Hong Kong, justifiably, ranks as one of the least corrupt places in the world, and has consistently been one of the top 20 economies with very low levels of corruption in the Transparency International Corruption Perception Index (CPI).
Over the past four years, Hong Kong has improved its ranking in the CPI, rising from 18th out of 167 jurisdictions in 2015 to 16th out of 180 jurisdictions in 2019.¹ Credit for these rankings goes to the Independent Commission Against Corruption (ICAC), Hong Kong’s main government body responsible for the investigation and prevention of corruption, for working hard to educate, investigate and bring enforcement actions, including against high profiled individuals, and to Hong Kong based organizations and people, for being vigilant and lodging complaints with the ICAC. Between January and December 2019, 2,297 corruption complaints (excluding election related corruption complaints) were received; 134 persons were prosecuted; 20 persons were formally cautioned, and 91 government officers were recommended for disciplinary/administrative action.²
COVID-19 increasing corruption risks
However, corruption thrives in difficult economic times, particularly when organizational and enforcement oversight is weak. The disruptions caused by COVID-19 has had organizations focused on business continuity and workforce-related issues, with some being concerned if they will survive the financial impact of the disruptions and starting to furlough and/or lay off employees. At the same time, employees have been trying to adapt to the upheaval. Many have been working remotely with less supervision, trying to be productive. Some are now worrying about job security. These factors can result in organizations paying less focus on internal controls and compliance requirements, and employees cutting corners and/or giving in to the temptation of engaging in nefarious activities (e.g. offering bribes to secure business opportunities so that they can meet their bonus targets or soliciting bribes to line their pockets in case they lose part or all of their income through being furloughed or laid off).
As a guide to issues and risks to watch out for, we summarize below Hong Kong’s anti-corruption regime and some of the reported corruption enforcement actions in the first quarter of 2020.
Hong Kong’s corruption legal framework
The Prevention of Bribery Ordinance, Cap. 201 (POBO), Hong Kong’s main anti-corruption law, regulates both the public and private sectors. It proscribes the soliciting, accepting or offering of an advantage, which is widely defined in section 2 of the POBO as covering the following wide scope of benefits:
- any gift, loan, fee, reward or commission consisting of money or of any valuable security or of other property or interest in property of any description
- any office, employment or contract
- any payment, release, discharge or liquidation of any debt
- any other service or favour (other than entertainment)³
- the exercise or forbearance from the exercise of any right, power or duty
- any offer or promise of any of the above benefits