113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERSCORRUPTION PREVENTION - THE HONG KONG
EXPERIENCE
Thomas Chan*
I. INTRODUCTION
This paper describes the Hong Kong
experience in fighting corruption. It briefly
outlines a number of factors that are
conducive to corruption and fraud and thendetails some of the activities of the Hong
Kong Independent Commission Against
Corruption, better known simply as the
ICAC. While the corruption prevention
practices have been developed to suit theHong Kong environment, it is believed thatmany corruption problems stem from
common causes and may respond to similar
approaches.
II. CORRUPTION IN SOCIETY
Corruption can be found in all walks oflife ranging from matters involving petty
and relatively insubstantial issues to thoseof great significance and value.
Nonetheless, corruption has commonly
been associated with major development
activities such as:• infrastructure projects including
dams, harbour works, bridges,
highways, airports, railways, andmass transit systems;• licenses and/or leases for extractive
industries and other concessions (e.glogging, mining and oil leases, fishingconcessions);• large scale industrial, commercial orresidential developments (e.g mass
housing programmes, resorts, newtowns, theme parks, science parks);• the design, specification and supply* Director, Corruption Prevention, Independent
Commission Against Corruption, Hong Kong.

of transportation andtelecommunications equipment(railway rolling stock, bulk handling);• bulk purchases of supplies, such as
petroleum, fertilisers, cement,chemicals and pharmaceuticals;• service and consultancy activities(feasibility, land tenure studies, etc).
A more detailed examination of cause
and effect indicates that there are anumber of common factors that generate
corruption risk. These generally compriseof:• any level of decision-making
involving the exercise of discretionary
power;• arrangements involving patronage orconflict of role;• approval, licence or permit systems
which involve granting of a benefit
or generating a financial gain;• situations involving security or
confidentiality that can becompromised; and• situations where the standard
operating rules and procedures are
not clearly defined.
These factors bear no relationship to thevalue of a purchase or transaction. Thus,
cases of bribery and corruption may arise
from routine licensing arrangements andapprovals as well as from immigration andcustoms breaches, electoral malpractices,
and all types of cash collection
arrangements. Corruption may involve theleakage of confidential information inpolice operations or in procurement; inadministrative decisions on welfare benefit

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entitlements and housing allocation; or in
the distribution and location of hawkers’
stands and market stalls.
Public attention is drawn to the more
obvious cases where the incentives forcorruption are greater and which entail
major decisions involving large sums ofmoney. However, the risk of corruption isjust as real for everyday transactions wheremore elaborate protective mechanisms
cannot be economically employed. Given
the number and scope of such pursuits, thecumulative exposure to risk may wellexceed that of the larger contracts, while
the moral impact is equally damaging.
Nonetheless, both motivation andopportunity must come together in orderfor corruption to occur. Unless theopportunity presents itself to individuals,
corruption will remain just a theoreticalp o s s i b i l i t y. T h i s i n t e r m i n g l i n g o fmotivation and opportunity must always
be considered when structuring an effective
anti-corruption strategy.
III. THE IMPACT OF CORRUPTION
What damage is caused by corruption?
The most obvious effect is to directly
increase the cost of a transaction. If a bribe
of 5% or 10% is paid, it seldom comes outof the seller’s pocket. They will merely build
it into the price to be met by the purchaser.
Indeed, the fact that a bribe is being paid
often makes it possible for the seller toinflate the price by considerably more thanthe bribe amount.
It is not easy to find definitive statistics
on the likely economic cost of corruption.
A 1996 Hong Kong fraud study, publishedby consultants KPMG, estimated a total
cost (to local respondents) of HKD $230M.
The consultants highlighted that thisfigure was probably significantly
understated. KPMG also reported that the366most prevalent areas were purchase fraud,
which accounted for 26% of reported cases.
Twenty percent of the frauds could be
categorised as corruption related offencessuch as kickbacks. Similar figures werereported in another KPMG International
Fraud Report, which highlighted kickbacks
and procurement fraud as particular
problems but also identified employee
fraud as being the most prevalent sourceof malpractice. The amount of internal
employee involvement provides anindication of where one needs to start withcorruption prevention measures.
KPMG’s 1995 Australian Fraud Survey
estimated corporate fraud at A$16B to
A$20B per year. Another survey by Ernst& Young in 1996 reported that 95% ofAustralia’s top 500 companies experienced
fraud over the preceding five years, and for
68 % of those cases it was over A$1M. The
Australian Commonwealth AuditorGeneral estimates the level oforganisational fraud to be 2-5% of private
sector turnover.
These figures, together with other
anecdotal evidence, indicates that
corruption can add between 2% to 15% to
the cost of business, depending on the
country and local environment. Despite
such obvious losses, it is disconcerting tonote that until recently, firms based insome developed nations have been
prepared to fund corruption in many
developing nations.
The direct increase in cost is by no means
the only effect. Once the possibility of
personal gain becomes a factor, it rapidly
becomes dominant - pushing aside quality
and other legitimate considerations in theawarding and performance of contracts orin the provision of services. The result isthat economic decisions are skewed; thewrong suppliers and/or contractors are
selected; and materials, quality standards

