Clement had been entrusted with handling the village-type house development project and should have cherished the opportunity to show his abilities. Unfortunately, his gambling habit led him to personal finance problems. Driven into a corner, he conspired with Mr Shum to deceive Mr Lai’s company and abused his employer’s trust in him. Clement knew very well that the $500,000 solicited by Mr Lai was not for donation purpose. By using a false receipt to deceive his principal Mr Lai, Clement might be in breach of Section 9(3) of the Prevention of Bribery Ordinance. Mr Shum might also commit a deception offence under the Theft Ordinance for falsely represented himself to Mr Lai as a village representative. 

As Clement and Mr Shum had business dealings, socialising might have been unavoidable. But Clement should have kept a suitable distance from Mr Shum and, above all, should not have had any pecuniary associations so that he would not have to show favouritism, or to get caught in a work dilemma where it was difficult to stay neutral, or to do illegal acts for personal gain. He should avoid engaging in frequent gambling activities with his clients to avoid involving in any monetary dealings that might lead to conflict of interest situation. 

Clement would also breach the Code of Ethics promulgated by the Estate Agents Authority for engaging in illegal activities and bringing discredit and/or disrepute to the estate agency trade. His failure to observe and comply with the law and the Code of Ethics might render him not being a fit and proper person under the Estate Agents Ordinance to hold license and disciplinary action might be taken against him.

Ronald had become entangled in debt and deliberately used his own consultancy firm to embezzle commission due to his employer. Under Section 9(3) of the Prevention of Bribery Ordinance (POBO), it is an offence for any agent to use false/ erroneous/ defective receipt/ account/ other document with the intent to deceive his principal. Ronald wilfully used a false document with intent to mislead the estate agency about Ms Yeung’s transaction. He might violate Section 9(3) of the POBO. 

Ronald was disloyal to his employer. He defied the law out of greed and ruined his own future. 

As a licensed estate agent, Ronald might also breach the Code of Ethics of the Estate Agents Authority which states that estate agents and salespersons shall refrain from activities during their practice which may infringe the law.

Facing keen competition in the industry and pressure to secure loan business in the bank, a bank staff may cross the line. Over reliance on sales staff to provide borrowers’ information without counter checks would increase the risk of manipulation. 

The Sales Executive, an employee (agent) of the finance company (the principal), intended to deceive/mislead the company by using invoices which contained false information. Notwithstanding he did not receive any bribes, he might have contravened Section 9(3) of the Prevention of Bribery Ordinance (POBO). 

The Sales Executive, machine supplier and SME owners could be charged with fraud against the finance company, or conspiracy to defraud the finance company. 

The Sales Executive rationalized his acts by regarding his practice as helping the finance company to secure more loan business, at the same time helping the SMEs to overcome difficult situations. However, the fact that customers had to obtain higher loans through a fraudulent means suggested that they are high risk customers. Granting them higher loans increased the risk exposure of the finance company. 

Approving a higher loan based on inflated collateral value or bogus transactions might also result in an unusual increase in bad debt cases, and internal review by the finance company would detect the irregularity involved. 

Banks should adopt good control practices such as setting up a central team to conduct vigilant due diligence on high credit risk customers, conducting independent assessment of machine suppliers involved in HP transactions to ascertain their reliability, gauging reasonableness of the sales prices on invoice, and conducting regular assurance check to detect irregularities/unusual trend.

Nearly all bank staff members who misuse customers’ funds believe that such action is only temporary and can be rectified shortly. However, crime is committed once the funds are misused and such action cannot be ‘rectified’ even if the funds are ‘repaid’ before the crime comes into light. In this case study, the relationship manager (an agent) might have violated Section 9(3) of the Prevention of Bribery Ordinance (POBO) by using forged documents to deceive his bank (the principal) in approving an increase in Client A’s credit limit and Client A’s fraudulent new loan. Also, the relationship manger could be liable for a series of other crimes including theft (transferring money from client’s account to his own), fraud and forgery. 

From the perspectives of customer service, it may be desirable for a relationship manager to provide personal service and act as the bank’s single point of contact for important clients. However, if all verification/clarification of questionable or doubtful transactions are routed through the relationship manager, it will undermine checks and balances and create opportunities for manipulations by unscrupulous relationship manager. 

Moreover, banks should adopt good control practices to remind supervisors to stay vigilant to potential risk of corrupt practices and make thorough enquiries into any suspected irregularities.

The relationship manager (agent) might have contravened Section 9(3) of the Prevention of Bribery Ordinance (POBO) by using a false document (forged customer instruction) to deceive the bank (the principal). He might also be liable of a series of other crimes including theft, fraud and forgery. 

Some elderly customers may be vulnerable to exploitation as they may trust bank staff members (e.g. the relationship manager) to execute transactions on their behalves (e.g. signing blank instruction forms or giving their e-banking passwords) so as to save physical visits to the bank. 

The practice of keeping account advices for customers to collect later on is vulnerable to falsification or concealing irregularities. 

Furthermore, inactive, dormant accounts with a large balance or credit line are subject to the risk of exploitation, as the account owners may not monitor their accounts properly or may have changed addresses without informing the bank. 

Banks should devise control measures to protect dormant accounts from possible abuse and to avoid fraud. These control measures may include alerts on unusual fund movements, verification and confirmation with the customers, requirements for supervisors’ review/ override for transactions on inactive accounts, and requirements for identification of account holder when making withdrawals in person. Moreover, implementing requirements for staff members to take annual vacation leave, arranging and introducing a backup/ second officer to vulnerable customers, and practising staff rotation (say, on a three-year basis) may also help detect irregularities and misconduct at an early stage.

Soliciting bribes from overseas companies is also subject to prosecution 

Though the supplier, from which Mr Fong solicited bribes, was outside Hong Kong, Mr Fong might still commit an offence of soliciting an advantage under Section 9 of the Prevention of Bribery Ordinance (POBO) as he sent text messages requesting for loans to be deposited into his wife’s bank account in Hong Kong in return for placing more orders. 

Businesspersons should be aware that the POBO can apply when part of the corrupt act, e.g. promising, agreeing, soliciting or accepting advantages without permission, takes place in Hong Kong.

Accepting bribes, whether directly or indirectly, is against the law 

Loan is considered an advantage under the POBO. Accepting bribes regardless of whether the advantage is directly given to the acceptor or indirectly delivered to a third party is still against the law. In the case study, if the Mainland herbal supplier agreed to deposit the loans into Mr Fong’s wife’s bank account in Hong Kong, as long as it was proven that the receiving account was controlled by Mr Fong or that he was the ultimate beneficiary, Mr Fong would be considered as having accepted the advantage.