Whistleblower complaints at Indian companies up 8% to 1,074 in FY24

Whistle-blower complaints at Indian companies increased 8 per cent year-on-year to 1,074 in 2023-24 (FY24), according to data collated for BSE-50 companies.

Of the BSE-50 companies, two-year data of whistle-blower complaints were available for 14 companies.

Experts and industry executives view the rise as a sign of a stronger reporting mechanism. “The global median of whistle-blower complaints is 1.5 per cent of the total employees. India’s reporting is far away from this average,” said Jagdeep Singh, partner, EY India Forensic and Integrity Services.

Combined, these 14 companies employed nearly 1.1 million in FY24. The median of the whistle-blower complaints as the share of employees for these companies was 0.08 per cent, significantly lower than the global data.

Singh, however, expects complaints to continue rising as “companies build more robust mechanisms to report complaints and better governance in responding to them, including investigation and initiation of disciplinary action”. He said the increase in complaints was a good indication of employees’ confidence in the reporting mechanism and maturity of governance processes.

Among the companies, Tata Steel reported the highest number of complaints at 364, up from 303 in FY23. An email query sent to the company remained unanswered.

Three of the 14 companies reported zero whistle-blower complaints in the past two financial years.

Steel maker JSW Steel and engineering conglomerate Larsen & Toubro (L&T) saw more than double the number of complaints compared to the previous year. While JSW Steel’s complaints rose to 16 from 6, L&T’s grew to 52 from 18.

While an email query sent to JSW Steel remained unanswered, L&T’s spokesperson attributed the rise to greater awareness and confidence in the company’s grievance-handling mechanisms.

“L&T has a structured process for managing all the whistle-blowing complaints and has zero tolerance towards breach of code of conduct. Major reasons for the increase in the number of complaints are increased awareness amongst all stakeholders and improved confidence in stakeholders on the mechanism established by the company to address the grievances,” the spokesperson replied to Business Standard’s queries.

Based on the findings and outcome of the review, the spokesperson said, “specific actions, such as issuing warning letters, counselling, ending the employment contract, recovery process, etc. are taken against erring employees.”

Regulatory disclosures on whistle-blower complaints are typically stricter for large entities.

Singh from EY, however, said there was a change at smaller size entities as well. “I see a similar trend playing out for smaller companies or promoter driven companies in India, who are putting such mechanisms in place even if not required by them in a regulatory context.”