DCCC153/2010 HKSAR v. IP KIN MAN AND ANOTHER - LawHero
DCCC153/2010
區域法院（刑事）HH Judge Johnny Chan24/11/2013
DCCC153/2010
A A
B DCCC 153/2010 B
C C
IN THE DISTRICT COURT OF THE
D HONG KONG SPECIAL ADMINISTRATIVE REGION D
CRIMINAL CASE NO 153 OF 2010
E E
F ---------------------- F
HKSAR
G G
v
H IP Kin-man (D3) H
LO Wah (D5)
I I
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J J
Before: HH Judge Johnny Chan
K K
Date: 25 November 2013 at 9.30 am
L L
Present: Mr R. G. TURNBULL, Counsel on fiat, leading Ms Sabra LO,
M
Senior Public Prosecutor (Ag), for HKSAR M
Mr Joe CHAN, instructed by Lui & Law, for the 3rd and 5th
N N
defendants
O Offence: (1) to (11) Conspiracy to defraud (串謀詐騙) O
(12) to (13) Dealing with property known or reasonably
P P
believed to represent proceeds of an indictable
Q offence ( 處 理 已 知 道 或 合 理 相 信 為 代 表 從 Q
可公訴罪行的得益的財產)
R R
S S
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T REASONS FOR VERDICT T
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U U
V V
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A A
B B
Introduction
C C
D 1. This case concerns 11 charges of “Conspiracy to Defraud” D
(Charges 1 to 11) and 2 of “Dealing with Proceeds”.
E E
F 2. Charges 1 to 11 each concerns one letter of credit (1st to 11th F
LC). It is the Prosecution case that the defendants concerned, D1 to D3 for
G G
Charges 1 to 10 and D1, D4 and D5 for Charge 11, conspired in Hong
H Kong to defraud the issuing bank of the LC concerned by the application H
for the issue of the LC and the falsification of documents required for the
I I
negotiation of the LC and of causing payment to be made to the
J beneficiary under the LC pursuant to such negotiation when there was no J
genuine underlying commercial transaction relating to the LC concerned.
K K
L L
3. Charges 12 and 13 concern the dealings with the proceeds of
M
the LC fraud by the defendants involved, D2 and D3 for Charge 12 and D4 M
and D5 for Charge 13.
N N
O
The Pleas O
P P
4. D1 pleaded guilty to Charges 1 to 11 and admitted the facts
Q pertaining to those charges. Q
R R
5. The Prosecution offered no evidence against D2 in relation to
S all charges against her; hence all charges against D2, ie Charges 1 to 10 S
and Charge 12 were dismissed against D2.
T T
U U
V V
-3-
A A
B 6. D4 pleaded guilty to Charge 11 and admitted the facts B
pertaining to those charges. The Prosecution offered no evidence against
C C
D4 on Charge 13; Charge 13 was dismissed against D4.
D D
7. D3 and D5 pleaded not guilty to all charges laid against them.
E E
F 8. This trial concerns:- F
G (i) 10 charges of “Conspiracy to Defraud” (Charge 1 to 10) G
and 1 charge of “Dealing with Proceeds” (Charge 12)
H H
against D3; and
I I
(ii) 1 charge of “Conspiracy to Defraud” (Charge 11) and 1
J J
charge of “Dealing of Proceeds” (Charge 13) against
K D5. K
L L
The Particulars of Offence
M M
9. Charges 1 to 11 are similarly worded, each charge alleges that
N N
the defendants concerned, during the periods or on the dates pleaded, in
O Hong Kong conspired together to defraud the bank as particularized, by O
P
dishonestly:- P
(i) Causing and permitting application to be made to the
Q Q
issuing bank concerned for the issue of a LC in favour
R of the beneficiary company under the LC involved; R
S S
T T
U U
V V
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A A
B (ii) Causing and permitting the falsification of B
documentation required for the negotiation of the said
C C
LC;
D D
(iii) Causing and permitting payment to be made to the
E E
beneficiary company pursuant to the negotiation of the
F
LC; F
where there was no underlying commercial transaction relating to the said
G G
LC.
H H
I
10. Wing Fai Construction Company Limited (“Wing Fai”) was I
the applicant company for all 11 LCs.
J J
K
11. Famous Capital Enterprises Limited (“Famous Capital”) was K
st th
the beneficiary under the 1 to 10 LC.
L L
M 12. King Capital Engineering Limited (“King Capital”) was the M
beneficiary under the 11th LC.
N N
O 13. It is the Prosecution case that D3 worked in the Accounts O
Department of Wing Fai at the relevant period.
P P
Q 14. D3 was a director of Famous Capital during 2000, 2001 and Q
2002.
R R
S 15. D5 was a member of the Senior Management Staff of China S
Rich Holdings Limited (“China Rich Holdings”), according to the Annual
T T
U U
V V
-5-
A A
B Report of China Rich Holdings; Wing Fai was a subsidiary company of B
China Rich Holdings.
C C
D 16. D5 was a director and shareholder of King Capital, he was D
also an authorized signatory of King Capital’s current account with DBS
E E
Kwong On Bank.
F F
The Admitted Facts
G G
H 17. The document titled “Admitted Facts” sets out those facts that H
are admitted between the Prosecution, D3 and D5 pursuant to s 65C of the
I I
Criminal Procedure Ordinance.
J J
18. The admitted facts deal with matters relating to:-
K K
L L
1. The companies involved in this case, namely:-
M (i) China Rich Holdings; M
N (ii) Benefit Holdings International Limited N
(“Benefit Holdings”);
O O
(iii) Wing Fai;
P P
(iv) Sino Glister International Investment Limited
Q Q
(“Sino Glister”);
R R
(v) Famous Capital;
S S
(vi) Fitzroya Finance Company Limited
T (“Fitzroya”); T
U U
V V
-6-
A A
B (vii) GreaterChinaherbs.com Ltd B
(“GreaterChinbaherbs.com”);
C C
(viii) Asia Land Offshore Limited (“Asia Land”); and
D D
(ix) Ivy Fund Limited (“Ivy Fund”).
E E
F 2. The bank accounts of Wing Fai with:- F
G G
(i) DBS Kwong On Bank Limited (now DBS Bank
H (Hong Kong) Limited); H
I (ii) The Kwangtung Provincial Bank (now Bank of I
China (Hong Kong) Limited);
J J
(iii) The Hong Kong Chinese Bank, Limited (now
K K
CITIC Bank International Limited); and
L L
(iv) Standard Chartered Bank.
M M
3. The bank accounts of Famous Capital with Chekiang
N N
First Bank (now Wing Hang Bank).
O O
4. The bank account of King Capital with DBS Kwong
P P
On Bank Limited.
Q Q
5. The bank accounts of Fitzroya with:-
R R
S (i) DBS Kwong On Bank Limited; and S
T (ii) The Kwangtung Provincial Bank. T
U U
V V
-7-
A A
B 6. The bank accounts of GreaterChinaherbs.com with:- B
C (i) DBS Kwong On Bank; and C
D (ii) Standard Chartered Bank. D
E E
7. The bank account of Asia Land with DBS Kwong On
F F
Bank Limited.
G G
8. The bank account of Ivy Fund with Standard Chartered
H H
Bank.
I I
9. The report of the matter to the police in 2004 by David
J J
John Kennedy, a liquidator for Wing Fai.
K K
10. The arrest of the defendants in 2008.
L L
M 11. The clear criminal records of D3 and D5 in Hong M
Kong.
N N
O 12. Matters related to the 1st LC to the 11th LC, the O
respective subject matters of Charge 1 to Charge 11.
P P
Annex 1 contains a summary of the 11 LCs.
Q Q
13. Famous Capital was the beneficiary under the1st to the
R R
th
10 LC. For these 10 LCs, D3 signed the Application
S for Bills of Collection or Negotiation for each of them S
on behalf of Famous Capital.
T T
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A A
B 14. King Capital was the beneficiary under the 11th LC. B
D4’s signature appears on the Original Commercial
C C
Invoice issued by King Capital to Wing Fai for the
D alleged subject goods of the 11th LC. D
E 15. The amounts owed to the issuing banks and payments E
made thereunder were settled by debiting those
F F
amounts to the overdraft facility at Wing Fai’s account
G with the banks (except the 9th LC which was not G
debited from an overdraft facility). The details of the
H H
bank accounts and dates of settlement are summarized
I in tabulated form in paragraph 33 of the Admitted I
Facts.
J J
K 16. The overdrafts of the bank accounts (which included K
amounts not related to the charges) were later settled
L L
between 6 May 2002 and 17 May 2002.
M M
17. The fund flow relevant to the 1st to the 11th LC as set
N N
out in paragraphs 38 to 49 of the Admitted Facts.
O O
P
18. The corporate documents of Wing Fai, Famous Capital, P
King Capital, Fitzroya, Asia Land,
Q Q
GreaterChinaherbs.com, Sino Glister and China Rich
R
Holdings Limited are produced pursuant to the R
Companies Ordinance, Cap 32.
S S
T T
U U
V V
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A A
B 19. Banker’s affirmations and computer-produced B
documents are produced pursuant to section 20 and
C C
22A (5) of the Evidence Ordinance, Cap 8.
D D
19. With the aforesaid Admitted Facts and the evidence produced
E E
under the Evidence Ordinance, the Prosecution called a total of 8 witnesses
F to testify. They are:- F
G G
(i) PW1 – Ms Ip Ngai Man, former clerk of the Accounts
H Department of Wing Fai; H
I I
(ii) PW2 – Mr Lo Sek Chiu, former director of Wing Fai;
J J
(iii) PW3 – Mr Lai Kam Kwong, Sales Manager of
K K
Anderson Asphalt Limited;
L L
M
(iv) PW4 – Mr Lam Chuen Kee of the Inland Revenue M
Department;
N N
O
(v) PW5 – Mr Chim Kam Fai, the Assistant General O
Manager of Wing Fai at the material time;
P P
Q (vi) PW6 – Mr Ip Kwok Leung, an Engineer with the Q
Drainage Services Department at the material time;
R R
S (vii) PW7 – PC52290, who found and seized some S
corporate documents, cheque books and chops related
T T
U U
V V
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A A
B to Famous Capital, King Capital and Ivy Fund in a B
room at the residence of D3 on 14 May 2008; and
C C
D (viii) PW8 – Mr Chiu Chi Kai Walker of the Inland Revenue D
Department.
