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Apr 2024Joint press release: Twenty netted, syndicate smashed in ICAC and Competition Commission first joint operation against corruption and tender-rigging over building maintenanceThe ICAC and the Competition Commission conducted their first joint operation in the past two days (April 16 and 17), neutralising a newly-rising syndicate engaging in corruption and tender-rigging in relation to building maintenance. In the joint operation, the ICAC arrested 20 persons, namely 17 men and three women aged between 36 and 70, including the mastermind and backbone members of the syndicate. The arrestees included project contractors, project consultants, middlemen, members of Incorporated Owners and members of property management companies.In the joint operation, search warrants were executed by the ICAC and the Competition Commission to conduct searches at about 40 premises, including offices of the aforementioned project contractors, consultancies and property management companies, as well as residences of the individuals concerned. Various exhibits were also seized, including computers, mobile phones, and tendering documents relating to building maintenance projects, etc.The Competition Commission has exercised its compulsory powers in the operation. In addition to searching premises with warrants, it also requested relevant parties to produce documents and information. During the course of the operation, certain individuals had refused to provide relevant information. The Competition Commission will follow up on this obstruction of its investigation powers, which is criminal in nature under Sections 52 and 54 of the Competition Ordinance.The companies and individuals concerned were alleged to have engaged in corruption and anti-competitive activities, contravening Section 9 of the Prevention of Bribery Ordinance and the First Conduct Rule of the Competition Ordinance. Through bribery means, they had allegedly manipulated the tendering exercises of building maintenance projects, exaggerated contracts sums, assisted associated contractors to secure maintenance projects and consultancy contracts, and manipulated project supervision and project payment release.The operation involved renovation projects of a residential estate and a residential-commercial composite building on Hong Kong Island, as well as four residential estates and industrial buildings in the New Territories. Individual contracts of such renovation projects worth from several millions to several tens of millions dollars, totalling around $180 million. It is alleged that bribe payments of individual projects amounted to over $1 million. Half of the renovation projects were yet to be awarded, while works of the remaining projects had been launched prior to the commencement of the ICAC and Competition Commission investigations.The ICAC and the Competition Commission believe that the syndicate concerned has been neutralised. As inquiries are ongoing, further law enforcement actions will not be ruled out. No further comment on the case will be made by the ICAC and the Competition Commission at this stage.The joint operation conducted by the ICAC and the Competition Commission demonstrated the determination of the two agencies in cracking down corruption and potential anti-competitive activities in building maintenance. The two agencies will continue to maintain close liaison with other law enforcement agencies and related authorities to ensure a clean and level-playing field for the building maintenance industry and to safeguard the rights of property owners.The investigations arose from a corruption complaint in relation to building maintenance lodged with the ICAC by members of the public. In-depth inquiries by the ICAC uncovered the aforementioned syndicate and their alleged involvement in other residential estates and buildings. Meanwhile, the Competition Commission had also received intelligence earlier alleging anti-competitive conduct in relation to various building maintenance projects. The Competition Commission followed up on the case and was satisfied that there was reasonable cause to suspect that the concerned projects had been the target of collusion. The Competition Commission therefore decided to escalate the case to the investigation phase.The ICAC calls on property owners and members of the public that, should they suspect corruption is involved in building maintenance, they should make enquiries or report to the ICAC. The ICAC’s report corruption hotline: 25 266 366.The Competition Commission calls on anyone who can provide information on the matter or the relevant practices to contact the Competition Commission as soon as possible by telephone on 3462 2118 or by e-mail at complaints@compcomm.hk. The Competition Commission will keep any information provided, including the identity of informants, confidential. Those who consider that they may have engaged or been involved in cartel conduct should approach the Commission as soon as possible for leniency or co-operation (Leniency Hotline: 3996 8010; e-mail: leniency@compcomm.hk).The ICAC has adopted a three-pronged