Why HRs are Silent Supporters of Looting CEOs and Protect Their Crimes in Banks: A Deadly Umbrella of Silence

I can understand your anguish. These times have witnessed more than one CEO or promoter looting the company, diverting organization's funds to personal accounts, especially in countries like Switzerland and Mauritius. Notable cases include the like of Lalit Modi, who seek refuge in unscrupulous foreign countries, and others who exploit the loopholes in our laws to stay in India.

The Modus Operandi of Corporate Looters

The modus operandi of corporate looters is straightforward. They follow all rules and regulations of the law, yet commit fraud on company funds, often borrowing from banks. By defaulting on payments to creditors, they force the company to file for insolvency at National Company Law Tribunal (NCLT). Creditors or the looters themselves proceed to dispose of meager assets, making partial payouts to creditors, say a mere fraction of what they are owed. In this process, employees who have worked hard for the company's well-being lose their jobs and livelihoods.

The Role of HR Departments in Dismissing Employees

Unfortunately, in India, neither employees nor Human Resources (HR) departments object to the process of looting by CEOs. There are even instances where HR may collaborate with CEOs for petty benefits. While legally, HR is not the custodian of employees, their silence often stems from fear of exposure or moral irresponsibility. They hesitate to bring fraudulent CEOs or promoters to light.

Moral Responsibility of HR and Finance Heads

In our country, it is imperative to have whistle-blowers. HR directors and finance heads, in particular, may need to take on a moral responsibility. They must not ignore their ethical obligations to the employees and the organization. It is crucial to stand up for justice and uphold integrity, even if it means taking a stand against powerful individuals or institutions.

Addressing the Issue of Corporate Looting

To combat corporate looting, we need to strengthen the legal framework and enhance transparency in financial transactions. Whistle-blower protections and incentivizing ethical behavior are also essential. Corporate governance must be reformed to ensure that HR and finance personnel act in the best interests of the employees and the organization. Reporting mechanisms should be robust, and those who commit fraud should face strict legal consequences.

Conclusion

The silent complicity of HR departments in protecting looting CEOs is a concerning issue. It is high time that we prioritize employee rights and ethical practices in corporate governance. By taking action, we can create a safer and more equitable workplace, free from the shadows of corporate crime.