2020 Review & 2021 Outlook Anti-Corruption Laws in Hong Kong

“Reject every form of corruption which diverts resources from the poor.”

Pope Francis

INTRODUCTION

With China being a signatory to the United Nations Convention Against Corruption (“UNCAC”), Hong Kong’s commitment to strong anti-corruption practices is a continuing one. The formation of the Independent Commission Against Corruption (“ICAC”) and its strong and hard-earned reputation thereafter is, after all, one of the many reasons cited behind Hong Kong’s success when compared to other jurisdictions in the region.

Whilst there has not been any key amendment to the local legislation in 2020, the guidelines and anti-corruption practices have been evolving incrementally by way of case authorities. Hong Kong to this date remains a model for neighbouring Common Law jurisdiction, most notably, the New South Whales ICAC is known to have been modelled after Hong Kong’s ICAC. The continued developments of anti-corruption laws in Hong Kong, therefore, remains a key contribution to anti-corruption agency practice.

ANTI-CORRUPTION LAWS REVIEW OF 2020

“Corruption is worse than prostitution. The latter might endanger the morals of an individual, the former endangers the morals of the entire country”

Kral Kraus

  1. Expanded Scope: The Court of Final Appeal (“CFA”) confirmed that “pre-existing legal relationship” is NOT required to be classified as an “agent” for bribery offences. It is trite law that s. 9 of the Prevention of Bribery Ordinance (Cap. 201) (“POBO”) criminalizes corrupt transactions involving agents in both public and private sectors. As such, one of the first element that many POBO cases struggles against is establishing the agency requirement.

The CFA in HKSAR v Chu Ang (FACC 6/2019) clarified that an agent can include a person who has agreed OR been chosen so to act in circumstances which may give rise to a reasonable expectation and thus a duty to act honestly and in the interests of such appointee to the exclusion of his or her own interests. Legal relationship is therefore NOT a pre-requisite.

  1. Legitimate Advantages for “Fair, Open & Honest” Elections: On 11 March 2020, the Court of Appeal in HKSAR v Cheng Wing Kin FACC 5/2019; [2020] HKCFA 3 clarified the ‘corruptly’ requirements under s. 7(1) of the Election (Corrupt and Illegal) Conduct Ordinance, Cap. 554 (“ECICO”). At the heart of the issue in contention is the differentiation between ‘advantages’ provided with aims of interfering in the integrity of an election vs. advantages provided for legitimate purposes.

In this particular instance, in a postscript Summary of Judicial Decision published by the Department of Justice (“DoJ”) in May 2020, the DoJ summarized that the word “corruptly” is confined to dealings that carry the objective to undermine “fair, open and honest” elections. As such, advantages with the aim to disrupt competition (e.g. thinning the votes) was deemed as corrupt act. On the other hand, according to the said DoJ paper, “advantage” for the specific purpose of cultivating “a young person for possible candidature in elections”, should not be criminalized.

  1. Acquittal to the biggest anti-corruption probe: In November 2020, the District Court acquitted three former Convoy executives in one of Hong Kong’s largest anti-corruption probe. The Department of Justice is set to appeal such decisions.
  2. Corruption complaints fell to 40 years all-time low in Hong Kong: with massive shut-downs owing to the COVID-19 pandemic, the slowdown of business activities has been theorized as one of few contributing reasons for a sudden drop in corruption complaints (for both private and public sectors).

Anti-Corruption Laws Outlook for 2021

  1. Rebound in number of investigations: with the continued roll-out of COVID-19 vaccines across the city as well as effective containment/prevention measures, business activities is expected to experience a rebound in 2021. A reversal of the 2020 dip is therefore likely to be seen.
  2. The Convoy Drama & the Court of Appeal: As announced by the ICAC, the drama involving the city’s largest anti-corruption investigation is headed back to Court as the department files its Notice of Appeal against the earlier acquittal.
  3. Question of Scope: Under existing laws, the sitting Chief Executive of Hong Kong is immune to sections 3 and 8 of POBO. 2012 saw the ICAC pushing for a review to expand the law’s scope. However, as the current administration has cited that any changes to existing law is likely to affect constitutional framework, whilst the matter is under study, changes is unlikely to take place in 2021.
  4. National Development: On a national level, the Central Government has recently amended paragraph 1 of Article 163 of the Criminal Law relating to the criminal sanctions of accepting bribes by a non-state functionary (“Amendments”) with the said Amendments taking effect as of 1 March 2021. Whilst the definition of the offence of accepting bribes by a non-state functionary remains unchanged, the scope for private parties (e.g. members of any company, enterprise, or other types of entities) will find themselves under the Amendment’s auspices.

All in all, the Amendments seeks to impose heavier penalties on the bribe taker for private parties with case law developments to come.

CONCLUSION

All in all, we see stronger development on anti-corruption practices on a national level this past year. The national development as outlined hereinabove is likely to have a significant impact as more and more business practices (in the private sector in China) will come under scrutiny.

Hong Kong, being the gateway for the rest of the world into China, will likely see ripple effect of the Amendments.

Solicitor, ONC Lawyers

Joshua Chu is a Litigation Solicitor qualified to practice in Hong Kong. Before becoming a lawyer, Joshua worked in the healthcare industry serving as the IT department head at a private hospital as well as overseeing their procurement operations.

Since embarking upon his legal career, his past legal experience includes representing the successful party in one of Hong Kong’s first cryptocurrency litigation cases as well as appearing before the Review Body on Bid Challenges under the World Trade Organization Government Procurement Agreement concerning a health care industry related tender.

Today, Joshua’s practice is mainly focused in the field of dispute resolution and technology law.

Aside from his legal practice, Joshua is currently also a Senior Consultant with a regulatory consulting firm which had been founded by ex-SFC Regulators as well as being a management consultant for the Korean Blockchain Centre.

Partner, Ravenscroft & Schmierer, Hong Kong

Anna is a Hong Kong qualified lawyer and is responsible as a partner at Ravenscroft & Schmierer for the commercial litigation department. Aside from her legal background, Anna is also an advisor to the Ohkims Blockchain Centre in South Korea and Hong Kong qualified lawyer and a regulatory consultant specialized in IT control and compliance.  

Before starting her practice as a lawyer, Anna worked closely with the United States Patent and Trademark Office (USPTO) and US Food and Drug Administration (FDA) on intellectual property and FDA regulatory matters. 

​Since embarking on her legal career, Anna was part of the team that defended a party in Hong Kong High Court proceedings involving the jurisdiction’s first cryptocurrency cases where she leveraged her science and engineering skills extensively to help improve her client’s case’s position. This feat was repeated again shortly after when Anna again leveraged her science background in a healthcare-related tender dispute. 

​Today, Anna is proactively working on various Distributed Ledger Technology related projects where she combines her love for science and technology together with the logic behind regulatory framework.