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.

Edwin might breach Section 9 of the Prevention of Bribery Ordinance (POBO) if he, as an employee of his bank, without the approval of his employer (i.e. the bank), accepted an advantage (i.e. special commission from the sales representative) for buying an obsolete printer model from the sales representative. The sales representative might also breach the same provision of the POBO for offering the bribe as an inducement to Edwin for abusing his authority at work. 

Edwin was facing an ethical dilemma that might put his personal values such as honesty and responsibility to challenge. In handling situation like this, Edwin 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 loyalty, honesty and responsibility?
4. Can he disclose his decision to others openly and honestly without misgivings?

To uphold his professional ethics and avoid breaking the law, Edwin should say no to the sales representative’s offer and report the matter to the bank or the ICAC.  He could also refer to the ETHICS PLUS ethical decision making model for solving his ethical dilemma and choosing the best course of action.

Peter 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. 

Peter also commits a corruption offence under Section 9 of the Prevention of Bribery Ordinance (POBO) for soliciting from Joe an advantage as a reward for leaking confidential information from his bank. He may also violate the Code of Conduct^[1] of his bank as he fails to preserve the confidentiality of the bank's internal information.

^[1] According to HKMA’s Supervisory Policy Manual CG-3, each authorized institute (AI) (bank) should develop its own Code of Conduct containing certain minimum conduct requirements which include “no member of staff should, during or after termination of his employment with the AI, except in proper course of his duties or with the written consent of the AI, divulge or make use of any secrets or of any correspondence, accounts, connections or dealings of the AI or its customers or of any knowledge gained in relation thereto during his employment.”

Bank employees are required to treat their customers' banking affairs as private and confidential.Cindy might violate the Code of Conduct^[1] of her bank for releasing customers’ information of her bank to a third party without their consent. Such a disclosure is also strictly prohibited in accordance with the Personal Data (Privacy) Ordinance (PDPO).

Cindy breached Section 9 of the Prevention of Bribery Ordinance by accepting an advantage, i.e. $1,000 for each set of data released to Fred. Fred in turn committed an offence of offering a bribe.

^[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 “no member of staff should release customer information to a third party without written consent from the relevant customer, unless the release complies with the PDPO or he is required or permitted to do so by law.”

Terry breached Section 9 of the Prevention of Bribery Ordinance (POBO) as he abused his official position as a bank manager by expeditiously approving an application of overdraft facilities and solicited and accepted an advantage in return without permission from his employer. Likewise, Mark breached the POBO by offering an unlawful advantage to Terry. In this case, Terry also violated Section 124 of the Banking Ordinance.

Although the "under-the-table" deal had not been completed, Terry and Mark still committed an offence. Under the POBO, a person will be found guilty even though the purpose of bribery has not been achieved. Terry might also violate the Code of Conduct^[1] of the bank by soliciting and accepting personal benefits from a customer.

^[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 “no member of staff should solicit, accept and retain personal benefits from any customer of the authorized institute (bank) or any individual or organisation doing or seeking to do business with it.”

Nelson and Leo breached Section 9 of the Prevention of Bribery Ordinance (POBO) as Nelson accepted advantages from Leo in the form of commission and free travel for providing assistance in approving Leo's L/C applications without the permission of the bank. It is also a violation of Section 124 of the Banking Ordinance for Nelson to accept the advantages. Nelson commits a corruption offence despite that Leo deposited the commissions into the account of Nelson's wife. Under the POBO, a person is considered to have accepted an advantage, even though another person acting on his behalf receives the advantage.

Nelson also could not excuse himself by explaining that the acceptance of the Chinese New Year trip is a customary practice as custom is not a defence according to the POBO. Nelson might further contravene the Code of Conduct^[1] of his bank for accepting personal benefits from a customer doing business with the bank.

Nelson’s acceptance of entertainment and free accommodation without doing anything at the early stage might not contravene Section 9 of the POBO at the outset. Nevertheless, Nelson should avoid accepting excessive levels of entertainment or advantages as it might affect his objectivity in dealing with Leo.

^[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 “no member of staff should solicit, accept and retain personal benefits from any customer of the authorized institute (bank) or any individual or organisation doing or seeking to do business with it.”

If Daniel and Michael did not obtain their principal's permission to accept the advantage, both of them and Calvin would be in breach of Section 9 of the Prevention of Bribery Ordinance. It also constituted a breach of Section 124 of the Banking Ordinance. In this case, Daniel should clarify with his bank as his principal rather than follow his supervisor's advice.

Although the corrupt transaction happens outside Hong Kong, both of them commit a corruption offence in Hong Kong since the application of credit facilities is processed in Hong Kong. The location where the acceptance or offering of an advantage takes place is only one of the factors to be considered for prosecution.

They may also violate the Code of Conduct of their bank by accepting personal benefits from a customer. They should have actively discouraged their customer from offering them personal benefits of any kind.

Adam might violate Section 9 of the Prevention of Bribery Ordinance (POBO) if he, as an employee of his company, without the approval from his employer, accepted advantages offered by Philip (i.e. the shares of his uncle’s new company) for turning a blind eye to the unqualified loan application.  Philip might also violate the POBO for offering bribes.

As an accounting professional, Adam should observe and comply with his professional 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, Adam also needs to observe his company’s code of conduct governing loan applications.  He may consider report the attempted bribe to the management and to the ICAC.

Ken had followed Stephen's advice and issued a post-dated cheque for HK$810,000 for the specific purpose of offering a bribe. So long as the offeror believes that the advantage is a reward for favours done in relation to one's duties, he has already committed an offence of offering a bribe under the Prevention of Bribery Ordinance. This is true, regardless of whether the target of the bribe receives the advantage or not.

Since Stephen was not the person responsible for approving the loan application, he was not actually accepting a bribe directly, but he was guilty of deceiving the businessman of HK$810,000. He contravened the law, even though the post-dated cheque was never honoured.

In the above case, Louis was an employee of the bank as the manager of the loans department, i.e. an agent under Section 9 of the Prevention of Bribery Ordinance (POBO) while the bank was his 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.     

The bank certainly would not allow Louis to accept advantage (i.e. 5% rebate from the loan granted) related to his official position, thus the rebate was an illegal advantage and the acceptance of which would constitute an offence of accepting a bribe.  As such, Louis might commit an offence under Section 9 (1) of the POBO for accepting bribes whereas Clark might also commit a bribery offence under Section 9 (2) of the POBO for offering illegal advantage. 

Furthermore, Louis may also violate the Banking Ordinance and the Code of Conduct[1] of his bank by accepting personal benefits from a customer doing business with the bank.

According to HKMA’s Supervisory Policy Manual, each authorized institute (bank) should develop its own Code of Conduct containing certain minimum conduct requirements which include “no member of staff should solicit, accept and retain personal benefits from any customer of the authorized institute (bank) or any individual or organisation doing or seeking to do business with it.”