Hong Kong's Competitive Advantage : A Clean Society

Comprehensive & Effective Approach to Anti-Corruption. The Hong Kong ICAC Ex-perience, with a View on New Approaches in the Fight Against Corruption

Introduction Short History and the achievement of the ICAC

Hong Kong was definitely one of the most corrupt places on earth in the 1960s and early 70s. Corruption was widespread and regarded as a “way of life”. It existed “from womb to tomb”. Corruption in the public sector, particularly the law enforcement agencies were well organized and syndicated, hence making a mockery of the criminal justice system. As a taxi-driver, you could even buy a monthly label from the corrupt syndicate, stick it on your taxi, and it would guarantee you from any traffic prosecution during that month! Such was the scale of open corruption in Hong Kong. After the establishment of the Independent Commission against Corruption, and within five years, all the overt and syndicated corruption was eradicated and now Hong Kong is regarded as one of the most corruption-free societies in the world. The Hong Kong case was regarded as one of the very few successful models of turning a very corrupt place into a clean one. It demonstrates that corruption can be effectively controlled, no matter how serious and widespread the problem is.

In its 33 years of history, ICAC has achieved the following successes:

Eradicated all the overt type of corruption in the Government. Corruption now exists as a highly secretive crime, and often involves only satisfied parties. Citizens rarely suffer from extortion by government officials.
Amongst the first in the world to effectively enforce protection against private sector corruption, providing an excellent business environment for Hong Kong and a levelled playing field for all investors.
Ensured that Hong Kong had a clean electoral process during its transition from a British Colony to democracy
Pioneered solutions through corruption prevention studies in most corruption prone areas and promulgated best practice guidelines in areas such as public procurement, construction, financial sectors, staff management, etc.
Changed the public’s attitude to no longer tolerate corruption as a way of life, and support the fight against corruption by not only reporting corruption willingly, but also be prepared to identify themselves in the reports. Before the ICAC was set up, most corruption reports were anonymous. Now more than 75% of the reports come from non-anonymous sources.
As an active partner in the international arena in promoting interna-tional co-operation. ICAC is the co-founder of the International Anti-Corruption Conference (IACC)

I. What is the Hong Kong ICAC’s success factors?

As a result of the success of the Hong Kong model in fighting corruption, many countries followed Hong Kong’s example in setting up a dedicated anti-corruption agency. However, many of them are not effective and hence there are queries as to whether the Hong Kong model can be successfully applied to other countries. The point is whether there is a thorough understanding of the working of the Hong Kong model. From my experience, it consists of the following eleven indispensable components

1. Three-pronged strategy

There is no single solution in fighting corruption. Hong Kong ICAC adopts a three-pronged approach: deterrence, prevention and education. As a result, the Commission consists of three separate departments : the Operations Department to investigate corruption and to prosecute the offenders: the Corruption Prevention Department to examine the systems and procedures in the public sector, to identify the corruption opportunities and to make recommendations to plug the loopholes; and the Community Relations Department to educate the public against the evil of corruption and to enlist their support and partnership in fighting corruption.

2. Enforcement led

The three prongs are equally important, but unlike many anti-corruption agencies (ACAs), ICAC puts the priority on resources for enforcement. It devotes over 70% of its resources in the Operations Department. The reason is that any initiatives on corruption prevention and education are doomed to fail in a corrupt country where the corrupt officials are still around and powerful. Any successful fight against corruption must start with effective enforcement on major targets, so as to get rid of the obsta-cles, and demonstrate to the public the political will and determination to fight corruption at all costs. This can also demonstrate the effectiveness of the anti-corruption agency. Without that, the ACA is unlikely to get the public support, which is a key to success. Successful enforcement also assists in identifying problem areas for corruption prevention review and can clear any human obstacle in the review. The successful enforcement stories also provide basis for public education and act as deterrence for the other corrupt officials.

3. Professional staff

Fighting corruption is a very difficult task, because you are confronting people who are probably very intelligent, knowledgeable and powerful. Thus the corruption fighters must be very professional in their job. The ICAC ensures that their staffs are professionals in their diverse responsi-bilities – the Operations Department has professional investigators, intelligence experts, technical experts, accountants and lawyers amongst its staff. The Corruption Prevention Department has management experts and the Community Relations Department pools together education, ethics and public relations experts. Apart from professionalism, all ICAC staffs are expected to uphold a high level of integrity and to possess a passion and sense of mission in carrying out their duties. ICAC strives to be highly professional in their investigation. ICAC is one of the first agencies in the world to introduce the interview of all suspects under video; they have a dedicated surveillance team with over 120 specially trained agents who performed surveillance during their life-long career. They also have a number of specialized units such as witness protection, computer forensic and financial investigation.

