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Case Studies
Unauthorised commission in custody of another person
Nelson was a branch manager of an overseas bank and was responsible for the day-to-day management including the granting of credit facilities to individual and corporate customers. Leo, a client of Nelson, was a director of a trading company. They maintained close ties and Leo always spent considerable sums of money entertaining Nelson by way of lunches, dinners and visits to ballrooms. On top of that, Nelson and his family were enjoying free accommodation in a flat owned by Leo's company.
In recent years, Leo's company had been facing difficulties in obtaining credit facilities due to the economic downturn. One day, Leo called Nelson for dinner and disclosed that he was applying for some Letters of Credit (L/Cs) in Nelson's bank. In a hope to secure his applications, Leo told that Nelson's assistance would be of great help. In return, Leo agreed to offer Nelson commission and deposit it into the account of Nelson's wife. Leo also invited Nelson and his family to spend the Chinese New Year holiday on a golf trip to Malaysia at his expense. Nelson thanked Leo and accepted the offer.
Case Analysis
Nelson and Leo breached Section 9 of the Prevention of Bribery Ordinance (POBO) as Nelson accepted advantages from Leo in the form of commission and free travel for providing assistance in approving Leo's L/C applications without the permission of the bank. It is also a violation of Section 124 of the Banking Ordinance for Nelson to accept the advantages. Nelson commits a corruption offence despite that Leo deposited the commissions into the account of Nelson's wife. Under the POBO, a person is considered to have accepted an advantage, even though another person acting on his behalf receives the advantage.
Nelson also could not excuse himself by explaining that the acceptance of the Chinese New Year trip is a customary practice as custom is not a defence according to the POBO. Nelson might further contravene the Code of Conduct[1] of his bank for accepting personal benefits from a customer doing business with the bank.
Nelson’s acceptance of entertainment and free accommodation without doing anything at the early stage might not contravene Section 9 of the POBO at the outset. Nevertheless, Nelson should avoid accepting excessive levels of entertainment or advantages as it might affect his objectivity in dealing with Leo.
[1] According to HKMA’s Supervisory Policy Manual CG-3, each authorized institute (bank) should develop its own Code of Conduct containing certain minimum conduct requirements which include “no member of staff should solicit, accept and retain personal benefits from any customer of the authorized institute (bank) or any individual or organisation doing or seeking to do business with it.”