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
and safety are compromised. Supplies or
projects that are not needed may be given
priority over more important projects forno better reason than the fact that they
enable decision-makers to obtain large
bribes.
The moral damage is perhaps more
serious. Bribery involves a breach of trust
or a violation of a relationship. The damage
to confidence, reputation and image
inflicted on a corporation or on public sector
administration is debilitating, while theloss of faith in the integrity of decisionmakers can even destroy the social fabricof a nation. While seemingly benign on thesurface, corruption breeds distrust andmay contribute to more violent crimes as
the social injustices accumulate andbecome more obvious.
IV. THE HONG KONG ICAC MODEL
The ICAC was established in 1974 inresponse to rampant corruption within thepolice force and other sections of the public
sector. It has adopted an integrated threepronged attack on corruption based on thestrategic components of investigation,
prevention and education. These threeanti-corruption offensives are reflected inits structure, which comprises threefunctional departments - the Operations
Department, Corruption Prevention
Department and Community Relations
Department.
The Operations Department receives
reports and investigates complaints. This
investigative and enforcement role iswithout doubt the most visible activity of
the Commission, attracting intense public
and media interest in major cases. The
corruption cases are identified fromcomplaints received from a number ofsources including a 24-hour hot-line report
centre.

The Community Relations Department
is responsible for the education, publicity
and moral leadership roles of theCommission. Its role is directed towards
mobilising public support in the fightagainst corruption. In addition to broad
community-based programmes using themass media, specific programmes havebeen developed for various sections of thecommunity. These activities explain antibribery laws in layman’s language, educate
the young at schools and universities, andencourage business organisations to adopt
appropriate corporate codes and corruption
prevention measures. The generalconfidence-building and outreachprogrammes are designed to raise the levelof public awareness and willingness toreport promptly any suspicion of corruption
offences. They also include the operationof a number of regional community officesthat are readily accessible to the public.
The end result is that the ICAC maintains
a high public profile and ‘mind-share’
within the community.
The Corruption Prevention
Department’s mandate is to prevent
corruption within organisations byexamining their internal operations andproposing corruption-resistantmanagement and administration systems.
This objective has been successfully
implemented within the public sector by
the establishment of effective andtransparent systems, thus providing an
example of the principle that prevention ismuch better than cure.
V. CORRUPTION PREVENTIONROLE
From the time the ICAC wasestablished, maintenance of the integrity
1

In “Corruption: The Facts”, article by Daniel
Kaufmann, p. 114 of “Foreign Policy” - Summer
1997.
2 In “Model Law on Corruption”.