E E
F F
20. After Mr Turnbull closed the case for the Prosecution,
G Mr Chan made a submission of no case in relation to Charge 11, after G
hearing submissions from Mr Chan and Mr Turnbull, I ruled that D3 and
H H
D5 each had a case to answer on all the respective charges against them.
I I
21. Both D3 and D5 elected to give evidence. No defence
J J
witness was called.
K K
22. The Prosecution’s written closing contains a summary of the
L L
evidence of the live witnesses, subject to a few corrections pointed out by
M Mr Chan. M
N N
23. The Prosecution case, in a nutshell, is that for each of the
O “Conspiracy to Defraud” charge, the defendants concerned conspired O
P
together to defraud the issuing bank by applying for the issuing of a LC P
and collecting payment under the LC when the underlying transaction did
Q Q
not even exist.
R R
24. The Prosecution says the 11 underlying transactions were all
S S
fictitious and D3 and D5, both employees of Wing Fai, were made
T directors of Famous Capital and King Capital respectively. T
U U
V V
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A A
B 25. As said, Wing Fai was the applicant for all 11 LCs, Famous B
Capital was the beneficiary under the 1st to the 10th LC whereas King
C C
Capital was the beneficiary under the 11th LC.
D D
26. The Prosecution says the 11 underlying transactions were
E E
fictitious because:-
F F
(i) The absence of important details in the invoices;
G G
H (ii) That Mr Lo and Mr Chim of Wing Fai had never heard H
of Famous Capital and King Capital;
I I
J (iii) That the directors of Famous Capital (D3 and D2) and J
King Capital (D4 and D5) were all related to China
K K
Rich one way or the other:-
L L
M
• D3 and D4 were employees of Wing Fai; M
N N
• D5 was mentioned in China Rich’s Annual Report
O 2002 as a project manager in charge of PRC O
projects;
P P
Q • D2 is the daughter of D1; Q
R R
• D3 and D2 were trusted with the bank accounts of
S Famous Capital (Paragraph 18 of the Admitted S
Facts) whereas D4 and D5 were trusted with the
T T
U U
V V
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A A
B bank account of King Capital (Paragraph 19 of the B
Admitted Facts).
C C
D (iv) Both Famous Capital and King Capital were not on the D
list of the authorized suppliers kept by the Drainage
E E
Services Department;
F F
(v) The fund flow of the proceeds of the 11 LCs; and
G G
H (vi) The records from the Inland Revenue Department. H
I I
27. The 2 counts of dealing with the proceeds of an indictable
J offence concern “the receipt and movement of funds obtained by third J
parties (companies and individuals) as a result of the fraudulent LC
K K
transactions”, said Mr Turnbull in paragraph 4 of the Prosecution’s
L L
closing.
M M
28. The Defence says there is a possibility that some of the
N N
construction materials under the 11 LCs had been delivered to China for
O
the PRC projects undertaken by China Rich Properties, a subsidiary of O
China Rich Holdings; it is also possible that some of the materials had
P P
been delivered to the construction sites undertaken by Wing Fai in Hong
Q Kong. As Mr Chan put it, the Defence does not have a positive case that Q
the materials had in fact been delivered to China for use by China Rich
R R
Properties or to the sites undertaken by Wing Fai in Hong Kong, the
S Defence says all possibilities exist and the Defence puts the Prosecution to S
strict proof on these matters.
T T
U U
V V
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A A
B 29. The thrust of the defence for D3 and D5 is that all along they B
trusted their employer. D3 and D5 were asked to become directors of
C C
Famous Capital and King Capital respectively and they saw nothing
D unusual in it. All along, D3 was told Famous Capital was a subsidiary of D
China Rich Holdings; D5 was told King Capital was a subsidiary of China
E E
Rich Holdings. Both D3 and D5 believed in what they were told.
F F
30. In the case of D3, she says she did not understand much
G G
English and all the paperwork in relation to the 10 LCs of Famous Capital
H had been prepared by others before she was called upon to sign. All along H
she trusted China Rich as it was a listed company. She was told Famous
I I
Capital was involved in the purchase of construction materials.
J J
31. For the cheques signed by D3, D3’s case is that before she
K K
signed the cheques in question, she would look at the attached vouchers to
L L
make sure that approval had been given. She could not read the contents of
M
the description columns of the vouchers as they were in English. M
N N
32. For ease of reference, the relevant cheques can be found in
O
the Cheques Bundle. For cheque no. 3 payable to Fitzroya, cheque no. 9 to O
Wing Fai, cheque no. 11 payable to GreaterChinaherbs.com and cheque no.
P P
28 payable to Ivy Fund, D3 thought they were reallocation of funds within
Q China Rich Holdings. Q
R R
33. For cheque no.1 payable to Pacific Challenge Securities and
S cheque no. 2 payable to Christfund Securities, they were issued for the S
purchase of shares of China Rich Holdings by D3 on behalf of a Mainland
T T
contractor who did works for China Rich Properties in Shungde, China.
U U
V V
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A A
B With the consent of Mr Yip Kwong, monies payable to the contractor were B
paid to the securities firms instead.
C C
D 34. For 2 cash cheques, cheque no. 6 and 24, they were issued and D
given to D3 to reimburse D3 for the money that D3 had advanced on the
E E
contractor’s behalf in the purchase of shares of China Rich Holdings.
F F
35. For cheque no. 4 payable to a Godfrey Mak, a colleague of
G G
D3, cheque no. 5 payable to BOCI Securities, cheque no. 7 payable to
H Leung Siu Wah, cheque no. 26 payable to Wu Chia Ling and cheque no. 27 H
payable to Morgan Stanley, D3 did not know the reason for the issuing of
I I
these cheques, she says the reasons should be apparent on the payment
J vouchers. J
K K
36. In the case of D5, he had received tertiary education in the
L L
United States. He was asked to become a director of King Capital. He was
M
told the setting up of King Capital was for the purpose of helping the M
sub-subcontractors of Wing Fai who had difficulties in paying for the
N N
construction materials. As in the case of D3, D5 all along trusted China
O
Rich Holdings. He agreed to become a director of King Capital and a O
signatory to its bank account as he believed it was only a normal and
P P
necessary procedure for the company to operate.
Q Q
37. D5 was not involved in the daily operation of King Capital,
R R
he would be asked to sign documents of King Capital from time to time.
S S
38. For cheque no. 29, a cheque in the sum of $3.5million, D5
T T
says when he signed the cheque, there was a piece of paper attached to the
U U
V V
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A A
B cheque giving an explanation that the cheque was about dealing with the B
shortage of funds of contractors/sub-contractors of Wing Fai.
C C
D DISCUSSION D
E E
General Matters
F F
39. I have considered all the evidence and submissions. As said,
G G
Mr Turnbull and Ms Lo have already summarized the evidence of live
H witnesses in the Prosecution’s closing, subject to some corrections by H
Mr Chan. The fact that I have not dealt with each and every piece of
I I
evidence does not mean the same has escaped my attention; I say the same
J about the matters raised in the submissions made by counsel. J
K K
40. I have borne in mind it is for the Prosecution to prove beyond
L L
reasonable doubts all the elements of the offences under complaint.
M M
41. I give myself a full Berrada direction on propensity and
N N
credibility as D3 and D5 each has a clear criminal record.
O O
Evidence of Live Witnesses
P P
Q PW1 Ip Ngai Man Q
R R
42. PW1’s evidence that D3 was one of her colleagues in Wing
S Fai is consistent with paragraph 10 of the Admitted facts and hence S
credible and reliable.
T T
U U
V V
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A A
B 43. PW1 identified D3’s signature on the collection B
documentation and Famous Capital’s invoices. In my judgment, PW1’s
C C
identification of D3’s signatures is credible and reliable. It is an admitted
D fact that D3 signed the collection documentation. D3, in her evidence, D
admits the signatures on Famous Capital’s invoices are hers.
E E
F 44. I accept PW1’s evidence that the 11 LCs, the subject of the F
charges, were prepared by PW1 with hand-written information supplied to
G G
her by D1. The applications were then given to D1 and Kam Shing to sign.
H I accept PW1’s evidence the way the 11 LC applications were prepared H
was not in accordance with the normal procedure. The normal procedure
I I
for making applications for LCs was that PW1 would receive documents,
J invoices from her colleagues in the Accounts Department; for the LCs in J
favour of Famous Capital and King Capital, PW1 received hand –written
K K
information from D1, the Financial Controller.
L L
M
45. I accept also the evidence of PW1 that after receipt of the M
invoices she would prepare the Trust Receipts for the banks relating to the
N N
LCs. The Trust Receipts would then be given to D1 and Kam Shing for
O
signing before they were sent to the banks. O
P P
46. It should be noted that when D3 was cross-examined about
Q the contact person for Famous Capital, ie “Ye” in the collection orders, D3 Q
said PW1 is also surnamed Ip. In as much as PW1 shares the same
R R
surname “Ip” with D3, it has never been put/suggested to PW1 that she
S was the contact person for Famous Capital “Ye” in the collection orders or S
that PW1 worked for Famous Capital.
T T
U U
V V
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A A
B PW2 Mr Lo Sek Chiu B
C C
47. I find PW2’s evidence credible and reliable. He joined Wing
D Fai in December 1993 and by August 2001, he had been with Wing Fai for D
over 7 years. He was a director of Wing Fai at the material time. I accept
E E
PW2’s evidence that his duties involved looking after all the construction
F works, which included making tender, buying construction materials, site F
management and supervising progress at site.
G G
H 48. I accept PW2’s evidence that he was familiar with the 5 H
government projects undertaken by Wing Fai at the material time. PW2’s
I I
evidence on this subject is consistent with the evidence of Mr Chim
J (PW5). J
K K
49. I accept also PW2’s evidence on the subject of the suppliers
L L
of concrete mix, asphalt and steel bars. PW2 is able to provide the court
M
with the names of the suppliers of these materials engaged by Wing Fai at M
the time. His evidence is supported by the evidence of PW5. For the
N N
complaints made by Mr Chan about the witness statements of PW2, I
O
accept PW2’s explanation that when he gave his statement, his memory O
was still fresh and he gave his answers based on his recollection, not as
P P
Mr Chan suggested, PW2 just went along with the suggestion by the
Q police. Q
R R
50. I accept PW2’s explanation that he did not mention the
S identity of the asphalt suppliers in his 2 statements because the invoices S
shown to him were about concrete mix and steel bars; the police did not
T T
U U
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A A
B ask him about asphalt hence he did not mention the asphalt suppliers. B
Mr Lo’s explanation makes good sense to me.