approach of enforcement, prevention and education in fighting corruption in relation to the building management industry. The ICAC will continue to proactively approach building management bodies and encourage flat owners to stay vigilant against corruption in renovation works through active participation in building management. In collaboration with different government departments, professional bodies, regulators and trade associations, the ICAC will continue to organise integrity training to enhance practitioners’ anti-corruption capacity and resistance to bribery temptations. The ICAC has also produced a wide range of practical education resources which are available in the Integrity and Quality Building Management website (bm.icac.hk). Citizens are also welcome to call the Integrity Building Management Enquiry Hotline at 2929 4555 for ICAC services.The ICAC has recently compiled the “Corruption Prevention 101 – Building Maintenance Tips for Owners” leaflet, which lists out the key points-to-note in relation to building maintenance projects, and provides relevant corruption prevention suggestions and information. Members of the public can now download the leaflet from the ICAC Corruption Prevention Advisory Service webpage (cpas.icac.hk).Building maintenance has been a matter of great concern for property owners in Hong Kong, and the Competition Commission has been proactively following up on cases in the relevant market. Cartel conduct such as bid-rigging, is specified as a serious anti-competitive conduct under the Competition Ordinance. In addition to enforcement actions, the Competition Commission has been actively launching publicity and educational initiatives to raise public awareness of such anti-competitive conduct, and to assist procurers in strengthening their preventive efforts. Apart from rolling out a series of educational resources on its website, the Competition Commission also reaches out to the community by speaking at briefings organised by different government departments, District Councils and public bodies targeting property owners and property management practitioners across different districts in Hong Kong.Separately, the Competition Commission has also published a set of model “Non-collusion Clauses” for procurers to incorporate into their invitation to bid documents and contracts, with a view to reducing their exposure to anti-competitive conduct during procurement exercises. In essence, the “Non-collusion Clauses” serve to warn bidders of the prohibition against, and consequences of, entering into anti-competitive arrangements, as well as to provide a clear and straightforward contractual remedy for procurers in the event that these clauses have been breached. 16
Apr 2024Two more charged by ICAC with accepting $200,000 bribes over workers’ employment in Third Runway Project, as cumulative bribe payments amounted to over $1.6mIn recent years, the ICAC has taken a series of enforcement actions against solicitation and acceptance of bribe payments from construction workers. Today (April 16) two more former employees of the main contractor and a sub-contractor of the Third Runway Project of the Hong Kong International Airport (Third Runway Project) were charged by the ICAC with accepting bribes of over $200,000 from an asphalt worker in relation to his employment with the sub-contractor. Arising from the relevant investigation, the Commission has so far charged a total of 28 persons, involving bribe payments totalling over $1.6 million.Paul Yu Wai-lun, 45, former foreman of SAPR JV; and Chan Ming-cheong, 39, former worker of MLife Engineering Limited (MEL), jointly face one count of conspiracy for agents to accept advantages, contrary to section 9(1)(a) of the Prevention of Bribery Ordinance and section 159A of the Crimes Ordinance.The duo were released on ICAC bail, pending their appearance at the West Kowloon Magistrates’ Courts on Thursday (April 18) for plea.The present case took place between January 2021 and June 2022. At that time, SAPR JV was the main contractor of the Third Runway Project and its sub-contractor MEL was responsible for recruiting construction workers to conduct various works. Yu was a foreman of SAPR JV overseeing asphalt workers, including Chan, at the project’s construction site. Since January 2021, an asphalt worker started to work for the project at a daily wage of over $1,400 with overtime allowances.It is alleged that at the material time, Yu and Chan conspired together to accept bribe payments totalling over $200,000 from the aforementioned worker for assisting him to continue his employment with MEL.ICAC enquiries revealed that Yu and Chan allegedly solicited from the worker a daily bribe ranging from over $250 to $450 together with part of his overtime allowances. The worker acceded to their request in the following one and a half years to avoid from being terminated by the defendants.The ICAC has so far charged 28 people, most of whom were site team leaders of a sub-contractor, for collecting bribes totalling over $1.6 million from more than 130 workers of the Third Runway Project. Twenty-one defendants had pleaded guilty or