Release of inside information

Kenneth, a senior partner of a solicitor firm, was in great financial difficulties. His old classmate offered to help with the debt if Kenneth could leak out inside information.
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Kenneth, a senior partner of a large solicitor firm, had recently suffered from a tremendous loss in the stock market leading him in serious financial difficulties.  Meanwhile, one of his long-term trusted clients, ABC Limited, was planning to make a series of large investment in overseas property market in which multi-billion deals would be involved.  The company would soon look for a solicitor firm to take care of the legal part of the project.  With the close work relationship, Kenneth knew that his firm would be a favourable choice but other competitors were also fighting hard to get the business.

One day, an old classmate in law school, Joe, invited Kenneth out for a dinner.  Joe was a senior partner of a competitor solicitor firm which was also interested in the project.  Knowing that Kenneth was in great financial debts, Joe made a very tempting suggestion to Kenneth.  Joe asked Kenneth to pass him the project proposal details prepared by Kenneth’s firm.  Then, Joe would copy the same content and submit another proposal before Kenneth’s firm, in order to win the project contract.  In return, Joe would give Kenneth 5% of the contract value as a token of thanks, which would help Kenneth clear off most of his debts.  Kenneth began to think.

Would Kenneth violate any legislation if he accepted Joe’s offer? What should Kenneth do?

Case Analysis

Kenneth, as an agent of his solicitor firm, might violate Section 9 of the Prevention of Bribery Ordinance (POBO) if he accepted the advantage (i.e. 5% of the contract value) offered by Joe for leaking internal information to Joe without the approval of his principal (i.e. the law firm). Meanwhile, Joe might also violate the POBO for offering bribes.

Kenneth might also violate the professional code of conduct for compromising or impairing his independence or integrity, as well as his duty to act in the best interests of his client.

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Professional negligence

Oscar, a lawyer, had to strike a balance between his work and his busy social life. Recently, he put one of his clients’ cases aside for quite a while without proceeding.
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Oscar had been in practice for fifteen years and had built up quite a name for himself. He moved around in society and had been Chairman of the Tigers’ Club for two consecutive years and led a very busy social life.

A man called Peter Pang was charged with deception. Though he pleaded not guilty, he was sentenced to 18 months’ imprisonment by the District Court. Peter’s wife, Wendy, was shaken and wanted to file an appeal. She approached Oscar and asked Oscar to represent her husband in the appeal.

At that time, Oscar had a full load of cases and, without paying much attention, told Peter’s wife that he would handle the matter. He put the case aside for quite a while without proceeding. When he finally had time to pick it up, and tried to have it reviewed at the District Court, he was informed that the review had to be made by the High Court.  Oscar was in trouble. It was already too late for an appeal to be lodged at the High Court.

What should Oscar do? Should he tell Wendy the truth about the present situation?  Or should he come clean and apply to the High Court for special leave so that Peter could pursue his appeal?

Case Analysis

Oscar was facing an ethical dilemma that might put his personal values such as responsibility and honesty to challenge. In handling the situation, Oscar 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 his self-values such as honesty?
  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 the dilemma.

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Delegation of site supervisory duties

Being heavily tied down by office work, the plant engineer assigned his technical assistant to carry out the inspection duties, which however were not performed properly.
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The duty of a plant engineer in a manufacturing company was to ensure proper consumption and disposal of chemicals used for production.  Being tied down by paperwork, the plant engineer seldom had chance to conduct on-site supervision over the workers in the factory.  To ease the problem, he assigned a technical assistant to carry out the inspection for him.

When several chemical workers had developed serious skin problems and complain about the hostile working environment, the plant engineer began to realize that some of the workers had continuously misused the chemicals. Worse still, chemical wastes were not properly disposed of and might have leaked to a river nearby through the drainage of factory without treatment.

Case Analysis

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.