C C
D 51. I accept Mr Lo’s evidence that at the material time in 2001 D
and 2002, apart from the 5 government projects, Wing Fai had only some
E E
small projects which were still active, but these small projects were
F basically completed and what remained were only some minor works. F
Mr Lo’s evidence in this regard is supported by Mr Chim.
G G
H 52. I accept Mr. Lo’s evidence that he had never heard of Famous H
Capital and King Capital and Wing Fai had never ordered concrete mix,
I I
steel bars and asphalt from these 2 companies. PW1’s evidence on this
J matter is supported by the evidence of Mr Chim, and to a lesser extent by J
the evidence of PW6, the Government Engineer. Given the uncontested
K K
evidence that suppliers of building materials for government projects had
L L
to be approved by the Government, it really defies common sense that if
M
Famous Capital and King Capital were amongst the authorized suppliers M
of building materials in Wing Fai’s projects, they would escape Mr Lo’s
N N
attention.
O O
53. It is clear from Mr Lo’s evidence that all the projects
P P
undertaken by Wing Fai were in Hong Kong, Wing Fai had no reason to
Q order building materials in Hong Kong and transport them to the Mainland. Q
China Rich Properties or other subsidiaries of China Rich might have
R R
construction projects on the Mainland which required the use of concrete
S mix, steel bars and asphalt but Wing Fai was not involved in these S
transactions and had no reason to apply for the LCs in question.
T T
U U
V V
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A A
B 54. Mr. Lo’s evidence about the technical or physical B
impossibility or impracticality of transporting concrete mix, asphalt and
C C
steel bars from Hong Kong to the Mainland makes a lot of good sense to
D me but the more important evidence of Mr Lo’s evidence is that all the D
projects of Wing Fai were projects in Hong Kong, government projects or
E E
otherwise. It has never been suggested to Mr Lo that Wing Fai had any
F construction projects on the Mainland, hence to some extent, Mr Lo’s F
evidence about the technical or physical impossibility or impracticality of
G G
transporting materials to the Mainland, is academic to a large extent.
H H
55. I am aware that Mr Lo did not mention it in his witness
I I
statements the absence of important details in the invoices of Famous
J Capital and King Capital, for the reason that the focus of the statements J
was whether Wing Fai had ordered materials from Famous Capital and
K K
King Capital, not the absence of important information that one would
L L
normally expect to see in an invoice from a supplier of Wing Fai. In my
M
judgment, the observations made by Mr. Lo are all valid. M
N N
56. I accept the evidence of Mr Lo that he had not heard of
O
situations that China Rich Holdings would purchase construction materials O
for its subsidiaries’ construction projects in Hong Kong. The procedure
P P
was the one as stated by Mr Lo in his evidence, ie Wing Fai would be the
Q purchaser of the construction materials; as for the suppliers, they had to be Q
approved by the government.
R R
S S
T T
U U
V V
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A A
B PW5 Mr Chim Kam Fai B
C C
57. Mr Chim’s evidence that D3 was not part of the Accounts
D Department of Wing Fai is not consistent with paragraph 10 of the D
Admitted Facts.
E E
F F
58. Mr Chim’s evidence about the suppliers to Wing Fai is
G consistent with the evidence of Mr Lo, the names of the government G
approved suppliers of concrete mix, asphalt and steel bars recited by
H H
Mr Chim are consistent with those mentioned by Mr Lo. I find Mr Chim’s
I evidence on the subject credible and reliable. I accept Mr Chim’s evidence I
that he had never placed any order in relation to the projects he handled on
J J
behalf of Wing Fai with Famous Capital and King Capital.
K K
59. I accept Mr Chim’s evidence that if Wing Fai ordered
L L
construction materials which were not approved by the government, those
M materials could not be used in the government projects undertaken by M
Wing Fai, hence Yip Kwong would definitely informed the site agents like
N N
Mr Chim and Mr Lo so that they could apply to the government for
O approval to use those materials. The evidence of Mr Chim not only makes O
P
good sense, it is also consistent with the evidence of Mr Lo. P
Q Q
60. Mr. Chan criticized Mr. Chim for failing to mention in his
R
statements that Pioneer and Ling Wui were suppliers of concrete mix to R
Wing Fai. I accept PW2’s explanation that due to mergers of companies
S S
he had not mentioned all the names though he knew them all.
T T
U U
V V
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A A
B 61. I accept Mr Chim’s evidence that the Mainland construction B
projects of China Rich were not projects of Wing Fai. There is no
C C
suggestion from the defence that Wing Fai had any construction project on
D the Mainland. D
E E
62. Whether China Rich Holdings or its subsidiaries had
F construction projects in China at the material time is one thing; whether F
Wing Fai had ordered construction materials for projects in China is a
G G
different matter. It seems to me PW5 is able to recollect clearly Wing Fai
H did not have any project in China and it had never ordered any construction H
materials from Famous Capital and King Capital.
I I
J 63. PW5’s evidence as to how Wing Fai chose its suppliers for J
government projects is consistent with the evidence given by Mr Lo: Yip
K K
Kwong did not have the final say completely, the management would
L L
make recommendations and Yip Kwong would listen to their views before
M
he made his final decision. Furthermore, the suppliers had to be approved M
by the government.
N N
O
64. Mr Chim was somewhat evasive when asked about the O
financial position of Wing Fai before it was taken over by Mr. Chim. He
P P
accepted with some reluctance that the financial position of Wing Fai was
Q not in good shape when Mr Chim took over in April 2002. It seems to me Q
Mr Chim was reluctant to admit Wing Fai was financially unsound as he
R R
still has a business stake in the company.
S S
T T
U U
V V
- 22 -
A A
B PW3 Mr Lai Kam Kwong B
C C
65. The evidence of Mr Lai is simple and straightforward. I
D accept Mr Lai’s evidence that he could not find any record, in paper or in D
electronic form, that Anderson Asphalt ever having done business with
E E
Famous Capital or King Capital. It should also be noted that Anderson
F Asphalt in the years 2000 to 2002 inclusive had not delivered any asphalt F
to the Mainland.
G G
H 66. I am aware that Anderson Asphalt was not the only asphalt H
supplier of Wing Fai.
I I
J PW6 Mr Ip Kwok Leung J
K K
67. I accept PW6’s evidence that contractor who undertook
L L
contracts from the Drainage Services Department had to use suppliers
M
approved by the government in writing. The records produced by PW6 M
(P20 to P32) show that Famous Capital and King Capital were not
N N
amongst the approved suppliers of construction materials in the contracts
O
of Wing Fai, as far as the Drainage Services Department was concerned. O
The records support the evidence of Mr Lo and Mr Chim that Famous
P P
Capital and King Capital had never been suppliers of Wing Fai.
Q Q
PW4 Mr Lam Chuen Kee
R R
S 68. Before Mr Lam took the witness stand, Mr Chan objected to S
Mr Lam’s evidence on the ground that according to section 4(3) of the
T T
Inland Revenue Ordinance, Cap 112, the return document in relation to
U U
V V
- 23 -
A A
B Famous Capital should not be produced in court. Mr Chan relied on B
section 4(3) only when he made his objection.
C C
D 69. I asked for written submissions and invited the parties to look D
carefully into the Organized and Serious Crimes Ordinance, Cap 455.
E E
F 70. At the resumed hearing, Mr Chan further drew my attention F
to section 3 and 4 of the OSCO. He submitted that despite section 3 and 4,
G G
the IRD return is still not admissible in court. I pointed out to Mr Chan that
H section 6 of the OSCO is relevant. After hearing submissions, I ruled that H
reading section 4(3) of the Inland Revenue Ordinance and sections 3, 4 and
I I
6 of the OSCO as a whole, the returns that the Prosecution sought to
J produce are clearly admissible pursuant to section 6 of the OSCO. Section J
6 clearly contemplates the obtaining of IRD information for the purpose of
K K
criminal prosecution; section 6 would be made nugatory if IRD
L L
information could only be obtained but not produced as evidence under a
M
production order. M
N N
71. The tax documents of Famous Capital are produced together
O
with the relevant Production Order. O
P P
PW8 Mr Chiu Chi Kai Walker
Q Q
72. Pursuant to a production order, PW8 of the IRD caused a
R R
search to be made of the IRD’s records to find any record of King Capital
S but none could be found. S
T T
U U
V V
- 24 -
A A
B PW7 PC52290 B
C C
73. PW7 gave his evidence in a straightforward manner. I have
D no difficulty in accepting his evidence as true and reliable. I accept PW7’s D
evidence that he searched D3’s residence in Mongkok on 14 May 2008.
E E
He found and seized 5 cheque books, ie a DBS cheque book of King
F Capital, a HSBC cheque book of Famous Capital, a Wing Hang Bank F
cheque book of Famous Capital, 2 Standard Chartered Bank cheque books
G G
of Ivy Fund, 2 company chops, one relating to Famous Capital and one
H relating to Ivy Fund, some company documents relating to Famous Capital H
and some corporate documents relating to Ivy Fund and a metal stamp for
I I
Ivy Fund. The aforesaid items were found in a paper box covered by a
J piece of plastic wrap in a room. J
K K
D3 Ms Ip Kin Man
L L
M
74. I have considered D3’s evidence carefully, bearing in mind M
the good character direction.
N N
O
The Admitted Facts O
P P
75. D3’s evidence that she was an employee of China Rich
Q Properties, a subsidiary of China Rich Holdings, is contradictory to Q
paragraph 10 of the Admitted Facts, which states that D3 worked in the
R R
Accounts Department of Wing Fai.
S S
T T
U U
V V
- 25 -
A A
B Why D3 was Chosen B
C C
76. I find it inherently improbable that D3, be she an employee at
D the Accounts Department of Wing Fai or as D3 testifies, an accounting D
clerk of China Rich Properties, would be asked to become a director of
E E
Famous Capital in the circumstances depicted by D3. From the evidence
F of D3, there was very little that D3 could contribute to Famous Capital, she F
did not know about the operation of Famous Capital, other than that the
G G
company was to buy construction materials for projects of China Rich.