were found guilty after trial, receiving sentences up to 16 months in jail. Two others are awaiting plea or trial.An ICAC spokesperson urges construction workers not to tolerate corruption. Should they be asked to pay bribes in exchange for their employment, they should reject and report to the ICAC immediately. ICAC’s report corruption hotline: 25 266 366. The ICAC calls on construction companies to adopt the Integrity Risk Management (IRM) Toolkit on recruitment of workers produced by the ICAC to formulate and implement control measures to mitigate integrity risks on recruitment of workers, uplift the integrity management capability and uphold professionalism of the construction industry. IRM Toolkit on recruitment of workers is available at cpas.icac.hk/EN/Info/TP_Library?cate_id=10027.The Airport Authority Hong Kong, SAPR JV and MEL have rendered full assistance to the ICAC during its investigation into the case. 15
Apr 2024Three former insurance agents charged by ICAC jailed for 25 to 34 months for conspiracy to defraud over commissions and bonuses totalling $950,000Three former insurance agents, charged by the ICAC, were today (April 15) sentenced at the District Court to jail terms ranging from 25 months to 34 months for conspiracy to defraud an insurance company into paying commissions and bonuses totalling about $950,000 by making false representations about the handling agents of 10 policies.Chan Ka-wo, 38, former branch manager of AXA China Region Insurance Company Limited (AXA), received a jail term of 34 months; Tsang Tsz-long, 30, and Lam Tsz-him, 35; both former insurance agents of AXA, were respectively jailed for 28 months and 25 months. The trio were earlier convicted of one count of conspiracy to defraud, contrary to the Common Law.In sentencing, Judge Mr Edmond Lee Chun-man remarked that the offence committed by the defendants constituted a breach of trust and the scam involved sophisticated planning by the trio. Hence, immediate custodial sentences were meted out.The court heard that at the material time, Chan was the up-line manager of Tsang and Lam. In the course of selling an insurance product of AXA, a handling agent was required to declare that he or she had asked the applicant the questions on the policy application form, verified the identity of the applicant and witnessed the applicant’s signature on the policy application form.Whenever an insurance product was successfully sold, the handling agents and his or her up-line manager would respectively receive commissions and overriding commissions from AXA. They were also entitled to various kinds of bonuses.Between November 25, 2014 and September 28, 2017, the three defendants conspired together to use 10 policies in which Lam, Tsang and others were falsely represented as the handling agents to defraud AXA to release commissions and bonuses totalling about $950,000 to them.The ICAC investigation arose from a corruption complaint. Enquiries revealed that Lam and Tsang did not handle those insurance policies, which eventually lapsed due to default payment of premiums.AXA had rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by prosecuting counsel Michael Delaney, assisted by ICAC officer Leung Po-shan.The ICAC will continue to collaborate with the insurance industry in providing integrity training to practitioners, as well as tips on managing staff integrity for managerial staff. For more information, please visit the Ethics Promotion Website for the Insurance Industry produced by the Hong Kong Business Ethics Development Centre. 11
Apr 2024Joint Press release: IA and ICAC conduct first joint operation against suspected unlicensed selling to Mainland visitorsThe Insurance Authority (IA) and the ICAC have conducted their first joint operation targeting corrupt conduct in the unlicensed sale of insurance policies to Mainland customers. The joint operation was conducted pursuant to the Memorandum of Understanding (MoU) signed by the ICAC and the IA on October 26, 2023.Search warrants were executed by the IA and the ICAC on two consecutive days (April 10 and 11) at four premises, including the offices of a licensed insurance broker company and a referral company. In the joint operation, the ICAC also arrested an individual broker and a referrer.The companies and individuals concerned are suspected of having engaged in, or conspired with others to carry on unlicensed regulated activities in contravention of the Insurance Ordinance (Note 1) and also of suspected offences of agent using documents with intent to deceive his principal under the Prevention of Bribery Ordinance. Breaches of the Code of Conduct for Licensed Insurance Brokers are also suspected to have been committed.The investigation concerns the suspected engagement and incentivisation of referrers by a broker company to carry on regulated activities (advising on and selling of insurance policies) on its behalf, even though such referrers do not have the requisite licence to do this. The broker company offered to pay inordinately high referral fees on successful sales, apparently incentivising its referrers to induce customers from the Mainland to buy