Hong Kong anti-bribery laws to apply beyond local borders

On 28 January 2010, the Hong Kong Court of Final Appeal (“CFA”) clarified the extra-territorial reach of the Prevention of Bribery Ordinance¹ (“Ordinance”) in B v The Commissioner of the Independent Commission Against Corruption². The central issue concerned advantages offered by persons in Hong Kong to agents outside Hong Kong for their acts or forbearance outside Hong Kong. In this case, the CFA concluded that offering a bribe in Hong Kong to a public official of a place outside Hong Kong is liable to be prosecuted under Hong Kong law. This alert discusses the key features of the judgment and the implications of this important decision.

Background

The case arose out of an ex parte order (“Order”)³ made in the Court of First Instance in favour of the Commissioner (“Commissioner”) of the Independent Commission Against Corruption (“ICAC”). The Order permitted the Commissioner to issue two notices under the Ordinance to two persons, one of them being the appellant. The relevant notice informed the appellant that the ICAC was investigating an allegation that the chairman of a Hong Kong company had conspired with others to offer “advantages” in Hong Kong to a public official of a place outside Hong Kong (the PRC in this case) as “rewards” for that public official’s assistance in the company’s business ventures in that place outside Hong Kong. The notice stated that the investigating officer believed the appellant to be “acquainted” with the facts relevant to the investigation and requested him to produce relevant documents on demand and answer questions in relation to the investigation. The appellant unsuccessfully applied to set aside the Order. The Appeal Committee granted him leave to appeal to the CFA.

The Decision

Three questions of law arose:

(1) Whether the relevant statutory provision applied even if the advantage was offered to a foreign official for an act or forbearance taking place in a foreign jurisdiction?

(2) Is an agreement to offer an advantage in the circumstances described a conspiracy contrary to the Ordinance and the Crimes Ordinance⁴, and thus triable in Hong Kong?

(3) If (1) and (2) were answered in the negative, would there otherwise be jurisdiction to make the applicable order under the Ordinance?

The CFA upheld the following principles:

• Statutory interpretation should be purposive, contextual and holistic;
• Regard must be had to the statutory purpose at the time of enactment;
• The Court must be guided by the fair meaning of the language of the enactment.

The appellant had valiantly argued that the ordinary meaning should not be adopted. Such a reading, it submitted, would create absurd implications and uncertainty; fall outside the legislative intent; go against the presumption against extra-territorial effect; and run counter to the global trend for specific provisions criminalising bribery of foreign officials.

The CFA rejected the appellant’s arguments, instead deciding to adopt the ordinary meaning test. On an ordinary reading of the Ordinance, a public official acting outside Hong Kong would come within the phrase “any person employed by or acting for another” (i.e. an agent). Their public duties in the foreign jurisdiction would also come within “in relation to his principal’s affairs”. The CFA did not need to consider the legislation in relation to its extra-territoriality and considered that if there was any extra-territorial element, this would be limited as the relevant legislation is directed against offers made in Hong Kong and targets the offeror only.

The CFA found that the relevant statutory provision applies where the advantage is offered in Hong Kong, even if the offeree is a public official residing outside Hong Kong, and the conduct relate to his activities in a foreign jurisdiction. In addition, since the giving of the offer to the foreign public official is an offence under the relevant section, any agreement to do so is a conspiracy under the relevant statute and triable in Hong Kong. The third question above did not arise as the first two questions were answered in the affirmative. The CFA unanimously concluded that the Order in aid of the ICAC’s investigation was made with jurisdiction. The appeal was dismissed with costs.

Implications

The above CFA decision gives the Ordinance a “flavour” not unlike the US Foreign Corrupt Practices Act - bribes offered in Hong Kong to a foreign public official for acts or forbearance outside Hong Kong are liable to be prosecuted under Hong Kong law and the ICAC will have jurisdiction to investigate. This raises serious implications for foreign business ventures – transactions between principals and agents outside Hong Kong may still be subject to scrutiny under Hong Kong law if the circumstances result in advantages being offered in Hong Kong.

 

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¹ _{The relevant section of the Ordinance is section 9(2) which makes it an offence for any person, without lawful authority or reasonable excuse, to offer an advantage to any agent as an inducement to or reward for the agent doing any act in relation to the principal’s affairs or business; or showing favour or disfavour in relation to any person in relation to his principal’s affairs or business. An “agent” includes any public servant employed by or acting for another.}

² _{FACV000006/2009 (28 January 2010, CFA)}

³ _{Section 14 (1A) of the Ordinance permits a judge to make an ex parte order for the purposes of investigating an offence suspected to have been committed by any person under the Ordinance. Further, if satisfied that there are reasonable grounds for suspecting that an offence has been committed under the Ordinance, the judge may authorise the Commissioner to require any person who the Commissioner believes to be “acquainted” with the investigation to furnish all information in his possession, to appear before the investigating officer, etc, and assist in any other way with the investigation.}

⁴ _{Section 159A of the Crimes Ordinance provides that any party to an agreement to carry out any offence triable in Hong Kong would be guilty of conspiracy to commit the crime.}