Whistleblowing in the spotlight: why are managers in Hong Kong more likely to blow the whistle?

In a continuation of the exercise started in 2014, Freshfields has gathered the views of over 2,500 respondents across 13 industries in the UK, US, France, Germany and Hong Kong to assess their attitudes towards whistleblowing and to examine how this has changed since our last survey in 2017. Our 2020 whistleblowing survey reflects the answers from 500 middle and senior managers within large companies in Hong Kong.

In a short series of blogs, we are going to explore the key headlines for Hong Kong based on the findings of our 2020 report and what it means for employers in the jurisdiction.

Managers in Hong Kong are the most involved in whistleblowing

Out of the five jurisdictions surveyed, respondents in Hong Kong have been involved in whistleblowing to the greatest extent, with 48 per cent of respondents saying that they have been involved in whistleblowing in one way or another. 

This is in stark comparison to the US, where only 18 per cent of respondents answered that they had been involved in whistleblowing. 

Further, 18 per cent of respondents in Hong Kong stated that they had been a whistleblower themselves, the highest percentage of respondents out of the five jurisdictions, with only 7 per cent of respondents in the US having been whistleblowers.

Why? 

This finding is somewhat surprising for two reasons:

1. Asian work culture tends to be more conservative and there are generally cultural sensitivities around speaking out.
2. The lack of specific whistleblowing legislation in Hong Kong means that there are limited protections for whistleblowers, who also have no financial incentives (unlike in the US).

So why are more managers blowing the whistle and getting involved in whistleblowing in Hong Kong? We think there are various possible explanations, as set out below.

Increased regulatory focus? 

Whistleblowing has been an area of focus for the Hong Kong Monetary Authority (HKMA) since March 2017, when it issued its circular on bank culture reform. This was the first time that the HKMA had referenced the need for authorised institutions to have an effective escalation policy, including a whistleblowing mechanism. 

Indeed, 67 per cent of respondents in Hong Kong from the finance sector answered that they had been involved in whistleblowing, compared to just 26 per cent of respondents in the legal sector. 

Furthermore, whistleblowing is increasingly becoming an agenda item for listed companies as the Hong Kong Stock Exchange is very focused on promoting corporate governance. So it is possible that the increased regulatory focus in this area is driving a shift in attitudes.

Younger whistleblowing culture? 

Our 2020 report has shown growing levels of scepticism in Germany and France, with only 15 per cent of respondents in Germany and 14 per cent of respondents in France answering that their firms actively encouraged employees to speak up (compared to 26 per cent in Hong Kong). 

As Hong Kong has been slower to legislate for and regulate whistleblowing, it’s probably fair to say that many employers in Hong Kong have only more recently taken steps to implement internal whistleblowing policies and procedures. 

A possible theory is that the cynicism and whistleblowing 'fatigue' amongst employers and employees seen in other jurisdictions is yet to reach Hong Kong.

Do the Hong Kong respondents mean 'whistleblowing' in the way that other countries understand it? 

There is no specific legislation in Hong Kong that provides a definition of 'whistleblowing' and there are no statutory restrictions on the types of issues that can be reported on a whistleblowing hotline. This is in contrast to the UK for example, where the statutory whistleblowing protections apply in respect of a 'protected disclosure', which is clearly defined. 

And while we generally recommend that, for example, HR-type complaints (eg personal grievances) should be reported through other channels outside of the whistleblowing procedure, what is a 'whistleblowing' report will be largely shaped by an employer’s own policies. 

Therefore, it may be possible that respondents in Hong Kong have a potentially wider and looser understanding of what it is to be a 'whistleblower' or to file a 'whistleblowing report'.

What does this mean for employers?

Does this positive finding mean that employers in Hong Kong can now sit back and stop being proactive in improving their whistleblowing policies and procedures because the findings indicate that employees are already speaking out? We think the answer to that is a firm 'no'.

While the 2020 report does reveal some encouraging statistics for Hong Kong, there is still lots of work to be done in this area, something echoed in a May 2020 HKMA report on bank culture, which we will explore in more detail in a later blog. 

Critically, 17 per cent of respondents in Hong Kong think that whistleblowing is a current issue within their organisations, which is the same percentage of respondents as Germany but higher than other jurisdictions. 

In particular, it seems that employers in Hong Kong can do more to raise the profile of their whistleblowing procedures and to encourage a speak-up culture: 34 per cent of respondents in Hong Kong answered that their organisation had a whistleblowing procedure in place but that it hadn’t been publicised, more than in other jurisdictions. 

This figure also represents a slight increase from our findings in 2017, which may indicate that, while more employers are putting in place whistleblowing policies in response to regulatory requirements, they are not promoting or raising awareness of the use of those policies.

How can we help? 

Often the first step in improving is to identify the weaknesses. We are happy to help you conduct a culture audit of your organisation, including taking a deep dive into your existing whistleblowing policies and procedures. We can then recommend practical changes and provide guidance on best practice. 

We have extensive experience advising companies on policy issues, legal considerations in relation to implementing whistleblowing hotlines and how to navigate the practical issues that whistleblowing investigations can throw up for organisations, such as data protection concerns, regulatory notification obligations and the handling of anonymous complaints. 

Please get in touch with a member of our team to see how we can best tailor our services to your needs.