Washington Post article “Maryland parks agency demotes auditor after spending questions, sources say” again brought to the forefront the retaliation auditors and risk managers face while doing their job. According to the article – “Abinet Y. Belachew was placed in a staff auditing position and his $124,000 salary was cut by more than $30,000, according to records from the agency after he questioned spending by top agency officials“. This is nothing new, the Ethics Resource Center survey of 2011 of US companies states that – “Almost one-fourth of those reporting bad behavior said they experienced some form of retaliation, up from 15% in 2009 and only 12% in 2007.”
The most surprising bit is, that there are hardly any such cases reported by Indian media. At most, media reports if a bureaucrat is fired or transferred from a critical position after a damaging disclosure of government wrongdoing. In respect to retaliation on risk managers and auditors in private sector, there is no coverage.
One can presume either that there is no retaliation or Indian auditing institutes haven’t lobbied to protect their members from retaliation. Indian institutes, namely, Institute of Chartered Accountants of India, Institute of Company Secretaries of India, etc. are governed by Ministry of Corporate Affairs. That could be reason for lack of awareness and action in this field. Moreover, India doesn’t have a whistle-blower protection act and a number of activists have been shot dead in broad daylight. Though, the listing agreement has a clause for whistle-blower protection, it is more in name only. Additionally, law and enforcement agencies are not without corruption. Hence, the cumulative affect is that private sector auditors and risk managers are left without recourse when facing retaliation.
1. Nature of Retaliation
Auditors and risk managers in India, therefore, have far tougher choices to make than their counterparts in the Western world. Doing the right thing and reporting against management, can cause more than just a job loss. In India, following methods are employed for retaliation against risk managers, auditors and whistle-blowers. These sometimes continue even after termination of the employee for a number of years :
a) Downgrade or transfer the individual from the position.
b) Isolate the person, turn the team against the person and bosses give threats of job loss.
c) Spread rumors about personal life of the person. For instance – if a person is married they inform the spouse about an affair, or if the person is single, they spread rumors on sex life and sexual orientation. Take photographs in compromising positions to blackmail the individual.
d) Spread rumors in professional circles to destroy the person’s credibility. The person is told that previous employers will be asked to do a negative background verification. After terminating the employee, organizations still do and even inform head hunters not to process the candidates papers.
e) Use detectives to tap phones, including mobile phones; hack personal systems to monitor correspondence and internet activity. Inform individual’s contacts not to respond to phones and emails, and threaten if they do so.
f) Enter employee homes without authorization, install bugs and cameras to watch personal activities. Even steal items to make employee feel more vulnerable.
h) Pay relatives, friends and neighbors to stalk the person – physically, on phone and internet - to cause a psychological breakdown. The person is isolated and humiliated publicly on every occasion to instill fear in others.
i) Threaten the person with murder and rape to ensure that they do not go to law enforcement agencies or media. Bribe law enforcement agencies, attorneys and media to not accept the complaint and report the same.
j) Ensure all other sources of income are stopped as the person becomes financially liable and cannot fight back.
k) Try and make the person physically sick, by food poisoning and other means. Deny medical aid or ask doctors to provide incorrect medicines for treatment.
l) Lastly, in rare cases the person is murdered.
Considering the risks of retaliation and the unwritten rule that reports should be published according to management directives, auditors and risk managers deal with internal conflict at multiple levels. It is at one level, between doing the right thing and progress within the organization. At another level, it is about passion for auditing and risk management versus fear of endangering career and life. Overall, the choice is between following an ethical path for the benefit of society versus the option of compromising them for self-interest. With the high-level corruption in Indian society, it appears to be losing battle as a lone person battles mighty organizations.
2. Some Suggestions
The choices would be simpler if institutes provided mentoring and support in dealing with such cases. The institutes ensure that all members sign of on a code of ethics; however, do not provide the training and support on dealing with ethical dilemmas and protection against retaliation. In this aspect, Indian institutes would do well to adopt practices of international institutes.
Moreover, international institutes have a stake in developing these practices in India. Not only Indians are members of the institutes, a number of multinationals operate in India. As multinationals are aware that it is easier to break the law and rules in India, due to high-level corruption and limited education on risk management areas, they are more prone to undertake unethical behavior and accounting practices in Indian and other emerging countries. Indian employees of multinationals are unlikely to whistle-blow on international law enforcement agencies websites as most don’t know where to report and the risks of reporting are high. Without support at local level, it is difficult to report at international level.
In the end, the decision each risk manager and auditor needs to take is based on the reason for joining the profession. In India, chartered accountants earn equivalent to doctors, engineers and MBA’s. If they joined the profession to earn well and climb the corporate ladder, they may willingly compromise ethical standards. On the other hand, if they joined because they were passionate about the subject and wished to make a difference, they may compromise their own self interest for the betterment of society.
Overall, retaliation is tough to deal with and a higher level can make many buckle down in fear. Auditors and risk managers have a lot of power in their hands to ensure good practices are adopted by the corporate world, it is best to use it wisely. People need to be educated that by retaliating against risk managers and auditors, they are playing in the hands of people using unethical practices, thereby risking their own investments and well-being. The institutes should build the public awareness about the same.