Whistleblowing – What should you be doing?

In a post-Weinstein, #MeToo, #TimesUp era, there is perhaps now more than ever a real spotlight on internal corporate culture and the need for companies to implement a robust whistleblowing infrastructure.

However, in Asia where whistleblowing legislation is generally more “light touch” compared to that of the UK and the European Union, it can be difficult for organisations to understand what is legally required of them and practically, how they should implement and operate a whistleblowing system.

The legal landscape 

More jurisdictions in the Asia-Pacific region now have legal regimes which place a positive obligation on companies to implement a whistleblowing policy and/or procedure.

In Australia, a new act came into force on 1 July that provides a more rigorous set of protections for whistleblowers than was offered under the previous regime. In particular, the new act requires certain types of companies (such as public companies, large proprietary companies, etc.) to put in place a whistleblowing policy by 1 January 2020.

Similarly, in China, the banking, insurance and security regulators have issued various guidelines that require companies to have an internal whistleblowing system as part of their internal control, governance and compliance system.

In Hong Kong, the Corporate Governance Code issued by the Hong Kong Stock Exchange requires listed companies to ensure that arrangements are in place by which the company’s employees can raise concerns about possible improprieties in financial reporting, internal control and “other such matters”. The HKMA has imposed similar requirements on authorised institutions in Hong Kong. Under recent guidance issued by the HKMA on 19 December 2018, authorised institutions will now be required to conduct self-assessments, reporting on their governance arrangements (including whistleblowing policies and escalation mechanisms) relating to corporate culture and the implementation of the enhancement measures in fostering a sound bank culture following the publication of the HKMA’s 2 March 2017 circular.

Why have a whistleblowing policy? 

Apart from complying with the relevant regulatory requirements, an internal system for employees to disclose wrongdoing without fear of reprisal shows that an employer is taking its responsibilities seriously. This also allows employers to have more control in relation to any concerns raised as it will provide an opportunity for the employer to investigate internally first (where appropriate) and potentially avoid any unnecessary public disclosure and associated negative press.

A well-drafted and operated whistleblowing policy should also help employers avoid potentially expensive claims by enabling them to pick up on issues at an early stage and deal with them promptly and appropriately.

Whistleblowing hotline

Many employers decide to also set up a whistleblowing “hotline”, which can be operated globally, to give potential whistleblowers an easy way to raise concerns. This can be an effective means of assisting to foster a “speak up” culture and can also assist the employer in complying with its regulatory obligations.

Practical issues with operating a whistleblowing policy – How to get employees to speak up

Once a whistleblowing policy has been implemented, how can an employer be confident that employees are and will use it to raise issues? What might encourage employees to speak up?

• Financial incentives: would employers offering employees financial incentives for making reports encourage a speak-up culture? While this is a feature of US whistleblower programmes set up by the SEC, CFTC and IRS, Hong Kong (like the UK) has considered and rejected the idea of financial incentives for whistleblowers. Indeed 20 per cent of respondents in Hong Kong participating in our 2017 Whistleblowing Survey thought that financial incentives would erode trust within their organisation.
• Increased awareness and support: it is important that an employer, as well as implementing a clear whistleblowing policy and process, conveys a strong anti-retaliation message and that the management team encourages a culture of speaking up. The existence of the whistleblowing policy and how it operates should be published and promoted to all employees.

How can we help you?

We can help you put in place a whistleblowing policy that works for your business across all jurisdictions. We can also provide guidance and best practice tips on things you can do to ensure your policy is effective and efficient. We have strong experience with the implementation of a whistleblower “hotline” and can help you to navigate the practical issues this throws up, including data protection and the handling of anonymous complaints.