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Banking Industry Whistleblower Stories in China: New Regulations Spark Hope for Reform
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In recent years, China has made significant strides in developing whistleblower protection mechanisms, dispelling the myth that the country lacks such safeguards. While still underdeveloped compared to established systems in the United States and Europe, China’s efforts are gaining momentum.
A Call to Action
In 2019, the Chinese government issued the Guiding Opinions on Strengthening and Standardizing In-Process and Ex-Post Regulation, requiring central ministries and provincial governments to establish whistleblower protection systems. The Civil Code of the People’s Republic of China, enacted in 2020, also encourages whistleblowing by mandating organizations to investigate workplace sexual harassment complaints.
Rewards for Whistleblowers
The most significant development is the Interim Measures for Rewards for Whistleblower Reports of Major Violations in the Field of Market Regulation, introduced by the Ministry of Finance and State Administration for Market Regulation in July 2021. The measures took effect in December 2021 and provide for monetary rewards up to RMB 1 million (approximately US$157,000) for whistleblowers who report major violations, meet specific conditions, and cooperate with investigations.
Whistleblower Protection Mechanisms
China has also established whistleblower protection mechanisms, making it illegal for employers to retaliate against whistleblowers. In cases of retaliation, companies may face administrative and criminal penalties. Whistleblowers may be entitled to reinstatement or compensation, including twice the statutory severance pay they would have received under a lawful dismissal.
What Companies Should Do
In light of these developments, companies with operations in China should:
- Revisit their internal reporting mechanisms and crisis management protocols
- Improve whistleblower policies to encourage internal reporting
- Set up special mailboxes and email addresses for anonymous reports
- Establish response deadlines for timely follow-up with whistleblowers
- Periodically monitor internal reporting mechanisms and conduct training on internal reporting procedures
Global Implications
Multinational companies operating in multiple jurisdictions, including China, should consider harmonizing their whistleblower policies and procedures to respond to developments in China and other regions. As the landscape continues to evolve, it’s essential for companies to stay informed and adapt to changing regulations.
Disclaimer
This article is not intended as legal advice and should be used only for general information purposes. For specific guidance on whistleblowing in China or any other jurisdiction, consult with qualified professionals.