Case Analysis

Under Section 9(1) of the Prevention of Bribery Ordinance (Cap.201) (POBO), it would be an offence if David (i.e. agent), without the approval of his employer (i.e. principal), accepted the advantage (i.e. the financial assistance to the down payment of the new flat) as an inducement to assisting Mr. CHAN to get the tender.  Meanwhile, Mr. CHAN might also be liable for promising to offer bribes to David under Section 9(2) of the POBO.

By leaking the insider information to Mr. CHAN, David might also breach the Rules of Conduct of the Hong Kong Institution of Engineers, which prohibited engineers from disclosing confidential information and required them to act in the best interest of the employers.

Corruption would impair fair competition and put public safety at stake.  The quality of work would be in question as the sub-contractor was not chosen by an objective assessment of its competence and capability.  To uphold professional ethics and avoid breaching the law, David should say no to Mr. CHAN’s request and report the matter to his company and/or the ICAC.

Case in Perspective

Leakage of sensitive or confidential tender information (e.g. bid prices) by compromised personnel to favour a particular bidder will undermine fair competition and integrity of the procurement process.  To prevent such malpractice, the company should establish a robust procurement system to ensure the selection of the most suitable contractor based on merit.  For example, 

(a) Take precautionary measures to prevent leakage of tender information, such as receiving tenders through secure electronic channels with the password split and separately held by different staff members, and tasking an independent team to witness tender opening;

(b) Prohibit the opening of tenders received before the deadline, and ensure tenders remain in the custody of designated officer to minimise the risk of information leakage;

(c) Accept late tenders only with the endorsement of the management (or the tender board, if any) on justifiable grounds; 

(d) Require staff involved in procurement to declare whether they have any conflict of interest in the matter, and manage any declared conflict to mitigate integrity risks; and

(e) Maintain proper documentation of the tendering process, including but not limited to meeting minutes, tender evaluation and negotiation, correspondence, and declaration and management of conflict of interest, to facilitate independent audits and ensure accountability. 

Chui and the construction workers, as employees of the construction company, submitted the false attendance records with the intention to deceive salaries from their employer had violated Section 9(3) of the Prevention of Bribery Ordinance (POBO).

Bobby was facing an ethical dilemma that might put his personal values such as responsibility and honesty to challenge. On one hand, he had the supervisory responsibility to report the misconduct of the workers to the company; on the other hand, it might reflect badly on him if Clint learnt that he failed to discharge his supervisory duties properly. In handling the situation, Bobby should identify the relevant facts and take stock of all stakeholders concerned. The following factors should be taken into consideration when identifying viable alternatives and choosing the best course of action for himself:

1. Does his decision violate any professional, industry specific, or company code of conduct?
2. Is his decision against the law?
3. Does it correspond with his self-values such as honesty and responsibility?
4. Can he disclose the decision to others openly and honestly without misgivings?

The ETHICS PLUS ethical decision making model might be helpful for him in solving the dilemma.

Lennon was facing an ethical dilemma that might put his personal values such as compassion, responsibility and honesty to challenge. On one hand, his turning a blind eye to allow Gary to collect materials from the landfill can help Gary overcome financial difficulties; on the other hand, he has to discharge his duties according to the work instructions.  In handling the situation, Lennon should identify the relevant facts and take stock of all stakeholders concerned. The following factors should be taken into consideration when identifying viable alternatives and choosing the best course of action for himself:

1. Does his decision violate any professional, industry specific, or company code of conduct?
2. Is his decision against the law?
3. Does it correspond with his self-values such as honesty?
4. Can he disclose the decision to others openly and honestly without misgivings?

The ETHICS PLUS ethical decision making model might be helpful for him in solving the dilemma.

Section 4 of the Prevention of Bribery  Ordinance

YAU and CHEUNG were convicted of offering/accepting an employment as a reward for abusing YAU’s official position as a public servant, contrary to Section 4 of the POBO.   Under this section, it is an offence for:

• a public  servant  to  solicit  or  accept  any  advantage  offered  as  an inducement to or reward for any action or inaction in connection with the performance of his official duty; and
• any person who offers such an advantage.

Advantage

As stipulated in the POBO, an offer of employment or contract is defined as an advantage.   Attention should also be drawn to the fact that loans from contractors are also classified as advantages. Such dealings are often precursors to more serious corrupt arrangements and should be avoided.

