China has left the US in the dust when it comes to Internet use. According to Xinhua and the China Internet Network Information Center, 338 million Chinese “netizens” are now online – exceeding the US population. Their top 10 most popular Internet sites include Sohu.com (the first publicly traded Chinese company), Sina.com and Baidu.com.
Sohu.com and Sina.com have both adopted Sarbanes-Oxley accounting standards. The Sarbanes-Oxley Act or SOX is of course the 2002 US federal law enacted “as a reaction to a number of major corporate and accounting scandals.”
I think it is interesting that popular Chinese Internet sites would adopt Sarbanes-Oxley. Is it limited to the accounting standards or does it extend to other provisions to prevent or address corruption like penalties for retaliation against whistleblowers? In China, whistleblowers have traditionally not been protected, in fact – just the opposite. This past December, The Beijing News published an investigative report citing that “public security officials in the City of Xintai in Shandong Province were said to have been institutionalizing residents who persist in their personal campaigns to expose corruption or the unfair seizure of their property.” They went on to report that “some people said they were committed for up to two years, and several of those interviewed said they were forcibly medicated.”
When this story broke, it justifiably outraged the public and drove “netizens” by the thousands to the Internet. At Sohu.com, this story was reportedly the fifth most-viewed headline and by the evening, 23,000 Chinese had commented on it. According to Dr. Charles Zhang, Chairman and CEO of Sohu.com, “People log onto the Internet and Sohu.com because in China, there is no Forbes, Reuters or The Washington Post. Print media was all state controlled and official, and the Internet filled this void.”
The sad fact is that whistleblowers in China have traditionally paid very dearly for standing up to corruption. We have all read the headlines about what happens to those who become an embarrassment for the government. This includes both those who are committing the crimes as well as the people who seek justice by exposing them. In 2007, Zheng Xiaoyu, former head of the State Food and Drugs Adminstration was executed for taking bribes to approve medicines. The same year, Zhang Shuhong, a senior executive with a major Mattel supplier, allegedly hung himself over the lead paint scandal in children’s toys.
“If you want to have a good system of consumer protection, protecting whistleblowers is an essential requirement,” says Wang Hai, a Chinese consumer rights advocate.”
The Internet has an important role to play here in terms of making these incidents public and being a catalyst for change. In fact, the Government of China just announced a month ago that they’d established a new confidential anti-corruption hotline for whistleblowers. The program’s Web site generated so much interest, it froze. In its first week, 11,000 calls were received and 6,000 online reports filed. According to the Xinhua News Agency, “operation capacity of the website currently can only accommodate 1,000 visits simultaneously, but it will soon have its bandwidth doubled and software updated to avoid any disconnection.” Once capacity issues are addressed, social media can help spread the word about this program and – if earned – encourage trust in this new system, motivating people to come forward and file reports.
Kudos to Sohu.com and Sina.com for adopting SOX, which is not inexpensive. If by doing so, they adopt all the provisions in the law, it will position them in a remarkable leadership role in China whereby the culture there around seeking justice may slowly change. It is the right thing to do and hopefully, their positioning will be emulated by their peers, protect whistleblowers, safeguard consumers and potentially save lives.