H She was a junior employee of China Rich Holdings, be it Wing Fai or H
China Rich Properties. She had no expert knowledge in the field, she did
I I
not even know the English word for asphalt. If Famous Capital was set up
J for the bona fides purpose of purchase of construction materials for J
construction projects in China, it really defies common sense that someone
K K
like D3 would be asked to become a director.
L L
M
Unreasonable Explanation M
N N
77. In my judgement, all the aforesaid inherent improbabilities
O
must be known, and were known to D3 at the material time. I reject as O
unreasonable the explanation put forward by D3, ie she agreed to be a
P P
director because she trusted the company and if she did not agree she
Q might lose her job. It must be obvious to D3 that if Famous Capital was Q
set up for the purpose of buying construction materials for projects of
R R
China Rich Properties, the appropriate candidates for the company
S directorship must be those who had experience in construction projects S
and/or procurement of construction materials, not someone like D3 who
T T
professed to know nothing about the matter.
U U
V V
- 26 -
A A
B B
Vague Recollection of Important Details
C C
D 78. D3’s recollection of the circumstances under which she was D
asked to be a director of Famous Capital was vague and unreliable. She
E E
cannot recall who it was in the senior management who asked her to
F become a director of Famous Capital; she cannot even recall the gender of F
the asking party. D3 did not even ask why she was chosen.
G G
H Ignorance Claimed by D3 H
I I
79. D3 tried to portrait herself as a person who was ignorant
J about many matters; she was not clear about her duties as a director of J
Famous Capital; she signed the documents and cheques without
K K
questioning; for the cheques she signed, she would only look at the
L L
voucher to make sure that approval had been given by someone. She did
M
not read the contents of the documents as they were in English, yet she had M
never asked others in the company about the contents of the documents
N N
that she was asked to sign. I do not believe D3 would continue signing
O
documents contents of which she did not understand and cheques purposes O
for which she did not know.
P P
Q 80. When D3 was questioned about her signing of the IRD Q
documentation, she had to admit that she knew a person would be
R R
responsible for a document she signed.
S S
T T
U U
V V
- 27 -
A A
B Subsidiaries of China Rich Holdings B
C C
81. D3 fails to explain why she believed Famous Capital and Ivy
D Fund were subsidiaries of China Rich Holdings. D
E E
The Vouchers Accompanying the Cheques
F F
82. When asked about the reasons for issuing the cheques in
G G
question, D3 kept saying the reasons should be apparent in the payment
H vouchers that accompanied the cheques. Yet not one voucher was H
produced as evidence and we only have the evidence of D3 which is
I I
unsatisfactory on this issue, since according to D3, she did not read the
J reasons, she just looked at the approval. J
K K
The Purchase of Shares for Mr Cheung
L L
M 83. For the 2 cheques issued to Pacific Challenge Securities M
(cheque number 1) and Christfund Securities (cheque number 2) and the 2
N N
cash cheques (cheque number 6 and 24), D3 said they were all related to
O the shares that she purchased on Mr Cheung’s behalf, and it was done with O
P
the consent of the company, hence contract sums due to Mr Cheung were P
paid instead to the securities firms or in the form of cash cheques.
Q Q
R
84. I find D3’s account most convoluted and unreasonable. D3 R
has to concede that it would be much simpler for Mr Cheung to deal with
S S
Mr Ip Kwong directly. Furthermore, I see no reason why D3 would agree
T to purchase shares for Mr Cheung, someone who she knew just “average”, T
U U
V V
- 28 -
A A
B using her own word. As D3 says, she would not have lost her job even if B
she were to refuse to buy the shares for Mr Cheung.
C C
D 85. If cheque number 6 was issued to reimburse D3 for the money D
she had paid on Mr. Cheung’s behalf, I do not understand why a cash
E E
cheque was issued. I find D3’s explanation unconvincing.
F F
The Contact Person “Miss Ye” in the Collection Orders
G G
H 86. A Miss Ye was put forward as the contact person of Famous H
Capital. D3 agrees that the contact numbers on the collection orders
I I
signed by her was that of Famous Capital; she also agrees that Ye is the
J Mandarin spelling of Ip. D3 was quite evasive when asked if there could J
be another Miss Ip/Ye in Famous Capital. She even suggested PW1 is also
K K
surnamed Ip, hence PW1 might be the Miss Ye referred to in the collection
L
orders. During Mr Chan’s cross-examination of PW1, Mr Chan put to L
M
PW1 and she agreed she was the Miss Ip, ie the contact person of Wing Fai M
in all 11 LCs. In my judgement, it is inherently improbable that PW1
N N
would be made the contact person both for Wing Fai and Famous Capital.
O
No suggestion was put to PW1 that she was the contact person of Famous O
Capital.
P P
Q 87. D3 in her evidence says the telephone number in the Q
collection orders was one of the numbers in the office, it is obvious that the
R R
use of Miss Ip in the applications of Wing Fai and the use of Miss Ye in the
S collection orders was a measure to make sure that PW1 would be reached S
when there were queries for Wing Fai and D3 would be approached when
T T
there were questions for Famous Capital to answer.
U U
V V
- 29 -
A A
B B
88. D3 says if anyone from the bank called and made enquiry, she
C C
would pass the telephone enquiry to other colleagues of the Accounts
D Department, if Famous Capital and Wing Fai had different office D
addresses, as the documents show, I do not see how D3 could pass the
E E
telephone to her colleagues.
F F
89. In my judgement, D3 signed all the documents of Famous
G G
Capital at China Rich’s premises at Connaught Road West when the
H documents of Famous Capital state that its office was at Great Eagle H
Centre is consistent with the Prosecution case that the there was a
I I
concerted effort to deceive the bank into believing that the buying and
J selling party for the 1st to the 10th LC were unrelated entities. J
K K
Mandy Ip as the contact person in the IRD Document
L L
M
90. If D3 was ignorant about the affairs of Famous Capital, I do M
not understand why she would be put forward as the person to answer any
N N
queries from the IRD (Pg 2889 and 2890).
O O
The Seizures of Items Related to Famous Capital and Ivy Fund at D3’s
P P
Residence
Q Q
91. There is not a ring of truth in D3’s evidence that the items
R R
found and seized were left over by the company when her brother in law
S purchased the flat form a subsidiary of China Rich Holdings, it is too much S
of a co-incidence that cheque books in relation to Famous Capital and Ivy
T T
Fund were found inside the premises occupied by D3.
U U
V V
- 30 -
A A
B B
Evasive and Contradictory Evidence
C C
D 92. I find D3 an evasive witness. She was evasive on numerous D
occasions and was unwilling to give straightforward answers to simple
E E
questions. For example, when Mr Turnbull suggested to her that as one of
F the signatories of the bank account, D3 should know where the money F
came from, D3 said these were all company matters, she suggested to
G G
Mr Turnbull that he should go and ask D2. On another occasion, D3 said
H the question put to her should be answered by Yip Kwong. H
I I
93. Her evidence is also self-contradictory at times, for example,
J In the early part of Mr Turnbull’s cross-examination, she was asked if she J
was able to read the English words “junior secretary” in her employment
K K
letter when she was offered the job in 1993 (Exh D1), she answered “Yes”.
L
When she was later asked if she knew the English word “secretary” in the L
M
account opening document of Famous Capital with Chekiang First Bank, M
D3 answered “No”
N N
O
The Credibility and Reliability of D3’s Evidence O
P P
94. Despite the fact that D3 has a clear record, I find D3’s
Q evidence both unreliable and not credible. Q
R R
D5 Mr Lo Wah
S S
95. I have borne in mind D5’s clear criminal record when I assess
T T
his evidence.
U U
V V
- 31 -
A A
B B
How D5 was asked to become a director of King Capital
C C
D 96. D5’s recollection of the circumstances under which he was D
asked to be a director of King Capital was vague, he could only say it was
E E
a manager of the Accounts Department.
F F
97. D5 admits that he was not clear about the management
G G
matters of Wing Fai at the head office and he had no knowledge in the
H finance and accounting matters about Wing Fai and China Rich Holdings, H
his background was essentially interior design and he was new to
I I
construction works, there was no logical reason why D5, a foreman of
J Wing Fai at the time, would be asked to be a director of King Capital, J
which was represented to D5 as a subsidiary of Wing Fai, when in fact it
K K
was not.
L L
M
The Reason for the Setting Up of King Capital M
N N
98. D5 said the manager told him King Capital was established
O
because the shortage of funds problem suffered by the sub-contractors of O
Wing Fai often led to delay, suspension and even abandonment of works.
P P
King Capital was set up to help the sub-contractors to solve their problem
Q of shortage of funds. Q
R R
99. I do not see how the setting up of King Capital could help to
S ease the shortage of funds problem faced by the sub-contractors. Wing Fai S
ordered construction materials from the suppliers and contractually Wing
T T
Fai was the one who had to pay the suppliers for the construction materials
U U
V V
- 32 -
A A
B it ordered. Even if the sub-contractors had to pay for the construction B
materials used in the projects undertaken by Wing Fai, King Capital was
C C
not even on the list of government approved suppliers, I do not see how the
D setting up of King Capital could help the sub-contractors with the problem D
of shortage of funds in the acquisition of materials.
E E
F The Cheque of $3.5million F
G G
100. For the cheque of $3.5 million, the subject matter of Charge
H 13, D5 was asked, to his understanding, where the money came from. D5 H
said as King Capital was a subsidiary of China Rich Holdings, definitely it
I I
would be given funds to operate though he had no idea as to the details of
J the fund flow. If the money for the cheque came from China Rich J
Holdings, as D5 suggested, then there was no need to set up King Capital
K K
at all, China Rich Holdings could have simply advanced the sum to the
L L
sub-contractors.
M M
101. D5 said the purpose of the $3.5 million cheque to Ivy Fund
N N
was to solve the problem of funding, according to what was written on the
O
piece of paper that accompanied the cheque. But the facts remain: D5 did O
not know the company Ivy Fund at all; he would not know what Ivy Fund
P P
did and he did not know how Ivy Fund processed its fund flow.