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Accepting advantage from subcontractor with close personal relationship

Peter, an engineer, wanted to buy a new car but struggled with the deposit. A subcontractor under Peter’s supervision offered Peter financial assistance without hesitation.
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Peter was an engineer in a private construction company. He had been assigned to supervise works carried out on site drainage in the eastern district of Hong Kong Island.  The job was awarded to a subcontractor and the director Stanley was very happy as the project brought in good money and would be renewed annually.

Stanley knew that one of Peter’s hobbies was buying new cars. So each time they met the conversation would invariably turn to the purchase of cars of various makes. Peter realised that Stanley was indebted to him in a way as Stanley’s company secured the contract only by a twist of good luck when others failed to meet the stringent requirements set by Peter.  One day, while chatting, Peter told Stanley he intended to place order for a new limited edition RV Van and he was about to pay the deposit.  But he was in a bit of difficulty over the cash flow at the moment.  Stanley discreetly offered to make the payment for him, and insisted that he need not bother about returning the money so soon.

“It can wait,” Stanley said, “You know it has nothing to do with our business relationship.”

Should Peter accept this loan?  Did Stanley mean it to be a loan or was it an offer in disguise in appreciation of what had happened? What would be the best line of action?  At the end of the day, could Peter let other people know about this arrangement without any scruples?

Case Analysis

Under Section 9(1) of the Prevention of Bribery Ordinance (POBO), it would be an offence if Peter (an employee), without the approval of his employer (the construction company), accepted advantage as a reward for awarding contract to Stanley. 

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.   Therefore, the deposit offered by Stanley for the car purchase can be regarded as advantage. 

Stanley might also violate Section 9(2) of the POBO for offering bribes.

In fact, Peter faced a conflict of interest situation when having a close relationship with Stanley, a subcontractor under his supervision at work.  Peter should exercise his professional judgement to keep a professional distance with Stanley in order to maintain his objectivities.  He should also observe and follow his company’s policy on handling conflict of interest and made declaration when appropriate.

Moreover, Peter might also violate the Rules of Conduct of Hong Kong Institute of Engineers if he failed to discharge his professional responsibilities with integrity, dignity, fairness and courtesy and subject to disciplinary sanction, e.g. suspension of professional qualification.

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Exercising discretion to approve claims

A senior engineer of a consultancy firm was offered shares of a company from his friend who was a subcontractor in a private housing estate project. The subcontractor asked him to exercise work discretion to approve additional claims.
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Alex was a senior engineer of a consultancy firm. Part of his duties was to approve various applications of claims from contractors and subcontractors.  Alex was in a good relationship with a contractor Bernard because they shared the same interest in golfing.

Recently, Alex’s company was responsible for over-seeing a private housing estate project, in which Bernard was one of the subcontractors. One day, Bernard invited Alex for lunch over which Bernard complained the funds for the project was short. He hinted if Alex could use his discretion to approve claims for an additional cost of around $5,000,000 for contingencies. Bernard even tried to convince Alex by offering shares of his company to Alex.

As Alex would retire from his company soon, should he help Bernard this time so that Bernard would return the favour after his retirement?

Case Analysis

Under Section 9(1) of the Prevention of Bribery Ordinance (POBO), it would be an offence for Alex (an employee), without the approval of his employer (the consultancy firm), to accept the advantages for exercising work discretion to approve additional claims for Bernard the subcontractor in a private housing estate project.  

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.   Therefore, shares of Bernard’s company offered by Bernard can be regarded as advantage.  

Bernard might also violate Section 9(2) the POBO for offering bribes to Alex.

Moreover, according to the Rules of Conduct of Hong Kong Institute of Engineers, members are required to discharge his professional responsibilities with integrity, dignity, fairness and courtesy.  By agreeing with Bernard’s suggestion, Alex might also violate his professional code of conduct which might lead to disciplinary sanction, e.g. suspension of professional qualification.

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Bribery for giving assistance in public contracts

A senior engineer was asked by a contractor to manipulate tender requirements in favour of his company in the bidding process.
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A senior engineer of a public body was assigned to supervise the construction work of the organisation's new headquarters.  In the process of calling tenders for curtain walling works, a contractor and a close associate of the senior engineer indicated immense interest in the project.

