Internal & Whistleblower Investigations

What this covers

An investigation usually starts with a whistleblower complaint, an audit finding, or a promoter dispute that turns into allegations of diversion. Once that happens, the board owns the response. Section 177 of the Companies Act, 2013 places the vigil mechanism under the audit committee, and what the company did about the complaint may later be examined by the regulator, the auditors or a court. For a US-listed group, the same facts reach the parent’s own disclosure and audit obligations.

The question is whether a specific thing happened, and the work to answer it is hands-on. A detailed data request drives it, and the ledgers, bank statements, invoices, vouchers and emails are read. Suspect transactions are traced to where the money went, and counterparties are checked in person, because a vendor can hold a real Goods and Services Tax (GST) number and a real bank account and still be a relative of the buyer with no premises. I interview employees in the order the documents suggest, and every finding ties to a numbered exhibit.

Internal audit is a poor fit for this work, because it reports to the management the complaint may be about. A consulting firm can do the accounting, but its report is an ordinary business record and may be used against the company later. I am a lawyer and a Certified Fraud Examiner, and I run the investigation under counsel, set up from the first interview to support privilege.

An engagement can cover:

• assessment of a whistleblower complaint, and an investigation plan the committee can approve;
• interviews of employees and third parties, conducted by a lawyer;
• review of ledgers, bank statements, invoices and vouchers;
• tracing suspect transactions and quantifying what was diverted;
• in-person checks on vendors, agents and counterparties;
• collection of email and devices to a forensic standard;
• a findings report with numbered exhibits, for the audit committee, the auditors or SEBI;
• support on discipline, recovery and disclosure after the findings; and
• other inquiries mandated by the board.

An engagement starts with a call to settle the allegation and the mandate, including who instructs, who receives the findings and the timeline. If the matter moves to recovery or enforcement, I can take the Indian-law steps or hand a litigation-ready file to counsel of your choice. If your board is facing a complaint of this kind, do reach out and I will take a look.