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Case Studies
Bidding low
A restaurant group operated a chain of ten restaurants in Hong Kong. The Director of the group, Alpha, was highly experienced in the food and beverage industry but was not familiar with renovation and related issues. As a result, he relied on his staff Ayden, an expert in engineering, when selecting contractors for the company. Ayden was authorised to approve renovation works valued up to $300,000 and contracts exceeding $300,000 would require Alpha’s endorsement.
Later, Ayden approached one of the contractors, Andy, and convinced him to offer a 5% commission on the contract price in return for providing Andy with quotation information submitted by other bidders during each quotation exercise. With this information, Andy constantly secured the contract with the lowest bid. Ayden also split contracts worth $300,000 or above into smaller contracts to avoid Alpha’s scrutiny.
Case Analysis
According to Section 9 of the Prevention of Bribery Ordinance (POBO), it would be an offence for Ayden, an agent of the restaurant group, without the permission of his principal, to solicit and accept rebates from Andy for providing him with quotation information submitted by other bidders. Andy might also commit an offence as the offeror of the bribes. Even if the contracts were not awarded to Andy in the end, once the offering and acceptance of the bribe was established, both of them would be guilty of an offence under the POBO.
Ayden intentionally split contracts to circumvent the established approval procedures, reflecting that the company had not set up an effective checks and balance system. The company should establish an internal audit team to conduct regular and surprise checks to prevent any non-compliance and detect such irregularities at an early stage.
Additionally, a company should implement an effective quotation system to enable the selection of the most suitable contractor for each project as well as to prevent leakage of tender information. To minimise the risk of information exposure, all received quotations should remain sealed until the official deadline for submission. Furthermore, the opening of the quotations should involve at least two authorised persons to prevent any potential tampering with the submitted prices.
As a construction professional, Ayden should not engage in any corruption or malpractice. Greed not only exposed him to criminal liability but also jeopardised his professional career.