If Raymond accepted advantages from Mr Wang and agreed to submit an inspection report containing false results to his employer (i.e. the inspection body), he would contravene Section 9 of the Prevention of Bribery Ordinance (POBO).  Even if no advantage was involved, Raymond would still breach Section 9(3) of the POBO by submitting false documents with an intent to deceive his employer.  Mr Wang, who offered the bribe, would also commit an offence under POBO.

Although the advantages were offered outside Hong Kong, the offence may still be prosecuted under POBO if any act of bribery (including offering, soliciting, accepting, promising, or agreeing to accept an advantage without permission) took place in Hong Kong.  For example, submitting a false inspection report to his employer in Hong Kong falls within the scope of the Ordinance. 

As a staff member of an independent third-party inspection body, Raymond is required to maintain impartiality and professional independence.  He should decline excessive, frequent or lavish entertainment offered by assessed organisations to avoid actual or perceived conflicts of interest, and strictly comply with his company’s policies on the acceptance of advantage and entertainment.

Soliciting bribes from overseas companies is also subject to prosecution

Though the supplier, from which Mr Fong solicited bribes, was outside Hong Kong, Mr Fong might still commit an offence of soliciting an advantage under Section 9 of the Prevention of Bribery Ordinance (POBO) as he sent text messages requesting for loans to be deposited into his wife’s bank account in Hong Kong in return for placing more orders.

Businesspersons should be aware that the POBO can apply when part of the corrupt act, e.g. promising, agreeing, soliciting or accepting advantages without permission, takes place in Hong Kong.

Accepting bribes, whether directly or indirectly, is against the law

Loan is considered an advantage under the POBO. Accepting bribes regardless of whether the advantage is directly given to the acceptor or indirectly delivered to a third party is still against the law. In the case study, if the Mainland herbal supplier agreed to deposit the loans into Mr Fong’s wife’s bank account in Hong Kong, as long as it was proven that the receiving account was controlled by Mr Fong or that he was the ultimate beneficiary, Mr Fong would be considered as having accepted the advantage.

Under Section 9 of the Prevention of Bribery Ordinance (POBO), the principal's permission (in this case, the toy company) has to be given before an agent (Ivan) solicits or accepts an advantage; otherwise the agent has to apply for permission as soon as reasonably possible after the acceptance. In addition, for such permission to be lawful, the principal needs to carefully consider the details of the application before granting permission.

Ivan's company had not stated clearly in advance whether or not its staff members could accept advantages in relation to their official duties. In other words, Ivan did not have the company's permission when he accepted the commission. Furthermore, since he had not applied for retrospective permission from his company afterwards, and his acceptance of the commission was not known to and approved by all shareholders, such acceptance was considered without the principal’s permission.  

Some of the company shareholders recklessly claimed that they had given permission for Ivan to accept commission. However, they had not specified the details and scope of acceptance, and there was no record of the accepted rebates. They also did not take into account the fact that such a policy would affect fairness of competition among their suppliers. This was against both the spirit and requirements of Section 9 of the POBO, so the defence of "permission of the principal" was not substantiated.

As such, companies should proactively formulate rules and regulations to govern the acceptance of advantages by staff at all levels. They should also state clearly in writing the company policy on the nature and maximum amount of advantages staff are permitted to accept, conditions of such acceptance, declaration procedures and enquiry channels, etc. for staff compliance.

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.

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.

It would be an offence of Section 9 of the Prevention of Bribery Ordinance (POBO) if Alexander, as an employee of the real estate development firm, without the approval from his employer, accepted advantages from Roy (i.e. Roy’s assistance in placing Alexander’s two sons into the best local school in Toronto) as a reward for helping Roy’s firm to get the business contract of environmental study.  Roy would also violate POBO for offering bribes.

Also, Alexander might violate his company’s code of conduct if he did not disclose his relationship with Roy to the management when there was conflict of interest. 

Apart from the aspects of compliance and company code of conduct, Alexander may also consider the following factors when identifying viable alternatives and choosing the best course of action:

1. Does it correspond with his self-values such as honesty, compassion and responsibility?
2. 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 the dilemma.

According to Section 9 of the Prevention of Bribery Ordinance (POBO), it would be an offence for Patrick, (an employee of the travel agency) without the approval of his employer, to accept advantages (i.e. $30,000 from William) for putting William’s restaurant into the company’s approved list.  William might also violate POBO by offering bribes.

Although the commission was deposited into the account of Patrick’s wife, Patrick might still commit a corruption offence.  Under the POBO, a person is considered to have accepted an advantage even if a third party receives the advantage on his behalf.

Moreover, it is important to note that it shall be an offence under the POBO if any act (including includes promising, agreeing, soliciting or accepting advantages without permission, etc.) of bribery takes place in Hong Kong.

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.