Case 1- Backhanders
Case 2- Sweet poison
Case 3- Leaks
Case 4- At the crossroads
Offering and accepting bribes in contract offers
A group engineering manager of a hotel group had developed
close connections with a number of contractors in his previous post as
chief engineer. The hotel management relied heavily on his expertise to
select contractors for repair and maintenance work, but he took advantage
of this privileged position to arrange a scam with his contractor connections.
In return for being awarded contracts, the contractors inflated their
prices and then paid the group engineering manager the extra they had
charged. In the end, the group engineering manager received more than
HK$1 million in illegal advantages for awarding decoration and maintenance
contracts to his cronies.
In awarding one contract, the group engineering manager
offered the new chief engineer a share of the illegal advantages to conspire
in the scam. But the chief engineer reported the matter to the ICAC, and
thanks to the full co-operation of the hotel group's management in the
investigation, the group engineering manager was finally brought to book.
Legal concerns
1. Soliciting advantages: By accepting illegal
kickbacks, the group engineering manager contravened Section
9 of the Prevention of Bribery Ordinance (PBO), which prohibited
an agent (normally an employee) from soliciting
or accepting advantages without his principal's
permission. The contractors offering the illegal kickbacks also
contravened the PBO. As a result, they all had to face the penalty.
2. Deceiving the employer: The group engineering
manager also committed an offence of deception when he conspired with
the contractors to inflate the contract price and thus defraud his employer.
He misused his authority for private gain and committed a serious breach
of the trust his employer had placed in him.
3. Consequence of corruption: Upon his conviction
for bribery and conspiring to defraud the hotel's management, the group
engineering manager was sentenced to 40 months' imprisonment and ordered
to return to the hotel group the money he had skimmed off the contracts.
Morals and ethical concerns
1. Say no to bribes: The temptation to indulge
in corrupt practices may be felt in many areas of the workplace, so it
is always important to maintain high standards of integrity. When asked
by the group engineering manager, his supervisor, to conspire in the scam,
the new chief engineer refused to follow suit. He turned down the bribe
and reported the matter to the ICAC. This is a good illustration of the
proper steps to take when a professional engineer is offered a bribe or
discovers instances of malpractice. In fact, under the HKIE's Rules of
Conduct, an engineer is obliged to blow the whistle and inform the HKIE
or his management if he finds any signs of illegal or unethical practices.
2. Corruption doesn't pay:
Corruption can have devastating effects on your career and reputation.
The group engineering manager was handed a heavy sentence and lost his
family. He ended up a broken man as a result of his greed.
3. Corruption causes financial
losses to a company: With the group engineering manager manipulating
the selection of contractors, the hotel was deprived of the opportunity
to choose from other suppliers who may have been able to offer better
services at a more competitive price.
4. Corruption endangers safety
and lives: Hotel repair and maintenance work includes work connected
to safety measures such as fire prevention facilities, maintenance of
elevators, etc. No supplier can continue to absorb corrupt payments and
maintain good quality work in the long run, and the repair and maintenance
services provided by corrupt contractors can easily fall short of standard.
As a result, the safety and lives of hotel guests and staff is put in
danger.
Advice on preventive actions
1. Introduce proper controls on contracting procedures:
The hotel group management provided its full support to the investigation
in this case to weed out corruption. However, the incident highlights
the importance of exercising proper controls on contracting procedures
with sufficient checks and balances. The hotel group management had become
overly dependent on the specialist advice of the group engineering manager
and had also probably been slack in its supervisory checks. Management
oversights of this kind breed opportunities for dishonest staff to exploit
possible loopholes for personal gain and will cause the company to suffer
financial losses, while its reputation is also tarnished.
2. Encourage frequent communication:
Frequent communication with co-workers, staff and contractors will help
a company detect early signs of corruption and malpractice and prevent
these illegal actions. "Tips on handling the offering
and acceptance of advantages" offers practical guidelines on dealing
with these issues. Staff should be encouraged to report malpractice to
the company's senior management through appropriate complaint channels.
Section 9 of the Prevention
of Bribery Ordinance (PBO)
It is an offence for an agent (normally an employee)
to solicit or accept an advantage without the permission of his principal
(normally the employer) when conducting his principal's affairs or business.
The person who offers the advantage is also guilty of an offence.
It is an offence for an employee to use any false document, receipt or
account to deceive his employer.
An agent
A person acting for or employed by a principal. Under some circumstances, you may also be the agent of your clients if you
are performing an act in relation to their business.
Advantages
Anything of value: money, a gift, employment, service,
a payment, a loan of money, discharge of liability, or a gift of money
such as "lai see" etc., but not including entertainment, which
means food or drinks provided for immediate consumption on the occasion.
Although "lai see" is normally given during the Chinese New
Year, it is not an excuse to say that it is customary to accept it during
festive seasons. According to Section 19 of
the PBO, it shall not be a defence that any such advantage is customary in any profession, trade, vocation or calling, and the court will reach its verdict based on whether permission
to receive it has been given by the principal.
Principal's
permission
It is lawful for an agent to accept an advantage
in relation to his official duties if he has received the permission of
his principal. This permission has to be sought before the advantage is
solicited or accepted. If the advantage is accepted without prior permission,
the agent must apply for his principal's retrospective approval as soon
as possible. When acting as an agent of your clients, you must also obtain their consent in addition to the permission of your employer.
Penalties
A person who violates Section 9 of the PBO can be
subject to a maximum penalty of seven years' imprisonment and a fine of
$500,000. He may also be prohibited from taking up a management post at
a corporation or a public body or from practising in any profession for
a period of up to seven years.
Tips on handling the offering
and acceptance of advantages
(a) Seek guidance from your employer: clarify
with your employer if there is any written policy on whether employees
can accept advantages from clients or business associates in the course
of business.
(b) Avoid being "sweetened":
avoid accepting benefits or favours from anyone with whom you have official
dealings if these favours are:
-- unreasonably generous, excessive or frequent;
-- likely to cause you embarrassment in the discharge of your duties;
-- likely to make you feel obliged to the party offering them; and/or
-- likely to bring either you or your company into disrepute.
(c) Before offering an advantage, ensure the recipient
has his principal's permission to accept it: obtain confirmation
from the recipient's principal that he is allowed to accept advantages
from clients or business associates.
Back to top
|