long-term insurance policies from authorized insurers in Hong Kong. In some cases, referrers appear to have been paid over 90% of the commission received by the broker company. Although the broker company submitted the insurance application forms to insurers, the substantial regulated activities were apparently performed by referrers prior to customers having any engagement with the broker company.In the investigation, the individual broker and the referrer are also suspected of corruptly conspiring to include false information in application forms submitted to the Hong Kong insurers underwriting the policies, including the annual income and amount of assets held by Mainland customers.Mr Peter Gregoire, Head of Market Conduct and General Counsel of the IA, said: “Our partnership with the ICAC in carrying out this joint operation demonstrates our shared determination to uphold proper sales practices in the insurance industry, ensure the market is founded on trust and integrity, and thereby provide confidence to all persons who look to the Hong Kong insurance market to meet their insurance needs. This close collaboration will continue not only through joint enforcement measures but also through industry training via the Hong Kong International Academy Against Corruption to enhance corporate governance standards and public education to empower consumers.”Deputy Commissioner and Head of Operations of the ICAC, Mr Ricky Yau Shu-chun, said: “The MoU signed between the ICAC and the IA last year strengthened our cooperation in referral of cases, joint investigations, training and exchange of information. Last month, IA representatives attended a three-day Training on Joint Operations organised by the ICAC for local regulatory bodies to enhance officers’ capability of combating financial crime and corruption. This joint operation showcases our common goal in upholding the integrity of the insurance industry. The ICAC will continue to closely collaborate with the IA, as well as other financial regulators, to combat corruption, illicit activities and misconduct relating to the financial sector. We will strive to maintain a fair business environment in Hong Kong, to sustain Hong Kong’s status as a clean international financial centre and to ensure the trust of stakeholders in the financial system.”No further comment will be made by the IA or the ICAC at this stage as the investigation is ongoing. The IA urges all authorized insurers and licensed insurance intermediaries to comply with the Insurance Ordinance, and undertakes to continue to take swift and firm enforcement actions to curb the abovementioned activities and / or any other misconduct.Notes:1. Section 64G of the Insurance Ordinance stipulates that “A person must not carry on a regulated activity in the course of the person’s business or employment; or for reward.” It is also stipulated that “A person must not hold out that the person is carrying on a regulated activity in the course of the person’s business or employment; or is carrying on a regulated activity for reward.” A person who, without reasonable excuse, contravenes the above commits an offence and is liable on conviction on indictment to a maximum fine of $1,000,000 and imprisonment for 2 years. 09
Apr 2024Ex-employee of Chinese restaurant charged by ICAC admits theft over revised billsA former employee of a Chinese restaurant, charged by the ICAC, today (April 9) admitted at the Eastern Magistrates’ Courts that she had stolen over $23,000 from the restaurant by revising the relevant records in the computer system of the restaurant after customers had paid the bills.Leung Tsz-ying, 35, former clerk cum substitute cashier of Lei Garden Restaurant, pleaded guilty to five counts of theft, contrary to Section 9 of the Theft Ordinance.Principal Magistrate Miss Ivy Chui Yee-mei adjourned the case to April 23 for sentence, pending the defendant’s background report. The defendant was remanded in custody of the Correctional Services Department.When the case took place between December 2019 and December 2021, the defendant was a clerk cum substitute cashier of a branch of Lei Garden Restaurant in Central. She was authorised to revise or cancel customer orders in the computer system of the restaurant.The court heard that the defendant deleted the number of dishes ordered and served in the computer systems after three customers had paid their bills totalling over $20,000, misleading Lei Garden Restaurant that their bills added up to about $15,000 in total, to facilitate the defendant’s pocketing of the difference of about $5,000.In addition, the defendant stole $13,300 maintained in the meal expenses deposit account of a customer of Lei Garden Restaurant. In order to cover up her misappropriation, she deposited about $5,200 into the account after stealing the sum from another customer by the same fraudulent means of cancelling orders in the computer system.The ICAC investigation arose from a corruption complaint. Subsequent enquiries revealed the theft offences committed by the defendant. Lei Garden Restaurant had rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by ICAC officer Jackie Lam.
