SEC policy expected to encourage whistle-blowers in Asia

The number of employees informing on a company's wrongdoing in Asia, including China, is expected to continue rising with a new policy by the US Securities and Exchange Commission (SEC) to protect the whistle-blowers, analysts say.

The global crackdown on corruption and greater financial incentives to report suspected crimes could lead to an increase in cases involving United States and British companies in Asia, according to a report by AlixPartners, an international business advisory firm.

"Our firm has seen an increase in the number of whistle-blower matters raised within China as a result of an increased focus on governance as well as the Chinese government's focus on corporations such as GlaxoSmithKline [Pharmaceuticals]," said Mike Murphy, managing director at AlixPartners.

The Chinese government is investigating GSK, the biggest British drug firm, for suspected bribery on the mainland.

"The allure of rewards through SEC represents a source of concern for companies," the AlixPartners report said.

Under a US programme established by the Dodd-Frank Act, those who report wrongdoing may receive financial rewards of 10 per cent to 30 per cent of the fines imposed on a firm by US authorities if their tips lead to successful enforcement.