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Case Studies
Lacking a clear company policy
Mr. Chung had established a toy manufacturing enterprise in the Mainland in partnership with his friends. Holding 10% of the shares, he was mainly responsible for supervising the manufacturing process. Since Chung had the authority to purchase materials for the company, he hinted to a Mainland supplier that he expected a rebate equivalent to 5% of the transaction amount as a reward for placing purchase orders. When the incident was exposed, the ICAC found that none of the shareholders in the enterprise had any knowledge of Chung’s acceptance of advantages. Besides, the company did not establish any clear policies on such acceptance of advantage either for its shareholders or staff. It was revealed that Chung had accepted a total of $50,000 over a period of eight months. Chung was sentenced to imprisonment for committing a bribery offence.
Case Analysis
In Hong Kong, according to the Prevention of Bribery Ordinance (POBO), it is an offence for any agent (generally the employee), without the permission of his principal (generally the employer), to solicit or accept an advantage as a reward for doing an act on relation to his principal’s business. Moreover, if any part of the bribery act takes place in Hong Kong, it shall still be an offence under the POBO. Although Chung was one of the shareholders of the enterprise, he was still an agent as defined by the law. He therefore must seek approval from the company before accepting any advantages.
Business organisations should take the initiative to govern the acceptance of advantages by all levels of staff (including directors) in relation to company businesses. The company should state clearly amounts of advantage that the staff are permitted to accept, and conditions of such acceptance. The policy should also list out the declaration procedures and enquiry channels for staff compliance.
Moreover, the company should establish detailed procurement procedures in order to ensure that the products purchased are of good quality and to prevent staff from abusing their authority or engaging in corrupt practices in the purchasing process. Staff should be reminded constantly of the importance of selecting suppliers in a fair and impartial manner.