Article (April-2019)


Whistle blower should not become scapegoat

Mihir Gosalia

Designation : -  

Organization : -  Mumbai


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1-P Mohan Reddy seemed to be systematic & organised in his working style that obviously knows his work well & is deeply entrenched in it. He also appears to be a senior pro in his functional role as works director. The fact that he became alert of suspicious activities in hiring process once the attrition rate was pointed out by maintenance manager, seeing the enormous amount paid to a single placement agency vendor in last one year, dilution of T&C in agreements with vendor and also hiring of a vigilance agency for reporting of fraudulent activities states so. However, one could point out that Mr. Reddy should not have given complete authority to Shiva to handle all recruitments & policy and decision making in that regards. Some level of control or regular reporting system had to be put in place by Mr. Reddy for Shiva. This was one of the lapses in the processes that have led ultimately to these fraudulent practices. However, Mr. Reddy could also be forgiven on his part for this lapse as Shiva was recruited by reference of an independent board director.

Shiva Prakash appears to be a fraudulent employee whose sole objective is to make money using the company's resources for his personal gains. He is also observed to be involved in extra-marital affairs in spite of having a family. Ethical behaviour or following ethical practices is not in the DNA of Shiva. Shiva Prakash cannot be trusted. The fact that he was devoting maximum time to recruitment activities by co-ordinating with his relative who ran the placement agency in spite of him being at a managerial position and not allowing his juniors to do so states the fact. Also due to lack of degree of control in work reporting to superiors, he misused the complete freedom & authority given to him to change recruitment policies, recruitment agreements with the vendors for his personal gains. Needs of the company were never his prerogative.

Shiva Prakash's acts are also very short-term minded. For how long, this will continue, one doesn't know. It will be very difficult for Shiva Prakash to find another job after he is suspended from his current organisation once his fraudulent activities are found out, reported and acted upon.

2-Definitely, lots of review is required in the people processes of the organisation and also in other processes like finance, legal and vendor empanelment. First of all, Finance should have questioned as to why an enormous amount like 10 million is paid to a single placement agency Metaphor Executive. Finance should have questioned HR or at least brought it to notice of Reddy since he is Director. Finance should not just be processing payments casually. Finance should be proactive.

All agreements with vendors including HR related should have Finance/Legal's stamp of approval too on it. Because ultimately Finance is going to make payment & legal will come in the picture if there is some issue like the one as reported by the vigilance agency. So they should also be aware of it in the first place. The recruitment manager or for that matter HR should not be the sole approving authority. It's too much of a risk. There has to be a maker-checker system.

There also seems to be absence of an authorised signatory process to sign all legal documents/T&C with vendors. Usually companies appoint a senior person to sign all external agreements/documents on behalf of the management/directors. But here it seems that it didn't exist. Shiva made use of this process lapse to empanel his relative as an executive search firm. He only became the approving authority. Both maker and checker.

Also if Shiva had tendency of unethical & fraudulent behaviour, why wasn't his previous employment reference check & background verification done? If this was done properly or had it been in place, then perhaps the organisation would have known his past history and may be not hired Shiva in 1st place itself and all these issues that have happened as a result of it could have been avoided.

It is to be noted that the case study mentions that Shiva Prakash was hired with the reference of an independent director by the corporate office. So what is the company HR's hiring and selection policy if a candidate is referred by a director/management, will that candidate be given preference or should merit and need based selection be the sole criteria?
There also seems to be absence or lack of employment service rules that an employee should sign on the day of joining an organisation. The employment service rules should mention that the person in responsible function is strictly prohibited in entering into business contracts on behalf of the company with relatives. Basically, there should not be any conflict of interest which was seen here.

Lastly, there also seems to be lack of whistle blower policy in the organisation wherein one can report fraudulent activities happening without any fear or malpractice happening to the whistle-blowing person that was seen in the case of Sumit being reported for sexual harassment by Shiva on behalf of female employee's working in his dept. This means that employee's working under Shiva are involved with him in his activities or might be doing it because he is their boss and has told them to do so or for fear of being exposed and nailed. Also why Sumit had to visit residence of Reddy and report the unethical behaviour of Shiva? Ideally, the company environment and culture should be such that one can work freely and report any wrong doings in the office itself. Shiva would have come to know Sumit has visited residence of Reddy and would have thus become suspicious. Hence in order to protect himself and his co-workers who are working in tandem with him, he counter levelled charges of sexual harassment against Sumit to protect his wrong doings.

3-There are two situations that Reddy has to handle now. Firstly, He should expose the fraudulent activities of Shiva Prakash. Reddy has gone about systematically for that. He got information from maintenance dept. Based on that he verified the attrition report and reasons underlying it. Following that trail, he took details from Finance that further confirmed his doubts. He then had an independent agency conduct probe against Shiva Prakash who submitted their report.

Secondly, Reddy has to handle the counter allegation move by Shiva Prakash of sexual harassment against Sumit who had exposed his unethical behaviour in the first place itself. Reddy can't be seemed biased against Sumit also just because he has got proof against Shiva Prakash. For the sexual harassment complaint, it should be referred to the committee that the company would have setup or have in place as per POST Act, 2013. Reddy should also furnish the information that he has got about Shiva Prakash's other activities to that committee so that they are aware of the background and credentials of the complainant too in the first place and so as to take an informed decision.

Regarding the fraudulent activities information collected by Reddy about Shiva Prakash, depending on the policies of the company, Reddy should forward it to the Corporate Office who will look into it and arrive at a decision. Reddy has done his duty as works director. The corporate office has to act upon it.

Sumit should be supported by Reddy and the company in his hour of crisis since he has done the whistle-blowing act in the best interests of the company against his departmental colleagues. Reddy should ensure that Sumit doesn't become the scapegoat in these two incidences. The trail of information collected by Reddy against Shiva Prakash including the report by private agency should aid the case of both Reddy and Sumit.