Handling of confidential information

Article exclusively contributed
by the ICAC

Henry, vice president of a multinational corporation, was recently appointed as chairman of a project committee with the task of overseeing the renovations of the company's Hong Kong office to be upgraded to become the regional headquarters. A number of contractors had expressed keen interest in obtaining this multi-million dollar project.

David, Henry's old schoolmate, was one of the potential bidders. In order to revive his contact with Henry, David initiated a reunion gathering inviting all "old pals," including Henry, to attend. Following that, he frequently treated Henry to lavish meals and karaoke parties where they gulped down bottles of expensive wine.

Henry enjoyed very much the entertainment he was treated to. He thought that they were only normal social outings, and did not realize that David was trying to "sweeten him up" step by step. One day David offered $80,000 to him for disclosing tender information submitted by other contractors in the bidding exercise.

It was an irresistible offer for Henry, who was troubled by financial problems, not to say that he found it difficult to refuse because their relationship had become so cozy lately. It turned out that David's company eventually won the contract.

The close ties between the two "old boys" quickly became the subject of gossip in Henry's office. Rumors were rife that Henry had favored David in the contract awarding process. There were also suspicions that Henry might have received advantages as a reward. Owing to the suspicious circumstances, the company's senior management subsequently reported the matter to the ICAC for investigation. It also approached the Advisory Services Group of the ICAC's Corruption Prevention Department for advice to plug any possible loopholes.

What went wrong?

Henry had breached the company's code of conduct by disclosing the confidential tender information without authorization from the company.

From a legal point of view, it was a violation of Section 9 of the Prevention of Bribery Ordinance for Henry to have accepted $80,000 as a reward to disclose the tender information, unless he had the company's consent to do so. In this case, the company stated very clearly that no employee was allowed to accept advantages in relation to the company's business. On David's part, he also breached the anti-corruption law by offering the bribe.

Confidential information

Tender information is but one among a wide range of confidential information of a company. Others include customers' information and price sensitive information.

The disclosure of personal data is governed by the provisions of the Personal Data (Privacy) Ordinance while the improper use of price sensitive information by a person when dealing with the securities of a listed company is dealt with by the Securities (Insider Dealing) Ordinance.

Advice to employees
Confidentiality of information is of fundamental importance to any business. To be a responsible employee and to protect yourself from breaching the law, you should :

- Fully understand and abide by the laws

Familiarize yourself with the laws, e.g. the Prevention of Bribery Ordinance, the Personal Data (Privacy) Ordinance and the Securities (Insider Dealing) Ordinance.

- Follow your company's conduct requirements

Observe the company's code of conduct including the sections concerning the use of confidential information.

- Avoid being "sweetened up"

Avoid accepting benefit or favor from any person who has official dealings with your company, if they are unreasonably generous, excessive or frequent, and likely to cause embarrassment when you discharge your duties.

- Consult the management when necessary

Tips for the management
To prevent employees from misusing or leaking any confidential information of the company, the management should adopt the following measures:

(a) Lay down clear conduct requirements

- Draw up a clear code of conduct laying down requirements on standards of behavior expected, particularly with regards to handling of confidential information.

- Communicate with employees effectively

- Inform all staff about the company code of conduct and policy on handling of confidential information as well as the serious consequences of leaking such information, such as disciplinary action or dismissal.

(b) Enforce the "need-to-know" principles

- Grant staff access rights to confidential information on a need-to-know basis and establish a clear policy prohibiting unwarranted communication of confidential information between individuals or departments.

- Implement monitoring procedures

- Set up a monitoring system to continuously track, identify and protect against any misuse of confidential information.

(c) Establish adequate safeguards

- Classify and maintain confidential information properly and adopt effective information system security measures, such as computer password controls and restricted access to certain operational areas to prevent unauthorized personnel from gaining access to confidential information.

(d) Enhance ethical awareness of staff

- Organize ethics training for employees and build up an ethical culture within the company as culture embodies the core beliefs of a company that will determine the way in which its employees behave both internally and externally.

For enquiries about this article or corruption prevention advice to private sector companies, please contact the Advisory Services Group of the ICAC's Corruption Prevention Department at (tel) 2526 6363, (fax) 2522 0505 or (e-mail address) Our service is free and confidential. To report corruption, call the ICAC 24-hour Hotline at 2526 6366.

Taken from Career Times 23 August 2002

(Last review date: 23 August 2013)

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Disclaimer: The opinions expressed in this article are those of the contributor.

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