4. Effective deterrence strategy

The ICAC’s strategy to ensure effective enforcement consists of the following components:

An effective public complaint system to encourage reporting of corruption by members of the public and referrals from other institutions. ICAC has a report centre manned on 24 hours basis and there is a highly publicized telephone hotline to facilitate public reporting.
Effective confidentiality system and protection of whistle-blowers and witnesses.
Effective confidentiality system and protection of whistle-blowers and witnesses.
The ICAC adopts a zero tolerance policy. So long as there is reason-able suspicion, all reports of corruption, irrespective of whether it is serious or relatively minor in nature, will be properly investigated.
There is a review system for the purpose of check and balance to ensure all investigations are professionally and promptly investigated, done so in a manner free from political interference.
Any successful enforcement will be publicized in the media to demonstrate effectiveness and to deter the corrupt.

5. Effective prevention strategy

The corruption prevention strategy aims at reducing the corruption oppor-tunities in government departments and public institutions. The general principle is to ensure efficiency, transparency and accountability in all government businesses.

The priority areas are public procurement, public works, licensing, public services delivery, law enforcement and revenue collection.

Comprehensive corruption prevention strategy should include en-hancement in the following management systems:

Performance Management
Procurement Management
Financial Management
Human Resources Management
Complaint Management

Examples of some of the corruption prevention practices are:

Identify risk in vulnerable areas and risk management
Streamline work procedure manual
Enhance staff supervision through surprise check system
Enhance internal audit
Maintain proper documentation for accountability
Information security policy
Job rotation policy
Performance indicators/performance pledges (service guarantee)
E-government and e-procurement
Exercise transparency & fairness in staff recruitment, appraisal & promotion

6. Effective education strategy

The ICAC has a very wide range of public education strategies, in order to enlist the support of the entire community on a partnership to fight corruption. It includes:

Working in collaboration with the media to ensure effective enforce-ment cases are well publicized, through press releases, press conferences and media interviews, as well as the making of TV drama series based on successful cases.
Media education – use of mass media commercials to encourage public to report corruption; promote public awareness to the evil of corruption and the need for a fair and just society, and as deterrence to the corrupt.
School ethic education programme, starting from kindergarten up to the universities
The establishment of the ICAC Club to encourage public to join members who wish to perform voluntary work for the ICAC in community education.
The promotion of a code of ethics in government and business
Corruption prevention talks and ethics development seminars to public servants and business sectors
The publication of corruption prevention best practices and guideline
In partnership with the business sector, the set-up of an Ethic De-veopment Centre as a resource centre for the promotion of business code of ethics
The organisation of exhibitions, fun fairs, television variety shows to spread the message of clean society.
The wide use of websites for publicity and reference, youth education and ethics development

7. Effective legal framework and anti-corruption laws

Hong Kong has a comprehensive legislation to deal with corruption. In terms of offences, apart from the normal bribery offences, it made illegal three more unique offences:

a) Offence for any civil servant to accept gifts, loans, discounts and passage over a certain limit, even if there is no directly related corrupt dealings, unless specific permission from senior official is given.

b) Offence for any civil servant to be in possession of assets dispropor-tionate to his official income; or living above his means.

c) Offence for conflict of interest. Any public officials abusing their authority for private gains, whether for himself or other persons. It in-cludes a statutory requirement to report potential conflict of interest.

On investigative power, apart from the normal police power of to search, arrest and detain, the ICAC has the power to check bank accounts, require witnesses to answer questions on oath, restrain properties suspected to be derived from corruption, and hold the suspects' travel documents to prevent them from fleeing the jurisdiction. If justified and in serious cases, they can apply proactive investigation technique such as telecommunication intercept, surveillance, undercover operations etc. Not only are they empowered to investigate corruption offences, both in the Government and private sectors, they can investigate all crimes which are connected with corruption.

