LegCo Paper No. HB 383/95-96
(These minutes have been seen by the Administration)
Ref : HB/C/2/95

Minutes of the third meeting of the Bills Committee to study
the Prevention of Bribery (Miscellaneous Provisions)(No.2) Bill 1995

held on Friday, 1 December 1995 at 8:30a.m.
in Conference Room B of the Legislative Council Building

Members Present :

    Hon James TO Kun-sun (Chairman)
    Hon Mrs Selina CHOW, OBE, JP (Deputy Chairman)
    Hon Eric LI Ka-cheung, JP
    Hon Zachary WONG Wai-yin
    Hon CHAN Yuen-han
    Hon CHEUNG Hon-chung
    Hon Albert HO Chun-yan
    Hon Ambrose LAU Hon chuen, JP

Absent with apologies :

    Hon Christine LOH Kung-wai *
    Hon Andrew CHENG Kar-foo *
    Hon Lawrence YUM Sin-ling #

By invitation :

Deputy Solicitor General, Attorney General’s Chambers (AGC)
Senior Assistant Law Draftsman, AGC
Commissioner, Independent Commission Against Corruption (ICAC)
Mr J E Buckle
Head of Operations, ICAC
Mr LI Ming-chak
Assistant Director/Operations, ICAC
Principal Investigator, ICAC
Miss Vivian SUM
Acting Principal Assistant Secretary for the Treasury (Revenue),
Finance Branch
Deputy Commissioner of Inland Revenue, Inland Revenue Department

Staff In attendance :

Mr Jonathan DAW
Legal Adviser
Mrs Betty LEUNG
Clerk to the Bills Committee
Chief Assistant Secretary (Bills Committees) 3
Miss Flora TAI
Senior Assistant Secretary (Bills Committees) 3


Resignation of Hon Emily LAU

Members noted that Hon Emily LAU had tendered her resignation of membership from the Bills Committee on 29 November 1995.

Written submissions received from organisations listed in Appendix 2 of the Report of the ICAC Review Committee

2. The updated summary table, the 10 new submissions and the Chinese translation of the 15 submissions previously received were tabled at the meeting for reference of Members and representatives of the Attorney General’s Chambers (AGC) and Independent Commission Against Corruption (ICAC) (subsequently issued to Members not present vide LegCo Paper No. HB260/95-96).

Meeting with representatives of the Administration and the Independent Commissioner Against Corruption

3. The Chairman welcomed representatives of the Administration and the ICAC. The Chairman invited views from the Finance Branch and Inland Revenue Department (IRD) on the provision of the Bill which allowed ICAC to apply to court for access to tax records in the possession of the Commissioner of Inland Revenue. Miss Vivian SUM explained that whilst the Finance Branch maintained that tax confidentiality should be upheld to encourage frank disclosure, the provision would be supported in the light that tax records might need to be disclosed in a circumscribed way for the sake of fighting crime. Mr A K GILL also confirmed that the IRD would not be opposed to the introduction of the provision. In this regard, Mr B E D de SPEVILLE pointed out that the ICAC was effectively barred from gaining access to tax records by section 4 of the Inland Revenue Ordinance (IRO) and the Commission agreed with the view of the ICAC Review Committee that power of ICAC should be expanded to the IRD in order to investigate allegation of corruption.

4. Members raised a number of questions in relation to the need to allow ICAC access to tax records under proposed section 13A. Representatives of the Administration and the ICAC responded accordingly. The deliberations are summarised in the following paragraphs.

Integrity of tax records

5. Mr Eric LI expressed grave concern, on behalf of the tax practitioners, that parties other than the IRD were getting access to tax records, first under the Drug Trafficking (Recovery of Proceeds) Ordinance (DTO), then the Organised and Serious Crimes Ordinance (OSCO), and now the Prevention of Bribery Bill, and possibly the forthcoming Inland Revenue (Amendment) (No. 3) Bill 1995 (which involved bilateral double taxation relief arrangements with other jurisdictions). He was worried that such move would undermine tax confidentiality and would infringe on the right of tax-payers.

6. Mr Eric LI asked and Mr GILL advised that the frequency of requests for access to tax records under the provisions of the DTO was about once a week and that for the OSCO was lower. Mr GILL would provide Members with the detailed information after the meeting.

The Adm

7. Mr Albert HO and Mrs Selina CHOW requested the Administration to provide justifications for tempering the integrity of tax records. Mr ALLCOCK said that the nature of corruption offences was unique and different from other offences such as drug trafficking, and that it would be important to establish one’s assets in order to prove a corruption offence had been committed. Mr J E BUCKLE supplemented that the power would be essential for the ICAC to investigate corruption offences related to IRD.

