This year marks the 10th anniversary of the Hong Kong Special Administrative Region. Prior to the handover, some punters put their bet on the demise of Hong Kong, as one international magazine so proclaimed "Hong Kong is dead" and, as we all know, they lost badly.

Today, Hong Kong is as vibrant as before the handover, having successfully battled through the Asian financial turmoil, the avian flu scare, the SARS epidemic outbreak, and a painful economic re-structuring. People of Hong Kong have emerged from the series of crises much stronger, more resilient, and better equipped to face the challenges ahead.

Hong Kong remains the freest economy in the world, rated as such by the Heritage Foundation in 2007 for the 13th year in a row, underscored by the rule of law, absence of trade barrier, a low and simple tax regime, an efficient civil service and a low level of corruption.

Indeed, Transparency International, the non-government anti-corruption watchdog, ranked Hong Kong the 15th least corrupt place among 163 territories in 2006, putting us in the same league as the United Kingdom, Canada, and Germany. Back in 1997, Hong Kong ranked 18th among 52 territories.

While Hong Kong enjoys such reputation, it is easy to forget that more than 30 years ago, the city was rampant with corruption and people, though disgruntled, accepted corruption as a way of life. The establishment of the Independent Commission Against Corruption in 1974 was a landmark event that made a difference to Hong Kong.

We owe the success of the ICAC to the vision of the then Governor, Lord MacLehose, and Sir Jack Cater, the founding Commissioner. Until this day, the "three-pronged" approach which complements law enforcement with corruption prevention and education, is still hailed as the international best practice.

Speaking at Interpol Conference in 2003, the Secretary General praised Hong Kong as "the anti-corruption capital of the world and the ICAC as "the No 1 anti-corruption agency".

The World Bank commended the ICAC for "a comprehensive approach towards corruption that addresses not only misconduct by public officials and bribery by private companies, but also fraud and corruption in the context of purely private transactions".

This is a very distinctive feature of the ICAC since it was established.

Today, there is no sign of revival of syndicated corruption which was once common in Hong Kong. Over the past 10 years, the ICAC received an average of 3,500 corruption reports, with ups and downs oscillating in an opposite direction as the economic cycle.

In 2006, the ICAC received about 3,300 corruption reports, of which 73% were non-anonymous. This is an indication of public confidence in the ICAC. About 8% of the reports ended up in prosecution and conviction reached a record high of 88%. The rest were either non-pursuable, or unfounded, or had to be dropped for lack of evidence. You will appreciate that corruption is a secretive crime with collusion between consenting parties.

Over the past 10 years, we have seen a shift in corruption reports from the public to the private sector. Whereas about 50% of the corruption reports in 1997 concerned the private sector, this increased to 61% in 2006. Building management and renovation made up 40% of the private-sector corruption reports. The finance and insurance sector, catering and entertainment sector and the construction industry together made up another 21%. 

In contrast, the number of corruption reports against government departments dropped to around 1,000 last year, the lowest since 1997. The Police, in particular, have made great strides in cleaning up the force by upgrading the qualification of police officers, improving their salaries and vigorously enforcing the codes of conduct. Police corruption reports dropped significantly from over 40% of the total corruption reports in the 1970s to 9% in 2006.

We have good reasons to believe that the growing number of private-sector corruption reports is a reflection of reduced tolerance, hence increased reporting. ICAC's annual surveys on public attitude towards corruption showed that, on a scale of 10, with zero being completely intolerant, the level of tolerance towards business-sector corruption dropped from 2.1 in 2001, when the question was first asked, to 1.6 in 2005.

This change of attitude is attributable to over 10 years of work in promoting ethical leadership among businesses in Hong Kong through ICAC's Ethics Development Centre. Six major business chambers are involved in setting standards of ethical practices, promulgating codes of conduct for various trades and professions, such as banking, insurance and accountants; and providing training for human-esource managers.

We also partner with the regulators including the Hong Kong Monetary Authority, Securities & Futures Commission, the Office of the Commissioner of Insurance, the Estate Agent Authority, as well as professional bodies such as the Hong Kong Institute of Certified Public Accountants to promote best practices in different trades and industries. Together with the SFC, for example, the ICAC has conducted talks for Mainland companies planning to be listed in Hong Kong.

