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 clerk of work is an agent of the architectural firm.  He accepted advantages (i.e. money and payment of expenses) from the proprietor of the engineering company for conniving at the latter’s substandard works, which was related to the affairs of the architectural firm (i.e. his principal).  Without the permission of the architectural firm to accept such advantages, he had contravened Section 9(1) of the Prevention of Bribery Ordinance (Cap.201) (POBO).  The proprietor of the engineering company had also violated Section 9(2) of the POBO by offering the advantages under such circumstances.  Both the clerk of works and the proprietor of the engineering company were sentenced to imprisonment.   

Case in Perspective

Site supervisory staff carry a pivotal role in ensuring the quality and safety of all construction works.  They should diligently inspect and check the works against the required standard, and require contractors to rectify any irregularities and defects identified.  In this case, however, the clerk of works breached the trust placed in him by his employer (i.e. the architectural firm) and abused his authority for personal gain.  Apart from prejudicing the interest of his employer, his act might also put public safety at stake. 

A company or an organisation implementing construction projects should put in place adequate safeguards to ensure proper works supervision by site supervisory staff.  For example,

(a) Draw up a comprehensive supervision plan to set out the critical works items requiring inspection, the frequency and the rank of staff responsible for such inspection;

(b) Require inspection staff to record the inspection details, including time, location and description of works inspected and inspection results; and, as far as practicable, make use of technologies such as mobile applications that enable on-the-spot logging;

(c) Arrange independent technical audits on inspection work; and

(d) Issue guidelines on acceptance of advantages and entertainment, handling conflict of interest, etc.

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.

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.

Section 9 of the Prevention of Bribery  Ordinance (POBO)

LAM conspired with the foreman and site agent to offer the Works Supervisor $300,000 for his turning a blind eye to the substandard piling work was an offence under Section 9 of the POBO.   This section states that:

• It is an offence for an agent (normally an employee) to solicit or accept an advantage without the permission of his principal (normally the employer) when conducting his principal’s affairs or business; and
• The person who offers the advantage also commits an offence.

Report Corruption

The positive action of the Work Supervisor was a good illustration of the proper action to take when one was being offered a bribe: refuse the bribe immediately and report the matter to the ICAC.

Consequences of Corruption

Turning a blind eye to substandard works would result in building defects, causing the company extra costs to rectify the problem.  Worse still, such hidden faults in construction works would be hazardous to public safety.

Construction professionals should bear in mind the implications of substandard works to public safety, as their responsibilities to his employer and the profession should at all times be governed by the overriding interest of the general public.

In similar court cases previously, the judge commented that the defendants “place in jeopardy not only the structure and those using it but also the reputation of Hong Kong.   The potential consequences of their actions may quite fairly be described as disastrous.   The conduct of these Accused casts a shadow over the entire construction industry…”

Corruption could also bring devastating damage to one’s career and reputation. Construction professionals need to live by a high standard of integrity so as to resist the corruption temptations facing them in the workplace.

Site Supervision

The allocation of adequate resources to site supervision is crucial to ensuring the quality of works.   Site supervisory staff are sometimes inadequate, both in number and experience, and may therefore not be able to monitor the work of the contractor effectively nor promptly detect any fraudulent acts. Employers/consultants should deploy sufficient on site supervisory staff with appropriate training and experience.

The deployment of only technical staff on site is inadequate and professional input is important especially at critical construction stages.

Infrequent site visits by professional staff is not uncommon in the construction industry.   In fact, regular supervisory check is crucial in ensuring that the work complied with the required standard.   Supervisory staff should use their own measuring tapes in checking the pile depth.   In addition, the role of independent internal technical audit should also be strengthened so as to guard against any possible malpractice.

Case Analysis

The foreman, CHAN, offered an advantage to the engineer (i.e. an employee and hence agent of the construction company) as a reward for assisting him to falsify attendance records, contrary to Section 9(2) of the Prevention of Bribery Ordinance (Cap.201) (POBO). Irrespective of whether the engineer accepts or rejects the bribe, the act of offering (by CHAN) already constitutes a criminal offence.  Should the engineer have accepted the bribe, the engineer would have committed a corruption offence and be charged under Section 9(1) of the POBO.    In addition, regardless of whether the engineer accepted the bribe, if he assists CHAN in falsifying the attendance record, this would amount to an offence under Section 9(3) of the POBO.  This provision stipulates that it is an offence for an employee to use any false document, receipt or account to deceive his employer.  Improper ethical behaviour may also lead to the revocation or suspension of a professional registration with a professional body and as a result the engineer would be restricted/prohibited from practice.

Case in Perspective

The lack of supervisory control and reliance on a manual tracking system over localised staff attendance create opportunities for personnel to abuse delegated authority, engage in unauthorised absences, commit payroll fraud, or offer bribes to secure the collusion of checking officers.  To address this problem, the main contractor should establish a system to strengthen attendance tracking and staff administration by implementing the following control measures –

(a) Eliminate susceptible manual systems and implement a digital attendance management system (e.g. fingerprint or facial recognition);

(b) In the interim, supplement manual systems with CCTV to authenticate staff presence, deter impersonation and provide verifiable records of attendance; and

(c) Conduct surprise on-site spot checks and physical headcounts to verify real-time worker presence by supervisors and/or independent units. 

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. 

Chui and the construction workers, as employees of the construction company, submitted the false attendance records with the intention to deceive salaries from their employer had violated Section 9(3) of the Prevention of Bribery Ordinance (POBO).

Bobby was facing an ethical dilemma that might put his personal values such as responsibility and honesty to challenge. On one hand, he had the supervisory responsibility to report the misconduct of the workers to the company; on the other hand, it might reflect badly on him if Clint learnt that he failed to discharge his supervisory duties properly. In handling the situation, Bobby 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 for himself:

1. Does his decision violate any professional, industry specific, or company code of conduct?
2. Is his decision against the law?
3. Does it correspond with his self-values such as honesty and responsibility?
4. Can he disclose the decision to others openly and honestly without misgivings?

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

Lennon was facing an ethical dilemma that might put his personal values such as compassion, responsibility and honesty to challenge. On one hand, his turning a blind eye to allow Gary to collect materials from the landfill can help Gary overcome financial difficulties; on the other hand, he has to discharge his duties according to the work instructions.  In handling the situation, Lennon 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 for himself:

1. Does his decision violate any professional, industry specific, or company code of conduct?
2. Is his decision against the law?
3. Does it correspond with his self-values such as honesty?
4. Can he disclose the decision to others openly and honestly without misgivings?

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