A herbal tea manufacturing company sourced its raw materials from various Mainland suppliers. Mr Fong, a senior merchandiser of the company, was responsible for purchasing herbal materials and inventory control.

Recently, Mr Fong who had experienced financial difficulties was in desperate need of money.  He sent several text messages to a Mainland herbal supplier to solicit a loan of RMB60,000. Mr Fong suggested to the supplier that more purchase orders would be placed if the supplier deposited the money into his wife’s bank account in Hong Kong. The supplier made no response to the request. Shortly after, Mr Fong sent another text message to the supplier asking for another loan of RMB30,000 and threatened to cut the purchase orders if it was not granted. The supplier did not agree to his request, as it amounted to solicitation of bribes. The supplier then reported the matter to the management of the herbal tea manufacturer. In view of the severity of the matter and having no tolerance for solicitation of bribes by its staff, the management of the herbal tea manufacturer immediately reported the case to the ICAC.

Mrs Mo, a flat owner, commissioned an estate agency as the sole agent for the sale of a shop premises priced at $13.6 million. The company assigned Anna and Bill to take care of the matter.

One day, Anna found a buyer who offered to buy the premises for $14 million. As Anna could not reach Mrs Mo at that moment and had to leave office for an urgent meeting, she asked Bill to contact Mrs Mo. When Bill contacted Mrs Mo, he told her that a buyer had offered $12.8 million for the premises. Bill eventually persuaded Mrs Mo to accept the offer and sign a provisional sale and purchase agreement.

The next day, Bill told Anna that the shop premises had been sold to his client Mr Sung who was willing to re-sell the premises to Anna’s original buyer as a confirmor. Sensing something was suspicious, Anna reported to her supervisor that Bill might have breached the company’s code of practice by showing favour to Mr Sung to sell him the premises at a lower price.

While the estate agency conducted an internal investigation, Bill begged Anna to falsely claim that she had only met the original buyer who made the $14 million offer after the provisional sale and purchase agreement had been signed. Anna immediately refused.

In fact, the whole situation happened because Bill did not want to share the commission equally with Anna. Instead of co-operating with Anna, he wanted to handle the transaction alone. He thus sought assistance from his friend Mr Sung in buying the shop at a lower price and then re-selling it as a confirmor to Anna’s original buyer at a higher price. Through this way, Bill not only could receive more than $50,000 commission from both the buyer and seller, he could also share the profits from the price difference with Mr Sung. The estate agency refused to pay Bill the commission and reported the situation to the ICAC.

Diana, an assistant manager at a chain fast-food restaurant, oversaw daily sales.  She misappropriated sales revenue and discount coupons for an extended period, resulting in chaotic and unclear financial records.

This situation persisted until Daisy, a newly hired cashier, noticed numerous irregularities in the restaurant's sales records.  She suspected Diana was manipulating the sales data for personal gain.  Noticing Daisy’s suspicion and to conceal her misconduct, Diana approached Daisy and promised to give Daisy 10% of the misappropriated funds if Daisy assisted in inputting false sales and coupon redemption records into the cash register system.  Daisy was caught in a dilemma as she knew this was wrong but could not resist the temptation of quick money.  Eventually, under Diana’s persistent persuasion, Daisy succumbed and agreed to help Diana conceal everything.

Although Daisy cooperated with Diana’s fraudulent activities, the chaotic and suspicious sales records eventually drew the attention of the restaurant manager.  Daisy felt uneasy about this situation and struggled with whether to reveal the truth to the manager.

Jimmy and Billy studied Accounting and Finance in the same university and became very good friends.  After graduation, Billy started his own trading business.  His company, B&B Co. Ltd., had been expanding very fast and achieving a huge annual turnover.  Jimmy pursued his career in accountancy and worked hard to become a partner in a CPA firm.  Naturally, B&B Co. Ltd. became one of the major clients of Jimmy's firm, contributing to 20% of its professional income.

This year, B&B Co. Ltd. was facing a very difficult position.  Apart from losing a few major customers, a significant loss was discovered after Jimmy's firm completed the year-end audit for B&B Co. Ltd.