Apr 2024Joint press release: Twenty netted, syndicate smashed in ICAC and Competition Commission first joint operation against corruption and tender-rigging over building maintenanceThe ICAC and the Competition Commission conducted their first joint operation in the past two days (April 16 and 17), neutralising a newly-rising syndicate engaging in corruption and tender-rigging in relation to building maintenance. In the joint operation, the ICAC arrested 20 persons, namely 17 men and three women aged between 36 and 70, including the mastermind and backbone members of the syndicate. The arrestees included project contractors, project consultants, middlemen, members of Incorporated Owners and members of property management companies.In the joint operation, search warrants were executed by the ICAC and the Competition Commission to conduct searches at about 40 premises, including offices of the aforementioned project contractors, consultancies and property management companies, as well as residences of the individuals concerned. Various exhibits were also seized, including computers, mobile phones, and tendering documents relating to building maintenance projects, etc.The Competition Commission has exercised its compulsory powers in the operation. In addition to searching premises with warrants, it also requested relevant parties to produce documents and information. During the course of the operation, certain individuals had refused to provide relevant information. The Competition Commission will follow up on this obstruction of its investigation powers, which is criminal in nature under Sections 52 and 54 of the Competition Ordinance.The companies and individuals concerned were alleged to have engaged in corruption and anti-competitive activities, contravening Section 9 of the Prevention of Bribery Ordinance and the First Conduct Rule of the Competition Ordinance. Through bribery means, they had allegedly manipulated the tendering exercises of building maintenance projects, exaggerated contracts sums, assisted associated contractors to secure maintenance projects and consultancy contracts, and manipulated project supervision and project payment release.The operation involved renovation projects of a residential estate and a residential-commercial composite building on Hong Kong Island, as well as four residential estates and industrial buildings in the New Territories. Individual contracts of such renovation projects worth from several millions to several tens of millions dollars, totalling around $180 million. It is alleged that bribe payments of individual projects amounted to over $1 million. Half of the renovation projects were yet to be awarded, while works of the remaining projects had been launched prior to the commencement of the ICAC and Competition Commission investigations.The ICAC and the Competition Commission believe that the syndicate concerned has been neutralised. As inquiries are ongoing, further law enforcement actions will not be ruled out. No further comment on the case will be made by the ICAC and the Competition Commission at this stage.The joint operation conducted by the ICAC and the Competition Commission demonstrated the determination of the two agencies in cracking down corruption and potential anti-competitive activities in building maintenance. The two agencies will continue to maintain close liaison with other law enforcement agencies and related authorities to ensure a clean and level-playing field for the building maintenance industry and to safeguard the rights of property owners.The investigations arose from a corruption complaint in relation to building maintenance lodged with the ICAC by members of the public. In-depth inquiries by the ICAC uncovered the aforementioned syndicate and their alleged involvement in other residential estates and buildings. Meanwhile, the Competition Commission had also received intelligence earlier alleging anti-competitive conduct in relation to various building maintenance projects. The Competition Commission followed up on the case and was satisfied that there was reasonable cause to suspect that the concerned projects had been the target of collusion. The Competition Commission therefore decided to escalate the case to the investigation phase.The ICAC calls on property owners and members of the public that, should they suspect corruption is involved in building maintenance, they should make enquiries or report to the ICAC. The ICAC’s report corruption hotline: 25 266 366.The Competition Commission calls on anyone who can provide information on the matter or the relevant practices to contact the Competition Commission as soon as possible by telephone on 3462 2118 or by e-mail at complaints@compcomm.hk. The Competition Commission will keep any information provided, including the identity of informants, confidential. Those who consider that they may have engaged or been involved in cartel conduct should approach the Commission as soon as possible for leniency or co-operation (Leniency Hotline: 3996 8010; e-mail: leniency@compcomm.hk).The ICAC has adopted a three-pronged approach of enforcement, prevention and