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Living Business in Hong Kong - Corporate Governance Living Business
Living Business in Hong Kong - Corruption
 

    Transparency International (TI)'s definition of corruption is 'the abuse of entrusted power for private gain'. Poor corporate governance could pave the way for corruption, which can take many forms that vary in degree from the use of influence to institutionalised bribery.

    The negative impact of corruption is enormous. From an individual company's perspective, corruption within the institution damages internal infrastructure. Crucially, corruption damages a company's reputation, forcing it to take enforcement action. From the business sector's point of view, corruption cracks the 'level playing field' business environment and retards the development of consumer markets. Corruption in the community harms the less affluent and may lead directly to a drop in public living standards.

    In light of these points companies have good reason to be committed to anti-corruption practices and be alert to corruption.

    Here are some areas you should keep an eye on.

Conflict of interest
Conflict of interest arises when the personal interest of an employee is in conflict with his official position. Some examples that employees may encounter are:
  • Giving advice on the strategy of bidding for a tender and contract when he himself is involved in the tender exercise

  • Having undeclared financial interests in suppliers and contractors that do business with the organisation

Misuse of information of value
Employees could release information of value to a third party in return for personal favours. Some examples of corruption traps are:
  • Providing tender information to bidders to assist them in securing a contract

  • Releasing the personal data of clients to outside parties

Sweetening process
The so-called 'sweetening process' often begins with the offering of free meals and small gifts that gradually progress to more extravagant favours so that the receiver falls into a trap and feels obliged to pay back. An employee may be 'sweetened' if he/she is:
  • Being offered frequent and lavish entertainment by clients, suppliers and contractors

  • Indulging in games of chance (eg poker and mah-jong) involving high financial stakes

Indebtedness
    Employees could easily succumb to corruption if they face great personal financial problems, which usually result from overspending, speculative investment beyond one's financial means and gambling.

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