Corruption Prevention Department Corruption Prevention Department - - PowerPoint PPT Presentation

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Corruption Prevention Department Corruption Prevention Department - - PowerPoint PPT Presentation

Oct 18, 2023 241 likes •585 views

Joe Lee, Head of Advisory Services Joe Lee, Head of Advisory Services Corruption Prevention Department Corruption Prevention Department Corruption in the Corruption in the Private Sector Private Sector Corruption Prevention Corruption

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Joe Lee, Head of Advisory Services Joe Lee, Head of Advisory Services

Corruption Prevention Department Corruption Prevention Department

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Corruption in the Corruption in the Private Sector Private Sector

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Corruption Reports Corruption Reports

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4

Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Natures (Private Sector) Natures (Private Sector)

  • Procurement & contract management
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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Order/Contract Order/Contract

Corruption in Purchasing Corruption in Purchasing

Supplier Supplier Supplier Company Company Company Staff / Senior Executive Staff / Senior Executive Staff / Senior Executive Bribe Bribe

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Order/Contract Order/Contract

Corruption in Purchasing Corruption in Purchasing

Supplier Supplier Supplier Company Company Company Staff / Senior Executive Staff / Senior Executive Staff / Senior Executive Relative/ Self-owned

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Order/Contract Order/Contract

Corruption in Purchasing Corruption in Purchasing

Supplier Supplier Supplier Company Company Company Staff / Senior Executive Staff / Senior Executive Staff / Senior Executive Information on others’ bids Information on others’ bids

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Order/Contract Order/Contract

Corruption in Purchasing Corruption in Purchasing

Supplier Supplier Supplier 2 Fake Quotations 2 Fake Quotations Company Company Company 1 Genuine Quotation 1 Genuine Quotation Staff / Senior Executive Staff / Senior Executive Staff / Senior Executive

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Order/Contract Order/Contract

Corruption in Purchasing Corruption in Purchasing

Supplier Supplier Supplier Company Company Company Staff / Senior Executive Staff / Senior Executive Staff / Senior Executive

  • Inadequate segregation / checks & balances
  • Inadequate controls: companies often think

requiring quotations = adequate control

$XXm Orders $ $XXm XXm Orders Orders <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order <$0.5M order

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Natures (Private Sector) Natures (Private Sector)

  • Procurement & contract management
  • Favour to others
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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Bank Loan Bank Loan

Company Company

Banker / Customer Service Manager Banker / Customer Service Manager Loan, Increase Credit, Lower Rate

Bank Bank

Loan Application Recommendation

  • Pressure for sales relaxation of controls
  • Inadequate checks & balances & segregation

Bribe

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Natures (Private Sector) Natures (Private Sector)

  • Sales, business referrals
  • Staff Management
  • Misappropriation of funds/assets, misuse of

company resources (e.g. customer data)

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

“ “Bribery Bribery” ”

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

“Corrupt Transactions with Agent”

Section 9(1) Section 9(2)

Agent (e.g. Employee) without lawful authority / reasonable excuse solicits/accepts Advantage, as reward/inducement

  • ffers

Any person Do / not do any act, favour or disfavour, in relation to Principal's (e.g. Employer’s) business

Offence: Max. 7 years & $500,000

EXCEPT with principal’s permission (before or asap after)

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Principal Principal’ ’s Permission s Permission

OK! OK!

May I?

Policy on Policy on Advantages… Advantages…

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Principal & Agent Relationship Principal & Agent Relationship

In a Company:

  • Principal = The Company
  • A Director is an agent of the Company

Outside the Company:

  • The Company (or its director/employee) could be agent of

another (e.g. a client)

  • The Company’s business partner could be agent of

another (e.g. a client)

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Strategy & Measures Strategy & Measures to Fight Corruption to Fight Corruption

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

ICAC Anti ICAC Anti-

  • Corruption Strategy

Corruption Strategy

Enforcement Enforcement Education Education Prevention Prevention

The Three- Pronged Attack The Three- Pronged Attack

Since 1974

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19

Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

ICAC Anti ICAC Anti-

  • Corruption Strategy

Corruption Strategy

Enforcement Enforcement Education Education Prevention Prevention

The Three- Pronged Attack The Three- Pronged Attack

Operations Operations Community Relations Community Relations Corruption Prevention Corruption Prevention Since 1974

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Fraud Theory: The Fraud Fraud Theory: The Fraud-

  • Rationalization

Rationalization Opportunity Opportunity

Fraud Fraud

Intent/Pressure Intent/Pressure

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

3 3-

  • Pronged Attack on the Fraud

Pronged Attack on the Fraud-

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Framework for a Corporation Framework for a Corporation

