David would violate Section 9(3) of the Prevention of Bribery Ordinance for manipulating quotation breakdown to deceive his employer i.e. the Hospital Authority (HA).  Dr M, who instructed David to take part in the fictitious quotation plot might also be charged with an offence of conspiracy to defraud.

Dr M might face disciplinary action taken by the Medical Council of Hong Kong and his fitness to practise might be questioned.

At the same time, the HA would also take follow-up action against Dr M and David who might breach the HA’s code of conduct which requires the procurement of goods to be the best value for money in terms of price, quality, delivery time and service.

Also, Dr M should, as far as possible, avoid any actual and perceived conflict of interest. When a situation of conflict of interest cannot be avoided, he should as soon as possible declare all relevant details of such situation to his organisation, i.e. his relationship with the sales manager of the potential supplier.

Dr E would violate Section 4 of the Prevention of Bribery Ordinance as he accepted an advantage i.e. the sponsorship for visiting the company's laboratory and attending a conference without  the  permission  of  his  employer,  and  in  return  recommended  the medical  equipment  of  Billy’s  company  to  the  hospital.    Billy  would  also commit an offence of corruption for offering the bribe to Dr E.

Dr E might breach Section 15.1 of the Code of Professional Conduct issued by the Medical Council of Hong Kong (Oct 2022) which specifies that doctors should avoid accepting pecuniary inducement from commercial firms that might compromise the independent exercise of their professional judgement.

According to the Hospital Authority's (HA) guidelines on acceptance of donation and sponsorship, overseas site visit relating to the selection of medical equipment before or during tendering exercises should be funded by the HA and should not be sponsored by any of the potential vendors.  In any case, HA employees should not solicit or accept, directly or indirectly, any advantage or gift which would, or might reasonably be seen to, compromise their integrity or judgement or influence the discharge or non-discharge of their duties and responsibilities.

As a government employee, the chief engineer was not permitted to accept advantage in connection with his work. In soliciting illegal advantage from the land development company, he had violated Section 4 of the Prevention of Bribery Ordinance (POBO).

The chief engineer's plot failed before he could do anything to secure the project, but he could not escape from legal sanctions. Under Section 11 of the POBO, if it could be proved that an advantage was given to the acceptor as a reward for favours done to the offeror, the following should not be considered a defence: (a) “he did not actually have the power so to do”, (b) “he accepted the advantage without intending so to do” or (c) “he did not in fact so do.”

Business operators or employees who come into frequent contact with government employees have to be particularly careful when managing their relationship with them as they are governed by stringent laws and regulations, restricting their acceptance of advantages in their public and private capacities. The offering of advantages to government officers may also constitute a violation of the POBO.

Case Analysis

The supplier offered an advantage (i.e. cash) to the engineer, who was an employee (i.e. agent) of the engineering company (i.e. principal), as an inducement or reward for showing favour in relation to his principal’s business by awarding the contract back to the supplier’s sub-contractor.  The supplier contravened Section 9(2) of the Prevention of Bribery Ordinance (Cap.201) (POBO).  Had the engineer accepted the bribe without the permission of his principal, he would have contravened Section 9(1) of the POBO. 

Case in Perspective

The use of bribery to obtain contracts will inflate the operation costs of the bidder and cause unfairness to other bidders who observe the principle of fair play.  The services procured may also fall short of standard and affect the overall quality of the job because no supplier can go on absorbing corrupt payments and still give the quality you want.  It is crucial for management to provide integrity training so that staff at all levels understand the anti-corruption laws and stay vigilant to the risks of corruption when performing their duties. 

The positive action of the engineer is a good illustration of the proper action to take when one is being offered a bribe or has discovered malpractices.  Staff members should refuse any bribes and promptly report any suspected malpractices or illegal activities to law enforcement agencies including the ICAC and/or the management.  Companies should establish a clear and confidential whistle-blowing mechanism.

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.

Case Analysis

Under Section 9(1) of the Prevention of Bribery Ordinance (Cap.201) (POBO), it would be an offence if David (i.e. agent), without the approval of his employer (i.e. principal), accepted the advantage (i.e. the financial assistance to the down payment of the new flat) as an inducement to assisting Mr. CHAN to get the tender.  Meanwhile, Mr. CHAN might also be liable for promising to offer bribes to David under Section 9(2) of the POBO.