Q Q
Matters Not Put to Witnesses
R R
S 102. If it is D5’s case that the shortage of funds problem on the S
part of the sub-contractors had led to delay, suspension in Wing Fai works,
T T
and even abandonment of works at the sites, these matters must be within
U U
V V
- 33 -
A A
B the knowledge of Mr Lo and Mr Chim. At no time did Mr Chan put these B
matters to the witnesses during Mr Chan’s cross-examination of Mr Lo
C C
and Mr Chim.
D D
Assessment of D5’s Evidence
E E
F 103. Despite the fact that D5 has a clear record, I find his evidence F
both unreliable and not credible.
G G
H FINDINGS H
I I
Conspiracy to Defraud
J J
Were Famous Capital and King Capital Suppliers of Wing Fai?
K K
L L
104. I accept the evidence of Mr Lo and Mr Chim that they had not
M
heard of Famous Capital and King Capital and these 2 companies had M
never supplied concrete mix, asphalt and steel bars to Wing Fai. Given
N N
Mr Lo and Mr Chim’s positions in Wing Fai and their experience with the
O
company, I am sure that they know who were among the suppliers of Wing O
Fai at the material time.
P P
Q 105. The IRDs’ records of Famous Capital and the absence of Q
record in relation to King Capital go some way to support Mr Lo and
R R
Mr Chim’s evidence that Wing Fai did not have any dealings with Famous
S Capital and King Capital. S
T T
U U
V V
- 34 -
A A
B 106. The records kept by the Drainage Services Department B
support Mr Lo and Mr Chim’s evidence that Famous Capital and King
C C
Capital were not Wing Fai’s suppliers for the projects of the Drainage
D Services Department. D
E E
107. I accept Mr Lo and Mr Chim’s evidence that Famous Capital
F and King Capital were not on the list of government approved suppliers. F
Wing Fai had no reason to order materials could not be used at its 5
G G
government projects. For the small works that remained at the material
H time. They would not require use of large amount of concrete mix, asphalt H
and steel bars.
I I
J 108. As Wing Fai did not have any construction project on the J
Mainland at the material time, it is impossible that Wing Fai would order
K K
the construction materials of the 11 LCs and transport them to the
L L
Mainland, the issue of technical feasibility apart.
M M
109. I find as a fact Famous Capital and King Capital were not,
N N
and had never been suppliers of construction materials to Wing Fai.
O O
Did the Underlying Transaction relating to the 11 LCs exist?
P P
Q 110. It follows from the preceding discussion that the underlying Q
transactions relating to the 11 LCs did not exist, in other words, the 11
R R
transactions were all bogus in nature.
S S
T T
U U
V V
- 35 -
A A
B Economic Loss/Risk of Economic Loss/Non-economic Loss B
C C
111. I do not agree with the Prosecution’s submissions that the
D issuing banks had suffered economic loss in that the banks had been D
deprived of the use of the funds which, but for the fraud, would have been
E E
available for use by the banks. Given the fact that all the 11 LCs had been
F settled and the banks had charged and received interest payment for the F
credit facilities used by Wing Fai, I do not think it can be said that the
G G
banks had suffered economic loss.
H H
112. I find that as the underlying transactions were bogus and the
I I
goods referred to in the 11 LCs did not exist, the economic interests of
J each of the issuing banks were put at risk. I accept as true the contents of J
the bankers’ affirmations that the banks would look to the goods, the
K K
subject of the LCs, in the first instance to secure repayment of the funds
L
advanced under the LCs. If the goods did not exist, the banks’ economic L
M
interests were put at risk in that they might not be able to secure total M
reimbursement of the funds owed to them.
N N
O
113. I appreciate that construction materials, like concrete mix, O
asphalt and steel bars, once used, cannot be seized by the issuing banks.
P P
The very nature of concrete mix, asphalt and steel bars makes the risk more
Q apparent and realistic in that, without the goods, the issuing banks could Q
only resort to collaterals put up by the applicant.
R R
S 114. I agree, therefore, with the Prosecution’s submissions that the S
fact that the banks suffered no loss does not mean that at the time the LCs
T T
were issued and payment made thereunder they were not at risk of
U U
V V
- 36 -
A A
B economic loss. The collaterals and guarantees put up by China Rich B
Holdings would only be as good as they were at the time of the
C C
enforcement. There was no guarantee that China Rich would remain in a
D sound financial position, after all we are concerned with risk of economic D
loss, not actual loss to the issuing banks. On the part of Wing Fai, the
E E
applicant of the LCs, its financial situation was not in good shape when it
F was sold in April 2002. In July 2002, a winding up petition was presented F
by its creditor.
G G
H 115. I find that each of the issuing banks had also suffered H
non-economic loss as a result of the fraud practiced on the banks; the
I I
banks’ rights had clearly been prejudiced. A state of affairs had been
J brought about as a result of which each of the issuing banks was deceived J
into acting to the prejudice of its rights. As a result of the fraudulent acts in
K K
the course of the application, negotiation and payment procedure in
L L
relation to each LC, the issuing bank concerned had acted to the prejudice
M
of its rights by the issue of the LC, the acceptance of the negotiation and M
the payment made thereunder. Had the true state of affairs been known to
N N
the issuing bank, it would not have issued the LC, accepted negotiation and
O
made payment under it when called upon to do so. O
P P
Dishonesty
Q Q
116. In my judgement, an agreement which involved:-
R R
S (i) Causing and permitting application to be made to a S
bank for the issue of a LC in favour of a company;
T T
U U
V V
- 37 -
A A
B (ii) Causing and permitting the falsification of B
documentation required for the negotiation of the said
C C
LC; and
D D
(iii) Casuing and permitting payment to be made to the
E E
aforesaid company pursuant to the negotiation of the
F said LC F
G G
where there was no underlying commercial transaction relating to the said
H LC, must be dishonest according to the two-stage test as set out in Ghosh. H
I I
Intent to Defraud
J J
117. In my judgement, a person who participated in an agreement
K K
to do the overt acts in the preceding paragraph with the knowledge that
L L
there was no underlying commercial transaction relating to the LC
M
intended to practice a fraud on the issuing bank in question, that person M
also intended to act to the prejudice of the rights of the issuing bank.
N N
O
Agreements to Defraud the Banks (Charges 1 to 11) O
P P
118. For the 11 LCs relating to Charges 1 to 11, a fraud had
Q successfully been practiced on the issuing bank concerned. In my Q
judgement, a fraud like the ones in this case could not be practiced
R R
single-handedly by a person. Each of the 11 LCs required the use of a
S beneficiary company, Famous Capital for Charges 1 to 10 and King S
Capital for Charge 11. Each fraud also required the use of an applicant
T T
company, ie Wing Fai for all 11 LCs in question. Each fraud, in order to
U U
V V
- 38 -
A A
B succeed, required participation by and co-operation between at least one B
person from Wing Fai, the applicant company, and one from the
C C
beneficiary company.
D D
119. I have no doubt that for each of the 11 fraudulent LC
E E
transactions, D1 was a participant, she caused applications be prepared by
F PW1 Miss Ip and she signed on Wing Fai’s documentation, eg the F
application forms and the trust receipts. I am sure that D1, as the Financial
G G
Controller and Deputy Chairman of China Rich Holdings, and one of its
H Executive Directors, was aware that the underlying transactions for all 11 H
LCs were all bogus in nature. From the evidence before me, I have no
I I
doubt that at the material times for Charges 1 to 11, D1 had participated in
J each of the 11 agreements to defraud the issuing banks and she remained in J
all the agreements throughout.
K K
L L
120. I am sure that the participant(s) from the beneficiary company
M
for each of the LCs, be it Famous Capital or King Capital, must be trusted M
with the knowledge that there was no transaction throughout. If the
N N
handler of the beneficiary company thought all along the transactions were
O
genuine, and handled the LC applications as if they were genuine, there O
was every chance that he or she might find out the true colors of the
P P
transactions and report the fraud to the police.
Q Q
121. I am sure that for each of the 11 LCs, it was a fraud
R R
committed by at least 2 persons, not by a lone fraudster.
S S
122. I am sure that for each of the fraud, there was an agreement to
T T
defraud the issuing bank in question
U U
V V
- 39 -
A A
B B
Was D3 a Party to Any Agreement to Defraud the Banks (Charges 1 to
C C
10)?
D D
123. The evidence of D3 reveals that she had contact with D1 after
E E
she joined Wing Fai. D3 says she was employed by China Rich Properties
F but paragraph 10 of the Admitted Facts states that she worked in the F
Accounts Department of Wing Fai. D3 admits D1 had given her
G G
instructions in the past.
H H
124. D3 was a director of Famous Capital and a signatory to
I I
Famous Capital’s bank account. D2, the daughter of D1, was also a
J director of Famous Capital and a signatory to Famous Capital’s bank J
account.
K K
L L
125. D3 could sign singly on the bank account. She signed a total
M
of 28 cheques of Famous Capital relevant to Charges 1 to 10. M
N N
126. In respect of the 1st to the 10th LC, the Application for Bills of
O
Collection or Negotiation for each of them was signed by D3 on behalf of O
Famous Capital. D3 also signed the invoices on behalf of Famous Capital.
P P
Q 127. I reject D3’s claim that she did not understand the contents Q
and nature of the documents she signed. I agree with the Prosecution’s
R R
submissions at paragraph 87(d) of its closing submissions that “If she did
S not have such knowledge it could be possibly disastrous for the S
co-conspirators if an honest person was unknowingly participating in the
T T
scheme may discover the criminal activity half way through. This may
U U
V V
- 40 -
A A
B cause the scheme to unravel and result in matters being reported to the B
authorities…”
C C
D 128. I agree with the Prosecution’s submissions that it would be D
inconceivable for D3 to be put forward as the person to whom the IRD
E E
should make enquiries if they so wished concerning the matters of Famous
F Capital if D3 was ignorant about the affairs of Famous Capital, as she F
sought to portrait in her evidence.
G G
H 129. In my judgement, D3 was the contact person “Miss Ye” in the H
collection forms. D3 was the only person in Famous Capital with the
I I
surname “Ip”. “Ye” is the Mandarin word for “Ip”. In my judgement, a
J Miss “Ye” was put forward as the contact person in the collection forms J
because PW1 Miss Ip Ngai Man was made the contact person for Wing Fai
K K
in the LC applications; For the purpose of diverting any enquiry telephone
L L
call to the right person and not to cause any suspicion, it was necessary to
M
differentiate between the two contact persons, ie PW1 for Wing Fai and M
D3 for Famous Capital, hence, the use of “Miss Ye” for Famous Capital.