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of public institutions was considered to bea priority. Given our primary role to advise
government departments and public bodies
on reducing corruption opportunities, thelegislation therefore empowers us to act
with considerable authority when dealing
with corruption prevention in the public
sector.
The legislation also provides that wemust give advice on request to any person
and any private sector organisation. For
the private sector, the acceptance of our
prevention advice is not mandatory. To
strengthen the scope of our scrutiny we canapply to have organisations designated as‘public bodies’ where they enjoy particularmonopolies or have significant community
roles e.g the Hong Kong Jockey Club, Mass
Transit Railway Corporation, Airport
Authority, Utility Companies, Universities,
Hospital Authority and so forth. In total
there are currently 85 declared publicbodies.
The Department is relatively small with
only 59 staff members and is split intofunctional groups that specialise inparticular areas of work or client groups.
A high proportion of the staff is
professionally qualified. Staff members areappointed at a relatively senior level since
they must be sufficiently experienced andknowledgeable to liaise closely with seniorcompany management and government
officials on corruption prevention mattersthat can substantially affect operating
practices.
VI. CORRUPTION PREVENTIONMETHODOLOGY
Our prevention strategy is based on asystems approach, with a methodology
founded on operational audit principles.
Our major workload comes in the form ofassignment studies where priority
assignment areas are identified and then368

examined in detail, culminating in acomprehensive report containing a seriesof recommendations. To generate
maximum input and commitment to theprocess, client (i.e the organisation whose
procedures are being reviewed)
involvement is encouraged at all stages.
Draft recommendations are normally
discussed with the client prior to releaseof the report to take account of any practicalfactors in implementation and thereby
facilitate their adoption.
Strict confidentiality has been
maintained on the report contents to instil
confidence in the process. Accordingly,
there has been little publication of therecommendations except in general articles
covering anti-corruption issues or as source
material for the development of “Best
Practice” approaches. To date we havecompleted more than 2300 assignment
reports covering a wide range of public
sector activities.
The sources of work are Operations
Department investigations; areas
identified by our own staff or by joint ICAC/
client liaison groups; and requests from theclients themselves. As a liaison strategy wemeet regularly with the directorate officers
of major government departments and thesenior management of public bodies. These
Corruption Prevention Group meetings
discuss priorities, explore problem areas
and review the implementation of previous
studies. They have proved very productive.
A considerable number of private sector
referrals come through the services of theCommunity Relations Department andtheir network of regional offices.
Previously, much of this work was directed
towards specific problem areas such as
stock control, purchasing, and rules forstaff on accepting advantages, but thescope of work has been expanding with agreater focus on system risk analysis,

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managerial accountability and corporate
governance. Ethics development work is
typically conducted in association with our
Community Relations colleagues as part ofa co-ordinated programme of enhanced
ethical and corruption awareness training
linked with the promotion of Corporate
Codes of Conduct.
An increasing proportion of staff time isinvolved in consultative work. Government
departments commonly ask the
Department to study the implementationof new policies and procedures and we arerepresented on both ad-hoc and standing
working groups or committees.
Involvement in the policy development
process enables us to have effective input
at an early stage, where accountability andeffective controls are best identified.
Ty p i c a l e x a m p l e s i n c l u d e o u r
representation on a treasury review ofgovernment tendering and procurement
procedures and membership of theConstruction Advisory Board, which
provides advice to government on issues
related to the construction industry. Other
examples of our procedural development
work are the analysis of tenderingarrangements for major extensions of the
Kowloon and Canton Railway Corporationand Mass Transit Railway Corporation;
examination of Housing Authority policies;
and involvement in all stages of
construction of the new Hong Kong Airport
and related infrastructure projects.
VII. CORRUPTION RISK FACTORS
Our reviews of corruption risk
concentrates on areas identified as being
prone to fraud and corruption. Assignment
recommendations then focus onmechanisms for reducing or minimising
corruption opportunities while optimisingadministrative performance, system
controls, transparency and accountability.
This strategy of promoting system change

