The sales representatives committed an offence under Section 9(3) of the Prevention of Bribery Ordinance (POBO) offence if they had submitted false documents i.e. claims of commissions or entertainment expenses to deceive their principal i.e. the company.   

Furthermore, the offering of illegal commissions to agents of business clients with a view to obtaining or securing business might constitute a bribery offence under the POBO.   Agents of clients should obtain permission from their principals, i.e. their employers, for accepting advantages or commissions in relation to their work.  As approval should be given by the principal of the acceptor not the offeror, the Managing Director’s approval on the expense payments would not be considered the principal’s approval in this case.  

Although the clients were located in the Mainland, if any part of the act of bribery (including offering, soliciting or accepting a bribe) takes place in Hong Kong, the case may still be pursued by the ICAC under the POBO.  In any case, customary trade practice could not be a defence in any proceeding for a bribery offence under the POBO.  

Andrew should bring the issues to the attention of the company management and avoid involve in any acts that might call his integrity and professionalism into question. He should take into account his own views on ethics and legality and offer advice to the management if there were better alternatives.  

If corruption involving senior management was suspected, and all his attempts to find legal and ethical alternatives were rejected, then Andrew should consider resigning from the company and refuse to carry out any illegal transactions. He should consider reporting corruption to the ICAC and other crimes to the police.

It is against the law to offer any advantage, whether directly or indirectly, to any  person  or  to  a  third  party having  connections  with  that  person,  if  the advantage is proven to have been offered in relation to his duties. Although David offered an advantage to Fred under the pretext of giving him a wedding gift, both of them were still guilty of a bribery offence.

The illegal commission was offered to an employee of a Hong Kong company by a company based outside Hong Kong. However, if any part of the act of bribery (including offering, soliciting or accepting a bribe) takes place in Hong Kong, the case may still be pursued by the ICAC under the Prevention of Bribery Ordinance (POBO).

Likewise, if non-local residents request their Hong Kong counterparts to deposit bribes into a Hong Kong bank account, both parties will be in breach of the POBO as part of the bribery transaction takes place in the territory.

When conducting business overseas, it is important to watch out for increased bribery risks that may come with business operations under different systems and cultures.  Companies should pay special attention to the local laws and regulations in different jurisdictions as well as foreign bribery laws with extra-territorial effect.

In the case study, if Barry agreed with the Echo manger to inflate the bidding price in order to win the contract, Barry, the Echo Managing Director and the Echo manager might violate the anti-bribery provisions in the PRC Criminal Law.

In case any part of the bribery offence took place in Hong Kong, Barry might also breach Section 9 of the Prevention of Bribery Ordinance if he, without lawful authority or reasonable excuse, offered bribes to the Echo manager as an inducement or reward for securing the contract.

To avoid breaching the law and protect himself from any physical harm, Barry was suggested to report the matter to his company and seek help from local authorities.

Under Section 9 of the Prevention of Bribery Ordinance (POBO), it is an offence for any agent, without the approval of his principal, to solicit or accept an advantage as a reward for or an inducement to perform an act in relation to his principal’s affairs or business. The offeror will also be guilty of the offence. Even if the acceptance of bribes takes place outside Hong Kong, if any part of the bribery act (including offering, soliciting or accepting a bribe) takes place in Hong Kong, the case can be pursued under the POBO. Furthermore, according to Section 11 of the POBO, as long as the offeror of bribes intends to induce the acceptor to extend his/her favour(s), both parties would have committed bribery offence even if the acceptor claims that he/she 'did not actually have the power to do so', 'did not intend to do so' or 'did not, in fact, do so'. Hence, Mr Lee might have committed the offence of offering bribes and could not claim in his defence that the purpose of the bribes had not been carried out. Similarly, if Mr Cheung had accepted the red packet without declaring it to the bank, he might also have committed an offence even if he had not ultimately helped Mr Lee.

Entertainment means the provision of food and drink for immediate consumption, whereas dried seafood, spirits or red packets are advantages. The offeror cannot offer bribes in excuse of 'an established custom in the trade or 'trade practice'. According to Section 19 of the POBO, the court will not accept such defence on the part of either the offeror or the acceptor, but will only consider whether or not the acceptor has the permission of the principal.

According to the guidelines laid down in the Supervisory Policy Manual — Code of Conduct (the Code) issued by the Hong Kong Monetary Authority, a bank employee must declare any advantage received in the course of business.  While the acceptance of mere entertainment does not constitute an offence, entertainment that is in any way luxurious is very likely a prelude to corruption or bribery. Hence, the Code further stipulates that a bank employee can only accept normal business entertainment such as an ordinary meal.

When facing corruption temptation, Mr Cheung should make a declaration in compliance with the Code and report the offering of gifts and red packets offered by Mr Lee to the bank in order to protect himself from being implicated in a bribery case.

In this case, the senior credit manager, an employee (agent) of the bank (the principal), without the permission from the bank, accepted an advantage (a watch) from factory owner as a reward for turning a blind eye to the out-dated equipment and giving him a favourable site inspection report (an act in relation to the bank’s business). Although the acceptance of gifts took place outside Hong Kong, part of the bribery act occurred in Hong Kong (e.g. submission of a favourable report to the bank). The senior credit manager might breach Section 9(1) of the Prevention of Bribery Ordinance (POBO) for accepting bribes, whereas the factory owner might contravene Section 9(2) of the POBO for offering bribes. The senior credit manager might have also contravened the Banking Ordinance.

Although the senior credit manager was the supervisor of the credit manager, he did not have the authority to permit his subordinates to accept the advantage.

It is very common for banks’ corporate clients to have their business operations such as production plants or other assets in the Mainland or elsewhere outside Hong Kong. When site inspection/ visit by bank staff is required in assessing a loan application, the staff members are exposed to significant risk of temptation, which may comprise bribes, gifts, and excessive entertainment or services.

In fact, assigning staff members of the same unit (in particular one of them is the supervisor of the other one) to conduct high corruption-risk tasks is a formula of disaster. The credit manager did not decline the gift offer at the spot probably because of the pressure from his supervisor, and might eventually be tempted to collude with his supervisor.

Due to the differences in various cultures, some customers from other regions may regard offering gifts/ rewards in return for assistance or favour as a common business practice.  Banks should make it clear to their staff members that it is unnecessary and inappropriate for bank staff members to adopt local cultures which may violate the laws.  Moreover, an independent, reliable and confidential channel of reporting malpractices should be established by banks to encourage whistle-blowing.  Furthermore, it is essential for banks to communicate clearly to all staff members and customers, especially non-local ones, about the bank’s policies on anti-bribery, acceptance of advantages / entertainment and zero tolerance to corruption.

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.

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.