Resources
Case Studies
Acceptance of advantages without separating public from private interests
Gordon was an estate agent in an estate agency. Mr Yu, a client, commissioned Gordon to sell four commercial units, specifying a minimum average price of $20,000 per square foot. As Gordon knew his cousin Johnny planned to invest in commercial buildings in that district, he recommended Mr Yu’s units and sold two of them to Johnny at around $18,000 per square foot. To thank Gordon, Johnny offered him “tea money” of $150,000. Gordon then found another buyer, Mr Pau, for the remaining two units, asking $24,000 per square foot in order to fulfil Mr Yu’s price instructions. After several negotiations, the transaction was concluded at $22,000 per square foot. Although Gordon succeeded in selling Mr Yu’s units at an average price of $20,000 per square foot, Mr Yu suspected that Gordon had favoured Johnny and corruption was involved. He therefore reported the case to the ICAC. Gordon argued in court that the transaction had been concluded according to Mr Yu’s wishes and neither the estate agency nor Mr Yu had suffered any loss. However, the estate agency employing Gordon had stipulated that no agent was allowed to accept any private advantage from clients. The seller Mr Yu was also dissatisfied with Gordon’s behaviour.
Case Analysis
Under Section 9 of the Prevention of Bribery Ordinance (POBO), it is an offence for any agent, without the approval of his principal, to solicit or accept an advantage as a reward for or an inducement to perform an act in relation to his principal’s interest or business.
Gordon privately accepted a reward of $150,000 from his relative Johnny without the permission of his principals (namely the estate agency and Mr Yu). Hence, he might commit the offence of accepting a bribe under Section 9 of the POBO. Johnny might also commit an offence by offering a bribe.
Gordon and Johnny were relatives. Gordon should have declared this conflict of interest to the estate agency and Mr Yu.
When handling a transaction involving a relative and a client, Gordon should have remained neutral. Instead, he favoured his relative, resulting in loss to both Mr Yu and Mr Pau, the other buyer. Although Mr Yu had set a minimum average transaction price per square foot, Gordon should have tried to obtain the best possible price for the seller according to market conditions. Mr Pau had to acquire units at a higher price because of Gordon’s corrupt act.
Gordon’s behavior might also violate the Code of Ethics of the Estate Agents Authority which states clearly that estate agents or sales persons shall refrain from activities during the practice which may infringe the law. They shall provide services to clients with honesty, fidelity and integrity and protect and promote the interest of their clients, carry out the instruction of their clients in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in the transaction. Furthermore, any conflict of interest in relation to the property shall be disclosed to their clients that they are so acting.