N N
For the correspondence between the IRD and Famous Capital, there was
O
no need to differentiate between the Ips, therefore the name of Mandy Ip O
was used.
P P
Q 130. Looking at the fund flow set out in paragraphs 34 to 48 of the Q
Admitted Facts, one can see that some of the proceeds were used to pay for
R R
the purchase of the shares of China Rich Holdings by D3, a person named
S Wong Hon Wah and D1(paragraphs 19 and 46 of the Admitted Facts). S
T T
U U
V V
- 41 -
A A
B 131. Godfrey Mak, one of the payees, was one of the two B
authorized signatories to GreaterChinaherbs.com’s bank account with
C C
Standard Chartered Bank. D1 was the other authorized signatory (D1 and
D D3 were authorized signatories to GreaterChinaherbs.com’s bank account D
with DBS Kwong On Bank).
E E
F 132. For Ivy Fund, one of the payees, D2 was a director of Swift F
Finance Limited, which was the sole director of Ivy Fund. D2 was also the
G G
sole authorized signatory of Ivy Fund’s bank account. After the cheque in
H the sum of $1.9 million to Ivy Fund was deposited into its account, D2 H
signed a cheque in the sum of $1.4 million in favour of Asia Land. From
I I
paragraphs 14 and 22 of the Admitted Facts, one can see that D1 was a
J director of Asia Land and an authorized signatory of Asia Land’s bank J
account.
K K
L
133. Two cash cheques were deposited into D3’s bank account L
M
with Hang Seng Bank (Paragraphs 39 and 46 of the Admitted Facts). M
N N
134. 9 cheques were issued in favour of Wing Fai. Famous Capital,
O
the seller, was paying money back to Wing Fai, the buyer of the O
construction materials.
P P
Q 135. 4 cheques were issued to Fitzroya, a wholly owned subsidiary Q
of China Rich Holdings. D1 was one of the two directors of Fitzroya. D1
R R
and D3 were the authorized signatories of Fitzroya’s current account with
S DBS Kwong On Bank. D2 was also one of the authorized signatories of S
Fitzroya’s accounts with the Kwangtung Provincial Bank.
T T
U U
V V
- 42 -
A A
B 136. From the evidence, I find that:- B
C C
(i) the proceeds of some of the cheques were channeled to
D the securities accounts of D1 and that of D3; D
E E
(ii) 2 cash cheques were deposited into D3’s bank account
F with Hang Seng Bank; and F
G G
(iii) some of the proceeds of the LCs transactions were
H channeled to subsidiaries of China Rich Holdings by H
cheques signed by D3.
I I
J 137. The use of the proceeds of the LCs to pay for shares J
purchased in D1 and D3’s name shows that they were acting in concert.
K K
D3 had benefited financially from her participation in the fraudulent
L L
scheme.
M M
138. In my judgement, D3 who signed all the cheques in question,
N N
had to know why the cheques were issued and the use of the funds.
O O
139. The fact that cheque books, documents and chops of Famous
P P
Capital and Ivy Fund were found in the residence of D3 supports the
Q Prosecution case that D3 was a party to each of the conspiracies to defraud Q
the issuing banks in relation to Charges 1 to 10. D3 was not only trusted
R R
with the important task of signing the collection documents and invoices
S for the LC transactions, she was also trusted with the documents and chops S
of Famous Capital and Ivy Fund.
T T
U U
V V
- 43 -
A A
B 140. The only inference I can draw from the evidence is that D3 B
was a trusted employee of China Rich Holdings, and she was so trusted by
C C
D1 that she could be relied upon to carry out instructions concerning the
D LCs under which Famous Capital was the beneficiary. D
E E
141. I further draw the only irresistible inference that she had
F knowledge why Famous Capital had been established and what she was F
required to do in relation to Famous Capital. She knew that the underlying
G G
st th
transactions for the 1 to the 10 LC did not exist. She was not an innocent
H agent used by other fraudsters. She participated in the falsification of H
documentation, ie invoices of Famous Capital, used in the negotiation of
I I
process. She also caused and permitted payments to be made under the
J LCs by submitting the collection orders to the banks. All along D3 was not J
in the dark, instead, she was in the know.
K K
L L
142. I find it proved that D3 was a party to an agreement with D1
M and D2 to defraud the issuing banks as specified in Charges 1 to 10. M
N N
Dealing with Proceeds of an Indictable Offence (Charge 12 against D3)
O O
P
143. It is an admitted fact that the 28 cheques of Famous Capital P
referred to in paragraphs 39 to 47 of the Admitted Facts were all signed by
Q Q
D3.
R R
144. The Admitted Facts show that the aforesaid 28 cheques
S S
moved the proceeds of the negotiation of the 1st to the 10th LC from the
T current account of Famous Capital to the accounts of the various payees, T
saved for some cash cheques.
U U
V V
- 44 -
A A
B B
145. In my findings, D3 had dealt with the proceeds of the
C C
negotiation of the 1st to the 10th LC.
D D
146. I find that the proceeds of the negotiation of the 1st to the 10th
E E
LC were proceeds of an indictable offence (I am aware that the sum total
F of the 28 cheques signed by D3 includes proceeds of some LCs which F
were not made subject matter of any LCs charged).
G G
H 147. Given my findings that D3 was a party in the conspiracies to H
defraud the issuing banks for the 1st to the 10th LC, D3 had dealt with the
I I
proceeds of an indictable offence with knowledge.
J J
Was D5 a Party to an Agreement to Defraud Standard Chartered Bank
K K
(Charge 11)?
L L
M
148. The Prosecution concedes in its closing submissions that M
there is no evidence that D5 was involved in either (i) causing and
N N
permitting the making of the application for the 11th LC or (ii) causing and
O
permitting the falsification of documentation required for the negotiation O
of the 11th LC.
P P
Q 149. The Prosecution relies on the fact that D5 was a director of Q
King Capital, the beneficiary under the 11th LC and that he was one of the
R R
2 joint signatories to the bank account of King Capital. The Prosecution
S argues that D5 can be held responsible for causing and permitting payment S
be made to King Capital pursuant to the negotiation of the 11th LC.
T T
U U
V V
- 45 -
A A
B 150. In my judgement, there is insufficient evidence to prove that B
D5 knew that King Capital was involved in any LC application or that
C C
King Capital was a beneficiary under any LC. There is insufficient
D evidence to prove that D5 knew that the $3,508,739.97 that went into the D
bank account of King Capital was the proceeds of the negotiation of the
E E
th
11 LC. There is insufficient evidence to prove that D5 knew that the
F money in the bank account of King Capital was proceeds of a LC. F
G G
151. Bearing in mind the high burden of proof that the Prosecution
H has to discharge, on the evidence before me, I cannot be sure that D5 was a H
party to an agreement to defraud Standard Chartered Bank.
I I
J J
Dealing with Proceeds of an Indictable Offence (Charge 13 against D5)
K K
L L
152. As I cannot be sure that D5 had taken part in a conspiracy in
M
relation to the 11th LC, on Charge 13, it cannot be proved that D5 had M
knowledge that the property he dealt with, ie the cheque in the sum of $3.5
N N
million, represented proceeds of an indictable offence. The Prosecution,
O
in order to succeed, must prove that D5 had reasonable grounds to believe O
the property was criminal proceeds.
P P
Q Dealing With Property Q
R R
153. I have no difficulty in accepting that D5 had dealt with the
S property in question; it was D5 who signed the cheque in question which S
moved $3.5 million from King Capital’s bank account to that of Ivy Fund.
T T
U U
V V
- 46 -
A A
B Proceeds of Indictable Offence B
C C
154. I further find that the underlying transaction for the 11th LC
D did not exist and the transaction was a bogus one. From the evidence of D
Mr Lo and Mr Chiu, I am sure that King Capital had never supplied
E E
construction materials to Wing Fai.
F F
155. I accept the evidence of Mr Lo and Mr Chim that Wing Fai
G G
had no construction projects on the Mainland hence it had no reason to
H order construction materials and transport them to the Mainland. It is clear H
from the evidence that King Capital was not on the list of government
I I
approved suppliers, so Wing Fai had no reason at all to order construction
J materials from King Capital, knowing the same could not be used in the J
government projects in Hong Kong. For the other unfinished small
K K
projects of Wing Fai, they did not call for purchase of large quantities of
L L
concrete mix, asphalt and steel bars for these small projects had basically
M
been completed, subject only to some minor works. The fact that no M
record of King Capital could be found in the records of the IRD supports
N N
the finding that King Capital had not carried on any business.
O O
156. From the evidence before me, I have no difficulty in finding
P P
that there was an agreement between D1 and D4 to defraud Standard
Q Chartered Bank and the $3.5 million was proceeds that flew from the Q
negotiation of the 11th LC.
R R
S S
T T
U U
V V
- 47 -
A A
B Facts and Objective Factual Circumstances known to D5 B
C C
157. I find that the following facts and circumstances were known
D to D5 at the material time:- D
E E
(a) D5 was asked, and he agreed to become a director of
F King Capital; F
G G
(b) D5 was told that King Capital was set up to solve the
H shortage of funds problem faced by Wing Fai’s H
sub-contractors. When the sub-contractors did not
I I
have money to buy materials, King Capital would
J order the materials and pay for them on their behalf. J
When the job was completed, the money advanced
K K
would be deducted from the contract sum due to the
L L
sub-contractors;
M M
(c) D4 was the other director of King Capital, she worked
N N
in the Accounts Department of Wing Fai, a subsidiary
O
of China Rich Holdings; O
P P
(d) At that time, D5 was a foreman of Wing Fai;
Q Q
(e) D5, a relatively low ranking employee with little
R R
experience in drainage construction, was asked to
S become a director of King Capital; S
T T
U U
V V
- 48 -
A A
B (f) D4 and D5 became the joint signatories to King B
Capital’s bank account;
C C
D (g) There was no logical reason why D5 was chosen to be D
a director and a signatory of the bank account;
E E
F (h) D5, as a director of King Capital, did not have to F
concern himself with the business and administration
G G
of King Capital. He would only be asked to sign
H documentation and cheques at the head office of Wing H
Fai;
I I
J (i) The cheque of $3.5 million, the subject matter of J
Charge 13, was signed by D5; and
K K
L L
(j) D5 also signed some other cheques of King Capital.