is based on the belief, that whilst
corruption may be investigated andoffenders prosecuted, unless theunderlying management deficiencies arecorrected, the same or similar corrupt acts
could easily re-occur.
Fact-finding involves identification andassessment of a range of possible risks,along with current controls and possible
control improvements. These observations
do not imply that corruption is occurring,
but highlight areas where internal controls
are absent or deficient and the system ispotentially at risk. Our reviews therefore
extend beyond the scope of financial audits
to examine management issues whichmight allow misconduct such as:• misuse of power and discretionary
authority;• neglect of duty or omission;• favouritism;• administrative deviations andbreaches of regulations;• inappropriate legislation;• information and confidentiality
breaches; and• conflicts of interest.
Various techniques and risk indicators
are used in analysing the existing system
for weak-points and loopholes that might
expose the unit or operation to potential
corruption. These include:• internal control weaknesses reported
through internal audit reviews orprevious corruption cases;• discrepancies or deficiencies in theimplementation of previous remedialaction(s);• weaknesses in the system chain ofcontrols;• reported deviations frommanagement controls;• role playing and “what if?” scenarios;• identification of system control

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features able to be bypassed by higher
authorities or alternative procedures;and• inconsistencies in the matrix ofmanagement authorities andaccountabilities.
The report recommendations can be
wide-ranging and may include proposals
for revamping administrative systems;
review of asset management policies andprocedures; introduction of enhanced
transparency and procedural
arrangements for purchasing andtendering; better documentation andreview standards; new or revised
management and quality assurance
manuals; and the adoption andpromulgation of performance pledges,
ethical guidelines and Codes of Conduct.
While some organisations may initiallyfeel some trepidation in agreeing to an
assignment study, the use of competent andexperienced staff and close attention todetail in formulating the recommendations
has resulted in a high level of client
satisfaction. Conducting the study in a
spirit of close co-operation with the client
no doubt helps to achieve this outcome. The
work is conducted at no cost for privateclients and the acceptance andimplementation of the recommendations
remains at the company’s discretion.
VIII. A CASE STUDY IN
CONSTRUCTION
Engineering construction is an
important element in Hong Kong’s
economy and today contributes about 9%of Hong Kong’s gross domestic product. Of
this, public sector construction contributes
about 45% and the private sector 55%.
Public sector projects are handledtransparently with advance publication of
construction programs, pre-qualificationand open competitive tendering exercises

370

and increasingly stringent quality andsafety requirements, subject to on-site
supervision and third party testing andcertification. Contractors performing public
sector construction work are subject tofinancial and technical assessment and arechosen from approved lists maintained by
the central policy Works Bureau.
The newly completed Hong Kong Airport
Project constituted one of the most massive
infrastructure undertakings in the world.
The core projects were completed undervery stringent time and cost constraints
and contained all of the elements thatmight be prone to corruption such as:• sensitive planning and land use
approvals;• selection and appointment of widely
divergent consultant teams;• complex contracts (hundreds) withhighly technical specifications;• negotiated contracts and value
selection of contractors;• use of international and joint venturecontractors;• fast-tracking of planning, design andconstruction;• large sums of money;• numerous variations and claims
arising from design changes;• a multiplicity of sites and numerous
interface issues with contractors andconsultants; and,• the involvement of diverse skills,
nationalities and languages.
Given the immense size and tight timescale for the undertaking, the standard
form of government contract was modified,and revised contractual, administrativeand claims procedures were adopted. Fromthe beginning, the procedural
arrangements and tendering processes
were developed in close consultation with
the Corruption Prevention Department.
Particular attention was paid to include

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
mechanisms that would ensuretransparency and equity in consultant andcontractor selection, effective contract
execution and close monitoring of all
performance aspects, including claims andvariations. The evidence so far is that thisliaison was very successful, with few
allegations of corruption.

greater profitability by any means possible.
Value assessment and supplier selection isaccomplished by nomination of suitableassessment criteria that are weighted inproportion to their importance to thecontract performance or specification. We
provide extensive advice on thesetechniques and the attendant procedures.