education in fighting corruption in relation to the building management industry. The ICAC will continue to proactively approach building management bodies and encourage flat owners to stay vigilant against corruption in renovation works through active participation in building management. In collaboration with different government departments, professional bodies, regulators and trade associations, the ICAC will continue to organise integrity training to enhance practitioners’ anti-corruption capacity and resistance to bribery temptations. The ICAC has also produced a wide range of practical education resources which are available in the Integrity and Quality Building Management website (bm.icac.hk). Citizens are also welcome to call the Integrity Building Management Enquiry Hotline at 2929 4555 for ICAC services.The ICAC has recently compiled the “Corruption Prevention 101 – Building Maintenance Tips for Owners” leaflet, which lists out the key points-to-note in relation to building maintenance projects, and provides relevant corruption prevention suggestions and information. Members of the public can now download the leaflet from the ICAC Corruption Prevention Advisory Service webpage (cpas.icac.hk).Building maintenance has been a matter of great concern for property owners in Hong Kong, and the Competition Commission has been proactively following up on cases in the relevant market. Cartel conduct such as bid-rigging, is specified as a serious anti-competitive conduct under the Competition Ordinance. In addition to enforcement actions, the Competition Commission has been actively launching publicity and educational initiatives to raise public awareness of such anti-competitive conduct, and to assist procurers in strengthening their preventive efforts. Apart from rolling out a series of educational resources on its website, the Competition Commission also reaches out to the community by speaking at briefings organised by different government departments, District Councils and public bodies targeting property owners and property management practitioners across different districts in Hong Kong.Separately, the Competition Commission has also published a set of model “Non-collusion Clauses” for procurers to incorporate into their invitation to bid documents and contracts, with a view to reducing their exposure to anti-competitive conduct during procurement exercises. In essence, the “Non-collusion Clauses” serve to warn bidders of the prohibition against, and consequences of, entering into anti-competitive arrangements, as well as to provide a clear and straightforward contractual remedy for procurers in the event that these clauses have been breached. 16
Apr 2024Two more charged by ICAC with accepting $200,000 bribes over workers’ employment in Third Runway Project, as cumulative bribe payments amounted to over $1.6mIn recent years, the ICAC has taken a series of enforcement actions against solicitation and acceptance of bribe payments from construction workers. Today (April 16) two more former employees of the main contractor and a sub-contractor of the Third Runway Project of the Hong Kong International Airport (Third Runway Project) were charged by the ICAC with accepting bribes of over $200,000 from an asphalt worker in relation to his employment with the sub-contractor. Arising from the relevant investigation, the Commission has so far charged a total of 28 persons, involving bribe payments totalling over $1.6 million.Paul Yu Wai-lun, 45, former foreman of SAPR JV; and Chan Ming-cheong, 39, former worker of MLife Engineering Limited (MEL), jointly face one count of conspiracy for agents to accept advantages, contrary to section 9(1)(a) of the Prevention of Bribery Ordinance and section 159A of the Crimes Ordinance.The duo were released on ICAC bail, pending their appearance at the West Kowloon Magistrates’ Courts on Thursday (April 18) for plea.The present case took place between January 2021 and June 2022. At that time, SAPR JV was the main contractor of the Third Runway Project and its sub-contractor MEL was responsible for recruiting construction workers to conduct various works. Yu was a foreman of SAPR JV overseeing asphalt workers, including Chan, at the project’s construction site. Since January 2021, an asphalt worker started to work for the project at a daily wage of over $1,400 with overtime allowances.It is alleged that at the material time, Yu and Chan conspired together to accept bribe payments totalling over $200,000 from the aforementioned worker for assisting him to continue his employment with MEL.ICAC enquiries revealed that Yu and Chan allegedly solicited from the worker a daily bribe ranging from over $250 to $450 together with part of his overtime allowances. The worker acceded to their request in the following one and a half years to avoid from being terminated by the defendants.The ICAC has so far charged 28 people, most of whom were site team leaders of a sub-contractor, for collecting bribes totalling over $1.6 million from more than 130 workers of the Third Runway Project. Twenty-one defendants had pleaded guilty or were found guilty after