M M
The Objective Element
N N
O 158. Processing the aforesaid facts and objective factual O
P
circumstances to the mind of a commonsense right-thinking member of the P
community, in my judgement, this person possessed of the aforesaid facts
Q Q
and objective factual circumstances, objectively would consider them
R
sufficient to lead a person to believe that the cheque in the sum of $3.5 R
million constitutes the proceeds of an indictable offence.
S S
T 159. I agree with the Prosecution’s analysis that one of the T
possibilities that would have crossed the mind of a right-thinking member
U U
V V
- 49 -
A A
B of the community is that the setting up of King Capital in the B
circumstances, be it a subsidiary of China Rich Holdings or otherwise,
C C
involving the appointment of relatively low ranking staff members of
D Wing Fai to become directors with signing rights to bank accounts to solve D
money problems may involve illegal activity.
E E
F 160. D5 emphasized in his evidence that he trusted China Rich F
Holdings as it was a listed company. In my judgement, when China Rich
G G
Holdings embarked on the aforesaid course, D5 must have detected the
H anomaly. It must have crossed the mind of D5 that, the company which he H
acted as a director and one of the signatory to its bank account, was
I I
involving in some criminal activities, hence a puppet like D5 was used to
J fill the directorship and perform the task of cheque-signing. J
K K
L L
Conclusion
M M
161. For the reasons given, I find D3 guilty of Charges 1 to 10 and
N N
12.
O O
162. I find D5 not guilty of Charge 11 but guilty of Charge 13.
P P
Q Q
R R
S ( Johnny JH Chan ) S
District Judge
T T
U U
V V
A A
B DCCC 153/2010 B
C C
IN THE DISTRICT COURT OF THE
D HONG KONG SPECIAL ADMINISTRATIVE REGION D
CRIMINAL CASE NO 153 OF 2010
E E
F ---------------------- F
HKSAR
G G
v
H IP Kin-man (D3) H
LO Wah (D5)
I I
-----------------------
J J
Before: HH Judge Johnny Chan
K K
Date: 25 November 2013 at 9.30 am
L L
Present: Mr R. G. TURNBULL, Counsel on fiat, leading Ms Sabra LO,
M
Senior Public Prosecutor (Ag), for HKSAR M
Mr Joe CHAN, instructed by Lui & Law, for the 3rd and 5th
N N
defendants
O Offence: (1) to (11) Conspiracy to defraud (串謀詐騙) O
(12) to (13) Dealing with property known or reasonably
P P
believed to represent proceeds of an indictable
Q offence ( 處 理 已 知 道 或 合 理 相 信 為 代 表 從 Q
可公訴罪行的得益的財產)
R R
S S
----------------------------------
T REASONS FOR VERDICT T
----------------------------------
U U
V V
-2-
A A
B B
Introduction
C C
D 1. This case concerns 11 charges of “Conspiracy to Defraud” D
(Charges 1 to 11) and 2 of “Dealing with Proceeds”.
E E
F 2. Charges 1 to 11 each concerns one letter of credit (1st to 11th F
LC). It is the Prosecution case that the defendants concerned, D1 to D3 for
G G
Charges 1 to 10 and D1, D4 and D5 for Charge 11, conspired in Hong
H Kong to defraud the issuing bank of the LC concerned by the application H
for the issue of the LC and the falsification of documents required for the
I I
negotiation of the LC and of causing payment to be made to the
J beneficiary under the LC pursuant to such negotiation when there was no J
genuine underlying commercial transaction relating to the LC concerned.
K K
L L
3. Charges 12 and 13 concern the dealings with the proceeds of
M
the LC fraud by the defendants involved, D2 and D3 for Charge 12 and D4 M
and D5 for Charge 13.
N N
O
The Pleas O
P P
4. D1 pleaded guilty to Charges 1 to 11 and admitted the facts
Q pertaining to those charges. Q
R R
5. The Prosecution offered no evidence against D2 in relation to
S all charges against her; hence all charges against D2, ie Charges 1 to 10 S
and Charge 12 were dismissed against D2.
T T
U U
V V
-3-
A A
B 6. D4 pleaded guilty to Charge 11 and admitted the facts B
pertaining to those charges. The Prosecution offered no evidence against
C C
D4 on Charge 13; Charge 13 was dismissed against D4.
D D
7. D3 and D5 pleaded not guilty to all charges laid against them.
E E
F 8. This trial concerns:- F
G (i) 10 charges of “Conspiracy to Defraud” (Charge 1 to 10) G
and 1 charge of “Dealing with Proceeds” (Charge 12)
H H
against D3; and
I I
(ii) 1 charge of “Conspiracy to Defraud” (Charge 11) and 1
J J
charge of “Dealing of Proceeds” (Charge 13) against
K D5. K
L L
The Particulars of Offence
M M
9. Charges 1 to 11 are similarly worded, each charge alleges that
N N
the defendants concerned, during the periods or on the dates pleaded, in
O Hong Kong conspired together to defraud the bank as particularized, by O
P
dishonestly:- P
(i) Causing and permitting application to be made to the
Q Q
issuing bank concerned for the issue of a LC in favour
R of the beneficiary company under the LC involved; R
S S
T T
U U
V V
-4-
A A
B (ii) Causing and permitting the falsification of B
documentation required for the negotiation of the said
C C
LC;
D D
(iii) Causing and permitting payment to be made to the
E E
beneficiary company pursuant to the negotiation of the
F
LC; F
where there was no underlying commercial transaction relating to the said
G G
LC.
H H
I
10. Wing Fai Construction Company Limited (“Wing Fai”) was I
the applicant company for all 11 LCs.
J J
K
11. Famous Capital Enterprises Limited (“Famous Capital”) was K
st th
the beneficiary under the 1 to 10 LC.
L L
M 12. King Capital Engineering Limited (“King Capital”) was the M
beneficiary under the 11th LC.
N N
O 13. It is the Prosecution case that D3 worked in the Accounts O
Department of Wing Fai at the relevant period.
P P
Q 14. D3 was a director of Famous Capital during 2000, 2001 and Q
2002.
R R
S 15. D5 was a member of the Senior Management Staff of China S
Rich Holdings Limited (“China Rich Holdings”), according to the Annual
T T
U U
V V
-5-
A A
B Report of China Rich Holdings; Wing Fai was a subsidiary company of B
China Rich Holdings.
C C
D 16. D5 was a director and shareholder of King Capital, he was D
also an authorized signatory of King Capital’s current account with DBS
E E
Kwong On Bank.
F F
The Admitted Facts
G G
H 17. The document titled “Admitted Facts” sets out those facts that H
are admitted between the Prosecution, D3 and D5 pursuant to s 65C of the
I I
Criminal Procedure Ordinance.
J J
18. The admitted facts deal with matters relating to:-
K K
L L
1. The companies involved in this case, namely:-
M (i) China Rich Holdings; M
N (ii) Benefit Holdings International Limited N
(“Benefit Holdings”);
O O
(iii) Wing Fai;
P P
(iv) Sino Glister International Investment Limited
Q Q
(“Sino Glister”);
R R
(v) Famous Capital;
S S
(vi) Fitzroya Finance Company Limited
T (“Fitzroya”); T
U U
V V
-6-
A A
B (vii) GreaterChinaherbs.com Ltd B
(“GreaterChinbaherbs.com”);
C C
(viii) Asia Land Offshore Limited (“Asia Land”); and
D D
(ix) Ivy Fund Limited (“Ivy Fund”).
E E
F 2. The bank accounts of Wing Fai with:- F
G G
(i) DBS Kwong On Bank Limited (now DBS Bank
H (Hong Kong) Limited); H
I (ii) The Kwangtung Provincial Bank (now Bank of I
China (Hong Kong) Limited);
J J
(iii) The Hong Kong Chinese Bank, Limited (now
K K
CITIC Bank International Limited); and
L L
(iv) Standard Chartered Bank.
M M
3. The bank accounts of Famous Capital with Chekiang
N N
First Bank (now Wing Hang Bank).
O O
4. The bank account of King Capital with DBS Kwong
P P
On Bank Limited.
Q Q
5. The bank accounts of Fitzroya with:-
R R
S (i) DBS Kwong On Bank Limited; and S
T (ii) The Kwangtung Provincial Bank. T
U U
V V
-7-
A A
B 6. The bank accounts of GreaterChinaherbs.com with:- B
C (i) DBS Kwong On Bank; and C
D (ii) Standard Chartered Bank. D
E E
7. The bank account of Asia Land with DBS Kwong On
F F
Bank Limited.
G G
8. The bank account of Ivy Fund with Standard Chartered
H H
Bank.
I I
9. The report of the matter to the police in 2004 by David
J J
John Kennedy, a liquidator for Wing Fai.
K K
10. The arrest of the defendants in 2008.
L L
M 11. The clear criminal records of D3 and D5 in Hong M
Kong.
N N
O 12. Matters related to the 1st LC to the 11th LC, the O
respective subject matters of Charge 1 to Charge 11.
P P
Annex 1 contains a summary of the 11 LCs.
Q Q
13. Famous Capital was the beneficiary under the1st to the
R R
th
10 LC. For these 10 LCs, D3 signed the Application
S for Bills of Collection or Negotiation for each of them S
on behalf of Famous Capital.
T T
U U
V V
-8-
A A
B 14. King Capital was the beneficiary under the 11th LC. B
D4’s signature appears on the Original Commercial
C C
Invoice issued by King Capital to Wing Fai for the
D alleged subject goods of the 11th LC. D
E 15. The amounts owed to the issuing banks and payments E
made thereunder were settled by debiting those
F F
amounts to the overdraft facility at Wing Fai’s account
G with the banks (except the 9th LC which was not G
debited from an overdraft facility). The details of the
H H
bank accounts and dates of settlement are summarized
I in tabulated form in paragraph 33 of the Admitted I
Facts.
J J
K 16. The overdrafts of the bank accounts (which included K
amounts not related to the charges) were later settled
L L
between 6 May 2002 and 17 May 2002.
M M
17. The fund flow relevant to the 1st to the 11th LC as set
N N
out in paragraphs 38 to 49 of the Admitted Facts.
