Anti-graft efforts backed despite costs
Financial firms in HK look beyond the burden of compliance with British and mainland measures to the long-term benefits of cleaner practices
While financial companies in Hong Kong say anti-corruption measures introduced by the mainland and British governments in recent years have placed an extra burden on them, they believe a healthier business environment will result in the long term.
The mainland has stepped up its efforts to crack down on corruption after President Xi Jinping took power late last year. Luxury gifts and fancy meals for officials are now frowned upon.
Britain's Bribery Act, which took effect on July 1, 2011, prohibits the offering or acceptance of bribes from foreign public and private-sector officials, and lays down strict punishments for any failure by companies to prevent bribery by employees, agents and clients. Penalties include jail sentences of up to 10 years, unlimited fines, confiscation of property and disqualification of individuals from serving as company directors.
David Green, director of Britain's Serious Fraud Office, said the agency was handling 67 cases, including 15 cases under development in its intelligence section. These include possible cases under the Bribery Act.
Green would not be drawn on whether Hong Kong or mainland firms were involved.
While he said there had not been any big prosecutions in the two years since the new law was enacted, he said the statute had an important role to play in helping crack down on corruption.
"We want to establish a culture in which companies do not accept any bribe or corruption practice no matter where they are operating. This would create a healthy business environment for companies to do business around the world," Green told the on a recent visit to Hong Kong.
He said the act had almost universal jurisdiction and allowed individuals or companies that conducted trade for British firms, or those who acted as agents for British companies, to be prosecuted regardless of where the corruption crime was committed.
Steve Vickers, a retired Hong Kong police officer turned commercial investigator, said that so far he had not seen evidence that the British Bribery Act had had a significant impact, at least in terms of significant prosecutions.
"The law, may, however cause companies to pay more attention to compliance with anti-corruption provisions. This is good news for companies like my firm, as we get frequent requests from overseas-based companies who want to strengthen their internal controls and procedures to prevent corruption," said Vickers, who is chief executive of Steve Vickers & Associates, a firm that performs international commercial investigations and provides compliance and advisory services.
Vickers said the mainland's highly publicised recent efforts to crack down on corruption were still at a very early stage, so it would be premature to comment on their effectiveness.
"Making a show, for example by PRC government officials of limiting official dinners to four dishes and a soup is hardly the same as a tough anti-corruption crackdown," Vickers said.
"If they really want to crack down on corruption, they should act more vigorously on the underground fund flows out of China and specifically the underground banks and triad-controlled junket operators, who illicitly move billions from the mainland to Macau. This activity is in flagrant breach of Chinese government currency controls. These operations have, over the past four years, facilitated an El Dorado for corrupt cadres - using the nationwide junket network to feather their nests."
Joseph Chow York-wai, general manager of Bank of East Asia's London branch, said since the British law was enacted two years ago, his bank had had to do a lot more work to comply with it.
"Since we are operating in Britain, we have to follow the law," Chow said. "We have to make sure not just our British staff, but also our Hong Kong staff, supplier and agents, sign documents that say they understand the Bribery Act. That is very troublesome."
Chow said while it was reasonable for the bank to control its staff, it would be hard to exert full control over its agents. "These companies promised they would follow the British law, but it would be hard for us to check if they have fulfilled all the requirements," he said.
Christopher Cheung Wah-fung, who represents brokers in the Legislative Council, said overall, the anti-corruption measures would benefit the market in the long term. "Many financial firms would face extra costs in compliance to prevent corruption," Cheung said. "This may add costs in the short term, but it would benefit our overall business environment for the long term."
