The abominable bribe - laisee as a blessing in disguise, or something disguised as a blessing?

How you can be smart about giving laisee or mooncakes without exposing you and your business associates to the risk of bribery.

Gift-giving has traditionally played an important role in building and maintaining networks and fostering relationships in a business context, particularly within Chinese communities.  With the greater policing of potentially corrupt practices however, gift-giving in private sector businesses has dwindled.  Yet, two main types of gifts - the laisee and mooncakes - remain prevalent even today amongst local and foreign businesses operating in Chinese communities. 

With the approach of Chinese New Year(CNY), we look at how you can be smart about giving laisee without exposing you and your business associates to the risk of bribery.

Laisee

Laisee, also known as “lucky money” or “red packet” (hongbao in China) is money given in a red envelope as blessing and a symbol of good luck during CNY and other celebrations, such as weddings and birthdays. 

Interestingly, it is accepted, and somewhat expected, that laisee will be actively solicited during CNY – hence the Chinese term dau laisee or tao hungbao in Mandarin, which both mean “ask for laisee”.

The abominable bribe

When does a bribe take place?  Under Hong Kong’s Prevention of Bribery Ordinance(PBO), it is an offence to offer, solicit or accept an advantage, both in the public and private sector.  Specifically, the PBO curbs private sector corruption by prohibiting an agent (usually an employee) from soliciting, accepting or offering an advantage as an inducement or reward on account of the principal’s affairs or business.

It is also important to note that the giver and acceptor of the advantage would be guilty notwithstanding the fact that the acceptor did not in fact to carry out the intended act, or that s/he never intended to do so, or that s/he did not have the power, right or opportunity to do the intended act. The focus is on the act of giving and accepting the advantage with the intention of the advantage being connected with the parties’ business relationship or capacities – not on whether any act or favour was done as a consequence.

Advantage

Laisee being a cash-gift, falls squarely within the definition of an “advantage”, which can constitute a bribe under the PBO.  An advantage is widely defined in the ordinance to include any gift, loan, fee, reward or commission consisting of money or of any valuable security.

Even laisee of a low value can be an advantage, since the PBO does not set monetary limits on an advantage.  This means laisee of HK$500, HK$100 or even HK$20 could amount to an advantage, capable of being a bribe.  Although cash-gifts of any value could constitute an advantage, where the amount in question is small, the likelihood that this is offered / received an inducement for any act of favour would be correspondingly lower. 
 
A good point of reference would be the public sector, where a government servant is not permitted to accept gifts from contacts which they have official dealings with, but are permitted to accept (but not solicit) a gift not exceeding in total HK$3,000 from a “close personal friend” or HK$1,500 from any other person under traditional gift-giving occasions and not exceeding HK$500 or HK$250 in total from a close personal friend and any other person respectively on each other occasion.
 
If these thresholds are to be applied, these should be drafted into your company’s internal gift policy, and should be periodically reviewed – see section on “Best Practice” below.

Custom and tradition not a defence

The fact that everyone is in the habit of handing out laisee to business associates, or that it is customary within certain professions, industries or countries to give out laisee is no defence.  Section 19 of the PBO explicitly states that showing that an advantage is customary in any profession, trade, vocation or calling shall not be a defence to any offence under the PBO.

The art of giving

One can imagine the embarrassment that may be caused by a sudden refusal to give out laisee to business associates, or refusing to accept laisee offered during CNY. It is however reassuring to know that the PBO blesses us with a complete defence of lawful authority or reasonable excuse for the offering, soliciting or accepting of an advantage.
 
This would usually come in the form of approval or permission from the agent’s principal (or the Chief Executive for public servants and prescribed officers). The permission can be obtained before the advantage is offered, solicited or accepted, or applied for and given as soon as reasonably possible after the offer or acceptance. 

The rationale for this is to prevent an agent or employee receiving bribes for favours granted in the course of his principal’s affairs without his principal’s knowledge or consent.  Once the principal is put on notice, the scope for an employee or agent to give out favours in secret is reduced.

Best practice

It would also be unwise to give cash or non-cash gifts that are excessive in value or over lavish.  With this in mind, a robust and clear internal gift policy, which should be reinforced to your employees nearing the traditional gift-giving seasons, should be set down, stipulating a monetary limit for gifts that could be offered or accepted without needing the application for prior approval. Many corporations have a policy of requiring employees to apply for approval where gifts exceed a certain monetary threshold, particularly if the gifts relate to the parties’ business dealings.
 
It is also prudent to provide in your the internal gift policy mandatory subsequent reporting for record-keeping purposes.  Global corporates or MNCs will have clear guidelines on the booking of its laisee budget.

A comprehensive set of internal gift policy should be drafted based on legal advice to ensure this is compliant with the PBO.  Laisee should be given and received as blessing in the form of cash, and one should take care that these are not, and will not be perceived as, a bribe disguised as a blessing.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.