Jimmy was invited to lunch by Billy.  Over the lunch Billy told Jimmy that he was negotiating a big order.  If he could successfully apply for a line of credit with a bank to handle the order, B&B Co. Ltd.'s position would turn around. By then, even more services would be needed from Jimmy's firm. 

However, he was worried that if the bank was aware of B&B Co. Ltd.’s current financial position, it would not grant credit facilities.  Billy then asked Jimmy to use whatever device to improve the financial position of his company and promised to duly reward Jimmy with a luxurious car after overcoming this hurdle.  If Jimmy refused his request, he had no choice but to appoint another CPA firm next year.

Teddy was a clerk employed by a solicitor firm and much trusted by his employer.  The firm’s major source of income was property conveyancing and Teddy was responsible for handling all the paper work of the property deals.  Teddy would get married soon but his fiancée wanted a grand wedding ceremony which put Teddy under a lot of financial pressure.  

One day, Teddy had dinner with his friend Barry who worked in a bank. Teddy talked to Barry about his financial worries.  Barry responded that perhaps they could work out something together for their benefits.  Barry suggested that he would submit some forged mortgage loan applications to his bank with the support of fake conveyancing documents with inflated property values prepared by Teddy.  Barry ensured Teddy that no questions would be asked by the bank.  After that, they could equally share the approved loans.  Teddy decided to take the risk and agreed to Barry’s plan.

Upon her return to Hong Kong after a few years in the States, Sandy worked in La Fonda, an architect firm.  She had her first degree in Hong Kong but left for the US with her boyfriend soon after graduation.  Her performance in the firm was brilliant and the portfolios she submitted were excellent.  When her senior Kelly resigned, her unit head Antonio considered recommending Sandy for promotion to take up Kelly’s post.  Sandy was full of hopes.

Antonio was about to nominate Sandy. One evening, he was talking to his cousin Gamma who just returned from a long stay in the States. Gamma had been doing a doctoral programme in Architecture in the University of Vermont. Antonio causally mentioned to Gamma that his prize staff, Sandy, also worked on a second degree at the University of Vermont too.  Antonio thought that Gamma and Sandy might have met in the University because their years of study coincided. But, to Antonio’s astonishment, Gamma could not recall a Chinese lady studying Architecture during his seven years’ stay at the University, particularly as he worked part-time in the Registrar’s Office.  If Sandy had studied there, Gamma would have remembered her.

Antonio was flabbergasted and determined to look into the matter. When he went back to the office the next day, he sent for Sandy at once.  He asked Sandy if the credentials she submitted to the firm were in order. Sandy guessed what he was getting at and blurted out the truth.   

It was a sad story.  Sandy was about to be married to her boyfriend in US when she found out that he was dating another girl who could help him to get US citizenship. He tore her heart into pieces. After a few years of living only on the money sent from home, Sandy finally decided to turn over a new leaf and went back to Hong Kong.  She built up a portfolio of her own work which was in fact copied from overseas designers and made up an academic and professional history for herself.  Then she landed the job at La Fonda.

Antonio did not know what to do.  Should he expose the fraudulent past of Sandy?  Was it his duty to make sure that the firm was not cheated? Would this destroy the career of Sandy who had been a star in the firm?

Sandy had promised to work hard if Antonio kept her secret for her. Could Antonio do that with a clear conscience?

Using a number of false invoices, a company's lift maintenance engineer conspired with two maintenance supervisors and a sub-contractor to defraud his company by claiming that certain jobs were carried out by the sub-contractor whereas the jobs were actually done by the maintenance engineer's subordinates.  The offences came to light when one of the company’s workers who carried out the jobs suspected irregularities and reported to the ICAC.

An air-conditioning equipment supplier provided spare parts to an engineering company for an air-conditioning project of a large exhibition centre. As some of the parts supplied broke down due to manufacturing fault, the supplier engaged a sub-contractor to carry out repairing work at its own expenses. The work, however, was done unsatisfactorily. The engineering company subsequently reallocated the work to its own contractor and assigned an engineer to supervise the work. The supplier thus approached the engineer in a bid to get the job back to his sub-contractor and promised to reward the engineer by a sum of cash.