By leaking the insider information to Mr. CHAN, David might also breach the Rules of Conduct of the Hong Kong Institution of Engineers, which prohibited engineers from disclosing confidential information and required them to act in the best interest of the employers.

Corruption would impair fair competition and put public safety at stake.  The quality of work would be in question as the sub-contractor was not chosen by an objective assessment of its competence and capability.  To uphold professional ethics and avoid breaching the law, David should say no to Mr. CHAN’s request and report the matter to his company and/or the ICAC.

Case in Perspective

Leakage of sensitive or confidential tender information (e.g. bid prices) by compromised personnel to favour a particular bidder will undermine fair competition and integrity of the procurement process.  To prevent such malpractice, the company should establish a robust procurement system to ensure the selection of the most suitable contractor based on merit.  For example, 

(a) Take precautionary measures to prevent leakage of tender information, such as receiving tenders through secure electronic channels with the password split and separately held by different staff members, and tasking an independent team to witness tender opening;

(b) Prohibit the opening of tenders received before the deadline, and ensure tenders remain in the custody of designated officer to minimise the risk of information leakage;

(c) Accept late tenders only with the endorsement of the management (or the tender board, if any) on justifiable grounds; 

(d) Require staff involved in procurement to declare whether they have any conflict of interest in the matter, and manage any declared conflict to mitigate integrity risks; and

(e) Maintain proper documentation of the tendering process, including but not limited to meeting minutes, tender evaluation and negotiation, correspondence, and declaration and management of conflict of interest, to facilitate independent audits and ensure accountability. 

A bank employee should seek management's advice if he/she has any doubt about the propriety of any course of action, or if the employee finds his/her own interests may be in conflict with those of the bank. Nancy might breach the Code of Conduct[1] of her bank as she awarded the contract to her brother's company without disclosing their relationship to her employer. Even when Nancy was confident that the service provided by Gordon's company was as good as those of other firms, she should declare the interest to her employer.

[1] According to HKMA’s Supervisory Policy Manual CG-3, each authorized institute (bank) should develop its own Code of Conduct containing certain minimum conduct requirements which include “all staff should avoid situations that may lead to or involve a conflict of interest, actual or potential.”

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.

Edwin might breach Section 9 of the Prevention of Bribery Ordinance (POBO) if he, as an employee of his bank, without the approval of his employer (i.e. the bank), accepted an advantage (i.e. special commission from the sales representative) for buying an obsolete printer model from the sales representative. The sales representative might also breach the same provision of the POBO for offering the bribe as an inducement to Edwin for abusing his authority at work. 

Edwin was facing an ethical dilemma that might put his personal values such as honesty and responsibility to challenge. In handling situation like this, Edwin 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 violation to his professional, industry specific, or company code of conduct?
2. Is it against the Law?
3. Does it correspond with his self-values such as loyalty, honesty and responsibility?
4. Can he disclose his decision to others openly and honestly without misgivings?

To uphold his professional ethics and avoid breaking the law, Edwin should say no to the sales representative’s offer and report the matter to the bank or the ICAC.  He could also refer to the ETHICS PLUS ethical decision making model for solving his ethical dilemma and choosing the best course of action.

Mr Kwok, as an employee, might commit an offence under Section 9 of the Prevention of Bribery Ordinance (POBO) for, without the approval from his employer, soliciting and accepting an advantage (i.e. the ‘under-the-table’ commission offered by Raymond and Freddy) for recommending the listed company to buy their properties.  Meanwhile, Raymond and Freddy both might also violate Section 9 of POBO for offering bribes.

Individual ethics and corporate culture are among the key factors which shape a company’s corporate governance. Company directors and senior executives serving the company should serve as role models.

Mr Kwok, who held an influential position at the company’s property investment, should have used the power bestowed on him by the listed company to protect its interests.  However, Mr Kwok abused his company’s trust for personal gain and violated the law instead.  

It is important for the company to work on an ethical culture at the corporate level through practicing ethical leadership, giving clear guidance on ethical standard expected of staff, managing integrity training and putting in place a comprehensive internal control system which helps company prevent and detect crime or malpractices as early as possible.