trial, receiving sentences up to 16 months in jail. Two others are awaiting plea or trial.An ICAC spokesperson urges construction workers not to tolerate corruption. Should they be asked to pay bribes in exchange for their employment, they should reject and report to the ICAC immediately. ICAC’s report corruption hotline: 25 266 366. The ICAC calls on construction companies to adopt the Integrity Risk Management (IRM) Toolkit on recruitment of workers produced by the ICAC to formulate and implement control measures to mitigate integrity risks on recruitment of workers, uplift the integrity management capability and uphold professionalism of the construction industry. IRM Toolkit on recruitment of workers is available at cpas.icac.hk/EN/Info/TP_Library?cate_id=10027.The Airport Authority Hong Kong, SAPR JV and MEL have rendered full assistance to the ICAC during its investigation into the case. 15
Apr 2024Three former insurance agents charged by ICAC jailed for 25 to 34 months for conspiracy to defraud over commissions and bonuses totalling $950,000Three former insurance agents, charged by the ICAC, were today (April 15) sentenced at the District Court to jail terms ranging from 25 months to 34 months for conspiracy to defraud an insurance company into paying commissions and bonuses totalling about $950,000 by making false representations about the handling agents of 10 policies.Chan Ka-wo, 38, former branch manager of AXA China Region Insurance Company Limited (AXA), received a jail term of 34 months; Tsang Tsz-long, 30, and Lam Tsz-him, 35; both former insurance agents of AXA, were respectively jailed for 28 months and 25 months. The trio were earlier convicted of one count of conspiracy to defraud, contrary to the Common Law.In sentencing, Judge Mr Edmond Lee Chun-man remarked that the offence committed by the defendants constituted a breach of trust and the scam involved sophisticated planning by the trio. Hence, immediate custodial sentences were meted out.The court heard that at the material time, Chan was the up-line manager of Tsang and Lam. In the course of selling an insurance product of AXA, a handling agent was required to declare that he or she had asked the applicant the questions on the policy application form, verified the identity of the applicant and witnessed the applicant’s signature on the policy application form.Whenever an insurance product was successfully sold, the handling agents and his or her up-line manager would respectively receive commissions and overriding commissions from AXA. They were also entitled to various kinds of bonuses.Between November 25, 2014 and September 28, 2017, the three defendants conspired together to use 10 policies in which Lam, Tsang and others were falsely represented as the handling agents to defraud AXA to release commissions and bonuses totalling about $950,000 to them.The ICAC investigation arose from a corruption complaint. Enquiries revealed that Lam and Tsang did not handle those insurance policies, which eventually lapsed due to default payment of premiums.AXA had rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by prosecuting counsel Michael Delaney, assisted by ICAC officer Leung Po-shan.The ICAC will continue to collaborate with the insurance industry in providing integrity training to practitioners, as well as tips on managing staff integrity for managerial staff. For more information, please visit the Ethics Promotion Website for the Insurance Industry produced by the Hong Kong Business Ethics Development Centre. 11
Apr 2024Joint Press release: IA and ICAC conduct first joint operation against suspected unlicensed selling to Mainland visitorsThe Insurance Authority (IA) and the ICAC have conducted their first joint operation targeting corrupt conduct in the unlicensed sale of insurance policies to Mainland customers. The joint operation was conducted pursuant to the Memorandum of Understanding (MoU) signed by the ICAC and the IA on October 26, 2023.Search warrants were executed by the IA and the ICAC on two consecutive days (April 10 and 11) at four premises, including the offices of a licensed insurance broker company and a referral company. In the joint operation, the ICAC also arrested an individual broker and a referrer.The companies and individuals concerned are suspected of having engaged in, or conspired with others to carry on unlicensed regulated activities in contravention of the Insurance Ordinance (Note 1) and also of suspected offences of agent using documents with intent to deceive his principal under the Prevention of Bribery Ordinance. Breaches of the Code of Conduct for Licensed Insurance Brokers are also suspected to have been committed.The investigation concerns the suspected engagement and incentivisation of referrers by a broker company to carry on regulated activities (advising on and selling of insurance policies) on its behalf, even though such referrers do not have the requisite licence to do this. The broker company offered to pay inordinately high referral fees on successful sales, apparently incentivising its referrers to induce customers from the Mainland to buy long-term insurance