The engineer refused the offer and reported the matter to the ICAC.

Barry was a Senior Project Manager of a construction company in Hong Kong. Recently, his company was going to put in a bid to be the principal subcontractor of a project in the Mainland. The bid was RMB500 million. Barry then negotiated with Echo Ltd, the state-owned main contractor of the project that was asking for the bid. The Echo manager told Barry that his company would get the contract if he could inflate the bidding price from RMB500 million to RMB550 million. The manager further explained that the additional RMB50 million would be shared equally among the Managing Director of Echo Ltd, the manager himself and Barry as a hook to ensure Barry’s silence. Barry was disturbed because he had heard of stories like this which the bidder got physical harms as a return for refusal to cooperate.

Would Barry violate any bribery offence if he acceded to the Echo manager’s request? What should Barry do?

In January 2001, Lee & Wong Holdings Ltd (LW) awarded a $1,000 million contract to a main contractor for constructing four 40-storey residential blocks, a commercial complex and a car park.   The main contractor then sub-contracted  the  piling  work  to  another  company.    The  latter  in  turn awarded the work to Saar Piling Company Ltd (Saar) by simply deducting 15% of his original successful bid.  LW also appointed a consultant firm Joe & Partners (JP) to oversee the construction work.   The project was scheduled to be completed in twenty months and five months were allowed for the piling works.

JP deployed an engineer as the Project Manager (PM) to oversee the project but he was not required to be resident on site.   Occasionally, he would go to the site for meetings but did not carry out site inspections himself. Routine site inspection was left to an Assistant Inspector of Works (AIoW) and a Works Supervisor (WS) who were resident site staff appointed by JP. However, the AIoW had very limited experience in piling work.

As there were only two supervisory staff on site responsible for overseeing the whole piling works, the AIoW and the WS found it difficult to check every detail during the work process.  They could only rely on the records of Saar and sign the completion forms taking the face value without checking.

Due to unexpected difficulty encountered during the placing of reinforcement casings, LAM, Director of Saar, found that the piling work was behind schedule and a one-month delay was anticipated.   Saar, being a small sub-contracting company, found it difficult to bear possible substantial liquidated damage (LD) of $800,000 per day as stipulated under the main contract.

LAM then discussed the making of shortened piles with the foreman and site agent of the main contractor, who were always away from work and thus failed to monitor the work progress.  They thought that the specifications stipulated in the contract were conservative and shortened piles should cause no severe harm to the completed buildings resting on top of the piles.   They believed that the buildings would not be structurally affected.

LAM instructed his workers not to excavate the pile bores as deep as the proposed founding levels.   Instead, after the length of the reinforcement casings had been checked by the supervisory staff of JP, LAM asked his workers to cut the casings during night time when the consultant site supervisory staff were off duty.   LAM then manipulated a measuring tape by removing parts of its central portion so that it gave a reading longer than the actual measurement.   When the supervisory staff of JP measured the pile bore depth using the manipulated measuring tape provided and re-examined the reinforcement casing, they were not able to detect that the piles had been shortened.

One day, the WS of JP discovered that the length of the constructed piles did not match with the concrete delivery records for the piles.   He suspected that some of the piles might have been shortened.   He immediately approached LAM for an explanation for the irregularities discovered and the proposals for remedial actions.

LAM, after discussion with the foreman and site agent, went to the WS’s office to hand him an envelope containing $300,000 and plead him to turn a blind eye to the substandard piling works.   The WS immediately refused LAM’s request.

The WS immediately  reported LAM’s  offering of bribes to the ICAC. LAM, the site foreman and site agent of the main contractor were arrested and convicted of conspiracy to offer an advantage to the WS as a reward for turning a blind eye on substandard piling work.

Questions

1. Why were LAM, the foreman and site agent convicted of corruption offences? What actions should you take when being offered bribes?
2. How devastating would the damages be if a construction professional accepts advantages for turning a blind eye to substandard works? What are the consequences of such behaviour?
3. What is the importance of site supervision at a construction site?