Under Section 9 of the Prevention of Bribery Ordinance (POBO), it would be an offence for Mr To (an employee), without the approval of his employer (the listed company) to accept advantage (i.e. $100,000 offered by Tony) as a reward for leaking out confidential information relating to the company’s property acquisition plan. He had also abused the trust placed on him by his employer for misusing the company’s information for personal gain. Tony might also violate POBO by offering bribes. 

Furthermore, according to the Code of Ethics of Estate Agents Authority, estate agents or salespersons shall refrain from activities during their practice which may infringe the law. They shall, in the course of business, provide services to clients with honesty, fidelity and integrity, and protect their clients against fraud, misrepresentation or any unethical practices in connection with real estate transactions. Tony had breached the Code of Ethics for offering bribes and engaging in fraudulent activities in deceiving compensation.

Under Section 9 of the Prevention of Bribery Ordinance (POBO), it is an offence for any agent, without the approval of his principal, to solicit or accept an advantage as a reward for or an inducement to perform an act in relation to his principal’s interest or business. 

Gordon privately accepted a reward of $150,000 from his relative Johnny without the permission of his principals (namely the estate agency and Mr Yu). Hence, he might commit the offence of accepting a bribe under Section 9 of the POBO. Johnny might also commit an offence by offering a bribe. 

Gordon and Johnny were relatives. Gordon should have declared this conflict of interest to the estate agency and Mr Yu. 

When handling a transaction involving a relative and a client, Gordon should have remained neutral. Instead, he favoured his relative, resulting in loss to both Mr Yu and Mr Pau, the other buyer. Although Mr Yu had set a minimum average transaction price per square foot, Gordon should have tried to obtain the best possible price for the seller according to market conditions. Mr Pau had to acquire units at a higher price because of Gordon’s corrupt act. 

Gordon’s behavior might also violate the Code of Ethics of the Estate Agents Authority which states clearly that estate agents or sales persons shall refrain from activities during the practice which may infringe the law. They shall provide services to clients with honesty, fidelity and integrity and protect and promote the interest of their clients, carry out the instruction of their clients in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in the transaction. Furthermore, any conflict of interest in relation to the property shall be disclosed to their clients that they are so acting.

To protect the interests of investors, the listed company prohibited their agents or employees from abusing their official positions for personal gain. Mr Chan and Jenny were commissioned by the listed company to sell the property. They had to comply with the listed company’s policy on acceptance of advantages and were not allowed to solicit or accept any work-related advantage. Under the Section 9 of the Prevention of Bribery Ordinance (POBO), it is an offence for any agent, without the approval of his principal, to solicit or accept an advantage as a reward for or an inducement to perform an act in relation to his principal’s affairs or business. The offeror of the bribe shall also be guilty of the offence. Mr Chan and Jenny might commit an offence under Section 9 of POBO for accepting bribe. This went against the spirit of the tender system and also prejudiced the buyer’s interests. 

By attempting to secure business through corrupt means, Sidney’s action went against the spirit of fair competition and damaged the reputation of estate agency trade. He might also commit an offence under Section 9 of POBO for offering bribe. 

Furthermore, they all might have breached the Code of Ethics of the Estate Agents Authority which states that estate agents and salespersons shall refrain from activities during their practice which may infringe the law.

Under Section 9 of the Prevention of Bribery Ordinance (POBO), it would be an offence for Mr Wong (an employee), without the approval of his employer, to accept advantages (i.e. RMB575,000 illegal kickback from the two manufacturers) for placing more production orders with the two manufacturers. The offeror of the bribe would also be guilty of the offence. It shall be an offence under POBO if any act of bribery (includes promising, agreeing, soliciting or accepting advantages without permission) takes place in Hong Kong. By depositing the bribe money back into the bank account in Hong Kong, Mr. Wong might still violate the POBO. 

Mr Wong’s close relationship with the manufacturers had affected his objectivity when discharging his official duties. Though entertainment is an acceptable form of business behaviour, many past cases have shown that small favours such as free meals and small gifts etc. always breed corruption. It is therefore important for business manager to remind their staff of the need to handle their relationships with care, and to avoid accepting excessively frequent or lavish entertainment from them. 