Just before an official invitation for tendering was issued, the contractor offered to secure a highly sought-after golf club membership for the senior engineer to exchange for his assistance in winning the tender.  He requested the senior engineer to manipulate tender requirements to suit his company so that he could obtain the contract for the job.  In fact, the contractor charged a much higher rate than the other construction companies and the technical processes for constructing the curtain walling were not cost-efficient.

Case Analysis

The senior engineer might violate the Rules of Conduct of the Hong Kong Institution of Engineers if he abused his official authority to manipulate tender requirements in exchange for an advantage in the form of a golf club membership. He failed to fulfil his obligation to protect the interests of his employer and clients as the contractor might not provide the best service to his organisation, not to mention the excessive construction fee charged.

If the senior engineer had not obtained prior permission from his employer to accept the advantage, he might contravene Section 5 of the Prevention of Bribery Ordinance (POBO), which prohibits a public servant from accepting illegal advantages for giving assistance in securing contracts from the public body. And the contractor, the offeror of advantages for the same purpose, could also be liable to prosecution under Section 5 of POBO.

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Unreasonable exercise of discretion in project oversight

A senior engineer oversaw a large private housing project. An acquainted contractor asked him to approve extra funds for the project and promised a luxurious overseas trip in return.
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A senior engineer of an engineering consultant firm recently undertook to oversee a large private housing project.  Owing to frequent contact, he got along famously with a contractor who was around his age and shared his interest in golfing.

On one occasion, the contractor treated the senior engineer to a lavish meal in the Country Club and then revealed his hidden agenda.  He said that the funds for the housing project were quite short and he wished to have more allowances for contingencies.  As the senior engineer could approve claims for additional costs, the contractor tried persuading him to exercise his discretion and add $5,000,000 to the project.  As a token of thanks, the contractor promised to treat the engineer to a luxurious overseas golf trip.

Case Analysis

The exercise of discretion in approving claims should be based on an objective assessment of the project's financial requirements.  To comply with the Rules of Conduct of the Hong Kong Institution of Engineers, the senior engineer should avoid his professional judgement being clouded by the offer of advantages.

The senior engineer was the agent of the consultant firm (the principal) as he oversaw the housing project.  Without the principal's consent, he should not receive an advantage - free golf trip – when dealing with the principal's affairs.  The offering of the free golf trip by the contractor as an inducement for senior engineer to misuse his authority in approving extra funds for to the project would contravene Section 9 the Prevention of Bribery Ordinance (POBO). The senior engineer who accepted the offer would also contravene the law.

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Stealing information

Two young architects were close friends and they both entered the company’s internal competition on a redevelopment proposal. How far would they go in order to beat the other in the competition?
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Jackson and Jonathon were mates in university. They both joined in the same architecture firm as junior architects after graduation. Though they were close friends with similar background, they also competed with each other on almost everything. 

Lately, the company had an internal competition for making a proposal for a redevelopment project of the company’s warehouse in the suburbs. The proposal needed to consider various factors such as the increasing of labour cost, the shortage of land, the unpredictable economic trend, etc. Both Jackson and Jonathon participated in the competition and worked very hard to draw up a winning proposal. Competition between the two friends was fierce. Through personal connection, Jackson got some useful restricted information on the future development of the nearby lots from the Lands Office for his proposal. He casually saved the restricted information to his computer.  One day, Jonathon went to Jackson’s desk asking Jackson out for lunch. Jackson was not around, leaving his draft proposal displayed on the computer screen.  Jonathon took the chance to scan through Jackson’s draft proposal and discovered the restricted information.

Desperate to win the competition and to beat Jackson, Jonathon was in a crossroad. He could easily beat Jackson if he stole Jackson’s ideas and the restricted information to improve his own proposal.

What should Jonathon do? Should Jackson raise an alarm if he found out that Jonathon stole his information? After all, Jackson got the restriction information through improper means.