The ICAC cases are prosecuted by a selected group of public prose-cutors to ensure both their quality and integrity. The Judiciary of Hong Kong is the strong supporter of fighting corruption, who ensured that the ICAC cases are handled in courts by highly professional judges with fairness. The conviction rate for ICAC cases is very high, around 80%

8. Review mechanism

With the provision of wide investigative power, there is an elaborate check and balance system to prevent abuse of such wide power. One unique feature is the Operations Review Committee. It is a high powered committee, with majority of its members coming from the private sector, representing the citizens from all sectors to act as watchdog on the ICAC. The committee reviews each and every report of corruption and investigation, to ensure all complaints are properly dealt with and there is no “whitewashing”. It publishes an annual report, to be tabled before the Legislature for debate, thus ensuring public transparency and accountability. In addition, there is an independent Complaint Committee where members of the public can lodge any complaint against the ICAC and/or its officers and there will be an independent investigation. It also publishes an annual report to be tabled before the Legislature for debate

9. Equal emphasis on public & private sector corruption

Hong Kong is amongst one of the earliest jurisdiction to criminalize private sector corruption. The ICAC places equal emphasis on public and public section corruption. The rationale is that there should not be double standards in the society. Private sector employees vastly outnumber the public sector employees and unless they maintain the similar ethical standard, the society can never achieve corruption free status. Indeed private section corruption can cause as much damage to the society, if not more so than public sector corruption. Serious corruption in financial institution can cause market instability; corruption in construction sector can result in dangerous structure. Effective enforcement on private sector corruption can be seen as a safeguard for foreign investment and ensures Hong Kong maintains a level playing field in its business environment, thus a competitive advantage in attracting foreign investment.

10. Partnership approach

You cannot rely on one single agency to fight corruption. Everyone in the community and every institution have a role to play. The ICAC adopts a partnership approach to mobilize all sectors to fight corruption together. The key strategic partner of the ICAC is the government agencies. The head of government agency should appreciate that it is his solemn re-sponsibility to clean his own house. Every government agency should have a tailor made anti-corruption strategy, translated into an anti-corruption action plan and should have a high power management com-mittee to monitor the progress of the action plan, which should be subject to annual review and revision.

Other important partners of the ICAC include:

i. Civil Service Commission

ii. Business community

iii. Professional bodies

iv. Civil Societies & community organizations

v. Educational institutions

vi. Mass media

vii. International networking

11. Top political will, independence and adequate resources

The most important factor in fighting corruption is “political will”. In Hong Kong, there is clearly a top political will to eradicate corruption, which enables the ICAC to be a truly independent agency. ICAC is di-rectly responsible to the very top, the Chief Executive of Hong Kong. This ensures that the ICAC is free from any interference in conducting their investigation. The strong political support was translated into financial support. The ICAC is probably one of the most well-resourced anti-corruption agencies in the world! In 2008, its annual budget amounted to US$90M, about US$15 per capita.

II. Comparison with other ACAs

Some critics argue that the Hong Kong model can only work in Hong Kong because of the uniqueness of Hong Kong’s situation which cannot be applied to other countries. They usually give the following reasons:

1) Hong Kong is a small city whilst most corrupt countries have a large geographical area. This argument cannot stand. Hong Kong is a large city of over 7 million in population. If any corrupt country can apply the Hong Kong model as a pilot scheme just on its capital city, and achieve equal success, it would have a tremendous impact on the whole country. If there is a central and powerful national anti-corruption agency, it can develop adequate sub-offices throughout the countries (with centralized control, not subject to local government interference), there is no reason why the successful model cannot be applied throughout the country. The FBI in the US and the RCMP in Canada are national police agencies. Through the branches established all over their respective countries, they are successful in matters of law enforcement. Anti-corruption law en-forcement should not be different.

2) A country might be unable to afford the resources like the Hong Kong ICAC. It is true that the HK ICAC has a large budget. But it merely accounts for 0.38% of the national budget. In most corrupt countries where the ACAs are not seen to be effective, their budgets invariably are below 0.01% of the national budget, which speaks for the political will of these countries! If the corrupt countries can raise their anti-corruption budget to be 1% of the national budget, which clearly is justified, the budget should be more than adequate for any national anti-corruption agency.

3) A country might have a unique cultural tradition of gift giving and nepotism. Hong Kong had the same corruption-friendly culture in the past, if not more prevalent. The Chinese tradition of giving “Laisee” or “red packet” containing money to all children and business associates in the Chinese New Year was an open way of giving/receiving bribes in the past. The Hong Kong experience is that through effective public education campaign and law enforcement, this cultural problem can be solved.

Hence the problem is not that the Hong Kong model is not applicable. It is more the case of the lack of political will to fully adopt the Hong Kong model.

