled to relief, including back pay, reinstatement, and compensatory damages. The rules and procedures pertinent to handling of a SOX complaint provide that a "complaint will be dismissed if it fails to make prima facie showing that protected behavior or conduct was a contributing factor in the unfavorable personnel action alleged in the complaint." To reform American business practices, Congress pushed corporate officers, directors, and other employees into service, enlisting them as "foot soldiers" in the fight against corporate fraud. However, despite Sarbanes-Oxley being flaunted as a new defense against corporate fraud, the courts failed to prevent corporate fraud. Potential whistleblowers failed to come forward, as whistleblower protections failed to accomplish their anticipated purpose.