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Case Studies
Bribery still exists though purpose not achieved
Mr Lee was the proprietor of a karaoke restaurant in Hong Kong. Together with his friends, he had recently opened a chain of several karaoke restaurants in Guangdong and purchased a considerable amount of related audio-visual equipment.
Though business was still in the early stage of development, Mr Lee rushed ahead with rapid business expansion. To cope with the cash flow problem, Mr Lee applied for a hire purchase loan from a bank in Hong Kong. To secure a larger loan, he inflated the number and prices of the equipment in the application, and falsely represented that he had purchased some advanced brand new audio-visual equipment from overseas. The bank sent Mr Cheung, an officer of the loans department, to inspect Lee’s karaoke restaurants in Guangdong. Mr Lee took the opportunity to play the good host to Mr Cheung. Claiming that it was a way to extend hospitality, Mr Lee also presented Mr Cheung with expensive dried seafood and spirits.
After returning to Hong Kong, Mr Lee once again hosted a lavish feast for Mr Cheung. During the meal, after learning that Mr Cheung had recently become a father, Mr Lee immediately gave him a 'red packet' containing several thousand Hong Kong dollars. Mr Lee explicitly expressed his hope that Mr Cheung could help him secure the loan. Mr Cheung initially refused the red packet, but, upon Mr Lee’s insistence, he finally accepted it.
Two weeks later, as the loan still had not been approved and the karaoke business showed no signs of improvement, Mr Lee started to worry and became agitated. He called Mr Cheung again and asked about the progress of his loan application. What should Mr Cheung do?
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 affairs or business. The offeror will also be guilty of the offence. Even if the acceptance of bribes takes place outside Hong Kong, if any part of the bribery act (including offering, soliciting or accepting a bribe) takes place in Hong Kong, the case can be pursued under the POBO. Furthermore, according to Section 11 of the POBO, as long as the offeror of bribes intends to induce the acceptor to extend his/her favour(s), both parties would have committed bribery offence even if the acceptor claims that he/she 'did not actually have the power to do so', 'did not intend to do so' or 'did not, in fact, do so'. Hence, Mr Lee might have committed the offence of offering bribes and could not claim in his defence that the purpose of the bribes had not been carried out. Similarly, if Mr Cheung had accepted the red packet without declaring it to the bank, he might also have committed an offence even if he had not ultimately helped Mr Lee.
Entertainment means the provision of food and drink for immediate consumption, whereas dried seafood, spirits or red packets are advantages. The offeror cannot offer bribes in excuse of 'an established custom in the trade or 'trade practice'. According to Section 19 of the POBO, the court will not accept such defence on the part of either the offeror or the acceptor, but will only consider whether or not the acceptor has the permission of the principal.
According to the guidelines laid down in the Supervisory Policy Manual — Code of Conduct (the Code) issued by the Hong Kong Monetary Authority, a bank employee must declare any advantage received in the course of business. While the acceptance of mere entertainment does not constitute an offence, entertainment that is in any way luxurious is very likely a prelude to corruption or bribery. Hence, the Code further stipulates that a bank employee can only accept normal business entertainment such as an ordinary meal.
When facing corruption temptation, Mr Cheung should make a declaration in compliance with the Code and report the offering of gifts and red packets offered by Mr Lee to the bank in order to protect himself from being implicated in a bribery case.