We have written before about these troublesome cookies, which aren’t always quite as benign as they seem. A longstanding tradition around the Autumn Festival, we have found them priced in the hundreds of dollars with exotic fillings and, in one case, offered in elaborate packaging with engraved bars of gold on either side. Now, it seems, the Hong Kong authorities have mooncakes on their radar. Yuet Ming Tham, in DLA Piper’s Asia Regulatory & Litigation practice group in Hong Kong provides this update.
“In Hong Kong, a March court case caused sleepless nights for many a compliance officer in the territory, when Hong Kong’s powerful anti-graft agency, the Independent Commission Against Corruption, charged a construction company director for giving mooncakes to a police-station.
Every September and October, the Mid-Autumn Festival is celebrated by millions of Chinese people across Asia and in the weeks leading up to the Festival, thousands upon thousands of mooncakes, a pastry synonymous with the festival, are presented as customary gifts to business associates. In this case, the company director was sentenced to two months’ imprisonment for bribery, after he pleaded guilty to presenting 15 boxes of mooncakes to officers of a traffic-police team. It made no difference that the police officers promptly returned the 15 boxes uneatened the next day.
In Hong Kong, it is an offence to offer any benefit to an employee of the government or a public body where there are “dealings of any kind”, even if the dealings are not ongoing, but only anticipated. In this case, the moon cakes were presented eleven days before the Mid-Autumn Festival to the traffic team from which the company director had obtained a series of roadwork approvals. The Hong Kong court rejected the defendant’s plea that he had not realised it was an offence and that what he did was part of Chinese custom.
The anti-bribery provision in question is a draconian one. Unlike the FCPA, there is no need for the prosecution to show any corrupt intent on the part of the defendant. This provision presumes corrupt intent if: (a) there are dealings and (b) a benefit or gift is presented. The only way to escape conviction is for the defendant to show that there was lawful authority or a reasonable excuse, (for example, if the government employee happened to be the defendant’s good friend of many years preceding any “dealings”, mooncakes have always been exchanged and a reasonable number of moon cakes was given). This provision applies where a benefit and gift is offered not just to a government employee, but also to any employee of a public body such as Ocean Park, a famous local tourist attraction, or the Hong Kong Tourism Board. Finally, there is no minimum value involved, so that offering a piece of mooncake would have been as much an offence as 100 boxes of mooncakes. Harsh as it sounds, similar statutory presumptions can be found in the anti-bribery statutes of Singapore and Malaysia.
The irony of the case is that lunches, dinners and drinks (and entertainment provided during these meals) are exempt from the Hong Kong anti-bribery provisions. So, technically, if our hapless company director had instead of presenting the mooncakes as gifts, taken public servants out to a fabulous meal where they could have eaten all the mooncakes they desired in one sitting, this may have been alright.
This case is a good example of how corporations need to be aware of not just the FCPA, but also the pitfalls that come with not paying enough attention to local laws. Of course, an argument can be made that Hong Kong does not recognise the concept of corporate liability, unlike the FCPA. However, it would be a brave compliance or legal officer who would be willing to allow employees to violate such a law in Hong Kong, and not worry that there may be FCPA implications somehow for the company, whether under the FCPA’s antibribery provisions or the accounting provisions.”