Former chief secretary and property tycoon lose appeal in Hong Kong's highest profile corruption case

The convictions of former Chief Secretary of Hong Kong, Rafael Hui, and former Sun Hung Kai chairman, Thomas Kwok, have been upheld by Hong Kong's Court of Final Appeal.

In a case that has occupied the legal, political and business community, the judgment provides important clarification on the scope of the common law offence of conspiracy to commit misconduct in public office. The judgment confirms the well-established principle that benefits offered to develop or retain goodwill may fall foul of Hong Kong’s bribery laws.

The appellants knew one another well and had worked together. Immediately before taking office as Chief Secretary of Hong Kong, undisclosed payments totalling HK$ 8.5 million were made to Hui's bank account on the instruction of Kwok via the other appellants. The prosecution alleged that these payments were bribes in order to keep Hui favourably disposed to Kwok during Hui's tenure as Chief Secretary.

The appellants sought to appeal the technical elements required to establish conspiracy. Their case was that there was no evidence of actual misconduct; merely a perceived state of mind on the part of Hui in light of the surrounding facts, and that no specific advantage was received in return for payments.

The Court of Final Appeal unanimously held that it was not necessary for the prosecution to show that the conspirators agreed or intended that Hui would commit a specific act of serious misconduct; and that Hui’s goodwill had been bought, leaving Hui vulnerable to corrupt demands. See our ebulletin here for more details.

Chief executives under investigations by ICAC

The Independent Commission Against Corruption (ICAC) has started an investigation into Chief Executive Leung Chun-ying, after he intervened in an inquiry into his previous business dealings. Leung confirmed that he had "made suggestions about the scope" of the investigation, but denied any wrongdoing. It came to light that in 2012, after being elected Chief Executive, Leung had received HK$ 50 million from Australian engineering company UGL, which in 2011 had purchased DTZ, an insolvent property firm of which Leung was a director.

A select committee of the Legislative Council (LegCo) is investigating Leung's relationship with UGL and potential tax, conflict of interest and disclosure issues with the HK$ 50million payment. However, documents relating to the investigation were found to include amendments made by Leung himself.

The ICAC has recently dropped an investigation into incoming Chief Executive Carrie Lam's involvement in the approval of plans to build a museum without public consultation after no wrongdoing was uncovered.

Small bribes to bank staff result in ICAC charges  

Two recent cases in which company directors offered small "rewards" to bank clerks to assist in setting up company bank accounts have highlighted that the mere offer of a relatively small advantage – even when it is turned down –  is sufficient to lead to prosecution in Hong Kong. 

In a recent press release, the ICAC reported that it had charged a company director with offering an advantage to an agent, contrary to Section 9(2)(a) of the Prevention of Bribery Ordinance, after he allegedly twice offered a mobile phone and RMB 9,999 as a reward to an employee of a bank for assisting him in opening an account for his company. The employee of the bank declined the defendant’s offer on each occasion, and subsequently reported the matter to the management of the bank.

This is similar to an earlier case (reported in our June monthly ebulletin) in which another company director was sentenced to 10 weeks' imprisonment for offering a HK$ 1000 bribe to a bank clerk for assisting him in opening a bank account. The director was found guilty of offering an advantage to an agent contrary to section 9(2) of the Prevention of Bribery Ordinance. The bribe was also declined in that case.

LegCo gazette two bills on AML/CTF

The government has gazetted two bills with the aim of enhancing Hong Kong's legislative regime on anti-money laundering (AML) and counter-terrorist financing (CTF). Subject to LegCo approval, the amendments will come into effect on 1 March 2018.

  1.  Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017

    This bill seeks to apply statutory customer due diligence and record-keeping requirements to designated non-financial businesses and professions when they engage in specified transactions. "Designated non-financial businesses and professions" include solicitors, accountants, real estate agents and trust or company service providers.

  2. Companies (Amendment) Bill 2017

    This bill seeks to improve the transparency of beneficial ownership of companies. Among other things, it requires companies incorporated in Hong Kong (except listed companies regulated under the Securities and Futures Ordinance) to have beneficial ownership information for inspection upon request. This is similar to the recent introduction in the UK of the requirement that non-listed companies publish information on "persons with significant control" of the company.