HONG KONG (Reuters) - Walking a tightrope between anti-government protests and political masters in Beijing, many Hong Kong firms are opting to toe the Communist Party line to avoid potential repercussions having seen what happened at Cathay Pacific Airways.

FILE PHOTO - Students attend a rally to call for political reforms outside City Hall in Hong Kong, China, August 22, 2019. REUTERS/Kai Pfaffenbach

Last week the airline lost its CEO after Beijing exerted political pressure, and on Friday the head of Cathay Dragon’s Airlines Flight Attendants’ Association said she was fired, without explanation, after managers saw and confirmed her Facebook account.

Workers in other sectors, particularly in the financial industry, have also said they are afraid to even talk about the protests among colleagues or in message groups for fear they could be snitched to management if they voice support for the protest movement.

“Now the best way is to keep silent, because people could back-stab you for no obvious benefits,” said one person who said they were reported to management by a colleague.

One Hong Kong-based worker of a Chinese state-owned enterprise recently bragged in a WeChat chat group that he had been reporting employees who posted pro-democracy comments regarding the protests to human resources.

In extreme cases, some people said they had received calls from Chinese authorities after posting pro-protest comments on Facebook.

“It feels like we’re back to the era of Cultural Revolution,” said the executive of a large corporate, referring to the decade-long campaign unleashed by Mao Zedong on China in 1966, which encouraged people to inform on friends, colleagues and family members who did not follow the Communist Party line.

This fear of denunciation has been dubbed “the white terror” by Hong Kongers, distressed by the erosion of wide-ranging freedoms promised to the former British colony under a “one country, two systems” formula when it returned to Chinese rule in 1997.

The most high profile corporate casualty of the rising intolerance was Rupert Hogg, who resigned as CEO of Hong Kong flag carrier Cathay Pacific Airways 0293.HK after China demanded that the airline suspend staff involved in, or who support, the demonstrations that have roiled the city.

“The Cathay incident shows that when doing business in Hong Kong, politics and business are inseparable ... it’s quite an alarming message,” said a senior pro-Beijing politician.

Cathay’s new chief executive said this week the company has zero tolerance for any support or participation in illegal protests.

“The way every single one of us acts, not only at work serving our customers but also outside work – on social media and in everyday life – impacts how we are perceived as a company. We have made very clear that we have zero tolerance for illegal activities,” CEO Augustus Tang said.

Demanding the reinstatement of the sacked head of the cabin crew association, Rebecca Sy, the Hong Kong Federation of Trade Unions called on Cathay Pacific, which is 30% owned by Air China 601111.SS, to put an end to the "white terror".

“THERE’D BE BLOWBACK”

An expatriate business executive told Reuters the Cathay Pacific case had unnerved some companies, while a lawyer said he had inquiries from people asking if it was legal to check through employees’ phones or social media accounts.

“As Hong Kong companies, we thought we could run the company by ‘one country two systems’, but to Chinese regulators, they want us run like ‘one country, one system’,” an executive of a large Hong Kong corporation with business in China said.

All six people Reuters spoke to declined to be named as the issue is sensitive and they were worried their company could be targeted for speaking out.

Pressure has also spilled into the “Big Four” accounting firms, which published separate public statements late last week opposing violent acts in the city and voicing support for the “one country, two systems” principle. The notices came after an advert purportedly purchased by their employees was published in newspaper Apple Daily supporting the protests, drawing criticism from mainland media.

China’s state-owned tabloid Global Times criticized the firms for not issuing official responses, “as major firms have an obligation to let the public know their stances on the matter”.

Property developers, including CK Asset 1113.HK - owned by tycoon Li Ka-shing - and Sun Hung Kai Properties 0016.HK, have also denounced violent protests in newspaper notices since early last week, following a lead by the Real Estate Developers Association (REDA).

REDA’s statements were initiated by the Hong Kong government, and developers felt taking out additional adverts was “the right thing to do”, according to two people with knowledge of the matter.

REDA said the ads were not initiated by the government and merely reflected the association’s views. The government declined to say if it proposed the ad campaign but said it shared the association’s view.

Developers are also on tenterhooks after a major shopping center was criticized by demonstrators for allowing police to enter a mall and arrest protesters, while the Global Times criticized another mall for “kowtowing to radical protesters” by not letting police enter.

“In the beginning we wanted to please both pro and anti-protest people, but we learned it’s not possible,” an official at a property developer said. “We cannot not allow police to go into the malls, otherwise there’d be blowback.”