policies from authorized insurers in Hong Kong. In some cases, referrers appear to have been paid over 90% of the commission received by the broker company. Although the broker company submitted the insurance application forms to insurers, the substantial regulated activities were apparently performed by referrers prior to customers having any engagement with the broker company.In the investigation, the individual broker and the referrer are also suspected of corruptly conspiring to include false information in application forms submitted to the Hong Kong insurers underwriting the policies, including the annual income and amount of assets held by Mainland customers.Mr Peter Gregoire, Head of Market Conduct and General Counsel of the IA, said: “Our partnership with the ICAC in carrying out this joint operation demonstrates our shared determination to uphold proper sales practices in the insurance industry, ensure the market is founded on trust and integrity, and thereby provide confidence to all persons who look to the Hong Kong insurance market to meet their insurance needs. This close collaboration will continue not only through joint enforcement measures but also through industry training via the Hong Kong International Academy Against Corruption to enhance corporate governance standards and public education to empower consumers.”Deputy Commissioner and Head of Operations of the ICAC, Mr Ricky Yau Shu-chun, said: “The MoU signed between the ICAC and the IA last year strengthened our cooperation in referral of cases, joint investigations, training and exchange of information. Last month, IA representatives attended a three-day Training on Joint Operations organised by the ICAC for local regulatory bodies to enhance officers’ capability of combating financial crime and corruption. This joint operation showcases our common goal in upholding the integrity of the insurance industry. The ICAC will continue to closely collaborate with the IA, as well as other financial regulators, to combat corruption, illicit activities and misconduct relating to the financial sector. We will strive to maintain a fair business environment in Hong Kong, to sustain Hong Kong’s status as a clean international financial centre and to ensure the trust of stakeholders in the financial system.”No further comment will be made by the IA or the ICAC at this stage as the investigation is ongoing. The IA urges all authorized insurers and licensed insurance intermediaries to comply with the Insurance Ordinance, and undertakes to continue to take swift and firm enforcement actions to curb the abovementioned activities and / or any other misconduct.Notes:1. Section 64G of the Insurance Ordinance stipulates that “A person must not carry on a regulated activity in the course of the person’s business or employment; or for reward.” It is also stipulated that “A person must not hold out that the person is carrying on a regulated activity in the course of the person’s business or employment; or is carrying on a regulated activity for reward.” A person who, without reasonable excuse, contravenes the above commits an offence and is liable on conviction on indictment to a maximum fine of $1,000,000 and imprisonment for 2 years. 09
Apr 2024Ex-employee of Chinese restaurant charged by ICAC admits theft over revised billsA former employee of a Chinese restaurant, charged by the ICAC, today (April 9) admitted at the Eastern Magistrates’ Courts that she had stolen over $23,000 from the restaurant by revising the relevant records in the computer system of the restaurant after customers had paid the bills.Leung Tsz-ying, 35, former clerk cum substitute cashier of Lei Garden Restaurant, pleaded guilty to five counts of theft, contrary to Section 9 of the Theft Ordinance.Principal Magistrate Miss Ivy Chui Yee-mei adjourned the case to April 23 for sentence, pending the defendant’s background report. The defendant was remanded in custody of the Correctional Services Department.When the case took place between December 2019 and December 2021, the defendant was a clerk cum substitute cashier of a branch of Lei Garden Restaurant in Central. She was authorised to revise or cancel customer orders in the computer system of the restaurant.The court heard that the defendant deleted the number of dishes ordered and served in the computer systems after three customers had paid their bills totalling over $20,000, misleading Lei Garden Restaurant that their bills added up to about $15,000 in total, to facilitate the defendant’s pocketing of the difference of about $5,000.In addition, the defendant stole $13,300 maintained in the meal expenses deposit account of a customer of Lei Garden Restaurant. In order to cover up her misappropriation, she deposited about $5,200 into the account after stealing the sum from another customer by the same fraudulent means of cancelling orders in the computer system.The ICAC investigation arose from a corruption complaint. Subsequent enquiries revealed the theft offences committed by the defendant. Lei Garden Restaurant had rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by ICAC officer Jackie Lam.