Case Analysis

Both Jonathan and Jackson were facing an ethical dilemma that might put their personal values such as respect, responsibility and honesty to challenge. In handling the situation, they 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 their self-values such as honesty?
  4. Can they disclose the decision to others openly and honestly without misgivings?

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

As far as compliance is concerned, Jackson might violate Section 4(1) of the Prevention of Bribery Ordinance (POBO) if he, without lawful authority or reasonable excuse, offered advantages (e.g. money) to a public servant (i.e. a staff member of the Lands Office) for the public servant’s assistance in leaking the restricted information (i.e. an act in relation to the public servant’s capacity).  The staff member of the Lands Office as a public servant, who solicited or accepted the advantage for releasing the restricted information, might also violate Section 4(2) of the POBO.

On the other hand, the Code of Professional Conduct issued by the Hong Kong Institute of Architects requires members to maintain high integrity standard and refrain from dishonourable conduct and practices in the architectural profession.  Any member whose conduct is found to be in contravention of the Code or dishonouring the principle of the Code is liable to reprimand, suspension or expulsion.

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Leaking tender information

An engineering graduate was offered a big ‘laisee’ by an acquainted sub-contractor who lured him into leaking confidential tender information.
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An engineering graduate joined a construction company as an assistant engineer and was responsible for collecting tenders for specialist services.  He came to know a sub-contractor who was particularly on good terms with him as they were both e-sports lovers.

When time came for a tender to be made for a fire-proofing job, the sub-contractor invited the assistant engineer out to a sumptuous dinner over which he suggested a deal.  The assistant engineer was suggested to go through the tenders secretly and inform the sub-contractor about the lowest bid by texting a code to him. The sub-contractor would then beat that price and get his bid in just before the closing time.  In return, the sub-contractor promised to give the assistant engineer a big "laisee" in the coming Lunar New Year.  To win the young fellow over, the sub-contractor said that someone would get the project any way and he was as good as anyone else.

Case Analysis

Corruption will inflate project costs and impair fair competition.  The quality of work would also be in question if the sub-contractor was not chosen by an objective assessment of its competence and capability.

If the assistant engineer leaked the tender information to the sub-contractor, he would breach the Rules of Conduct of the Hong Kong Institution of Engineers, which prohibited engineers from disclosing confidential information and require them to act in the best interest of the employers.

He might also commit a corruption offence under Section 9 of the Prevention of Bribery Ordinance (POBO) if he accepted an advantage as a reward for leaking the confidential tender information to the sub-contractor.

Although the “laisee” might be given in the Lunar New Year, the assistant engineer could not excuse himself by saying that the acceptance was a customary practice during festive seasons as that would not be accepted as a defence under the POBO.

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Leaking confidential information on potential projects

A senior engineer of a construction consulting firm attempted to make money by selling restricted tender information to interested contractors through a middleman.
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A senior engineer of a construction consulting firm, who had obtained the information of a large scale private housing development project through participating in its planning work, attempted to make money by selling the restricted information.

The senior engineer sought his brother's help to carry out the plot.  Before formal invitations for tenders were made public, the senior engineer's brother approached a middleman and asked him to look for a contractor who would be interested in the project.  He said he had restricted information to offer which could assist the tenderer to obtain the contract.  In return, he asked for 10% of the contract price as a reward and promised to share part of the profits with the middleman.

Case Analysis

The senior engineer might breach the Rules of Conduct of the Hong Kong Institution of Engineers, which require an engineer to safeguard confidential information in relation to his employer and to refrain from receiving any advantage for disclosing such information or making use of it for personal gain.

Being an employee of his company, the senior engineer might also breach Section 9 of the Prevention of Bribery Ordinance if he received an advantage to leak confidential information.  The offeror of such advantage would also breach the same law.

Although the advantage was solicited by the senior engineer's brother, the senior engineer himself could still be liable to the charge of a corruption offence as the advantage was to be received on his behalf.

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