Threshold for invocation

8. Mr ALLCOCK remarked that the proposed section 13A could only be exercised with the approval of the High Court. The threshold for invocation was very high, namely, (a) reasonable grounds for suspecting that an offence had been committed; (b) reasonable grounds for believing that the material was relevant to the investigation and proceedings; and (c) reasonable grounds for believing that it would be in the public interest. Mr Ambrose LAU supported the view that there were sufficient safeguards under section 13A(2), particularly in subsection (2)(c) which required the High Court to be satisfied that the order was in the public interest.

9. Mrs Selina CHOW however held a different view and pointed out that (a) it did not require a lot of evidence to suspect someone; (b) "public interest" could be interpreted very widely; and (c) an investigating officer of ICAC, not just the Commissioner, could make an application. In this regard, Mr de SPEVILLE remarked that the High Court was entrusted to perform the balancing act and to determine whether the threshold for invocation was met. He added that it was inconceivable for an investigating officer to make an application without the authorisation of his senior officer. In this connection, the Legal Adviser pointed out that whilst only the Attorney General (AG) could make an application under section 3 (Requirement to furnish information or produce material) of the OSCO, the AG or an authorised officer could make an application under section 4 (Order to make material available) and "an authorised officer" meant any police officer or any member of the Customs and Excise Service Ordinance. At the request of Mr Eric LI, the Administration agreed to stipulate clearly in legislation that an investigating officer would need to have the consent of the Commissioner or Deputy Commissioner in order to make an application for access to tax records.

The Adm

Restricted disclosure of information obtained under section 13A

10. Mr ALLCOCK assured Members that the proposed section would not prejudice ordinary tax payers not related to corruption offences. He referred Members’ attention to the proposed section 13B which read :

"under or by virtue of section 13A, that information may be disclosed by the Commissioner or an investigating officer to the AG for the purpose of any proceedings relating to or any prosecution of an offence under this Ordinance but may not otherwise be disclosed."

11. Mr Eric LI requested the Attorney General to spell out the restriction in his speech when the Bill resumed Second Reading debate at the LegCo sitting.

The Adm

12. To address Members’ concern that a blanket order under section 13A (2) would be given, Mr ALLCOCK said that there was a limitation provision in subsection (6) by which an order under subsection (2) should only be made where an application under subsection (1) in relation to particular material was not reasonably practicable.

Usefulness of tax records as evidence

13. The Chairman queried the accuracy of tax records which might, in reality, be negotiated agreements between the taxpayers and IRD. Mr GILL admitted that it was necessary to make compromises in the daily operation of tax assessment. Yet he emphasised that any compromise made by an individual officer would be subject to monitoring within the IRD. Mr Eric LI remarked that there might be a case for the Commissioner to employ professional accountants within the definition of the Professional Accountants’ Ordinance.

14. Mrs Selina CHOW asked how the ICAC could use the tax records as a proof of corruption if the tax records were results of compromises. Mr BUCKLE explained that tax records would be produced as an exhibit in the court, together with other information, if the AGC advised that there was sufficient evidence to prove an offence. Mr ALLCOCK added that the main issue was to ensure a proper control in exercising the power to have access to tax records, and the Bill had already built in such provisions. Mr LI reiterated the need for strict internal guidelines within the ICAC on such application.

Necessity for ICAC to have access to tax records for non-IRD related cases

15. The Chairman asked how access to tax records would be essential for investigation of corruption offences not related to IRD. Mr LI Ming-chak provided an example in which a Crown servant was suspected of committing an offence under section 10 of the Prevention of Bribery Ordinance for possession of property above his earning power. The Crown servant explained that the money came from a relative who owned a number of profitable companies. Access to tax records would enable the ICAC to establish the financial profiles of the relative, which would be relevant and beneficial to the investigation, and might well substantially shorten the time and decrease public expense of inquiries.

16. The Chairman requested, and Members agreed, that ICAC should provide further examples to justify the full necessity for access to IRD tax records for non-IRD related cases. Mr LI also requested the Administration to put down in writing what powers given to the ICAC under the provisions of the PBO and the ICAC Ordinance to collect and acquire financial information were lacking in comparison with those given to the IRD under the provisions of the Inland Revenue Ordinance.

The Adm

Date of next meeting

17. The next meeting would be held on Monday, 11 December 1995 at 2:30 p.m..

18. The meeting ended at 10:35 a.m..

LegCo Secretariat
27 December 1995

* -- Other Commitments
# -- Out of Town

Last Updated on 23 Apr, 1997