Asia's Anti-Corruption Spotlight: Which Insider Will Expose Wrongdoings Next?
In a significant move towards combating corruption, companies operating in Asia are bracing for enhanced whistleblower legislation, following the footsteps of countries like India and China, who have recently enacted laws to protect whistleblowers, mirroring the United States' lead.
India's Whistleblowers Protection Act, approved on May 14, 2014, empowers the Central Vigilance Commission to restore whistleblowers who have faced employment retaliation to their previous positions. The Act also places the burden of proof on public officials to demonstrate that any adverse action taken against a whistleblower was not in retaliation. Confidentiality is ensured, and public officials who reveal a complainant's identity face up to three years imprisonment and a fine of up to INR50,000 (US$810).
China, too, has amended its Rules Dealing with Whistle-blowing by the People's Procuratorate. Announced on October 27, 2014, this amendment provides various rights and protections for whistleblowers, including anonymity and the ability to appeal a refusal to investigate. Whistleblowers can also request protection from harm to person or property and, under certain conditions, receive a reward.
However, it's important to note that overseas whistleblowers may not receive a corresponding level of protection against retaliation as compared to rewards. This is evident in the Second Circuit's decision, which leaves overseas FCPA whistleblowers vulnerable to employer retaliation.
In the United States, the Dodd-Frank Wall Street Reform and Consumer Protection Act rewards whistleblowers with 10 to 30 percent of the amount recovered by the Security and Exchange Commission (SEC) for violations over $1 million. Since the Dodd-Frank Act, the SEC has awarded over $45 million to 14 whistleblowers. However, the SEC's decision to award a compliance officer has been criticized for encouraging disclosures by personnel engaged to help prevent, detect, and address wrongdoing internally.
The SEC received 52 whistleblowing tips from China in 2013, making it the third-largest source of tips to the SEC outside the United States, behind the UK and Canada, with India coming in fifth. The SEC's largest award, $30 million, was given to a whistleblower living outside the United States. Yet, no publicly available search results specifically identify a recent false accusation made in China that led to a whistleblowing report and a reward claim to the U.S. SEC.
As Asia moves towards strengthening its whistleblower protections, it's crucial for companies to ensure a preliminary review is conducted within 120 days after receipt of a whistleblower complaint and that a report is filed with the SEC, if appropriate. This will not only foster a culture of transparency and accountability but also protect businesses from potential corruption and financial losses.
