Code of Conduct and Ethics

■ Whistle-blowing system and whistle-blower protection

E.SUN FHC, E.SUN Bank and E.SUN Securities has established " Whistleblowing Channels and Procedures ". The procedure specifies the time frame for receiving and investigating cases and establishes the dedicated handling unit and independent investigation units. Whistleblowing hotlines, email addresses, and mailboxes have been set up and announced on the corporate internal and official websites. These channels are available to any employee or outsider wishing to report cases. Whistleblowers' identities are kept confidential. It is also prohibited to impose unfavorable human resource measures on employees who report cases. Anonymous reporting is also enabled to actively prevent unethical, corrupt or illegal conduct.

Among the 28 cases filed via the whistleblowing channels in 2020, 1 was confirmed as breach of ethical corporate management (case 1), and the rest were concerning consumer disputes or matters irrelevant to the bank business. In addition, 3 cases (cases 2, 3 and 4) were not filed via the whistleblowing channels. The Compliance Department handles cases immediately after receiving them, and the President appoints an appropriate unit for investigation. Relevant investigation results are reported to the President and provided to the head of the accused person's department without revealing the identity of the whistleblower. The Company has investigated the facts of the 4 reported cases, disciplined the employees who breached ethical corporate management, and has taken appropriate measures accordingly. Case types and subsequent handling are as follows:
Whistleblower cases 2018 2019 2020
Cases reported by internal whistleblowers 0 1 0
Cases reported by external whistleblowers 22 30 28
Total 22 31 28

Note: A total of 28 cases were reported in 2020, and all investigations have been completed. Among them, 1 case was related to code of conduct and ethics.

■ Reporting on breaches

In 2020, there was zero lawsuit or monetary losses against E.SUN FHC and its subsidiaries for misconducts relating to: fraud, insider trading, anti-trust, anti-competitive behavior, market manipulation, malpractice, or other related financial industry laws or regulations. A total of 4 violations against ethical corporate management occurred in E.SUN Bank in 2020, among which 1 was in violation of anti-corruption laws. Units involved in the aforementioned ethical corporate management violations have been urged to review and improve deficiencies and the persons involved have been disciplined. The risk control measures have been comprehensively reviewed. Education for supervisors and employees has been enhanced to cultivate the corporate culture of compliance and the employees' compliance awareness to avoid similar problems in the future.
Cases related to violation of the code of conduct and ethics 2018 2019 2020
Reported via whistleblower channels 0 1 1
Reported via other channels (e.g. audit) 0 0 5
Total cases 0 1 6
Number of substantiated cases 0 1 6
Number of cases under investigation 0 0 0
Cases related to corruption 0 1 1
Case   Type Description Action Taken
E.SUN Bank 1 Corruption A financial consultant used counterfeiting and illegitimately embezzled customer funds. Please see the following column for details.
2 Discipline Employees conducted short-term opportunist transactions on futures, stock financing and stock day-trading during office hours. Punishment was imposed according to internal guidelines and policy.
3 Discipline Employees used the quota for customer airport transport.
4 Discipline Employees serviced customers of their original units after rotation.
E.SUN Securities 5 Dishonesty Some commission broker placed orders for stock using the customer's account, and there was capital exchange between them. The person has been suspended from work. Relevant management measures have been enhanced.
6 Discipline The responsible person did not report an incident that required arbitration within 5 business days of knowing it or of the incident's happening. Employee training has been enhanced. The reporting process was requested to be implemented according to relevant regulation and policy.

■ Authority penalty cases

(1) E.SUN Bank was fined 12 million NTD by the competent authority due to a former financial consultant at the Puqian Branch of E.SUN Bank who had opened fake accounts using customers' names to manipulate payments for personal use.

(2) E.SUN Bank was fined 20 million NTD by the competent authority due to a former financial consultant at the Fengshan Branch who led or impersonated customers to conduct remittances and used customers' stamped withdrawal slips or remittance application forms to embezzle funds in customers' accounts.

Determination on correcting financial consultants' breach of ethical corporate management

In 2020, a former financial consultant at the Fengshan branch of E.SUN committed a violation against ethical corporate management. E.SUN promptly contacted the involved customers and made an agreement to protect all of the customers' rights. Internally, relevant units were asked to seriously reflect on the matter. In addition, PricewaterhouseCoopers was commissioned to conduct a comprehensive weakness diagnosis and improvement plan to improve on culture, organization, systems and discipline on the basis of the existing clear risk control mechanisms:

  • Reformed organization and clarify the dedicated unit for the risk management of the main branch. The unit is responsible for formulating risk management policies and implementing risk monitoring measures.
  • Strengthened customer care at the counter and identity verification for transactions, improve on the transaction review notice for internet and mobile banking as well as the bank statement tracing and management system to improve the risk control mechanism before, during and after a customer transaction.
  • Established monitoring procedures for high-risk employee behaviors for all of the branches, improved inspection mechanisms of operational risks of the first and second lines of defense, and enhanced abnormal behavior status control and management.
  • Improved on the link between employee violations and internal control problems and reward, discipline, appraisal, promotion and bonuses; realized prevention and control measures against problems caused by financial consultants as well as the manager accountability mechanism, and improved the risk-oriented human resource system.
  • Improved the whistleblowing mechanism and enhanced the internal independent audit mechanism, established diverse communication, investigation and tracing to prevent and avoid repeated problems in real time.
  • E.SUN comprehensively re-examined the legal compliance and risk management related to breach of ethical corporate management, demanded the employees to be ethical, consolidated the management accountability and responsibility, and thoroughly reviewed the design of all control points and its effective implementation, so that all E.SUN employees will work together on "zero tolerance on risks and discipline, and zero trust in operational procedures" to effectively protect customers' rights and to avoid similar problems in the future.

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