IX. A PROCUREMENT EXAMPLE

Government and public bodies are
required to adopt open competitive bidding
methods, except under defined
circumstances requiring full justificationand documentation. Notwithstanding acompetitive award policy, negotiation canbe employed but is normally restricted tohigh value contracts because of theextensive documentation required andtime constraints, contractual difficulties,
perceived corruption opportunities andoverall costs of the process.

Procurement is one of the areas mostprone to corruption. In analysing
procurement systems, our objectives are toensure:• the best possible value-for-money
outcomes;• minimal risk of fraudulent or corrupt
activity in the selection of firms andfinal contract awards throughstructured processes; and,• reinforcement of all legal
requirements and ethical standards
by incorporating guidelines andcontractual conditions relating toBest Practice, Prevention of Bribery
Ordinance, corporate conduct,conflict of interest etc.
We require that the procurement processdemonstrates the necessary elements offairness and impartiality to survive full
disclosure and critical public scrutiny. The
resulting level of transparency needed to
avoid any potential claims of favouritism
or conflict of interest may involve very
detailed procedures and extensive
documentation depending upon the
product, service or project.
For many procurement cases the qualityof performance is a significant factor, andwe recognise that selection may not bebased purely on price competition. In fact,
uneconomic contract prices can provide afurther incentive for corruption duringcontract execution, as the participants
attempt to recover costs and achieve

Other anti-corruption techniques are to
restrict the discretionary role of the
procurement officers, to codify theprocedures, and to apply separation offunctions so as to require greater (andtherefore less likely) collusion if corruption
is to occur. Open advertising, prequalification exercises, formalised lists ofsuppliers and contractors, adoption of
objective selection criteria with advancenotice to bidders, detailed tendering andevaluation procedures, balanced selection
panels, full documentation, monitoring ofpurchasing patterns and vendor
relationships, random checking by senior
management and effective audit
programmes, are all strongly encouraged.
X. THE KEY TO PREVENTION TRANSPARENCY AND PUBLICITY
We believe the best ally in corruption
prevention is the public. When dealing withthe public sector, if people know andunderstand their entitlements and rights,
they will be aware of any shortfalls inservice quality. Therefore we consider it
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essential to ensure that the public is kept
well informed as to the expected time toissue licenses; when, how and where to
apply for services; the costs of services; andthe necessary documentation to besubmitted. The provision of clear selfexplanatory forms and supporting
documentation forms part of the necessary
publicity and education programme.
All government offices now routinely
publicise the key aspects of theiroperations, with prominently displayed
application forms and other public notices.
We also support the implementation of
performance pledges that give greatertransparency and clear guidance as to thereasonable expectations of minimum
service standards. This principle oftransparency extends to everyday eventsand activities. Studies relating to utility
works and roadworks have resulted inrecommendations leading to notices onstreet excavations showing the expected
date of completion and other details
enabling identification of the contractor
and contact persons.
Another area requiring good andcomplete public information is where morethen one government department isinvolved in a process. For example, inlicensing a restaurant, the hygiene, fire
safety, structural safety and ventilation
requirements all involve different
departments in the Hong Kong licensing
system. Satisfying these different
requirements can be baffling for a licenceapplicant and good publicity to guide theapplicant through the maze of the various
licensing processes is essential. To be
successful, this type of guidance needs tobe easily available at low or zero cost andwritten in plain and non-technicallanguage. The Department routinely gives
advice on the structure and developmentof such information packages.

