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Meena Datwani, the director-general of the Hong Kong Monetary Authority's enforcement division, talks to deputy chief executive Arthur Yuen. Photo: Jonathan Wong

Companies urged to do more to encourage business ethics

Tighter regulations and law enforcement not enough to ensure good behaviour, forum told

Tightening up the legal framework and law enforcement are not enough to ensure an ethical behaviour among the city's business people, according to regulators and business leaders at a forum last week.

Companies have to play a more active role, encouraging their employees not only to make money but also do the right thing, they say.

"Executives are not being incentivised by good ethics. We are incentivised by the actual return of the company, the share prices, the bonuses," Bernard Chan Charnwut, the president of Asia Financial Holdings, said on the sidelines of the conference. "The board has to put in systems to make sure that they don't incentivise the executives based on performance only. There should be enough incentive for people with good ethics as well."

Meena Datwani, the director-general of the Hong Kong Monetary Authority's enforcement division, said the main problem was the pressure to perform and to achieve higher profits.

"It's not sustainable. There should be other values making sure it's a win-win for everybody," she said. "It's not just the shareholders at the cost of the customers.

"We should reward honesty, integrity, fairness, acting in the best interest of customers and not whoever generates the best profit or sells the most products."

Acknowledging that there are many new players in the financial market, Datwani said the city needed to see regulatory requirements and standards of ethical conduct converge.

"If anybody who comes in to Hong Kong does business, they have to comply with rules and regulations, but the ethical standards also have to be similar," she said. "That is also what we hope the firms from the mainland will subscribe to, because this will ensure proper outcomes."

Datwani rejected suggestions the city's regulations were less strict than those of other jurisdictions, such as the United States.

"That is a misconception. If they were so strict, they wouldn't have so many banks in trouble," she said. "We've been very prudent, we've got very strong supervision and regulation, and also enforcement."

Lehman Brothers' bankruptcy and the financial crisis in 2008 shook the market and led to a loss of public confidence in bankers and the whole financial sector.

In Gallup's honesty and ethics survey conducted last month, only 23 per cent of Americans said bankers had high or very high ethical standards.

Some nations are discussing the idea of bankers taking an oath similar to the Hippocratic oath taken by doctors. In the Netherlands, 90,000 bankers took such a pledge last year. Those who break it face fines and suspension.

This article appeared in the South China Morning Post print edition as: Companies urged to do more to encourage ethics
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