Managing corruption in Hong Kong - be wary of risks near and far

July 2019

Much has been said about the extra-territorial reach of the United States’ (“US”) Foreign Corrupt Practices Act 1977 (“FCPA”) and the impact it has on companies operating internationally that are within the reach of US enforcement agencies.

The most recent example being a US retailer’s settlement in June 2019 with more likely to come with a number of ongoing investigations including one into another US company in China involved in transportation. Further examples of FCPA enforcement in the last 18 months in Greater China are listed in the appendix section.

Looking at such enforcement trends, companies and individuals are right to be concerned about the FCPA given the US ever-aggressive enforcement but they are also well advised to look closer to home. In Hong Kong through the powers contained in the Prevention of Bribery Ordinance 1971 (“POBO”), the Independent Commission Against Corruption (“ICAC”) and other enforcement bodies are quietly going about their business bringing prosecutions and enforcement action to deter bribery and corruption in Hong Kong, with a particular focus on prosecuting individuals.

This proactive and aggressive approach is most clearly highlighted by the joint investigation by ICAC and Hong Kong’s Securities and Futures Commission (“SFC”) into suspected corruption and misconduct in public office by a former joint head of the listing department at Hong Kong Exchange and Clearing (“HKEX”) in relation to the vetting of listing applications of two listed companies which led to the individual’s arrest in June 2019. This follows previous prosecutions against senior figures in Hong Kong society, including the former Chief Executive and other government officials as well as high profile business executives. It is clear that ICAC and the SFC are not intimidated by status or seniority in their attempts to rid Hong Kong of corruption.

In this article, we look at the corruption environment in Hong Kong and undertake an overview of the FCPA and POBO. We also provide some recent real life practical case studies to highlight corruption risks and to emphasise that given the recent flurry of activity now might be a good time to be proactive and stress-test existing bribery and corruption compliance frameworks to ensure you are not the next in the firing line.

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David Tiang

David Tiang
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