Both the sales manager who offered advantages to secure business and the greedy assistant service manager had committed a bribery offence under the Prevention of Bribery Ordinance.

The procurement field has always been vulnerable to the risk of corruption, especially on high value goods and services such as information system and IT equipment that require frequent updating.  When a chain of purchases of IT equipment is initiatedor consulting services are outsourced, the situation is rife with opportunities for illicit deals if the procurement process is not properly administered. Furthermore, the fact that the assistant service manager was able to take home some IT equipment revealed that the company’s asset control was a complete failure.

Management usually rely on the expertise in their workforce to perform procurement duties. But that must not excuse, deter or prevent them from instigating the necessary checks and balances to minimise the danger of corruption and malpractice. For examples, managers should lay down procedures and safeguards to prevent tampering or leakage of quotations or tenders during the procurement process. Tender evaluation panel involving professionals can be formed to evaluate the bids of high value or special purchases and make recommendations for senior management to consider. Proper records of quotations/tenders as well as products/services delivered should be kept for checking and future audits. Separating procurement duties from storekeeping duties and conducting inventory check are also helpful to minimize risks of company’s assets being misappropriated.

The software engineer contravened the Rules of Conduct of the Hong Kong Institution of Engineers, which require an engineer to offer complete loyalty to his employer and avoid engaging in business, investments or activities which conflict with the interests of his employer.

An employment or contract could be considered as an advantage.  As the software engineer's company neither approved the engineer to take up part-time job nor allowed him to accept any advantage in relation to his duties, the engineer had violated Section 9 of the Prevention of Bribery Ordinance for assisting the software house to get the job and accepting the project fee in return.

Susanna's old school friend clearly tried to sweeten her with gifts. He was the offeror and Susanna was the recipient. Even though Susanna subsequently did not place orders with his company, both of them already breached the Prevention of Bribery Ordinance (POBO).

Under Section 11 of the POBO, if it is proved that the offeror believes that the advantage given is an inducement or a reward of favours , the recipient of the bribe cannot use the defence that: (a) "he did not actually have the power to do so", (b) "he accepted the advantage without intending to do so" or (c) "he did not in fact do so". It is important to note that accepting any gift or sweetener is an offence under law, even if the final outcome or intent of the gift is not achieved.

Jonathan was facing a situation of conflict of interest as well as an ethical dilemma that might put his personal values such as loyalty and honesty to challenge. On one hand, his assistance to Leo could help Leo’s company maintain a good business relationship with Galaxy; on the other hand,  his taking up of the moonlighting job from Leo at the expense of his boss might create a conflict of interest.  In handling the situation, Jonathan 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 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 loyalty, 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.

Under Section 9(1) of the Prevention of Bribery Ordinance (POBO), it would be an offence if Man (an employee), without the approval of his employer, accepted advantage from Gordon for assisting him in getting the business contract. 

According to Section 2 of the POBO, advantage means any gift, loan, fee, reward or commission, employment, contract, service, favour, payment, release or discharge of loan or liability, etc. The set of free computer equipment offered by Gordon to Man can be regarded as advantage.

Gordon might also violate Section 9(2) of the POBO for offering bribes to Man for the same purpose.

Edmond was facing an ethical dilemma that might put his personal values such as honesty, responsibility and compassion to challenge. In handling the situation, Edmond 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:

1. Any violation to his professional, industry specific, or company code of conduct?

2. Is it against the Law?

3. Does it correspond with his self-values such as honesty, responsibility and compassion?

4. Can he disclose his decision to others openly and honestly without misgivings?

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

Commission is a kind of advantage under the Prevention of Bribery Ordinance (POBO).  The sales manager might have breached Section 9 of the POBO for accepting the commission as a reward for him to divulge company’s emails or information to the rival company. The offeror of the advantage might also breach the same law.

Management may take system security for granted, but this kind of oversight can prove costly – business may be diverted to competitors and security controls bypassed with just a few keystrokes.

The web design company should have adopted the necessary safeguards to ensure that the digital information was stored safely and under the control of authorised personnel. Proper audit trail should be maintained to detect and deter fraudulent practices.   Professional consultants can also be hired to review and enhance IT security on a regular basis.  Where these are not done, criminals can carry out acts which may not leave any trace, for example by abusing e-mails to commit crimes.

Financial Projection for Listing

Surely Patrick should handle the financial estimates and anticipated sales growth meticulously.  He should document his bases of assumptions and agree those with the Managing Director.  All these would be reviewed by the merchant bank which sponsored the listing as well as the reporting accountant, and the eventual delivery of the forecasts would be a matter of public and regulatory scrutiny once the company got listed.  Although the Managing Director did not bother which accounting method to use, Patrick should ensure that the accounting method followed all applicable Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and interpretations issued by the Hong Kong Institute of Certified Public Accountants.

Managing Director's Request for Manipulation of Management Accounting Data

Patrick should explain to the Managing Director that, first of all, a wilful act of manipulation of accounting data is a criminal offence.  Secondly, accounting information presented to banks would most likely be audited.  Once the banks realised that there were significant discrepancies between management accounting data previously presented and the audited accounting data, they would ask for explanations which would well call into question the credibility of the company.  In the worst case, banks could withdraw financial support to the company.

Request for a Cheque by the Assistant to General Manager

It would be a breach of the Section 9(3) of the Prevention of Bribery Ordinance (POBO) if the General Manger used false document e.g. false reimbursement records, to deceive his company. Furthermore, if the cheque payment was offered by the General Manager to the Mr Wong as an advantage in disguise to induce or reward for latter’s assistance in granting credit facilities to the company, both the General Manager and Mr Wong would breach Section 9 of the POBO.

Patrick should report the matter to the Managing Director and explain the legal consequences of being involved in such an act.  Patrick should take the opportunity to urge the Managing Director to issue a set of code of conduct to strengthen internal control of the company. He should report to the ICAC if corruption was suspected.

Offering of ‘Valuable Information'

The valuable information provided by Benny is likely to be insider information which, if used to deal in listed securities, could have severe legal consequences.  Patrick should make it clear to Benny that his evaluation of the banks was done in an objective manner and there would be no need for Benny to reciprocate with any 'gift' as a result of OPQ bank being appointed.  If Patrick's dinner with Benny is no more than a social entertainment, Patrick does not need to avoid it.  If by accident Patrick had heard of the valuable information from Benny but he did not deal, counsel nor procure other persons to deal in the securities, he would not breach the insider dealing provisions under the Securities and Futures Ordinance.