UBS confirmed with the Global Times it has asked its analyst Paul Donovan to take a leave of absence as the Swiss investment bank reviews the matter that the analyst discussed China’s inflation in distasteful and racist language which sparked uproar among Chinese internet users, economists and several industry associations.
“We confirm that we have asked Paul to take a leave of absence as we review this matter, to evaluate whether further steps need to be taken," the financial institution said in a statement sent to the Global Times late Friday night.
Donovan, UBS’ chief economist, said in a report entitled “Very Normal Inflation” on Thursday that, “Does it matter? It matters if you are a Chinese pig. It matters if you like eating pork in China,” which later UBS and analysts both claimed that it was only intended to describe why Chinese consumer prices rose and had nothing to do with insulting Chinese people.
The report sparked outrage among Chinese netizens and some economists on China’s Weibo and Twitter.
The Securities Association of China (SAC) has listed Donovan an unwelcome individual, and recommended member institutions not to invite him to any event, it said in a post published on its WeChat account on Friday. The association, supervised by the China Securities Regulatory Commission, represents 440 member institutions as of October 2018, according to its website. It also urged UBS to take measures to strengthen its internal compliance to avoid similar mistakes.
“We have informed all report assessing officers and analysts who are also responsible for supervision related to the office of the chief investment officer that there will be new mechanisms for reports supervision,” UBS said in an apology letter to SAC.
Meanwhile, by the end of July, the company will train all analysts involved with the chief investment officer to be more sensitive in the use of language and the awareness of culture.
Donovan also apologized in a Bloomberg TV program on Thursday by saying that “I made a mistake and I unwittingly used hugely culturally insensitive language.”
The Chinese Securities Association of Hong Kong also criticized his behavior as unprofessional, rude and immoral, according to a statement it sent to the Global Times on Thursday. “It hurts Chinese people’s feelings and reveals compliance loopholes, and the apology was insincere,” it said, referring to Donovan’s first apology made during a morning podcast on Thursday in London, which many Chinese netizens seemed not to buy.
The association in Hong Kong called for Donovan’s removal, and Chinese entities to rethink business relations with UBS, the statement said.
Industry insiders said that UBS is taking the matter “very seriously, actively and properly,” setting an example for all foreign firms that want to do business in China.
“The decision shows that the institution does not accept Paul’s insults on Chinese people. It also cleared its stance on China: attaching great importance to the market, which is totally different from Paul,” Dong Shaopeng, a veteran analyst who advises the CSRC, told the Global Times on Friday.
Analysts stressed that the UBS’ handling of the case “delivers the right value” for all foreign firms amid trade tensions, especially to US companies which may be influenced by the White House.
For the next step, he suggested that Paul should come out to explain the matter and make a “real and sincere apology” to quash Chinese people’s anger.
However, some Chinese netizens still called for a boycott of UBS to teach the foreign firm a lesson.
“We can’t forgive you, please leave the Chinese market,” a netizen going by the name Xixinjiechen said on Friday.
And another netizen noted that “for an analyst with such an important position in a big company to make such a mistake, an apology can’t fix it. It’s a deeply-rooted biased view.”
