George worked as the senior credit officer for a local bank with responsibility for verifying the information submitted by customers applying for credit facilities. One of the customers was Kelvin, the owner of a factory located in Dongguan, who had applied for a hire purchase facility of HK$3 million in order to invest in new machinery.
George subsequently decided to conduct a site visit in Dongguan to verify the information submitted by Kelvin and to inspect the new machines at the vendor's premises prior to approving the application for credit facilities. He went together with Peter, one of his subordinates, and they concluded that the machines seemed to have been in use for several years already. Suspecting irregularities, they raised their concerns with Kelvin who, no doubt hoping George and Peter would turn a blind eye, presented both of them with an expensive watch upon their return to Hong Kong.
As Chinese New Year was approaching, Kelvin also vaguely mentioned something about "commission" and offered George HK$10,000 in the form of a "lai see" packet.
Peter was still hesitant about accepting the watch and was surprised to find that George had apparently done so. In fact, George had also accepted Kelvin's lai see, something about which Peter was completely unaware. Since George could sense Peter's unease about the situation, he took him on one side and told him that refusing the watch would only cause embarrassment for all concerned. Eventually, Peter decided to keep the gift and, soon afterwards, helped George to prepare a favourable report about their visit to Dongguan and Kelvin's application.
A few months later, the bank's internal audit department had reason to suspect some irregularities in relation to Kelvin's application. The case was therefore reported to the ICAC.
After investigation, it was found that both George and Peter had breached the bank's code of conduct, which stipulated that no employee should accept advantages from customers who were doing or seeking to do business with the bank.
From a legal point of view, their action was a breach of Section 9 of the Prevention of Bribery Ordinance (PBO). They had accepted the watches and, in George's case, the "commission" as well, for approving Kelvin's application for credit facilities. At no point did they get the bank's consent to do so.
In these circumstances, instead of turning to his supervisor for advice, Peter should have sought assistance from his employer. Kelvin also committed an offence under the PBO of offering a bribe. In addition, the two bank employees, by accepting gifts or money from their client to help the latter procure credit facilities, had also breached Section 124 of the Banking Ordinance.
Under the PBO, referring to local custom is no defence. Therefore, George could not have exonerated himself by claiming that accepting lai see was a "customary practice".
Both George and Kelvin had breached Section 9 of the PBO, the maximum penalty for which is seven years' imprisonment and a fine of HK$500,000.
For enquiries about this article or corruption prevention advice for private sector companies, please contact the Advisory Services Group of the ICAC's Corruption Prevention Department at (tel) 2526 6363, (fax) 2522 0505 or (email address) email@example.com. Our service is free and confidential.
|Q&A relating to the Prevention of Bribery Ordinance (PBO)|
|Q1 ||What should a responsible employee do to avoid breaching the law?|
|A1 ||In order to avoid any problems with cases of possible bribery an employee should do the following:|
Familiarise yourself with and abide by the relevant laws Comply with your employer's code of conduct Undertake an ethical assessment process and carefully review the nature of the advantage or favour offered. If in doubt, cross check the provisions of anti-corruption laws and the Banking Ordinance, which include criminal penalties for accepting advantages in prescribed circumstances Avoid accepting advantages or favour in official dealings if they are unreasonably generous, excessive or frequent, or which are likely to cause you embarrassment in discharging your duties or will make you feel obliged to the other party Consult your management and seek approval as appropriate before accepting any advantages or favour offered in connection with your official duties
|Q2 ||What should management do to prevent any breaches of the law?|
|A2 ||The following steps are recommended: |
Adopt a code of conduct and ensure all staff are aware of the company's expectations about standards of behaviour Review the code regularly to keep abreast of changes in the business environment and those imposed by the regulatory authorities Put in place adequate and effective internal control measures, including appropriate segregation of duties, regular job rotations, spot checks of documentation and independent audit checks Monitor all internal controls on a regular basis Establish a communication/complaint channel and encourage staff to identify and report corrupt or dishonest acts Provide ethics training for newly appointed and existing staff to reinforce their commitment to integrity and ethical practices