Furthermore, business organisations should also establish clear policies on acceptance of advantage and declaration of conflicts of interest, and inform their suppliers or subcontractors of such policies. In the event that staff have violated the law or company policies, prompt action should be taken to report the case immediately.

In Hong Kong, according to the Prevention of Bribery Ordinance (POBO), it is an offence for any agent (generally the employee), without the permission of his principal (generally the employer), to solicit or accept an advantage as a reward for doing an act on relation to his principal’s business. Moreover, if any part of the bribery act takes place in Hong Kong, it shall still be an offence under the POBO. Although Chung was one of the shareholders of the enterprise, he was still an agent as defined by the law. He therefore must seek approval from the company before accepting any advantages. 

Business organisations should take the initiative to govern the acceptance of advantages by all levels of staff (including directors) in relation to company businesses. The company should state clearly amounts of advantage that the staff are permitted to accept, and conditions of such acceptance. The policy should also list out the declaration procedures and enquiry channels for staff compliance. 

Moreover, the company should establish detailed procurement procedures in order to ensure that the products purchased are of good quality and to prevent staff from abusing their authority or engaging in corrupt practices in the purchasing process. Staff should be reminded constantly of the importance of selecting suppliers in a fair and impartial manner.

In this case study, the project manager, an employee (agent) of the bank (the principal), accepted an advantage from the Mainland contractor, as a reward for making a recommendation to the bank’s head office in Hong Kong to accept the contractor's substandard works and employ the same contractor to renovate other branches (an act in relation to the bank’s business and took place in Hong Kong), might contravene Section 9(1) of the Prevention of Bribery Ordinance (POBO). The Mainland contractor might also contravene Section 9(2) of the POBO for offering bribes. If any part of the act of bribery (including offering, soliciting or accepting a bribe) takes place in Hong Kong, it may still be pursued by the ICAC under the POBO. 

Procurement of goods and services is one of the most corruption-prone business processes, in particular those involving high values or specialist knowledge and specialised products or services, e.g. renovation and maintenance works. 

It is common for banks to send staff members to work in the Mainland office. The staff members are exposed to significant risk of temptation due to their perceived remoteness from the main office in Hong Kong and the absence of supervisory control measures. Relying on a single staff member, who is a specialist, without effective checks and balances and segregation of duties, also increases the corruption risk. 

Banks should lay down guidelines for key procurement stages. They should also assign supervisors to conduct site inspections to ensure compliance with the laid down guidelines and to detect malpractice, such as connivance of substandard performance of contractors. It is also important to circulate the staff code of conduct regularly to remind staff members to refrain from accepting frequent/lavish entertainment from contractors/suppliers which may otherwise affect one’s objective commercial judgment. In addition, it is also advisable to communicate to suppliers/contractors, in particular non-local ones, on the bank’s policy regarding anti-bribery, acceptance of advantages/entertainment, zero tolerance to corruption and channel(s) for feedback/enquiry.

The bank manager, an employee (agent) of the bank (the principal) and without the permission of the bank, accepted advantage from the client as a reward for helping the latter to perform suspicious transactions through the bank (an act in relation to bank’s business). The bank manager might contravene Section 9(1) of the Prevention of Bribery Ordinance (POBO) for accepting bribes, while the client might contravene Section 9(2) of the same Ordinance for offering bribes. 

The bank manager might breach the Organized and Serious Crimes Ordinance or the Drug Trafficking (Recovery of Proceeds) Ordinance as well as the Anti-Money Laundering and Counter-Terrorist Financing Ordinance if he, knowing or having reasonable grounds to believe that any property which, in whole or in part, directly or indirectly represents any person’s proceeds of drug trafficking or indictable offence, deals with that property. 

Money laundering is a serious crime. Banks should make all staff members aware that the bank must comply with the laws and would constantly monitor fund transfers and audit the related control/processes, so as to provide a deterrent.

In this case, the senior credit manager, an employee (agent) of the bank (the principal), without the permission from the bank, accepted an advantage (a watch) from factory owner as a reward for turning a blind eye to the out-dated equipment and giving him a favourable site inspection report (an act in relation to the bank’s business). Although the acceptance of gifts took place outside Hong Kong, part of the bribery act occurred in Hong Kong (e.g. submission of a favourable report to the bank). The senior credit manager might breach Section 9(1) of the Prevention of Bribery Ordinance (POBO) for accepting bribes, whereas the factory owner might contravene Section 9(2) of the POBO for offering bribes. The senior credit manager might have also contravened the Banking Ordinance. 