III. New approach to fighting corruption

In order to properly assess the corruption problem in a country, thorough research should be carried out in the following areas:

Public perception & attitude towards corruption - assessing the local public perceptions and attitudes towards corruption.
Political & Legislative Framework – assessing the political will, the role of the National Congress and political parties, and the adequacy of anti-corruption legislation.
Integrity, Institutions and System - assessing the effectiveness of the integrity institutions, i.e. anti-corruption institutions, National Audit Office and Civil Service Commission etc.
Rule of Law - assessing the integrity in the three key organizations upholding the rule of law, i.e. Police, Prosecution Authority and Judi-ciary.
Administrative Quality - assessing the efficiency, transparency and accountability in the Government Ministries and their effort to fight corruption.
Voice & Accountability- assessing the freedom of the media and the role of civil societies.
In most corruption-prevalent countries, they usually share the follow-ing major problems:
At the national level:
Lack of or inadequate top political will and support to fight corruption.
Inadequate resources in financing the work of the anti-corruption institutions.
Lack of independence - corruption investigations are often subject to political interference.
Frequent political interference in human resources management, licensing and public procurement.
Inadequate investigative power given to anti-corruption institutions, often on the excuse of protecting human rights.
There is general public apathy to corruption.
Low salary of public servants.
Lack of strategic partnership in fighting corruption.
Lack of zero tolerance attitudes toward corruption.
In government institutions, the following problems are common:
In government institutions, the following problems are common:
Inadequate and ineffective in-house anti-corruption strategy and action plans.
Lack of integrity and ethics among civil servants.
Lack of enforcement of ethical conduct and ethical training.
Human resources policy/management do not include adequate corruption prevention measures.
Poor public service delivery due to bureaucracy.
Out-dated regulations and poor enforcement, resulting in a lack of transparency and accountability.
Nepotism and conflict of interest are common, and rules are absent.
Lack of effective mechanisms to check and balance abuse of power.
Lack of adequate procurement procedures.
Weak internal audit and monitoring systems.

I recommend that the government should take a step-by-step ap-proach in formulating measures on how to combat corruption in the country:

IV. National anti-corruption strategy

First the government should come up with a national strategy. The strat-egy should acknowledge that there is no single solution in combating corruption, and should also identify how the country can combat corruption through enforcement, prevention and education. It should also identify which agency can be responsible for taking the fight, ideally an independent ACA.

1. Independence

Anti-corruption agencies are subject to different form of independence. Some are answerable to the Chief Executive (Prime Minister or President), such as Singapore and Pakistan. Some are answerable to the Parliament or Congress, such as Australian ICAC New South Wales. Some shared the responsibilities with different agencies. Examples are the Philippines (Office of the Ombudsman and the Presidential Anti-Graft Commission), Nigeria (Independent Authority Against Corruption and Code of Conduct Bureau), China (Procuratorate, Supervision Ministry and Central Party Discipline Committee).

2. Appointment of head of anti-corruption agency

The appointment of the head of anti-corruption agency is crucial to ensure the independence of the agency. In Tanzania, the candidate is nominated by the President, but needs to be endorsed by the Parliament. In India, the appointment is made through a selection commission of the Parliament, members of which should include the opposition party. In the Philippines, once the head is approved, he cannot be removed during his term of office except through impeachment in Congress

3. Authority to Prosecute

Some anti-corruption agencies have full power to investigate and prose-cute offenders, such as the Philippines. Others maintain a check and balance system where the anti-corruption agency investigates and the Department of Justice authorizes the prosecution, such as Singapore and Hong Kong

4. Special court for corruption trial

In countries where there is a corruption problem in the judiciary, a special court with newly appointed judges is set up to deal with corruption trials, such as in Pakistan and the Philippines.

5. Jurisdiction

There are varying degrees of jurisdiction of anti-corruption agencies. Some do not have the power to investigate, such as South Korea KICAC. Other agencies can only investigate corruption in the public sector, such as Tanzania. Some can only react to complaints under strict rules (eg. Sworn affidavit), such as in Timor Leste, and others adopt a proactive strategy and can initiate investigation through intelligence development, such as in Hong Kong.

6. Effective anti-corruption law

The law should provide adequate investigative power and a full range description of corruption offences. Some ACAs have very restricted investigative power, or have no access to bank accounts. Some do not even have power to conduct arrests and have to call upon police to assist in taking action. They are doomed to fail. It should be appreciated that corruption is a secret crime and extremely difficult to investigate. Hence the ACAs should be given wide power, including telephone intercept, surveillance, undercover capabilities etc. Of course there should be a check and balance system built in to prevent abuse.

