Landmark CFA ruling on private sector bribery

The Hong Kong Court of Final Appeal (CFA) has handed down a landmark ruling clarifying an important element in an offence under section 9 of the Prevention of Bribery Ordinance (section 9). In Secretary for Justice v Chan Chi Wan Stephen and Tseng Pei Kun (CFA decision), the CFA quashed the appellants’ convictions and provided guidance as to the proper construction of section 9.

Implications for corporate clients

Section 9 concerns transactions between third persons and agents in relation to the affairs or business of their principals and is commonly known as the private sector bribery offence.

The most common form of agency is the employment relationship. In circumstances where employees and directors are offered opportunities for work-related external engagements, an employee may commit an offence under section 9 if the employee accepts payments for such external engagements without the employer’s permission.

The majority of the CFA took the view that an offence under section 9 requires proof that any advantage offered, solicited or accepted as an inducement or reward for any act or forbearance has to be aimed at, or intended to influence or affect, the principal’s affairs or business. The CFA considered that the relevant conduct has to subvert the integrity of the agency relationship to the detriment of the principal’s interests for an offence under section 9.