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Case Studies
Awarding subcontracting orders for monetary rewards
A mechanical engineering company in Hong Kong had operated a factory in the Mainland. Its production manager Mr. Wong was deployed to oversee the Mainland mechanical production process. Mr. Wong had worked in the company for eight years and won the praise and trust from his boss. Since some of the production procedures were subcontracted to other local manufacturers, Mr. Wong was also responsible for sourcing suitable factories and awarding the production orders. As such, Mr. Wong got acquainted with many other manufacturers, and was frequently invited to social activities after work. Two of them suggested offering him a kickback as a reward for placing more production orders and they would inflate the price of the orders to compensate the extra cost, i.e. the kickback to Mr. Wong. Succumbing to the temptations of monetary rewards, Mr. Wong accepted RMB575,000 in bribes and then deposited the bribe money into his bank account in Hong Kong
Would Mr Wong breach any laws? How could companies avoid such malpractices from happening?
Case Analysis
Under Section 9 of the Prevention of Bribery Ordinance (POBO), it would be an offence for Mr Wong (an employee), without the approval of his employer, to accept advantages (i.e. RMB575,000 illegal kickback from the two manufacturers) for placing more production orders with the two manufacturers. The offeror of the bribe would also be guilty of the offence. It shall be an offence under POBO if any act of bribery (includes promising, agreeing, soliciting or accepting advantages without permission) takes place in Hong Kong. By depositing the bribe money back into the bank account in Hong Kong, Mr. Wong might still violate the POBO.
Mr Wong’s close relationship with the manufacturers had affected his objectivity when discharging his official duties. Though entertainment is an acceptable form of business behaviour, many past cases have shown that small favours such as free meals and small gifts etc. always breed corruption. It is therefore important for business manager to remind their staff of the need to handle their relationships with care, and to avoid accepting excessively frequent or lavish entertainment from them.
Furthermore, business organisations should also establish clear policies on acceptance of advantage and declaration of conflicts of interest, and inform their suppliers or subcontractors of such policies. In the event that staff have violated the law or company policies, prompt action should be taken to report the case immediately.