7. Resources for ACA

It would be reasonable to set a percentage of the government budget for the ACA, such as 0.3% as in Hong Kong, or ideally higher. In Mongolia, there is a law prohibiting any reduction of the budget for ACAs, com-pared with the year before. This is an effective guarantee that demonstrates a continued political will towards helping ACAs conduct their work.

8. Professional ACA

This is the area where most ACAs failed. If ACAs are established, even with good laws and resources, but the staff is unprofessional or incompetent to perform the difficult task of combating corruption, unless there are adequate capacity-building efforts put into the new ACAs, it has little chance of success. The anti-corruption consultant recommending the establishment of the ACA should have the responsibility to provide capacity-building input to see through its success.

9. Role of government ministries

All Government Ministries should be ordered to take an active role in combating in-house corruption. I had assisted the President of the Philip-pines and the Prime Minister of Mongolia to conduct Anti-corruption sum-mits for their heads of ministries. It was amazing to note that initially these heads of ministries did not consider fighting corruption as part of their prime responsibilities. But it is interesting to note that after the workshop, they then came to have a better understanding of their re-sponsibilities to clean their own house. They agreed that there were indeed many things which they could and should do. These workshops ended up with a consensus for an action plan which the government ministries should implement, such as:

Set up their own Anti-corruption steering group.
Review procedures and systems to make them more transparent and accountable.
Formulate tailor-made codes of ethics and include regulation on acceptance of gifts, and entertainments.
Introduce a declaration system for conflicts of interests.
Practice open & fair recruitment & promotion systems, and include integrity checking.
Introduce staff training on ethics & corruption prevention.
Leadership by example.
Promulgate zero tolerance policy.
Set up internal staff monitoring unit and internal audit unit.
Enhance & promulgate public and internal confidential complaints channels with complaints hotlines.
Prompt Referrals of cases to ACAs and full cooperation with ACAs on investigation.
Joint partnership with ACAs, media, civil societies and international donor agencies to launch public integrity campaigns and projects

10. Enabling environment

Even with the best strategy and law, it is necessary to build in the en-abling environment of the country to support the fight against corruption. The civil servants salary and staff management structure should be re-viewed and improved. The prosecution authority and judiciary should be free from corruption; the public administration should be required to become more efficient, transparent and accountable. The media should be given the freedom to expose corruption. The public and civil societies should be mobilized to support the fight against corruption.

11. Adopting International Best Practices

Some international best practices in combating corruption can be adopted. The best guideline is the UN Convention against Corruption. Having travelled to different countries as an international anti-corruption consultant, I have collected some examples of the internationally best known practices, such as:

In South Korea, the public sector, the business sector and the civil societies joined hands in forming a coalition called Korea-PACT. Over 800 organizations signed the PACT and undertook to implement the agreed action plan. The progress was reviewed annually by an international evaluation team.
In the Philippines, an expert team is going through the government ministry one by one to carry out a comprehensive integrity audit check and to make recommendations on what measures the government ministry should implement to combat internal corruption problems.
New Zealand requires all heads of government agencies to submit an annual anti-corruption action plan.
In Philippines, all public procurement in government ministries should be conducted through a “Bids and Award Committee”, and inde-pendent observer should be appointed to be one of its members to represent the public to monitor the decision making progress.
In Canada, all public officers have a legal obligation to report corruption.
In Pakistan, Philippines and Indonesia, special anti-corruption courts were formed to hear corruption trials.
In Nigeria, government officials and politicians are not allowed to have overseas bank accounts.
In Singapore, Civil Servants cannot accumulate personal debts of more than three months salary.
Malaysia set up its own Malaysian National Integrity Index to monitor the integrity progress in the country.

After due consideration and consultation, a national anti-corruption action plan should be adopted. An example of a country action plan is as follows, which should be further improved after having taken consideration of all the above mentioned ideas:

Corruption Risk Mitigation Plan – Corruption

Table 1

Conclusion

There is no single solution in fighting corruption. Every country has to examine its unique circumstances and come up with a comprehensive strategy, but any strategy must embrace the three-pronged approach - deterrence, prevention and education. Ideally there should be a dedicated and independent anti-corruption agency tasked to co-ordinate and implement such strategy, and to mobilize support from the community.

The Hong Kong experience offers hope to countries which have a serious corruption problem that appear to be insurmountable. Hong Kong’s experience proved that given a strong political will, a dedicated anti-corruption agency and a correct strategy, even the most corrupt place like Hong Kong can be transformed to a clean society within a rather short period of time.