By Peter Yuen
In China, it is the responsibility of each individual
business organization to determine the ethical standards of
behaviour for its management and employees. Management of a
responsible company should ensure that the anti-corruption and
anti-bribery policy adopted by the company is enforceable,
practical, up-to-date and set in accordance with fair
competition principles. A well-established anti-corruption and
anti-bribery policy can help prevent corruption and fraud,
control and minimise damages should these activities occur, and
build a company's reputation.
What Should be Included
Promotion of Honesty
Responsible management should aim to build a culture where
employees are expected to carry out their duties to the best of
their abilities for the benefit of the company, and not to take
advantage of any situation for personal gain.
Encouraging Raising Concerns
The management should encourage individuals to raise
concerns regarding the integrity of anyone acting on behalf of,
or in business with, the company.
Prevention Over Cure
The best deterrent against fraud and corruption is a clear
framework of procedures and responsibilities, which will help
to disclose fraud and corruption at their earliest stages. This
framework will include clear guidance on the investigation of
all allegations and ensure that sufficient professional
resources are available for detection. The existence of such a
framework should give a strong warning to any person
contemplating dishonest actions against the best interests of
When hiring new management level employees, written
references should be sought regarding each candidate's honesty
New employees should receive induction training regarding
relevant company fraud and corruption policies.
Taking appropriate action
The senior management should ensure that all identified
irregularities are reported to a designated senior officer and
are promptly and properly investigated. Appropriate
disciplinary action should be taken when necessary. Procedures
should also be stipulated to ensure that losses are recovered
It is often difficult to assess the seriousness of problems
related to corruption and bribery, and what action the
management must take. Almost invariably, the management will
want to carry out some form of investigation.
In the financial sector, if it becomes necessary to contact
regulators, the management should demonstrate an understanding
of the problem and show regulators that the matter is under
Experience also shows that seemingly minor issues may end up
having major consequences, and action may be required, not only
in relation to the regulators but also potentially involving
customers, staff, system, market counterparts, insurers, and
even the press.
Therefore, it is important to get to the root of the problem
as soon as possible, and to make a thorough assessment of its
Before conducting staff interviews, the investigation team
should identify all relevant people and relevant documentation
those people are likely to have.
It is good practice to tell an employee in advance why he is
being interviewed so that the employee has a chance to
In appropriate circumstances, it would also be necessary to
explain to the employee that (i) information obtained in the
interview may be used for the purposes of disciplinary action,
and (ii) the employee is not permitted to disclose any
information obtained during the interview, which may be deemed
sensitive to the company.
If there is a real risk of the employee facing criminal
prosecution, or a risk that the employee's interests and those
of the firm will conflict, it should be made clear to the
employee that he may seek independent legal counsel.
During an investigation, the company may consider it
necessary to review the personal and work-related documents and
communications of their employees.
The company's right to take such action is dependent upon
the extent of the employee's right to privacy as against his
employer. This is, as yet, untested in China.
Responsible management should be transparent with employees
about the degree of office monitoring, and arrangements should
be made to:
¡P inform employees that their emails and telephone
calls may be monitored, stored and reviewed for various
purposes, including to ascertain regulatory compliance, and
preferably to obtain employees' consent to this;
¡P create a policy on the use of emails, the telephone
and computers for private purposes; and
¡P ensure employees that if emails and telephone calls
are monitored and recorded, it is done purely for the purpose
o establishing the existence of facts; and/or
o ascertaining compliance with applicable regulatory
practices or procedures; and/or
o preventing or detecting a criminal offence.