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Case Studies
The Loan Clark: Facing Temptation
After graduation, Louis had been working in a bank for almost eight years and was recently promoted to manager of the loans department.
One of his clients, Clark, who was the proprietor of a garment firm, approached Louis for assistance in a grand expansion plan of his firm. Clark was an ambitious young man in his late twenties who wanted to make his first pot of gold before his thirtieth birthday.
His grand plan would involve investing large sums of money into his factory in the PRC as well as setting up more retail outlets. He wondered if Louis could help him increase his loan and credit facilities at the bank to 24 million dollars although he and his company might not be so credit-worthy.
“I could provide you with whatever transaction records and invoices necessary to support my application, just let me know the requirements and I can supply the documents in no time,” Clark said.
He also made promises of a quick return of the loan. He boasted about his connections both in the PRC and in Hong Kong. He also said, “I will repay the money in a jiffy. My plan is set to succeed. Besides, if you help me, I will not forget the favour you do me. If I get the loan, I will give you 5% of the amount of loan granted.”
When Louis showed hesitation, Clark promptly added, “Louis, indeed we aren’t cheating the bank. I have every intention to return the loan and pay the interest too. What are credit facilities for if they do not facilitate?”
Louis did some quick mental arithmetic and was tempted to say ‘yes’. He was going to get married soon but had underestimated the expensive costs of hosting a grand wedding banquet requested by his fiancée. Now he could certainly do so with the cash Clark was offering.
Should he say ‘yes’ to Clark?
Case Analysis
In the above case, Louis was an employee of the bank as the manager of the loans department, i.e. an agent under Section 9 of the Prevention of Bribery Ordinance (POBO) while the bank was his principal.
According to Section 2 of the POBO, advantage means any gift, loan, fee, reward or commission, employment, contract, service, favour, payment, release or discharge of loan or liability, etc.
The bank certainly would not allow Louis to accept advantage (i.e. 5% rebate from the loan granted) related to his official position, thus the rebate was an illegal advantage and the acceptance of which would constitute an offence of accepting a bribe. As such, Louis might commit an offence under Section 9 (1) of the POBO for accepting bribes whereas Clark might also commit a bribery offence under Section 9 (2) of the POBO for offering illegal advantage.
Furthermore, Louis may also violate the Banking Ordinance and the Code of Conduct[1] of his bank by accepting personal benefits from a customer doing business with the bank.
According to HKMA’s Supervisory Policy Manual, each authorized institute (bank) should develop its own Code of Conduct containing certain minimum conduct requirements which include “no member of staff should solicit, accept and retain personal benefits from any customer of the authorized institute (bank) or any individual or organisation doing or seeking to do business with it.”