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XI. OVERCOMING RESISTANCE TO
CHANGE
Notwithstanding our progress inintroducing initiatives to combat
corruption, there is sometimes a degree ofentrenched organisational resistance tochange. Key decision makers may refuse
to accept that the most effective way to
reduce corruption and other workplace
crime is to establish revised practices orprocedures within the organisation thathave an anti-corruption goal. Powerfulindividuals may also resist change becauseof habit or inertia, or fear of the unknown,or because they are afraid they do not havethe necessary skills if the changes are
implemented and they fear losing some of
their power.
Organisations, like individuals, also
sometimes resist change because of fear of
the cost, or a perception that they do nothave the necessary resources. Sometimes
key decision-makers fail to understand thealternative. Subtle resistance is often
embedded in the resource allocation
procedures, with reluctance to adopt newpolicies or refusal to change an establishedpolicy.
Resistance typically involves affectedgroups such as middle managers,
supervisors, units or groups who areopposed to a given corruption prevention
strategy. In the worst case scenario there
may be active opposition represented by :• denial of the need for an anticorruption strategy;• refusal to recognise responsibility
and accountability;• refusal to implement an anticorruption strategy initiative thathas been adopted by the organisation;and• sabotage or dismantling of an anticorruption strategy after
implementation has begun.

113TH INTERNATIONAL TRAINING COURSE
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Such potential resistance must be both
recognised and managed. At the working
level, our response is firstly to involve theclient as deeply as possible in theassignment study so that they arecommitted to a successful outcome.
Secondly, we attempt always to set
standards, objectives or time lines against
which progress may be assessed so that
there is an effective means of monitoring
implementation. In addition to formalmonitoring studies, we also have standard
follow-up procedures to track the level of
acceptance of report recommendations andtheir implementation. This process has
proved very successful and often gives rise
to continuing liaison with the client andmore extensive work.
XII. FACTORS FOR SUCCESSThe success we have achieved in fighting
corruption and fostering change has been
based on a number of factors, of which I
shall nominate a few:
• support from the highest levels ofgovernment providing the politicalwill, legislative framework andfunding necessary to ensure our
independence and focus on the job athand;• recruitment of staff with the skills
and experience to deal with practicalreal life situations, such asaccountants, engineers, quantity
surveyors, ex-policemen andexperienced public servants;• involvement of the client in all phasesof our studies - from thedetermination of the work to be done
through to the development ofprevention measures and how they
are to be implemented;• concentrating on more structured
ways to exercise discretion such as
inspection check lists, objective
marking schemes for performancemonitoring and marking systems fortender assessment;• adopting a more global approach topreventing corruption by examining
not just the symptoms but theunderlying causes such as poor
management structures, poor morale,
lack of information, unenforceable
rules and inadequate legislation; and• adherence to the principle oftransparency.
XIII. NEW CHALLENGES
New challenges are emerging as a resultof economic, social, political andtechnological changes. Hong Kong’s rapidtransition from a light manufacturing
economy to a predominantly service-based
economy has made anti-corruption work
more complex and difficult, while the public
expectation of effectiveness, transparency
and accountability is rising.
New business structures are being
created as the practices of outsourcing andprivatisation or corporatisation havebecome more prevalent. Both public sector
and private sector organisations now
contract out a wider range of services
ranging from data preparation andprocessing, management consulting andhuman resource functions, to research anddevelopment services, professional advice
and the operation of independent business
entities.
The outsourcing business model
typically involves a small number ofmanagement professionals responsible forcontracting, supervising and monitoring
services provided by external firms suchas contractors, manufacturers, third-party
sales and distribution networks, andsuppliers of corporate and administrative
services. It represents a desire to focus oncore business fundamentals in a drive toachieve world competitive practices and

