What can junior employees in Hong Kong companies do when they suspect their boss has committed a crime? Until recently, not much, other than report their suspicions and risk being sacked. But that is changing.
Last week, a Hong Kong court heard the case of a KPMG manager accused of bribery, a case that arose from a subordinate blowing the whistle on what he suspected was illegal activity. The manager was acquitted on Thursday, but the whistle-blower system at the accounting firm worked as it was designed to.
In the United States, the Sarbanes-Oxley Act of 2002 required the audit committee of a publicly listed company to establish a 'complaint notification', or whistle-blower system, to allow employees or suppliers to report any malpractices.
Hong Kong has yet to require such a system, but last December, Hong Kong Exchanges and Clearing, operator of the local stock market, proposed something similar in its code of corporate governance practices. The HKEx said all listed companies should install a whistle-blowing policy to enable employees and other business associates to raise concerns to the company about suspected malpractices.
'We consider the audit committee the most appropriate committee to be responsible for an issuer's whistle-blowing policy,' the HKEx consultation paper said. 'We believe that an issuer should be able to define a whistle-blowing policy that is appropriate to its own circumstances, so we do not propose to define, in detail, the contents of its policy.'
The HKEx consultation ended in March but the exchange has not yet announced what comments it has received and it is uncertain whether the proposal will be implemented.
