Information Note for the
Provisional LegCo Panel on Public Service
Meeting on 22 September 1997

Review of the system for
declaration of interests by civil servants

Purpose

The purpose of this note is to brief Members on the scope of the Administration's current review of the system for declaration of interests by civil servants.

The Policy

2. The guiding principle is that civil servants have the right to make legitimate private investments so long as there is no conflict of interest between such investments and their official duties. Furthermore, civil servants should not use their positions in the civil service, or any information made available to them in their capacity as a civil servant, to benefit or favour themselves, their families, relations or friends.

3. The principles are reflected in the relevant Civil Service Regulations which provide guidelines and impose requirements on officers to avoid and report conflict of interest situations, and to seek approval prior to undertaking outside work. These regulations are long standing and are updated regularly. Given the size of the civil service, it is clearly only practicable that the onus is to be placed on individual civil servants to avoid any conflict between their private interests and official duties, and to seek guidance if there is any doubt.

Present Arrangements

4. Civil servants are required to declare their private investments in Hong Kong on appointment and to report subsequently any conflict of interest between their investments and official duties. They may be directed to divest themselves of an investment where a potential or real conflict of interest arises. Failure to disclose a conflict of interest renders them liable to disciplinary action that may lead to removal from the service.

5. In response to concerns expressed by Members and the public, the Administration issued two Civil Service Bureau circulars in March 1995 and January 1996 respectively to provide further guidelines on avoidance of conflict of interest arising from civil servants�business connections or investments in Hong Kong and outside Hong Kong. These guidelines have been drawn up having regard to the relevant provisions in the Bill of Rights Ordinance.

The Review

6. Now that the declaration systems have been implemented for some time, the Civil Service Bureau has initiated an internal review on their effectiveness. The review covers the following areas:

1. whether the existing declaration systems and related guidelines are administratively clear, practical and effective. Information on the number of posts designated for declaration of investments for regular reporting and comments arising from administering the systems are being collated and examined. A brief summary of the current position is at Annex;
2. in the light of the feedback from (a) and having due regard to legal considerations on individual rights of privacy, whether, and if so, what additional guidelines to the declaration systems may be introduced to better assist the departmental management in monitoring compliance of the requirements from staff who may be particularly vulnerable to situations of potential conflict of interest between their private investments or businesses connections (whether in or outside Hong Kong) and their official duties because of the nature and responsibilities of their work; and
3. whether and how additional measures may be launched to enhance the knowledge and alertness of civil servants at all levels towards situations where potential conflict of interest may arise and to remind them of their responsibility to seek guidance from departmental management and the Civil Service Bureau where in doubt.

7. In conducting the review, we remain mindful of maintaining the right balance between civil servants�right of private investments and the Administration's determination to uphold a high standard of integrity and impartiality in the civil service. We would consult within the Administration, the Independent Commission Against Corruption and the staff side on the outcome of the review.

8. We have just embarked on the review and aim to develop initial recommendations for consultation by the end of the year.

Civil Service Bureau
September 1997

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Annex

Situation Report on the Existing Systems of
Declaration of Investments

Declaration of Investments in Hong Kong

Civil Service Bureau (CSB) Circular No 6/95 was issued in March 1995 promulgating new rules on the declaration of investments in Hong Kong by civil servants. The new declaration and reporting arrangements were introduced in response to public concerns that civil servants should be subject to a disclosure scheme in order to minimise opportunities for them to gain financially from information obtained in the course of duties.

2. Posts with access to market sensitive information are designated as Tier I posts and the officers concerned are required to declare their investments in Hong Kong on appointment to post and annually thereafter, and to report within seven days each investment transaction involving a value equivalent to HK$200,000 or three months�salary whichever is the less.

3. Other posts are designated as Tier II posts and the officers concerned are required to report their investments on appointment and when their investments are likely to give rise to potential conflicts of interest. Around 1,500 directorate officers in Tier II posts are required to report their investments once every two years.

4. As at September 1997, 707 posts are designated as Tier I posts and the incumbents are to declare their investments in Hong Kong annually.

Declaration of Investments outside Hong Kong

5. CSB Circular No 4/96 was issued in January 1996 to remind civil servants of the importance of existing Civil Service Regulations concerning conflict of interest; investments; outside work; and activities that might bring the Government service into disrepute.

6. The circular asked Bureau Secretaries and Heads of Department to consider, in the light of their operational needs, requiring individual officers in designated posts where a potential conflict of interest may arise between their official duties and their private investments to declare such investments in places outside Hong Kong which are relevant to or related to the duties of their posts. It also asked Bureau Secretaries and Heads of Department to consider, where necessary, issuing internal guidelines and introducing additional requirements for declaration of investment in respect of specific posts having regard to the duties of these posts. These arrangements were introduced in response to public concerns that some civil servants may be involved in business undertakings in places outside Hong Kong, and that the performance of their official duties might be compromised

by such investments or economic activities. 7. So far some 422 posts have been designated for declaration of investments in places outside Hong Kong. In addition to regularly circulating the relevant CSB circulars and guidelines to staff, Heads of Department, when required, issue internal directions or instructions for staff compliance.

Civil Service Bureau
September 1997