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Wednesday, July 16, 2014

"We will fight in the double-entry ledgers, we will fight in the restatement of net earnings, we will fight in the explanatory notes to executive compensations....we will never surrender."


A story that has gotten weirdly little play in the US (I can’t speak for the UK press or the press in other countries) is the pushback by the ‘Big Four’ accountancy firms against the democracy movement in Hong Kong. On July 1, over 100,000 people marched in protest against Chinese plans to curtail democracy in Hong Kong. But the Big Four had not only made it clear that they didn’t like the protests – they had threatened that business would pull out of Hong Kong if the protests continued. 
This is a quite remarkable initiative. It was published in Chinese rather than English – presumably both to speak more directly to potential protesters, and to make it less likely that it would seep into the English speaking press. According to one of the firms, it was pushed by local branches rather than the accountancy groups’ international management. Even if this is true, the statement is signed in the names of the firms and have not been publicly repudiated. 
    "The big four global accounting companies have taken out press advertisements in Hong    Kong stating they are “opposed” to the territory’s democracy movement, warning that        their multinational clients may quit the city if activists carry out threats to disrupt business with street protests. In an unusual joint statement published in three Chinese-language newspapers on Friday, the Hong Kong entities of EY, KPMG, Deloitte and PwC said the Occupy Central movement, which is calling for electoral reform in the former British colony, posed a threat to the territory’s rule of law.The group of pro-democracy activists is calling for 10,000 people to block traffic in the central business district as part of a campaign to put pressure on the Hong Kong government, although if and when this will happen is still under discussion. In the advert, the big four firms warned that protests would disrupt the Hong Kong stock exchange, banks and the headquarters of financial and professional services firms causing “inestimable losses in the economy”. It added that clients of the four firms had reflected further concerns about the wider impact of the protests: 'We are worried that multinational companies and investors would consider moving their regional headquarters from Hong Kong, or indeed leave the city entirely. This would have a long-term impact on Hong Kong’s status as a global financial centre,' the joint statement said."
Of course, this isn’t the first shameful decision made by Western companies looking to build business in China – see Bloomberg’s squashing of a story on corruption among family members of senior Chinese leaders, or, for that matter, Rupert Murdoch’s instruction to Harper-Collins not to publish Chris Patten’s memoirs. But this goes substantially further than quiet acquiescence, to public and active opposition to the pro-democracy movement, and the issuing of threats intended to stifle it. It would be nice to see Ernst-Young, KPMG, Deloitte and Price-Waterhouse Cooper put on the spot by US politicians and journalists about their Hong Kong offices’ unrepudiated public statements opposing pro-democracy protestors.

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