ABC Co. Ltd. (ABC) manufactured a wide variety of toys and games for children.  Ben had been the auditor of ABC and befriended its owner, Dale, for years. They were good friends and both found their business relationship quite rewarding. The growth of ABC had given Ben opportunities to provide additional services to the firm and its owner.

Due to contractions of the toy industry, ABC was facing serious financial difficulties.  When auditing the accounts of ABC, Ben discovered the financial impact of the industry contraction on ABC.  Sales of ABC declined while receivables and inventory went up.  The audit also revealed material quantities of slow-moving stock which was confirmed by the marketing manager and production manager.

When Ben informed Dale of his findings, Dale replied that he intended to design and produce more creative toys to boost up the sales in order to save the company from bankruptcy. However, it required large capital outlays for manufacturing equipment.  Dale asked for Ben’s help to manipulate the accounting records, so that he could successfully apply for a large loan from the bank.  In return, Dale offered a luxury clubhouse membership to Ben as a token of thanks.

What major factors should Ben consider when handling Dale’s request?  What should Ben do? 

Teddy was a clerk employed by a solicitor firm and much trusted by his employer.  The firm’s major source of income was property conveyancing and Teddy was responsible for handling all the paper work of the property deals.  Teddy would get married soon but his fiancée wanted a grand wedding ceremony which put Teddy under a lot of financial pressure.  

One day, Teddy had dinner with his friend Barry who worked in a bank. Teddy talked to Barry about his financial worries.  Barry responded that perhaps they could work out something together for their benefits.  Barry suggested that he would submit some forged mortgage loan applications to his bank with the support of fake conveyancing documents with inflated property values prepared by Teddy.  Barry ensured Teddy that no questions would be asked by the bank.  After that, they could equally share the approved loans.  Teddy decided to take the risk and agreed to Barry’s plan.

Lily, a litigation clerk in a solicitor’s firm, was gentle and pleasant by nature.  One day, she was tasked to institute legal proceedings for covering arrears of rents of $900,000 and possession of four premises on behalf of the firm’s client.

Lily visited the premises and spoke to the tenants.  She was appalled by their hardship, especially after hearing the tales of woe spun by the tenants.  She agreed with the tenants that the landlord was too harsh on them and had been charging a cut-throat rent.  Many families would have to sleep in the streets if evicted.

Lily wished that she could do something to help.  She kept stalling for time and deferred carrying out what she had been instructed to do.  Weeks passed.

The client became impatient and complained to Lily’s boss, Henry. Lily made an excuse that she was too busy with other chores at that time. Henry accepted her explanation.  But when the client complained again, Henry started to give pressure on Lily.  Lily went to talk to the tenants who pleaded to Lily desperately.

What should Lily do?  Should she confess that she had not carried out her duty because she was sympathetic to the tenants’ plight? Would her lack of action be an indication of her inefficiency and lack of commitment to her job?  Would they suspect that she had received advantages for so doing?

Baldwin, a legal clerk of a very respectable legal firm specializing in criminal cases, was responsible for handling paperwork, filing documentation, communicating with clients, as well as setting appointments and meetings.

Recently, Baldwin was handling a criminal case for a client, Timothy, who was a sales representative in a jewelry wholesale company and was charged with two counts of theft amounting to around $250,000.  Timothy claimed that he was unduly implicated when his colleague suddenly resigned soon after the thefts were discovered.  Fearing to be convicted, both Timothy and his wife were desperate to seek legal assistance.

Sensing the desperation of his client, Baldwin tried to take advantage of the situation.  Baldwin hinted to Timothy and his wife that their chance of winning was half-and-half but it would certainly increase with Baldwin’s expertise.  He also stated that the legal fees would be expensive but worthwhile because Timothy’s reputation within the trade was more important.  The couple was so eager that they were willing to pay whatever it took to get out of the mess.

Soon after, Timothy and his wife came to the legal firm for a meeting with Baldwin.  At the end of the meeting, the couple gave an envelope to Baldwin saying that its content was a token of appreciation if Baldwin could help Timothy off the hook.  Baldwin opened the envelope and bundles of cash came into sight.  Baldwin gladly accepted the ‘token’.  However, Timothy was eventually convicted due to substantial evidence.

Did Baldwin violate any legislation for accepting money from his clients even though the outcome of the whole case was really not up to him to manoeuvre?

In the midst of the rush to get overseas passports, Hong Kong people cast their eyes to countries far and near.  Some thought of Pollyanna, a small country in Europe.  Stories went round that there was a quick means to secure a Pollyannese passport.  They only had to make about $500,000 donation to a political party in Pollyanna as well as investing in the property market there.  In this way, they could bypass normal formalities and procure their passports in a short time.  Many people fell for the scheme and got hold of Pollyannese passports in this manner.

