A busy year for Hong Kong’s enforcement authorities

Enforcement trends

The Prevention of Bribery Ordinance, Hong Kong’s main anti-corruption law, creates a number of public and private sector bribery offenses. These relate to government and judicial officers and to agents — typically, employees of a private company.

Most complaints to the ICAC in January to June 2018 were from the private sector — 67%. This is down 4%, compared with last year. The number of people prosecuted in the same period fell 42%, compared with 2017. Those convicted for bribery fell 15%.

Closer cooperation with financial regulators

In December 2017, the ICAC and the Securities and Futures Commission (SFC) together raided the offices of Hong Kong-listed Convoy Global Holdings, as well as the homes of its senior executives. Several of the executives were arrested. In 2018, the ICAC and SFC continued with related raids, although there has not been much publicity around these investigations. This is likely due to the secrecy provisions imposed by the Prevention of Bribery Ordinance and Securities and Futures Ordinance. The ICAC and SFC have yet to begin prosecutions in relation to the Convoy Global Holdings crack down, but we should expect more in store in 2019.

Statutory amendments tighten anti-money laundering protections

The Anti-money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Ordinance came into force on 1 March 2018. It adds customer due diligence and record-keeping requirements to non-financial businesses, such as lawyers, accountants, and real estate agents. The Companies (Amendment) Ordinance came into force on the same date. It requires companies registered under the ordinance to keep registers of people who have significant control over the company.

The reforms bring Hong Kong’s laws in line with standards set by the Financial Action Task Force. It sets international standards on combating anti-money laundering and terrorist financing.

Former Hong Kong minister convicted in the U.S.

The former home affairs minister of Hong Kong, Patrick Ho Chi-ping, was convicted in the U.S. on seven of eight counts of bribery. The case relates to payments to African public officials. His conviction prompted Hong Kong lawmakers to ask the ICAC to look into possible links to the case in Hong Kong. Unlike the U.S. Foreign Corrupt Practices Act, the Prevention of Bribery Ordinance doesn’t apply to foreign officials outside Hong Kong.

Transactions related to the conviction by China Energy Fund Committee, a non-governmental organization in Hong Kong led by Mr Ho, may have taken place in Hong Kong.

ICAC ends its investigation into former chief executive

On 12 December 2018, after a four-year probe, the ICAC stopped its investigation into Leung Chun-ying, former chief executive of Hong Kong, for allegations of corruption and misconduct in public office. The Hong Kong Department of Justice felt there was insufficient evidence to charge those involved. The allegations stemmed from Mr Leung’s entering into an agreement with UGL Limited and payments he received while chief executive.

This contrasts a series of high-profile convictions for corruption in recent years.