Intent/Pressure, Rationalisation Opportunity V Integrity Management Programme Company Policies & Procedures

Human Approach System Approach

Corruption Detection & Action

Enforcement

Risk Assessment, Audit & Review Post-mortem Whistle-blowing Preventive & Detective Controls Transparency Law Enforcement Agency

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Ethical & Compliant Culture Ethical & Compliant Culture

  • Laid

Laid-

  • down Standard/Guidelines

down Standard/Guidelines

  • Corporate Core Values
  • Code of Conduct
  • Education

Education

  • Laws & regulations, ethics
  • Company policies, rules, procedures
  • Action

Action

  • Comply with laws & regulations (spirit too)
  • Adopt ethical/compliant business practices
  • Provide support, e.g. enquiry/reporting channel
  • Enforcement
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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

  • Code applying to staff,

Code applying to staff, but not Directors but not Directors

  • No reminder

No reminder not to offer not to offer corrupt gifts corrupt gifts

  • Offer

Offer of business gifts/commissions should not exceed

  • f business gifts/commissions should not exceed

$XXXX or requires approval $XXXX or requires approval

  • Need to seek permission/declare, but

Need to seek permission/declare, but from/to whom from/to whom? ?

  • No guideline on acceptance of entertainment

No guideline on acceptance of entertainment

  • There

There’ ’s a code somewhere but s a code somewhere but nobody nobody has read it has read it

Code of Conduct Code of Conduct

Common Inadequacies: Common Inadequacies:

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

  • Apply to or separate Code for

Apply to or separate Code for Directors Directors

  • Acceptance of advantages

Acceptance of advantages (from persons having

(from persons having business dealings with the company) business dealings with the company)

prohibit acceptance of advantages for showing favour /

where impartiality is influenced

allowable circumstances & value & procedures approving authority, reporting channel client’s permission (if applicable)

  • Avoidance/declaration of

Avoidance/declaration of conflict of interest conflict of interest

declare to whom, declaration form give practical examples

Code of Conduct Code of Conduct

Address POBO concerns Address Address POBO POBO concerns concerns

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

  • Prohibit

Prohibit offer

  • ffer of illegal advantages (bribery)
  • f illegal advantages (bribery)
  • Relationship

Relationship with clients, suppliers, etc. with clients, suppliers, etc. e.g. not to accept lavish & frequent entertainment

  • No misuse

No misuse of

  • f official position, company
  • fficial position, company

property or information property or information

  • Consequences

Consequences of breaches

  • f breaches
  • Enquiry / reporting

Enquiry / reporting channel channel

  • Endorsed by Board / GM

Endorsed by Board / GM

Code of Conduct Code of Conduct

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Integrity of Suppliers, etc. Integrity of Suppliers, etc.

  • Doing business only with ethical operators

Doing business only with ethical operators

  • Some corporations remove suppliers convicted
  • f bribery from their lists
  • Integrity requirements (probity clauses) for

Integrity requirements (probity clauses) for suppliers, contractors, etc. suppliers, contractors, etc.

  • Govt: probity clauses for certain contractors
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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

System Controls System Controls

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

System Controls System Controls

  • Policies, procedures, guidelines

Policies, procedures, guidelines

  • Authorities & accountability

Authorities & accountability

  • Segregation of duties, checks & balances

Segregation of duties, checks & balances

  • Supervision & monitoring

Supervision & monitoring

  • Technical controls

Technical controls

  • Independent checks/audit

Independent checks/audit

  • Feedback & whistle

Feedback & whistle-

  • blowing

blowing

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Corruption Prevention Strategy Corruption Prevention Strategy

System Controls Staff & Integrity Mgt Risk Assessment, Audit & Review

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Detection & Enforcement Detection & Enforcement

Objective? Objective?

generate the belief/perception that corruption/misconduct can be detected & a high price to be paid report criminal cases to the authority (do not protect / cover up)

To Deter To Deter : :

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

ICAC Publications ICAC Publications

  • A Corruption Prevention Guide for

A Corruption Prevention Guide for Listed Companies Listed Companies

  • Toolkit on Directors

Toolkit on Directors’ ’ Ethics Ethics

  • A Guide to the prevention of Corruption

A Guide to the prevention of Corruption for SME Entrepreneurs Investing in for SME Entrepreneurs Investing in Guangdong & Hong Kong Guangdong & Hong Kong

  • Business Ethics

Business Ethics – – Your Way to Success Your Way to Success

  • Other trade/profession

Other trade/profession-

  • specific guides

specific guides and training kits and training kits

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Corruption Prevention

Corruption

Prevention

Hong Kong ICAC

Corruption Prevention Department’s Advisory Services Group (ASG) Advisory Services Group (ASG)

Advisory Services Advisory Services Advisory Services