01 August 2016

Anti-bribery and corruption guide: Hong Kong

"Bribery cases are attracting increasing public attention in Hong Kong. There is heightened sensitivity around dealings with jurisdictions that score poorly on corruption perception indices and politically exposed persons, particularly in the financial services space. Practical compliance controls are key."

Urszula McCormack
Partner

1. What is bribery?

Public sector

The Prevention of Bribery Ordinance of Hong Kong (Cap. 201) (“PBO”) creates a number of public and private sector bribery offences. In the context of the public sector, it prohibits the following acts:

  • ƒƒsolicitation or acceptance by a prescribed officer, whether in Hong Kong or elsewhere, of any advantage without the Chief Executive’s permission;
  • ƒƒoffering any advantage to a public servant, or acceptance by a public servant of any advantage, in connection with performing or not performing public duties, or for assisting or hindering any business transaction between any person and a public body;
  • ƒƒoffering, soliciting, or accepting any advantage in connection with procuring a contract with a public body, withdrawing a tender for a contract with a public body, or refraining from bidding at an auction conducted by a public body;
  • ƒƒoffering any advantage to a prescribed officer or a public servant while having dealings with the government or a public body; and
  • ƒƒpossession of unexplained property by a current or former Chief Executive or a prescribed officer.

The terms “prescribed officer”, “public body” and “public servant” are broadly defined in the PBO and generally relate to government-related and judicial officers. “Advantage” includes money, gifts, commissions, offices, contracts, services, favours and discharge of liability in whole or in part.

Extension to private sector

Extending to the private sector, the PBO makes it an offence to offer an agent, or for an agent to solicit or accept, any advantage as an inducement or reward to perform or abstain from performing any act in relation to their principal’s affairs or business without the principal’s permission. An “agent” is broadly defined to include a public servant and any person employed by or acting for another.

Extra-territorial impacts

The offences under the PBO may have extraterritorial effect. That is, they may capture conduct undertaken outside of Hong Kong. For example, the offence relating to bribery of agents applies even if the agent in question is a foreign public official, and where the advantage is received in relation to their public duties in a place outside Hong Kong. The necessary nexus is that the advantage is received in or offered from Hong Kong.

Additional common law and sectorspecific offences

Importantly, the PBO has not replaced the common law offences relating to bribery and misconduct in the course of public duties, which continue to apply in Hong Kong. In addition, specialised legislation in Hong Kong creates sector-specific bribery offences. For example, section 124 of the Banking Ordinance (Cap. 155) prohibits the directors and employees of Hong Kongregulated banks and other “authorized institutions” from soliciting or accepting a broad range of advantages from customers.

This guide focuses on the offences under the PBO.

2. What are the exceptions/defences?

Under the PBO, it is a general defence for any person to prove that they offered, accepted or solicited the advantage with lawful authority or reasonable excuse. However, it is not a defence to show that it is customary practice to accept the advantage, nor is it a defence that the advantage did not or could not have any effect on the person accepting it.

3. What are the sanctions?

Financial penalties and imprisonment

The following table summarises the maximum penalties prescribed under the PBO:

Offence Summary conviction Conviction on indictment
Soliciting or accepting an advantage
- ƒƒFine of HK$100,000
ƒƒ- 1 year imprisonment
Not applicable

Bribery - Fine of HK$100,000
- ƒƒ3 years imprisonment
- ƒFine of HK$500,000
- ƒƒ7 years imprisonment
Bribery for giving assistance or withdrawal of tenders - Fine of HK$100,000
- ƒƒ3 years imprisonment
- Fine of HK$500,000
- ƒƒ10 years imprisonment
Bribery in relation to auctions and public servants; corrupt transactions with agents - Fine of HK$100,000
- ƒƒ3 years imprisonment
- Fine of HK$500,000
- ƒƒ7 years imprisonment
Possession of unexplained property - Fine of HK$500,000
- ƒƒ3 years imprisonment
- Fine of HK$1,000,000
- ƒƒ10 years imprisonment
  The relevant property may also be awarded to the Government

Additional consequences

Any person convicted of accepting a bribe must also pay the amount or value of the bribe received by them to such person or public body as the court orders.

In addition, anyone convicted of an offence under the PBO may be prohibited for a period not exceeding seven years from taking up or continuing employment as a professional or as the director or manager of a corporation, public body, partnership or firm.

Principal investigative agency

The Independent Commission Against Corruption is the principal agency responsible for investigation corruption and enforcing the PBO in Hong Kong.

4. Recent developments

There have been a number of recent high profile cases involving bribery / corruption. For example, in 2014, Thomas Kwok, Hong Kong’s third-richest person and former joint Chairman of Sun Hung Kai Properties, was sentenced to five years’ imprisonment and fined HK$500,000 for providing various advantages, including unsecured loans and rent-free accommodation, to the former Chief Secretary for Administration, Rafael Hui.

As Chief Secretary, Hui was the second-most senior official in the Hong Kong Government. He was convicted of multiple offences relating to misconduct in public office and bribery. He is currently serving a term of 7½ years imprisonment, and was ordered to pay bribe monies amounting to HK$11.182 million to the Government.

Interestingly, Hui was convicted under the PBO while Kwok was convicted of a common law offence. Kwok was granted bail in July 2016, while Hui remains in prison, pending the resolution of their respective appeals.

 

More from the Anti-Bribery and Corruption Guide:

Australia, Belgium, ChinaFrance, Germany, Italy, Saudi Arabia, Singapore, Spain, United Arab Emirates and United Kingdom.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China

Anti-Bribery and Corruption - An International Guide

The International Anti-Bribery and Corruption Guide is also available as a PDF.

The guide covers the regimes in the following regions: Australia, Belgium, China, France, Germany, Hong Kong, Italy, Saudi Arabia, Singapore, Spain, UAE and UK.

Anti-Bribery and Corruption - An International Guide
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