Daphne might violate Section 9 of the Prevention of Bribery Ordinance (POBO) if she (as an employee), without the approval of her principal (the watch manufacturing company) accepted an advantage (i.e. 2% profit from the mark-up price offered by Simon) for recommending Simon’s company to her watch manufacturing company.  Simon might also violate POBO for offering bribes.

Daphne was facing a dilemma that might put her personal values such as responsibility and honesty to challenge. In handling the situation, Daphne 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 her self-values such as responsibility and honesty?
4. Can she disclose her decision to others openly and honestly without misgivings?

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

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.

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.

It would be an offence under Section 9 of the Prevention of Bribery Ordinance (POBO) for Ivan and Ian, who were employees of the department store, to accept the advantage, i.e., the monthly commission of $10,000, offered by Wong and Au for assisting the latter in overstating the quantity of toiletries without the permission of their employer.  Wong and Au might also commit an offence by offering bribes.  Furthermore, by overstating the purchase orders and acknowledging the false receipt, both Ivan and Ian might breach Section 9(3) of the POBO, which forbids employees from using documents containing false, erroneous or defective information to deceive their employer.  They might also commit an offence of conspiracy to defraud.

Ivan and Ian should adhere to their company’s code of conduct on handling persons having business dealings with the company and avoid gambling with suppliers.  While Ivan and Ian might seem very lucky to win a lot during mahjong games with Wong and Au, frequently gambling together and winning excessive amount might portray the perception that Wong and Au were losing to them deliberately so as to pass benefits to Ivan and Ian in return for favour at work.

Leo is regarded as an agent of the hotel.  Without the hotel’s permission, he accepted a rebate from Louis for abusing his official capacity to disclose other bidders’ information to the latter.  Leo might breach Section 9 of the Prevention of Bribery Ordinance (POBO) while Louis might also commit the offence by offering a bribe.  Accepting bribes, whether directly or indirectly through a third party, is against the law.  If the purpose of offering the advantage is to induce the agent to do an act in relation to his principal’s business, both the offeror and the recipient would commit an offence under the POBO.  Bidders’ or clients’ information is valuable to the hotel and staff members should strictly follow the guidelines laid down by the hotel for protecting confidential information.

On the other hand, hampers and gifts are advantages.  According to Section 19 of the POBO, custom or trade practice cannot constitute a defence.  If these gifts were offered to Leo with a corrupt motive, both Leo and Louis might commit a bribery offence, even if they were offered during festive occasions. Even if no corruption was involved, Leo should follow the hotel’s code of conduct regarding the acceptance of advantages to avoid conflict of interest.  He should be particularly cautious of the sweetening process initiated by Louis’ offer of gifts.  Accepting frequent gifts and favours will put the recipient in an obligatory position to reciprocate, compromising one’s objectivity in carrying out official duties and potentially leading to corruption.

It is an offence under Section 9 of the Prevention of Bribery Ordinance (POBO) for any agent, without the permission of his principal, to accept any advantage as an inducement to or reward for him to abuse his authority in relation to his principal’s affairs or business.

Bruce, as the chief chef of the hotel, is regarded as an agent.  He might breach Section 9 of the POBO for accepting money from Bob for turning a blind eye to the substandard food quality without the permission of the hotel.  Bob might also commit an offence for offering bribes.

Bruce’s unethical behaviour constituted a serious breach of his employer’s trust and caused unfairness to other suppliers and customers.  Moreover, substandard food quality might also jeopardise food safety if not properly addressed.

According to Section 9(3) of the Prevention of Bribery Ordinance (POBO), any agent who uses false, erroneous or defective receipts, accounts or other documents with an intent to deceive his principal shall be guilty of an offence.  Emma intentionally concealed her conflict of interest and did not disclose her marital relationship with Eric in declaration documents.  She also deliberately altered the quotation documents submitted by other bidders, which contained false information to deceive the restaurant in awarding the contracts to her husband.  Emma might contravene Section 9(3) of the POBO or other criminal offences such as fraud and false accounting, and her husband might also be guilty of conspiracy to defraud.

Additionally, Emma invited her husband to submit bid for the tendering exercise, placing herself in a conflict of interest situation.  This would make it difficult for Emma to perform her duties impartially and may even lead to suspicions of corruption.   Employees should strive to avoid conflict of interest as far as possible and make timely declarations strictly adhering to internal guidelines.

According to Section 9 of the Prevention of Bribery Ordinance (POBO), it would be an offence for Ayden, an agent of the restaurant group, without the permission of his principal, to solicit and accept rebates from Andy for providing him with quotation information submitted by other bidders.  Andy might also commit an offence as the offeror of the bribes.  Even if the contracts were not awarded to Andy in the end, once the offering and acceptance of the bribe was established, both of them would be guilty of an offence under the POBO.

Ayden intentionally split contracts to circumvent the established approval procedures, reflecting that the company had not set up an effective checks and balance system.  The company should establish an internal audit team to conduct regular and surprise checks to prevent any non-compliance and detect such irregularities at an early stage.

Additionally, a company should implement an effective quotation system to enable the selection of the most suitable contractor for each project as well as to prevent leakage of tender information.  To minimise the risk of information exposure, all received quotations should remain sealed until the official deadline for submission.  Furthermore, the opening of the quotations should involve at least two authorised persons to prevent any potential tampering with the submitted prices.

As a construction professional, Ayden should not engage in any corruption or malpractice.  Greed not only exposed him to criminal liability but also jeopardised his professional career.

Sally, a purchasing staff member of an airline company, made use of her office to ask the supplier to inflate the service fee and accepted advantages from the supplier as a reward for assisting the latter in obtaining the cleaning service contract without obtaining the approval of the airline company.  Both Sally and Susan might violate Section 9 of the Prevention of Bribery Ordinance (POBO).

By inviting Susan to submit a bid for the tendering exercise, Sally found herself in a conflict of interest situation.  Sally intentionally concealed the conflict of interest and made false statements on the conflict of interest declaration form to deceive her company, which might also commit Section 9(3) of the POBO or other fraudulent offences.  If fraudulent acts are involved to conceal conflicts for personal gain or to benefit acquaintances, it may lead to other criminal offences such as deception, fraud, false accounting, etc.

Employees must adhere to the company’s guidelines and procedures when conducting procurement and tendering exercises, including the guidelines on handling conflicts of interest.  Employees should avoid conflict of interest as far as possible and make timely declaration strictly following the internal guidelines.  Otherwise, they may violate the company’s code of conduct or internal policies.