Although the senior credit manager was the supervisor of the credit manager, he did not have the authority to permit his subordinates to accept the advantage. 

It is very common for banks’ corporate clients to have their business operations such as production plants or other assets in the Mainland or elsewhere outside Hong Kong. When site inspection/ visit by bank staff is required in assessing a loan application, the staff members are exposed to significant risk of temptation, which may comprise bribes, gifts, and excessive entertainment or services. 

In fact, assigning staff members of the same unit (in particular one of them is the supervisor of the other one) to conduct high corruption-risk tasks is a formula of disaster. The credit manager did not decline the gift offer at the spot probably because of the pressure from his supervisor, and might eventually be tempted to collude with his supervisor. 

Due to the differences in various cultures, some customers from other regions may regard offering gifts/ rewards in return for assistance or favour as a common business practice. Banks should make it clear to their staff members that it is unnecessary and inappropriate for bank staff members to adopt local cultures which may violate the laws. Moreover, an independent, reliable and confidential channel of reporting malpractices should be established by banks to encourage whistle-blowing. Furthermore, it is essential for banks to communicate clearly to all staff members and customers, especially non-local ones, about the bank’s policies on anti-bribery, acceptance of advantages / entertainment and zero tolerance to corruption.

In this case, the relationship manager, an employee (agent) of the bank (the principal), without the permission of the bank, accepted monetary bonuses (advantages) from the acquainted client as a reward for his preferential service in managing the investment portfolio (an act in relation to the bank’s business). The relationship manager might violate Section 9(1) of the Prevention of Bribery Ordinance (POBO) for accepting bribes; whereas the acquainted client might contravene Section 9(2) of the POBO for offering bribes. 

The personal relationship between the relationship manager and the acquainted client would give rise to conflict of interest, which was conducive to favouritism towards the customer, e.g. providing first priority in the investment portfolio management. 

To prevent corruption and malpractices, banks should enhance the awareness of integrity among staff members and promote ethical culture by: 

• disseminating a clear message by top management on commitment to business ethics and integrity, and zero-tolerance to unethical practices; 
• specifying the integrity standard expected of all staff members in a Code of Conduct, in particular, the restrictions on acceptance of advantages from bank customers, and the requirement for staff to declare and avoid conflict of interest. 

It is also necessary to conduct regular (induction, refresher) staff trainings on integrity and anti-corruption and to communicate with customers, including non-local customers, about the bank’s policies on anti-bribery and acceptance of advantages policy.

Under Section 9(1) of the Prevention of Bribery Ordinance (POBO), it might be an offence for the senior bank manager (i.e. an agent, as an employee of the bank), without the permission of his principal (i.e. the bank), to accept advantages (i.e. expensive gifts offered by the client) as rewards for assisting the client to secure extension of loan repayment. The client might also violate Section 9(2) of POBO for offering bribes. 

The senior bank manager might have also contravened Section 124 of the Banking Ordinance which prohibits any employee of an authorized institution to receive any gift, commission, advantage etc. for his own personal benefit, for procuring or endeavouring to procure for any person any advance, loan, financial guarantee or credit facility from that institution. 

For efficiency purpose, bank managers are often delegated with authorities to endorse certain loan-related applications up to certain limits. The risk of corruption is in proportion to the discretion which bank managers are allowed to exercise. The greater the discretion, the higher the corruption risk. 

The restructuring of distressed loans is a corruption-prone area which is easily overlooked. A desperate debtor could entice the bank manager to secure favourable credit terms, e.g. extension of credit facilities. 

Corruption in the lending function will result in an increase in bad loans, affecting the bank’s business and profitability. When a customer is willing to bribe for favour in credit approval, it reflects both the underlying financial problems of his business and his poor integrity. His chance of defaulting repayment will be high. An internal review of the case will unearth the impropriety and corruption dealing. With a stringent control mechanism of a bank and a whistle-blowing mechanism, there is a good chance that the corrupt dealings will be detected.