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realise benefits from improved access to
specialist expertise.
Outsourcing brings with it greater
demands for overall co-ordination andcloser relationships between the various
parties to the contract with a consequent
shift towards new forms of performancemonitoring and control, and different legal
and contractual frameworks. Much of thistrend is being driven and supported
through developments intelecommunications and information
technology.
Developments in outsourcing may
introduce management issues having
corruption implications. Close examinationof the overall client and supplier alliance
may reveal new areas where corruption canenter the process and affect the outcome.
Since many operational activities are nolonger performed solely “in-house”, greater
emphasis needs to be placed on thedevelopment of “self-regulatory” systems,with the adoption of appropriate Codes ofConduct.
The computer in its various guises now
pervades every walk of life. Millions ofdollars are handled daily over national andinternational networks, and personal
information is captured for a myriad oftransactions. Vast databases are being
developed containing extremely detailed
information on individuals andorganisations. Information technology has
provided new opportunities for datacollection and management, facilitating
demographic segmentation (data mining)
and new and more extensive forms ofmanagement information analysis. With
these developments have come associatedconcerns for the privacy and security of thefinancial and personal data and attendantcorruption opportunities in the potential
misuse of this data.

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Some systems are undoubtedly well
protected and properly resistant to security
breaches, but the relaxed attitude of manyorganisations to information security
stands in stark contrast to the procedures
found necessary by banks and otherfinancial institutions. An ever-present
danger is that some computer systems,
designed many years ago, still remain in
operation and may be potentially subject
to new forms of attack as companies moveto embrace e-commerce.
One of the disturbing features is that too
few organisations have undertaken any
risk analysis of their own corporate
information systems and may be unable totell when or whether or not a crime has
been committed. An essential task of the
future will be to ensure that the integrityof these systems is not compromised bycorruption. Appropriate physical barriers,
software barriers, system administration
controls, functional separation of key
activities and the monitoring of criticaltransactions will be essential.
Procurement practices are also
undergoing significant change aspurchasers and suppliers grapple with bestpractice developments in supply sourcing
and the complexities of international law,fair trade requirements and the impact of
new technology. Some of the emerging
technological developments include
electronic commerce and electronic funds
transfer and payment systems;
interconnected materials procurement
management and manufacturing systems;
corporate card purchasing; and electronic
tendering. The growth of the Internet andelectronic commerce introduces theprospect of a new generation of informationand monetary transfers that are moredifficult to track and could make bribery
payments less traceable.

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
Each of these developments brings a newperspective to the maintenance of system
integrity. They introduce problems
associated with security and confidentialitythat commonly form key elements in the
typical chain of corruption. Management
systems, which once seemed secure, may
be prone to attack as organisations adapt
to these changes.

widespread introduction of appropriate
Codes of Conduct is being strongly pursued.
We have expanded our capacity to assist
both the public and private sectors byintroducing a quick-response consultancy
support system offering advisory services.
Together with this more responsive
approach, we have introduced a corruption
prevention telephone hot-line.

XIV. OUR RESPONSESAs technology advances and political andeconomic boundaries begin to blur,corruption has taken on a global
perspective and the need to develop
regional and international liaison willcontinue to grow. To this end we haveactively pursued a policy of greater
involvement with our colleagues in otherjurisdictions such as the Royal Canadian
Police, the Australian Federal Police andthe US Federal Bureau of Investigation.
The ICAC now acts as the Regional
Information Co-ordination Centre in the
Asia-Pacific region and publishes a regularn e w s l e t t e r. T h i s l i a i s o n w i t h o u r
counterparts will continue and expand.
The proven effectiveness of ourcorruption prevention work will ensure its
continuation, albeit somewhat modified totake account of emerging trends. Moreexpertise will be needed in systems andrisk analysis and we have had a policy forsome time of recruiting staff for prevention
work with strong and up-to date computerand information technology skills.
Greater emphasis will be placed on
managerial accountability in a more selfregulatory environment. The adoption of
performance pledges, Best Practice
approaches and quality management andquality assurance programmes alreadyform part of our armoury. The introductionof specific probity-related clauses intendering requirements and the

In conjunction with the Community
Relations Department’s drive for expanded
moral and ethical education programmes,
we have taken a pro-active approach toenlisting greater support from the private
sector with extensive mailings, visitation
programmes and speaking engagements.
In addition, we have embarked upon aseries of targeted training and development
seminars directed towards particularindustry areas.
We have formulated no fewer than 15
Best Practice modules covering key
industries and their operations which are
now being widely distributed as part of ouradvisory services. These modules aredesigned to provide guidance toorganisations developing or reviewing theirown internal systems. In time, thesemodules should cover the majority of the
key operational areas found to be prone tocorruption.
Finally, in the midst of this change wehave also grasped the benefits of newtechnology with revamped internal
operational procedures and improved
information technology capabilities. This
will enable us to better analyse trends,
perform better research and improve ouroverall productivity. These changes include
expansion of our Internet Web presence toprovide greater public access and enable
us to reach a wider audience.

