ICAC charges former Vitasoy staff for allegedly concealing conflict of interest in ads worth HK$1.9m

Hong Kong's anti-corruption watchdog ICAC has charged a former Vitasoy marketing manager for allegedly deceiving the company into awarding various outdoor advertisement purchase orders worth totalling about HK$1.9m to a vendor by concealing that the latter was controlled by one of them. The former manager and a subordinate also allegedly used a number of false quotations and outdoor advertisement inspection reports to mislead the company.

The duo were released on ICAC bail, pending their appearance in the Tuen Mun Magistrates' Courts on 24 February 24 for mention, pending the prosecution's application for transferring the case to the District Court.

According to the official release, Chan Wing Fung, former manager of marketing department of Vitasoy, faces one count of fraud, while he and Keung Tze Ping, former outdoor visibility officer of marketing department of Vitasoy, jointly face two counts of conspiracy for agents to use documents with intent to deceive his principal, contrary to the Prevention of Bribery Ordinance and section 159A of the Crimes Ordinance.

At the material time, Chan was the manager of the merchandising team and outdoor advertising team of Vitasoy's marketing department. Among other duties, Chan was responsible for approving the engagement of vendors. Keung was an outdoor visibility officer working in the outdoor advertising team. She was responsible for assisting Chan to obtain quotations from vendors. The duo were required to obtain at least two or three quotations, subject to the amount of a procurement exercise involved.

It is alleged that between January 2016 and early October 2019, Chan concealed from Vitasoy his interest in Why Creative Graphic Design House (Why Creative), and with intent to defraud, induced Vitasoy to award 39 outdoor advertisement purchase orders to Why Creative.

In an internal audit conducted by Vitasoy, it was revealed that a majority of the purchase orders issued by the outdoor advertising team during July 2017 and April 2019, totalling around HK$6.3m, were awarded to three vendors, including Why Creative. Chan had further approved to pay a monthly fee of HK$36,000 to one of the vendors for conducting inspections on all outdoor advertisements of Vitasoy to make sure that they were in good condition and were updated. Hence, Vitasoy requested the outdoor advertising team to provide the relevant quotations and inspection reports for examination.
      
Between early May and June 2019, Chan and Keung allegedly conspired together with a subordinate in the outdoor advertisement team to use 31 sets of quotation documents purportedly issued by four outdoor advertising vendors to mislead Vitasoy. It is also alleged that the trio had used 37 sets of outdoor advertisement inspection reports purportedly prepared by one of the above vendors to mislead Vitasoy that it had conducted the relevant inspections and prepared and submitted the reports concerned.

ICAC investigation revealed that the four vendors had never issued the quotations concerned, and had never been engaged to conduct the relevant inspection.

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The ICAC reminds staff of business organisations to avoid conflict of interest situations and to make timely declarations to their employers. Concealing any conflict of interest in relation to one's official duties to benefit himself or his associates may contravene the criminal law. 

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