The Way to Integrity
Case Study - Duty Encroachment 255
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    This issue's of The Way to Integrity  focuses on the serious crime of duty encroachment.


    Recently, the Internal Audit Department found that a number of multinational corporate tenants of an office tower had renewed their tenancies through some small-scale and little-known intermediary companies. In addition, Hang Lung had paid a large amount in agency fees to these intermediary companies. This was different from normal market practices and has drawn high-level attention from the Internal Audit Department.


    Colleagues in the Internal Audit Department investigated the case further and found that the Exclusive Appointment Letters signed between the office tower tenants and intermediary companies were not original copies. The content, format of the letters, and the signature of the legal representative on the agreements were replete with mistakes. It was subsequently discovered that these tenancy renewals were in fact handled directly by the Leasing Team of the office tower. There was no involvement of any intermediary company.


    Since the case was serious, the Internal Audit Department submitted the evidence to the Management immediately. Finally, the Company reported the case to the police.


    After investigation, the so-called "agreements" were found to be counterfeit documents created by leasing staff of the office tower at the time. It has been confirmed that they had used this strategy to defraud the Company by syphoning off the agency fees paid to the connected intermediary companies.


    The three concerned staff members were fired immediately. The case was brought to court by the police. Two of them were sentenced and sent to a jail for 8 and 10 years, respectively. The third criminal escaped and is wanted by the police.


    Assistant Director (Corporate Audit) Ricky Tsang said:

    The creation of counterfeit documents to defraud the Company is an extremely dishonest act and a criminal offense. If such incidents were found, the Company would terminate the employment of the staff members who committed crime and report them to the police. It is never acceptable for employees to seek personal gains illegally in any way from their work.


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