Case 1- Backhanders
Case 2- Sweet poison
Case 3- Leaks
Case 4- At the crossroads
Misuse of confidential information in a conflict
of interest
A project engineer working in the government was assigned to work on a highway
development project where he had access to restricted information. In the
tendering process for the project, a contractor who was also a close friend
of the project engineer indicated immense interest.
Just before the official tender invitation was issued, the contractor asked
the project engineer if he could give him any information that would help
him win the contract. He proposed that the project engineer let him know
the lowest bid price by leaving a coded message on his mobile phone. The
contractor would then beat that price in his bid that he would submit just
before the deadline. In return, he would make the project engineer a part-time
consultant of his company and share the profit from the project with him.
To win the project engineer over, the contractor says that someone would
get the project any way and it might as well be him, he was as good a choice
as any other contractor.
Anxious to cover the losses he had suffered in his stock investments, the
project engineer indicated that he would try out the scheme proposed by
the contractor.
Legal concerns
1. Misuse of confidential information: As
a government employee, the project engineer is in breach of Section
4 of the PBO if he accepts advantages in return for leaking confidential
information.
2. Accepting outside employment: The post
of consultant offered by the contractor is regarded as an advantage under
the PBO. If the project engineer accepts the outside employment without
the consent of his department in return for releasing the tender information,
he may contravene internal government regulations as well as the PBO.
3. Verbal agreements count: Will it make
a difference if the project engineer does not in the end provide the confidential
information and thus fails to secure the project for his friend?
Section 11 of the PBO
states that both the party offering a bribe, i.e. the contractor, and
the party receiving it, i.e. the project engineer, are liable to the charge
of bribery when a verbal agreement to commit a corrupt act is made, even
if the intended purpose of the bribery is not carried out or the recipient
does not have the power to do what he is being bribed to.
4. Consequences of corruption: If a government
employee is found to have violated Section 4 of the PBO, he can be subject
to a maximum penalty of seven years' imprisonment and a fine of $500,000.
Apart from Section 4, a government employee is also subject to the scrutiny
of Section 3 and Section 10 of the PBO. The maximum penalty of Section
10 of the PBO is up to ten years' imprisonment and a fine of $1,000,000.
If convicted of a bribery offence, 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.
Morals and ethical concerns
1. Preserve confidential information: It is
important for engineers to realise that under the HKIE's Rules of Conduct,
they have a duty of loyalty to both their clients and their employers
that requires them to maintain confidentiality of information. This is
because most information about how a business is run and about its products
or services directly affects the company's ability to compete in the marketplace.
What's more, some information that may on the surface appear to be of
no interest or value to the public in general may be of great value to
corrupt individuals. Engineers should guard against falling into these
kinds of traps where they end up committing corrupt practices by disclosing
confidential or restricted information.
2. Avoid conflicts of interest: Conflicts
of interest cast doubt on the reliability of professional judgment, sow
seeds of distrust and, in their most serious form, lead to corruption.
Under the HKIE's Rules of Conduct, an engineer should avoid engaging in
business, investments or activities which conflict with the interests
of his employer or client. In case of any possible conflict between his
own financial interests including those of his immediate family, and the
interests of his client or employer, he shall inform the concerned parties
immediately. The project engineer will come into conflict with the interests
of his employer, i.e. the government, if he provides his friend with confidential
information about the project and helps him obtain the contract, not to
mention his acceptance of a reward for doing this. Although requests for
assistance from a close friend or relative may seem difficult to refuse, an engineer should turn them down if the assistance
will place the recipient in a favourable position with regard to others.
Advice on preventive actions
1. Preserve confidentiality of information:
Engineers should exercise due care and protect confidential information
through the practical application of the need-to-know principle. If asked
to provide information related to his official duties, he should stay
alert and carefully evaluate whether the information is of value to a
third party or proprietary in nature. "Tips on
identifying proprietary information or information of value"
provides practical guidelines for handling confidential information.
2. Declare conflicts of interest:
-Engineers should stay alert to situations
that may lead to an actual or perceived conflict of interest. These
situations commonly arise when you:
- give advice on bidding strategies for a tender/contract during
your involvement in the tendering exercise;
- have a business partnership with clients;
- take up outside employment, for example as a consultant, which
may conflict with the interests of your employer; and
- assess bids, tenders or quotations submitted by your close friends
or relatives.
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-The best way to make yourself less vulnerable
to the trap of conflicting interests is to maintain objectivity at
work. You can do this by declaring the interests related to your official
position. In a situation that gives rise to a conflict of interest,
you should notify your employer or clients of any interest relating
to your official position as well as any actual or potential conflict
involving official dealings with your business associates.
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| -"Tips on maintaining
objectivity at work" provides practical guidelines on
what to do when a conflict of interest arises in matters involving
your business associates. |
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.
Section 4 of the PBO
It is an offence for a public servant to solicit or accept any advantage
offered as a reward in connection with the performance of his official
duties. Any person offering such an advantage also commits an offence.
Section 11 of the PBO
Both the parties offering and receiving a bribe are liable to prosecution
as long as a verbal agreement of corruption has been reached, and both
parties will be guilty even if the intended purpose of the bribery is
not carried out. Under Section 11 of the PBO, if it can be proved that
the recipient accepted an advantage as a reward for favours done to the
benefit of the person offering the bribe, it cannot be considered a defence
that: (a) he did not actually have the power to grant the favour; (b)
he accepted the advantage without intending to grant the favour; or (c)
he did not in fact grant the favour.
Tips on identifying proprietary information
or information of value
Here are some useful questions for evaluating whether information is of
value to a third party:
1. Has the information been made public yet?
2. Will the release of information affect the interest of stakeholders,
including employers, clients, or members of the public? For example, will
it violate the privacy of individuals or cause financial loss to the company,
etc.?
3. Will a third party treat the information as relevant for determining
what action to take to secure a benefit? For example, will it help them
win a tender?
If in doubt, you should consult your employer or the designated person
in your company, e.g. the compliance officer.
Tips on maintaining objectivity at work
If you suspect there is a conflict of interest when handling your employer's
affairs, you should declare to your employer:
1.any private interest which may affect your judgment in the performance
of your duties;
2. any investment held by you or your close relatives which may lead to
a conflict of interest;
3. any decision which may ultimately prejudice the interests of other
clients; or
4. if you are asked to work on an area where you already have a private
interest.
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