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XV. CONCLUSION
The enforcement of a strong anticorruption law based on a zero tolerance
approach, backed by effective prevention
and educational programmes, has had amarked impact in Hong Kong. The
populace is sensitive to corruption issues
and acutely aware of the ICAC role andmechanisms for reporting corruption. The
community culture has changed from oneof tolerance of corruption to rejection.
The nature of much corruption meansthat staff already working within an
organisation are responsible for most
failures. Internal access to administrative,
operational and information networks
therefore may present a far greater risk
than the spectre of physical entry or
external access. Software and systemaccess controls subject to internal attack
can easily become ineffective due to laxity,
complacency, under-estimation of risk andundue reliance on trust.
Corruption prevention is anorganisational, as well as individual,
ethical responsibility. While corruption
depends on individuals, it may be
unwittingly encouraged or protected bycertain features of an organisation’s
activities or structural deficiencies. Many
problems can be traced back to poor control
exercised by senior management.
An organisation can lift some of theburden from individuals, not only byplacing greater emphasis on teams andshared decision-making, but also byadopting effective corruption prevention
practices. The detection of corrupt practices
is also a management responsibility,
achieved partly by setting up effective
supervisory and control systems, and also
by managers being alerted to indicators ofcorruption.

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Effective prevention programs will
provide incentives for managers to educate
themselves regarding the attitudes andvalues held by their subordinates, to locate
the areas in which corruption is likely tooccur, to exert positive leadership and more
quickly curtail abusive and corrupt
activities. Increasing awareness ofcorporate governance principles may see
greater use of senior management
performance indicators that include
evidence of the implementation of effective
fraud/corruption prevention plans and risk
management strategies.
While the lessons to apply must takeaccount of individual social and work
ethics, there are a number of common
features worth noting. Firstly, complex,
unnecessary and unenforceable rules
increase the risk of fraud or error withconsequential increase in the likelihood ofcorruption. The solution may be to simplify
the system.
Secondly, many licence, approval andbenefit arrangements incorporate perverse
actions and seek excessive detail unrelated
to corruption or fraud preventive measures.
The answer is to set minimum standards
for efficient and effective administration
and redirect resources to prevention
strategies.
T h i r d l y, p o o r c o - o r d i n a t i o n ,communication and co-operation between
various agencies or organisations may
facilitate corruption. Provided the system
requirements meet the criteria of simplicity
and effectiveness, the answer is to monitor
service levels, measure performanceagainst objective standards and penalise
non-compliance through transparent
mechanisms.
Prevention, however, involves more thanrisk assessment and the introduction ofmonitoring and supervisory reviews. It

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
requires the development of an ethicalculture reinforced by a code of conduct todeal with specific issues faced by staff. The
code should address a variety of internaland external issues affecting theorganisation, including the way it interacts
with business associates.
With changing work patterns andincreasing globalisation, the principles ofindividual and organisational integrity andaccountability may need to be further
reinforced. As governments and businessalike strive to achieve their objectives in
the most cost effective and efficientmanner, business plans will need to take
into account suitable corruption prevention
strategies.
The Hong Kong experience is that withclose co-operation between business,
Government and the ICAC, the adoptionof a broadly based and integrated
preventive approach can realise theobjectives of minimising corruption. The
message we have given and will continue
to send is a simple one. Corruption does
not pay and will continue to be driven to
the very margins of our society.

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