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Partners in crime
Michael, the chief engineer of the hotel, was responsible for purchasing spare parts for the repair of the hotel’s air-conditioning system. According to the purchasing policy of the hotel, Michael was required to declare any conflict of interest and obtain quotations from various suppliers for each purchase and recommend a selected supplier to the hotel.
Michael’s high school classmate, Mike, was a spare parts supplier of the hotel but Michael never declared the conflict of interest to the hotel. They agreed that for each procurement exercise, Michael would first disclose the quotations from other companies to Mike, who would then submit his quotation before the submission deadline. Mike’s company often won the supply contract with the lowest bid. In case where no quotations were received for minor purchase items, they falsified multiple quotations, and Mike’s company secured the contracts with the lowest bid.
On the other hand, Mike submitted false invoices to the hotel, falsely claiming that he had delivered all the parts according to the quoted quantities. In reality, the amount of goods delivered was insufficient and Michael assisted in concealing the under-delivery.
Case Analysis
Michael is regarded as an agent of the hotel. Without the hotel’s permission, he accepted rebates from Mike for disclosing quotation information of other bidders to the latter so that Mike could secure the contract at the lowest bid. Michael might breach Section 9 of the Prevention of Bribery Ordinance (POBO) while Mike might also commit the offence by offering bribes. Michael conspired with Mike to use false documents to deceive his employer so that Mike could obtain the supply contract, he might breach Section 9(3) of the POBO or other fraudulent offences and Mike might also commit a conspiracy to defraud offence. Similarly, Mike submitted false invoices to the hotel to conceal the under-delivery and Michael assisted to cover up the matter. Both of them might commit the offence of conspiracy to defraud.
Michael and Mike were high school classmates which constituted a conflict of interest. Michael did not declare the conflict of interest to the hotel intentionally and might violate the company’s internal policies. Employees must adhere to the company’s guidelines and procedures when conducting procurement exercises, including the guidelines on handling conflicts of interest. They should avoid conflict of interest as far as possible and make timely declarations strictly following the internal guidelines. Mishandling conflict of interest may distort and cast doubt on the reliability of one’s professional judgement. On the other hand, companies should implement internal monitoring mechanisms and effective checks and balances to ensure that employees properly follow the procurement policies and goods receiving procedures.