Playing by the Rules
Hong Kong adopts a zero tolerance policy against corruption, says the head of the city’s anti-graft body.
30 July 2014
Hong Kong’s competitive edge comes from a clean and fair business environment. Simon Peh, Commissioner of the city’s anti-corruption agency, the Independent Commission Against Corruption (ICAC), discusses how companies can protect themselves from questionable practices.
How does Hong Kong compare with other major cities when it comes to corruption?
Hong Kong is internationally recognised as a “clean” metropolitan city. It has been ranked for years as one of the least corrupt places in the world and the second “cleanest” in Asia in the Transparency International’s Corruption Perceptions Index. The city is also acclaimed for being the world’s freest economy with minimal corruption, in the Heritage Foundation’s Index of Economic Freedom.
We have a culture of zero tolerance against corruption. The government, the business community, and the general public are supportive in fighting corruption. Major chambers of commerce and professional bodies have worked closely with the ICAC to promote ethical practices and a level business playing field.
What are the main issues the ICAC is concerned about when it comes to the business community?
Business today is mostly cross-boundary, and this is particularly true in this region. Differences in legal and regulatory frameworks among jurisdictions pose challenges to companies operating outside Hong Kong.
Globally, the volatile economic situation and fierce competition might push companies to gain business by corrupt means. Nevertheless, experience shows that companies tolerating corrupt practices will only render themselves even more vulnerable to loss of money and reputation.
What’s your advice to SMEs on guarding against corruption?
Corrupt business is bad business. SMEs should stand firm and refrain from participating in any questionable practices. Report to the ICAC immediately in order to prevent themselves from being affected or implicated. They should also familiarise themselves with anti-graft laws in order to avoid breaching them inadvertently.
Companies may conduct internal checks to assess potential corruption risks. Some simple control measures, such as transparent work procedures and spot checks, can be very effective in preventing corruption and fraudulent practices. A clear code of conduct is also useful to ensure that staff members follow the company’s ethical standard, and to send a clear message to trade partners of the companies’ strong stance on business integrity.
Asian culture has a long tradition of hospitality. How can companies doing business in Hong Kong draw the line between gifts and bribes?
It is common in many places, not just in this part of the world, to offer and accept hospitality during business dealings. In Hong Kong, the Prevention of Bribery Ordinance sheds light on the legality of hospitality and specifies under what conditions a gift becomes a bribe. Everything of value, be that a gift, a red packet, a loan or a service, is an advantage under the law. If the advantage is given in relation to business dealings, the recipient must have his or her employer’s approval for accepting it. Custom or tradition is no defence.
That’s why it is important for companies to lay down clear staff guidelines on acceptance of advantages. The guidelines should also cover entertainment because although entertainment is not an advantage by law, it can be a sweetener and precursor to corruption.
What’s your advice for businesses to ensure staff are made aware of the importance of keeping business transactions clean?
The first step is to set out a code of conduct. This will help staff understand the company’s anti-bribery policy and reduce malpractice caused by ignorance and misunderstanding. The company should also organise training to ensure staff members have sufficient knowledge of legal and corporate requirements and skills in handling integrity-related issues. Most importantly, always take a zero tolerance stance towards corruption. Staff members will be more alert to malpractice if they realise that the management is really serious about it.
What types of assistance can the ICAC offer for Hong Kong-based businesses that run into trouble in other jurisdictions?
Many Hong Kong businesses have operations in the Pearl River Delta region, where the legal system is different from that of Hong Kong. To help them understand the local anti-corruption laws and avoid violating the laws inadvertently, we have published legal guides covering anti-corruption legislation in the Chinese mainland and Macau.
As the saying goes, “Prevention is always better than cure,” if a company has stringent system control and high awareness of probity, it is more capable of resisting corruption in any part of the world. The ICAC may organise staff integrity training for companies, and give free and confidential advice on enhancing their control systems. No matter where you do business, it saves you a lot of trouble if you abide by local laws, strengthen internal control and stay firm against corrupt offers.
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