In accordance with the Prevention of Bribery Ordinance (POBO), the term "agent" includes individual directors of a company.  In the above case, Tim as a director was an agent of his company.  He breached Section 9(3) of the POBO by intentionally using false documents to deceive and mislead his principal, i.e. the company.

Tim, who provided false information to mislead the transportation company operator, might also commit offences of false accounting and deception.

Daphne might violate Section 9 of the Prevention of Bribery Ordinance (POBO) if she (as an employee), without the approval of her principal (the watch manufacturing company) accepted an advantage (i.e. 2% profit from the mark-up price offered by Simon) for recommending Simon’s company to her watch manufacturing company.  Simon might also violate POBO for offering bribes.

Daphne was facing a dilemma that might put her personal values such as responsibility and honesty to challenge. In handling the situation, Daphne 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 violations to her professional, industry specific, or company code of conduct.
2. Is it against the Law?
3. Does it correspond with her self-values such as responsibility and honesty?
4. Can she disclose her decision to others openly and honestly without misgivings?

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

Under the Prevention of Bribery Ordinance (POBO), the principal of a company is the entire Board of Directors, while individual shareholders or directors are considered as agents. In this case, Mr Chow was an 'agent' as he was one of the shareholders and the paid General Manager of the factory. Prior to any solicitation or acceptance of any advantage in the course of business, Mr Chow should have obtained permission from the Board of Directors.

The principal’s permission should be definite and given in advance in accordance with Section 9 of the POBO. Otherwise, the agent has to apply for permission as soon as reasonably practicable after the acceptance. In addition for such permission to be lawful, the principal must have carefully considered the application before granting permission.

Mr Chow’s company had not stated clearly in advance whether or not its staff members could accept advantages in relation to their duties. During the investigation, Mr Chow claimed that he had notified other shareholders that the rebates concerned were used to cover the entertainment expenses incurred in Chinese Mainland. Nevertheless, he had, in fact, only casually brought this matter to the attention of just two of the shareholders. Furthermore, the arrangement had not been discussed at any board meeting or formally approved, and there was no record of the accepted rebates, nor how they were dealt with. As such, Mr Chow was considered not to have obtained the company’s permission to accept the rebate at the material time. Moreover, he had not applied for retrospective approval from his company, and his acceptance of the rebates was not known to and approved by all shareholders. Thus Mr Chow accepted the rebates without the principal’s permission.

To protect the interest of the companies and their stakeholders, companies should take the initiative to formulate rules and regulations governing the acceptance of advantages by their board members and staff and to state clearly in writing the company’s stance and policy regarding acceptance of advantages, and entertainment. The procedures for declaring acceptance of advantages and the channels for making enquiries should also be laid down and made known to all staff.

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.

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 the above case, Cherry was an employee of the manufacturer i.e. an agent under Section 9 of the Prevention of Bribery Ordinance (POBO), while the manufacturer was her principal. 

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. 

Under Section 9(1) of the Prevention of Bribery Ordinance (POBO), it was an offence for Cherry (an employee), without the approval of her employer, to accept advantages (i.e. the expensive watch and other monetary rewards) for making false accounting records to conceal the marked up shipment cost.   Ray might also violate Section 9(2) of the POBO for offering bribes. 

Furthermore, Cherry might breach Section 9(3) of the POBO by intentionally using false documents to deceive and mislead her principal, i.e. the manufacturer.

Ray and Cherry, who conspired to provide false information to mislead the manufacturer, might also commit offences of false accounting and deception.

According to the Prevention of Bribery Ordinance (POBO), free tours, “red packet” and casino tokens are all advantages. If the two representatives accepted these advantages from Bill in Hong Kong, both of them and Bill would be subject to the POBO, so that both the offeror and recipient would breach the law if they do not have the permission of their employers to receive the advantages.

They cannot use customary trade practice as an excuse because according to Section 19 of the POBO, it shall not be a defence to show that any such advantage is customary in any profession or trade, The court shall only make a judgement based on whether permission was given by the principal of the recipient.

Ben could consider the following major factors when handling Dale’s request:

Professional / Company code of conduct

The Hong Kong Institute of Chartered Public Accountants (HKICPA) requires a professional accountant to comply with relevant laws and regulations, and avoid any conduct that the professional accountant knows or should know might discredit the profession.  Also, a professional accountant needs to comply with the fundamental principles of integrity and objectivity as stipulated in the HKICPA’s Code of Ethics for Professional Accountants which requires an accountant to be straightforward and honest in all professional and business relationships and avoid any conflict of interest situations.   Meanwhile, Ben also needs to observe his company’s code of conduct governing the above behaviours.

Legal Requirements

Ben might violate the Section 9(1) of the Prevention of Bribery Ordinance (POBO) if he accepted the advantage (luxury clubhouse membership) offered by Dale for helping Dale to obtain the bank loan by manipulating ABC’s accounting records; whereas Dale might violate Section 9(2) of the POBO by offering bribes.

Uncompromising Self-values

Helping Dale to get a bank loan by manipulating ABC’s accounting records might undermine Ben’s self-values of honesty, integrity and responsibility to his accounting firm.

Sunshine Test

If Ben accepted Dale’s offer and helped him to get the bank loan, he would fail to disclose his decision and the situation openly and honestly without misgiving.

When facing the above situation, Ben should avoid involve in any acts that might call his integrity and professionalism into question. He must take into account his own views on ethics and legality and offer advice to Dale if there were better alternatives.  

Zero tolerance to attempted bribes

If Dale insisted on asking for Ben’s help to get the bank loan, Ben should decline the advantage offered by Dale and report the attempted bribe to his accounting firm and the ICAC as soon as possible.

The plant engineer breached the Rules of Conduct of the Hong Kong Institution of Engineers by failing to discharge his supervisory role with due diligence and care, resulting in chemical pollution to the environment and potential safety and health hazards to the workers and the public.

To comply with the standard, the plant engineer should accept responsibility for his actions and have the supervisory control tightened up. He should ensure that the persons to whom he delegates the authority are sufficiently competent to carry out the associated responsibility.