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Case Studies
Conflict of interest and embezzlement
Timmy, an estate agent, was commissioned by Mrs Chung, a landlord, to sell a residential unit at $9,000,000. Ms Lam, a client, expressed willingness to buy the unit at $8,780,000 but instead of informing Mrs Chung of the offer, Timmy told Mrs Chung that a client had agreed to buy her unit at $8,580,000 in the name of a limited company. He persuaded Mrs Chung to sell the unit at a reduced price for cash flow reason as there were signs that property prices were going down. Mrs Chung eventually agreed. However, Mrs Chung later found out that, after the transaction was completed, the buyer had immediately sold the unit to Ms Lam at $8,780,000. She reported the case to the ICAC which subsequently revealed that Timmy was one of the shareholders of the limited company which was the buyer.
Case Analysis
As a licensed estate agent, Timmy should observe the Code of Ethics of the Estate Agents Authority. Estate Agents and salespersons, in engaging and accepting an appointment as an agent, should protect and promote the interests of their clients, carry out the instructions 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. Also, they should avoid accepting an appointment involving a property in which they have a beneficial interest. Any pecuniary or other beneficial interests in relation to the property shall be disclosed fully to all parties concerned.
Timmy’s dishonest behaviour not only caused loss to Mrs Chung and Ms Lam but also tarnished the reputation of the trade. Timmy’s conduct might constitute a criminal offence of fraud under Section 16A of the Theft Ordinance.