The private-sector initiative of the ICAC has won the support of the World Bank, which observes that "having a government agency directly involved in the dissemination of business ethics is quite exceptional worldwide and reflects the very strong policy of prevention implemented in Hong Kong".

With an illustrious track record and well-established systems, you may think that being the Commissioner of the ICAC is an easy job. I should like to think so, but unfortunately the world is not static and success is after all a relative measure. Looking to the future, the ICAC faces new challenges, and with challenges there are opportunities.

Globalisation presents a challenge. As the world economy becomes more globalised, corruption activities also traverse across sovereign boundaries. This calls for more international cooperation in law enforcement.

In February last year, China ratified the United Nations Convention Against Corruption, the first global and most comprehensive legal instrument on anti-corruption. The Convention automatically applies to Hong Kong and the ICAC was designated as the agency in China to provide technical assistance to other state parties.

To cope with the impact of globalisation, the ICAC has established two specialised units on financial investigation and computer forensics. We also maintain an effective global network of overseas anti-corruption agencies to exchange experience, enhance the professional development of staff and foster closer cooperation in investigation of transnational crimes. To date, Hong Kong, has signed 21 mutual legal assistance agreements and 16 extradition agreements.

A few years ago, we mounted a simultaneous joint operation with the UK Metropolitan Police to smash an international counterfeit credit card syndicate operating in both jurisdictions. More recently, the ICAC exposed a case of bribery involving a Principal Official in Macao through suspicious transactions reported by a Hong Kong bank. These cases illustrate the cross-jurisdictional nature of corruption activities in modern times, and the importance of international cooperation in fighting corruption.

China's accession to the World Trade Organization has opened up a huge market for investors. Today, the sage would say, "a company could hardly have a growth strategy without a China strategy". People venturing into the China market will have to get to grip with the Chinese laws and bureaucracy in order to survive and succeed.

With a long tradition of doing business in China and deep cultural links, Hong Kong is well-positioned to support foreign investors in setting up their business in the Mainland, getting to know the Chinese laws and manoeuvring within the bureaucracy.

The ICAC has produced cross-boundary business guidebooks to help business executives familiarise themselves with the anti-corruption laws in the Mainland to avoid inadvertent offences. We also assist businesses in strengthening the internal audit systems in their Mainland operations and conducting staff-integrity training.

For new arrivals from the Mainland, the ICAC also offers briefings on the anti-corruption laws in Hong Kong to highlight the differences between Hong Kong and Mainland anti-corruption laws and practices.

For example, in Chinese laws, corruption and bribery are different offences. Corruption also covers embezzlement, stealing and misconduct in public office. In Hong Kong, the ICAC is obliged to investigate every pursuable corruption report, irrespective of the amount of money involved. In the Mainland, anti-bribery laws primarily target public officials and cases are taken to court only if the amount of bribe exceeds the prescribed amount.

As cross-boundary activities increase in volume, the ICAC will step up corruption-prevention education among people of Hong Kong doing business on the Mainland, and new arrivals in Hong Kong from the Mainland.

Corruption is very much a social and political issue. Where there are people, there is corruption. No region or nation, developed or developing, can claim purity. The fight against corruption requires a holistic integrity system, underpinned by the core values of honesty, fairness and the rule of law, and sustained efforts to internalise these values through education.

The ICAC maintains close contact with a broad range of community and district organisations, including schools and universities, to raise awareness of corruption opportunities, and to enlist public support in averting and reporting corruption.

We fully recognise that the accomplice to corruption is indifference. Annual public-opinion surveys have consistently shown that 99% of the population support the work of ICAC; 68% are willing to report corruption in all circumstances, and another 24% depending on circumstances.  This notwithstanding, we have to continue the community and preventive education to keep the lid on, lest corruption should revive.

Hong Kong has come a long way in the battle against corruption and can be justly proud of its achievements. The Hong Kong story shows that anti-corruption requires a systemic approach involving both structural and cultural changes, and the concerted efforts of the entire Government and the community.

The rule of law, a level playing field, freedom of speech, an active civil society, a sound education system, an independent judiciary, and effective watchdog institutions are the pillars of Hong Kong's integrity system. The ICAC will continue to play the role of the guardian of justice and a champion of ethical practices, and protect Hong Kong's hard-earned reputation of the "anti-corruption capital of the world".

ICAC Commissioner Fanny Law gave this addtress at a Hong Kong Association Luncheon in London.