Resources
Case Studies
Offering or accepting a bribe are both offences in law
A director of a finance company and the credit manager of a bank became good friends due to their frequent business contacts. They both enjoyed playing mahjong and drinking fine wine, so they often spent free time together. But every time they went out, it was almost always the director of the finance company to foot the bill.
The demand for loans from the finance company had increased recently. In order to secure more business, the director of the finance company asked his bank manager friend to increase his credit limit. Knowing well that he could not provide sufficient collateral, the director privately agreed to offer a rebate of HK$50,000 to the bank manager for every one million dollars increase in his credit line.
In a short period of 18 months, the finance company was granted credits totalling nine million dollars on separate occasions, even though there was insufficient collateral to cover the credits granted. The case was eventually detected by the compliance department of the bank and referred to the ICAC for investigation.
Case Analysis
In the above case, the bank manager was an employee of the bank, i.e. an agent under Section 9 of the Prevention of Bribery Ordinance (POBO) while the bank was the principal.
The bank certainly would not allow the manager to accept advantages related to his official position, thus the rebate was an illegal advantage and the acceptance of which constituted an offence of accepting a bribe. The finance company director also committed bribery for offering illegal advantages.
Under the POBO, food or drink for consumption on the occasion when it is provided is considered as "entertainment", which is not defined as an advantage. Even though it is not against the law to accept entertainment, accepting excessive level of entertainment by a bank staff may breach the Code of Conduct of the bank. The bank manager compromised his impartiality when he dined frequently with the finance company director.
Although entertainment is common in business practice, a bank staff should avoid meals or entertainment that are excessive in nature or frequency, so as not to cause embarrassment or loss of objectivity when conducting business with clients. In case of doubt, it would be prudent to consult the bank’s management prior to acceptance.