Michael was a solicitor who had been in the profession for a long time.  He was now a wealthy man enjoying great respect.  When one of his friends invited him to take on clients and help them to procure Pollyannese passports in this way, Michael began to ponder.

Should he assist in expediting normal procedures?  Would it be alright for him to participate in a shady scheme like this? As a legal professional, should he consider whether the means in achieving the ends were ethical from his professional perspective?

Kenneth, a senior partner of a large solicitor firm, had recently suffered from a tremendous loss in the stock market leading him in serious financial difficulties.  Meanwhile, one of his long-term trusted clients, ABC Limited, was planning to make a series of large investment in overseas property market in which multi-billion deals would be involved.  The company would soon look for a solicitor firm to take care of the legal part of the project.  With the close work relationship, Kenneth knew that his firm would be a favourable choice but other competitors were also fighting hard to get the business.

One day, an old classmate in law school, Joe, invited Kenneth out for a dinner.  Joe was a senior partner of a competitor solicitor firm which was also interested in the project.  Knowing that Kenneth was in great financial debts, Joe made a very tempting suggestion to Kenneth.  Joe asked Kenneth to pass him the project proposal details prepared by Kenneth’s firm.  Then, Joe would copy the same content and submit another proposal before Kenneth’s firm, in order to win the project contract.  In return, Joe would give Kenneth 5% of the contract value as a token of thanks, which would help Kenneth clear off most of his debts.  Kenneth began to think.

Would Kenneth violate any legislation if he accepted Joe’s offer? What should Kenneth do?

Oscar had been in practice for fifteen years and had built up quite a name for himself. He moved around in society and had been Chairman of the Tigers’ Club for two consecutive years and led a very busy social life.

A man called Peter Pang was charged with deception. Though he pleaded not guilty, he was sentenced to 18 months’ imprisonment by the District Court. Peter’s wife, Wendy, was shaken and wanted to file an appeal. She approached Oscar and asked Oscar to represent her husband in the appeal.

At that time, Oscar had a full load of cases and, without paying much attention, told Peter’s wife that he would handle the matter. He put the case aside for quite a while without proceeding. When he finally had time to pick it up, and tried to have it reviewed at the District Court, he was informed that the review had to be made by the High Court.  Oscar was in trouble. It was already too late for an appeal to be lodged at the High Court.

What should Oscar do? Should he tell Wendy the truth about the present situation?  Or should he come clean and apply to the High Court for special leave so that Peter could pursue his appeal?

Howard joined a publicly listed company recently as a senior internal audit manager.

One day, Howard received an anonymous letter alleging a possible fraud in the company.  Following his diligent investigation, there was evidence showing some wrongdoings of Mr Szeto, the Purchasing Director and a close relative of the Managing Director.  The malpractices included operating bogus companies to supply materials to the listed company, accepting secret commissions in awarding contracts to selected suppliers and claiming private expenses through the company's accounts.

He presented his findings to the Managing Director and expected appreciation for his work and management’s follow-up on the misconduct and malpractices committed by Mr Szeto.  However, the response of the Managing Director was totally unexpected.

The Managing Director "accused" Howard of being over-zealous in the case.  He said that Mr Szeto was a respected senior member of staff in the company.  The evidence was also questioned in minute detail and the variations were described as minor.  Finally, the Managing Director advised Howard to stay away from the case.

How should Howard react?

Dicken was the financial controller of a publicly listed company, Good Men Investment Co. Ltd.  He was finalizing the share prospectus of his company.  Lawrence was Dicken’s best friend.  Their friendship dated back when they were in the same university and worked for the same CPA firm immediately after graduation.

Having a chronic illness which required expensive long-term treatment, Lawrence had also been suffering from financial difficulties.  Dicken felt very sorry about Lawrence’s situation.  Knowing that there would be a sharp rise of Good Men’s shares, Dicken intended to drop a hint to Lawrence to acquire the shares of Good Men from the market before the public announcement.  Dicken understood his action was insider dealing but he convinced himself that he was in good intention.  He thought that this case could be an exception considering the sad plight of Lawrence.

Should Dicken help Lawrence? Are there any other alternatives?

Leonard was an accounting manager of a listed company. After returning from a regional meeting, company’s department heads filed their expense vouchers.  Nothing was out of the ordinary except that one new department head, Cain, submitted a voucher for $6,000 less than the others.  Someone in the accounting department thought that this was strange as everyone used the same transportation and stayed at the same hotel.  But Leonard who had worked in the company for long enough knew that padding travel expenses was not uncommon.  Some of the vice-presidents even joked about it as being an additional fringe benefit.  However, the company policy clearly stated that such cases were strictly prohibited and that violators would face demotion or termination.  It’s Leonard’s job to decide how to enforce the policy.

What should Leonard do?  Should he suggest Cain following the others and amending the claims?  Should he take serious action against all the others?  Should he issue reminders to all staff to reiterate the company policy?