Site Supervision

Site supervision is crucial in different stages of work.   Reliance on a single individual should be avoided.   Senior officers should conduct spot checks, closely monitor the quality and progress of work and keep thorough and accurate records.   The role of independent auditing should also be strengthened to provide a means to detect possible malpractice at an early stage.   In addition, corruption prevention awareness amongst all tiers of supervisory staff should be raised.

Section 4 of the Prevention of Bribery  Ordinance

Section 4 of the POBO deals with corruption relating to public servants. Under this section, it is an offence for:

• a public servant to solicit or accept any advantage offered as an inducement to or reward for any action or inaction in connection with the performance of his official duty; and
• any person who offers such an advantage.

In the circumstances, CHONG offered an advantage to Martin for conniving at the shortcut screeding method. Both thus committed an offence under Section 4 of the POBO.

Over-Socialisation

The contractor and site supervisory staff work in close circles and they easily become over-socialised and develop unhealthy relationship. Gambling, lavish and frequent entertainment are conducive to corrupt activities among the parties. The acceptance of free pleasure trips is an advantage under the POBO.     Such unhealthy relationships will easily affect their ability to effectively supervise the works of the contractors. Site staff may also be “sweetened up” by the unscrupulous contractors with the lavish and excessive entertainment.

Customary Practices

Any special events or festive occasions, such as ‘Lo Pan Festival’ (魯班誕 ),  are  not  excuses  for  staff  to  accept  any  advantage  or  laisee  from contractors. As  stipulated  in  section  19  of  the  Prevention  of  Bribery Ordinance, it shall not be a defence to show that any advantage accepted is customary in any profession, trade, vocation or calling.

Gambling

Habitual gamblers and persons in debt are highly vulnerable to corruption. Loans offered by contractors to site supervisory staff are major temptations and frontline staff who are in great debt will be comparatively easier to be tempted to accept bribes.

Case Analysis

The site supervisor was the employee and hence agent of the construction company.  He solicited and accepted advantages (i.e. the “introduction fees”) from the workers for referring them to work at the construction site, which was related to the affairs of the construction company (i.e. his principal).  In the absence of the principal’s permission to solicit and accept advantages, he had contravened Section 9(1) of the Prevention of Bribery Ordinance (Cap.201) (POBO).  As a result, the site supervisor was sentenced to imprisonment and ordered to pay $200,000 as restitution to the construction company.  The workers who paid the “introduction fees” had also contravened Section 9(2) of the POBO, for offering advantages to an agent of the company.

Case in Perspective

Under the POBO, both the giver and receiver of bribes commit an offence.  In addition, trade practice or custom could NOT be an excuse for soliciting, offering or accepting bribes. 

In the above case, the site supervisory staff breached the trust placed on him by his employer in the recruitment of workers and abused his powers for personal gains.  This rendered himself liable to criminal liabilities, damaged the reputation of the construction company and the industry as a whole, and might even undermine the quality and safety of the works, particularly if incompetent workers were recruited for the works only because they were willing to pay the “introduction fees”.  

To prevent their staff/employees and agents from falling prey to corruption in the recruitment of workers and hence ensure the quality and safety of works, construction companies should put in place adequate corruption prevention safeguards in recruitment of workers.  Examples of safeguards include –

(a) Prohibit staff/employees or agents, through staff code of conduct or employment contracts, from soliciting and accepting advantages in relation to their work particularly in the recruitment of workers;

(b) Enhance the transparency of payment of wages to workers (e.g. adopting written employment contracts and clearly specifying the wages therein) and put in place control measures in the procedures for recruitment of workers;

(c) Arrange payment of introduction/handling fee, if applicable and payable to the staff/agents, directly to the staff/agents responsible for recruitment of workers; and

(d) Remind staff/employees, agents and workers to be vigilant and report suspected corruption to the ICAC immediately.

A bank employee should seek management's advice if he/she has any doubt about the propriety of any course of action, or if the employee finds his/her own interests may be in conflict with those of the bank. Nancy might breach the Code of Conduct[1] of her bank as she awarded the contract to her brother's company without disclosing their relationship to her employer. Even when Nancy was confident that the service provided by Gordon's company was as good as those of other firms, she should declare the interest to her employer.

[1] According to HKMA’s Supervisory Policy Manual CG-3, each authorized institute (bank) should develop its own Code of Conduct containing certain minimum conduct requirements which include “all staff should avoid situations that may lead to or involve a conflict of interest, actual or potential.”

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.