USFDA-hit Indian pharma looks for whistleblowers

Dec 14 2013, 08:55 IST
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SummaryIndian laws do not make it binding for a company adopt whistleblower policy.

“Having seen corporates work for last 20 years, I would believe that (any complaint) is best handled internally because there would be no way one would operate with a third-party outsider,” Mehta said, adding that an insider will understand the internal affairs of the company better and would handle complaints more effectively than an outsider.

However, some lawyers say there is an inherent conflict of interest when the top management is in charge of a committee sitting in judgement on whistleblower revelations. They would recommend a third-party ombudsperson overlooking the process. “Lawyers are instructed these days on how to handle a whistleblower policy so that they are able to professionally guide a company on how the policy should be managed very systematically,” ALMT Legal founding partner Sameer Tapia said.

Sandeep Parikh, a corporate lawyer in Finsec Law Advisors and ex-executive director with Sebi, said any such policy has to be well-designed. “It doesn’t have to be an agent of the company, it can be someone independent. Someone retired from the Central Vigilance Commission, or people like that who know well about the policy are ideal for the job (of handling whistleblower complaints),” Parikh said.

Ranbaxy learnt the lesson of not having a policy the hard way. The company, in 2013, pleaded guilty of various cGMP (current good manufacturing practices) violations and was levied a penalty of $500 million. Three of its manufacturing facilities still face an import ban into the US and the recent quarterly results reflected the reduction in sales. However, after the Thakur debacle, Ranbaxy has now instituted a whistleblower policy. It’s website says law firm P&A Law Offices is the designated ombudsperson for administering the policy. The employee can complain on a website that is managed by a third-party contractor and is run on a server independent of the one that hosts Ranbaxy’s websites. Employees have the option to complain online or over the phone and can choose to remain anonymous, if required.

With the new Companies Act empowering independent directors, the whistleblower revelations can be acted upon within the company, as the promoter-directors would have to pay heed, some analysts feel.

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