Preventing corruption in property management and construction companies requires both management and staff to plug procedural loopholes and enhance personal integrity. The ICAC's Advisory Services Group can offer a helping hand
Procedural loopholes and business malpractice are the fundamental sources of corruption common to many property management and construction companies. To keep these sources of corruption at bay, a sound management system with corporate governance, which gives employees clear ethical guidelines and work procedures for acting in the best interests of the company, is vital.
About one fifth of the 810 corruption reports received in 2002 concerning building management were allegations lodged against property management companies. Many past cases revealed that corruption opportunities mainly arose when "job instructions were unclear, staff integrity low and ethics not upheld. Such conditions often created fertile ground for conspiracy and favouritism," says Kenny Fok, a senior assignment officer with the Advisory Services Group (ASG), an advisory unit under the Corruption Prevention Department of the ICAC set up to help private companies prevent corruption.
Similar conditions also prevail in some construction companies. For instance, site supervisors and even some engineers or surveyors sometimes unknowingly violate professional ethics and conspire with contractors to accept sub-standard materials and poor workmanship.
"Many come to the point of no return," says Nelson Chan, a senior assignment officer with the Corruption Prevention Department of the ICAC, who works closely with the management of government departments and public bodies in the construction industry. He says these supervisors are trapped into being "sweetened up" by accepting free and lavish entertainment, leisure trips, expensive meals, etc.
"The sweetening trap is something industry practitioners, especially young graduates, need to be aware of," Mr Fok warns, saying that, once they have dipped their fingers into the "sweet-pot", they cannot possibly undo what happened. As a result, they would have no other choice than to be held to ransom for ever by unscrupulous parties.
Advice given to property management and construction companies on corruption prevention covers a wide range of major corruption-prone areas, including procurement and tendering, repair works, site supervision, materials selection and approval, piling works and so forth. In all these areas, the basic problem generally lies in a lack of procedural control and an absence of staff integrity.
To curb corruption opportunities, companies need to tighten control over their work procedures by designing work manuals, setting quality standards, running random supervisory checks and performing independent audits. Taking these measures seriously not only enables management to effectively monitor work performance but, more importantly, also to "discourage and prevent conniving staff from exploiting system loopholes in the service of their own interests," explains Mr Fok.
"The point is not to impose a bunch of rules on every single task people do. Instead, emphasis should be placed on the company's core activities. Take procurement, for instance. Managers should establish clear guidelines on methods for purchases of different values. High-value purchases should be subject to tighter tender procedures, so as to prevent abuses of power and ensure fairness in the process of procurement, while verbal or written quotation methods may be used for low-value purchases - but with random supervisory checks built in as a control measure."
Additionally, companies should enhance staff integrity to reduce corruption risks. "Instituting ethics training is one way to go about this," says Mr Chan, adding that various tertiary institutions and local training bodies such as the Vocational Training Council now incorporate such topics in their related courses. What's more, companies should promulgate codes of conduct for staff, specifying appropriate behaviours under various circumstances, he stresses. All this, he continues, allows companies to "raise [their] staff's awareness of the potential risks involved in doing certain tasks, dealing with certain people, accepting sweeteners and so on."
Corruption prevention services
The ASG provides private companies with free and confidential advice on matters related to corruption prevention. Since its inception in 1985, the ASG has provided tailor-made advice to over 3,000 private-sector companies of different trades and sizes. Mr Fok says: "Upon request, we'll assist our clients to identify risk areas and suggest corresponding measures to safeguard the company against corruption and abuse by reviewing their business and work processes."
"The ASG proactively reaches out to private-sector companies, offering our professional services to them. We also organise seminars and talks for major clients, including trading associations and vocational institutions, to obtain maximum exposure and get across our message to different sectors of society. With our ongoing efforts in preventing corruption over the years, private sector awareness of the benefits of proactive prevention has greatly increased."
"Compared with the ASG's approach, we don't see much difference in procedure when dealing with our public-sector clients," adds Mr Chan. "The Corruption Prevention Department has a duty to proactively review the practices and procedures of government departments and public bodies, ensuring corruption risks are reduced to a minimum. The ASG is also duty-bound to respond to every request for corruption prevention advice from the private sector."
According to Mr Chan, the Corruption Prevention Department also regularly distributes Best Practices Modules and educational materials to the private and public sectors for reference. Some of these - which provide general practices and real-life stories - specifically target property management and construction companies, with the aim of helping their management and staff to plug loopholes in their existing systems and enhance personal integrity.
To make corruption complaints and enquiries, please contact the ICAC Report Centre by phone on 2526 6366 (24-hour service), or by mail at GPO Box 1000, Hong Kong. For advice on corruption prevention or other related enquiries, please contact the Advisory Services Group directly on 2526 6363 or at firstname.lastname@example.org.