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The continuous duty and importance of disclosure of conflict of interest

2021-11-29

The continuous duty and importance of disclosure of conflict of interest


Introduction

In the case of香港特別行政區  劉文建 [2021] HKCFI 3078, the Court of First Instance (the “Court”) considered an appeal case from the Magistrates’ court which concerns the common law offence of misconduct in public office. This case illustrates the application of the principles reformulated in the landmark case of Sin Kam Wah v HKSAR (2005) 8 HKCFAR 192.

 

Background

Facts

The defendant, Lau Man Kin (the “Defendant”) was the Research and Development Director of the Hong Kong Applied Science and Technology Research Institute (“ASTRI”), a limited company established by the Hong Kong Government in 2000.

Between June 2016 and October 2017, the Defendant conducted 7 purchases on behalf of ASTRI and accepted the quotation by Globalactive Technology Ltd (“Globalactive”) and Broadlearning Technology (Asia) Ltd (“BTAL”), both of which were subsidiaries of Golden Commercial Ltd. (“GCL”). Both the Defendant and his wife were the directors of GCL, while BTAL was partly held by GCL and partly held by Cheng Yin Yee (“Cheng”), a senior to the Defendant at the university. Despite the Defendant’s interest and relationship with the above parties, he concealed the same in all the 7 purchases by declaring that he had no conflict of interest in the internal computer system of ASTRI.

The appeal

The Defendant was found guilty of the common law offence of misconduct in public office by the Magistrate, and was sentenced to an imprisonment of 6 months, suspended for 30 months. The Defendant appealed against the conviction on the grounds that:

  1. the Magistrate failed to consider / sufficiently consider the good character of the Defendant;
  2. the Magistrate erred in law when considering the means rea (mental) elements of the common law offence of misconduct in public office;
  3. the Magistrate erred in law in ruling that the Defendant has no “reasonable excuse” in committing the wrongful acts;
  4. the Magistrate erroneously ruled that the Defendant’s misconduct was serious. 

 

Ground 1: The Defendant’s previous good character

The Defendant argued that the magistrate failed to consider / sufficiently consider the good character of the Defendant, and accordingly failed to give direction regarding the Defendant’s credibility and his low propensity to commit crime.

The Court did not consider this ground tenable since the Magistrate has already given a good character direction in his judgment. This indicates that the Magistrate must have already considered the Defendant’s good character in his favour when determining his credibility and propensity to commit crime.

 

Ground 2: Mens rea (mental element)

It is not disputed by the Defendant that the common law offence of misconduct in public office is committed where (1) a public official; (2) in the course of or in relation to his public office; (3) wilfully misconducts himself, by act or omission; (4) without reasonable excuse or justification; (5) where such misconduct is serious.

Wilful misconduct

The Defendant argued that given his initial disclosure of interest in GCL, Globalactive and BTAL when he first commenced his office in 2014, his failure to disclose interest again before the purchases only rendered the disclosure incomplete and not sufficient, but should not amount to a wilful misconduct. The Court however refuted this argument, as the Defendant only notify ASTRI that he was a former director of GCL. There was no disclosure on his and his wife’s shareholding in GCL, nor his relationship with Cheng, and hence the Defendant had never made an authentic disclosure regarding his interest. It is also unlikely that he was not aware that his conduct in the 7 purchases would give rise to a serious conflict of interest against his relationship with the parties involved. The Court on that account inferred that the Defendant deliberately concealed his relationship with the parties, despite his knowledge that the same should be disclosed.

 

Ground 3: Reasonable excuse defence

The Defendant raised the defence of reasonable excuse because upon the full disclosure of the Defendant’s interest in 2018 to ASTRI after the 7 purchases had been conducted, the Defendant was permitted to continue with the procurement in relation to Globalactive and BTAL. The Court ruled that in any event, the Prosecution only needs to prove that the Defendant had the relevant mens rea at the time when the offence was committed i.e. when he declared that he was not interested in the procurement. The fact that permission was later granted by ASTRI does not mean that the same had been granted when the Defendant committed the offence.

 

Ground 4: Seriousness of the offence

The Court considered it obvious that the Defendant’s misconduct is serious. As a director of ASTRI, the Defendant benefited from his position and his relationship with the suppliers, which disgraces his position, and brings ASTRI or even public organizations into disrepute, affecting social stability and harmony. The fact that ASTRI continued its employment relationship with the Defendant upon knowledge of his misconduct has no correlation with the seriousness of the misconduct as ASTRI may have its own commercial considerations, which are different from the factors considered by the Court in determining seriousness. The misconduct of the Defendant may seriously undermine public confidence towards officials of public organizations, and as such the Defendant must bear criminal liability.

 

Conclusion

The Court eventually upheld the decision of the Magistrates’ Court and dismissed the Defendant’s appeal against conviction. Persons holding public office should be aware of the recurring duty of full disclosure throughout the course of public office and the applicable circumstances which calls for disclosure of interest as stipulated in the relevant code of conduct of their employments.

 


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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2021

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