O O
P
18. The corporate documents of Wing Fai, Famous Capital, P
King Capital, Fitzroya, Asia Land,
Q Q
GreaterChinaherbs.com, Sino Glister and China Rich
R
Holdings Limited are produced pursuant to the R
Companies Ordinance, Cap 32.
S S
T T
U U
V V
-9-
A A
B 19. Banker’s affirmations and computer-produced B
documents are produced pursuant to section 20 and
C C
22A (5) of the Evidence Ordinance, Cap 8.
D D
19. With the aforesaid Admitted Facts and the evidence produced
E E
under the Evidence Ordinance, the Prosecution called a total of 8 witnesses
F to testify. They are:- F
G G
(i) PW1 – Ms Ip Ngai Man, former clerk of the Accounts
H Department of Wing Fai; H
I I
(ii) PW2 – Mr Lo Sek Chiu, former director of Wing Fai;
J J
(iii) PW3 – Mr Lai Kam Kwong, Sales Manager of
K K
Anderson Asphalt Limited;
L L
M
(iv) PW4 – Mr Lam Chuen Kee of the Inland Revenue M
Department;
N N
O
(v) PW5 – Mr Chim Kam Fai, the Assistant General O
Manager of Wing Fai at the material time;
P P
Q (vi) PW6 – Mr Ip Kwok Leung, an Engineer with the Q
Drainage Services Department at the material time;
R R
S (vii) PW7 – PC52290, who found and seized some S
corporate documents, cheque books and chops related
T T
U U
V V
- 10 -
A A
B to Famous Capital, King Capital and Ivy Fund in a B
room at the residence of D3 on 14 May 2008; and
C C
D (viii) PW8 – Mr Chiu Chi Kai Walker of the Inland Revenue D
Department.
E E
F F
20. After Mr Turnbull closed the case for the Prosecution,
G Mr Chan made a submission of no case in relation to Charge 11, after G
hearing submissions from Mr Chan and Mr Turnbull, I ruled that D3 and
H H
D5 each had a case to answer on all the respective charges against them.
I I
21. Both D3 and D5 elected to give evidence. No defence
J J
witness was called.
K K
22. The Prosecution’s written closing contains a summary of the
L L
evidence of the live witnesses, subject to a few corrections pointed out by
M Mr Chan. M
N N
23. The Prosecution case, in a nutshell, is that for each of the
O “Conspiracy to Defraud” charge, the defendants concerned conspired O
P
together to defraud the issuing bank by applying for the issuing of a LC P
and collecting payment under the LC when the underlying transaction did
Q Q
not even exist.
R R
24. The Prosecution says the 11 underlying transactions were all
S S
fictitious and D3 and D5, both employees of Wing Fai, were made
T directors of Famous Capital and King Capital respectively. T
U U
V V
- 11 -
A A
B 25. As said, Wing Fai was the applicant for all 11 LCs, Famous B
Capital was the beneficiary under the 1st to the 10th LC whereas King
C C
Capital was the beneficiary under the 11th LC.
D D
26. The Prosecution says the 11 underlying transactions were
E E
fictitious because:-
F F
(i) The absence of important details in the invoices;
G G
H (ii) That Mr Lo and Mr Chim of Wing Fai had never heard H
of Famous Capital and King Capital;
I I
J (iii) That the directors of Famous Capital (D3 and D2) and J
King Capital (D4 and D5) were all related to China
K K
Rich one way or the other:-
L L
M
• D3 and D4 were employees of Wing Fai; M
N N
• D5 was mentioned in China Rich’s Annual Report
O 2002 as a project manager in charge of PRC O
projects;
P P
Q • D2 is the daughter of D1; Q
R R
• D3 and D2 were trusted with the bank accounts of
S Famous Capital (Paragraph 18 of the Admitted S
Facts) whereas D4 and D5 were trusted with the
T T
U U
V V
- 12 -
A A
B bank account of King Capital (Paragraph 19 of the B
Admitted Facts).
C C
D (iv) Both Famous Capital and King Capital were not on the D
list of the authorized suppliers kept by the Drainage
E E
Services Department;
F F
(v) The fund flow of the proceeds of the 11 LCs; and
G G
H (vi) The records from the Inland Revenue Department. H
I I
27. The 2 counts of dealing with the proceeds of an indictable
J offence concern “the receipt and movement of funds obtained by third J
parties (companies and individuals) as a result of the fraudulent LC
K K
transactions”, said Mr Turnbull in paragraph 4 of the Prosecution’s
L L
closing.
M M
28. The Defence says there is a possibility that some of the
N N
construction materials under the 11 LCs had been delivered to China for
O
the PRC projects undertaken by China Rich Properties, a subsidiary of O
China Rich Holdings; it is also possible that some of the materials had
P P
been delivered to the construction sites undertaken by Wing Fai in Hong
Q Kong. As Mr Chan put it, the Defence does not have a positive case that Q
the materials had in fact been delivered to China for use by China Rich
R R
Properties or to the sites undertaken by Wing Fai in Hong Kong, the
S Defence says all possibilities exist and the Defence puts the Prosecution to S
strict proof on these matters.
T T
U U
V V
- 13 -
A A
B 29. The thrust of the defence for D3 and D5 is that all along they B
trusted their employer. D3 and D5 were asked to become directors of
C C
Famous Capital and King Capital respectively and they saw nothing
D unusual in it. All along, D3 was told Famous Capital was a subsidiary of D
China Rich Holdings; D5 was told King Capital was a subsidiary of China
E E
Rich Holdings. Both D3 and D5 believed in what they were told.
F F
30. In the case of D3, she says she did not understand much
G G
English and all the paperwork in relation to the 10 LCs of Famous Capital
H had been prepared by others before she was called upon to sign. All along H
she trusted China Rich as it was a listed company. She was told Famous
I I
Capital was involved in the purchase of construction materials.
J J
31. For the cheques signed by D3, D3’s case is that before she
K K
signed the cheques in question, she would look at the attached vouchers to
L L
make sure that approval had been given. She could not read the contents of
M
the description columns of the vouchers as they were in English. M
N N
32. For ease of reference, the relevant cheques can be found in
O
the Cheques Bundle. For cheque no. 3 payable to Fitzroya, cheque no. 9 to O
Wing Fai, cheque no. 11 payable to GreaterChinaherbs.com and cheque no.
P P
28 payable to Ivy Fund, D3 thought they were reallocation of funds within
Q China Rich Holdings. Q
R R
33. For cheque no.1 payable to Pacific Challenge Securities and
S cheque no. 2 payable to Christfund Securities, they were issued for the S
purchase of shares of China Rich Holdings by D3 on behalf of a Mainland
T T
contractor who did works for China Rich Properties in Shungde, China.
U U
V V
- 14 -
A A
B With the consent of Mr Yip Kwong, monies payable to the contractor were B
paid to the securities firms instead.
C C
D 34. For 2 cash cheques, cheque no. 6 and 24, they were issued and D
given to D3 to reimburse D3 for the money that D3 had advanced on the
E E
contractor’s behalf in the purchase of shares of China Rich Holdings.
F F
35. For cheque no. 4 payable to a Godfrey Mak, a colleague of
G G
D3, cheque no. 5 payable to BOCI Securities, cheque no. 7 payable to
H Leung Siu Wah, cheque no. 26 payable to Wu Chia Ling and cheque no. 27 H
payable to Morgan Stanley, D3 did not know the reason for the issuing of
I I
these cheques, she says the reasons should be apparent on the payment
J vouchers. J
K K
36. In the case of D5, he had received tertiary education in the
L L
United States. He was asked to become a director of King Capital. He was
M
told the setting up of King Capital was for the purpose of helping the M
sub-subcontractors of Wing Fai who had difficulties in paying for the
N N
construction materials. As in the case of D3, D5 all along trusted China
O
Rich Holdings. He agreed to become a director of King Capital and a O
signatory to its bank account as he believed it was only a normal and
P P
necessary procedure for the company to operate.
Q Q
37. D5 was not involved in the daily operation of King Capital,
R R
he would be asked to sign documents of King Capital from time to time.
S S
38. For cheque no. 29, a cheque in the sum of $3.5million, D5
T T
says when he signed the cheque, there was a piece of paper attached to the
U U
V V
- 15 -
A A
B cheque giving an explanation that the cheque was about dealing with the B
shortage of funds of contractors/sub-contractors of Wing Fai.
C C
D DISCUSSION D
E E
General Matters
F F
39. I have considered all the evidence and submissions. As said,
G G
Mr Turnbull and Ms Lo have already summarized the evidence of live
H witnesses in the Prosecution’s closing, subject to some corrections by H
Mr Chan. The fact that I have not dealt with each and every piece of
I I
evidence does not mean the same has escaped my attention; I say the same
J about the matters raised in the submissions made by counsel. J
K K
40. I have borne in mind it is for the Prosecution to prove beyond
L L
reasonable doubts all the elements of the offences under complaint.
M M
41. I give myself a full Berrada direction on propensity and
N N
credibility as D3 and D5 each has a clear criminal record.
O O
Evidence of Live Witnesses
P P
Q PW1 Ip Ngai Man Q
R R
42. PW1’s evidence that D3 was one of her colleagues in Wing
S Fai is consistent with paragraph 10 of the Admitted facts and hence S
credible and reliable.
T T
U U
V V
- 16 -
A A
B 43. PW1 identified D3’s signature on the collection B
documentation and Famous Capital’s invoices. In my judgment, PW1’s
C C
identification of D3’s signatures is credible and reliable. It is an admitted
D fact that D3 signed the collection documentation. D3, in her evidence, D
admits the signatures on Famous Capital’s invoices are hers.
E E
F 44. I accept PW1’s evidence that the 11 LCs, the subject of the F
charges, were prepared by PW1 with hand-written information supplied to
G G
her by D1. The applications were then given to D1 and Kam Shing to sign.
H I accept PW1’s evidence the way the 11 LC applications were prepared H
was not in accordance with the normal procedure. The normal procedure
I I
for making applications for LCs was that PW1 would receive documents,
J invoices from her colleagues in the Accounts Department; for the LCs in J
favour of Famous Capital and King Capital, PW1 received hand –written
K K
information from D1, the Financial Controller.
L L
M
45. I accept also the evidence of PW1 that after receipt of the M
invoices she would prepare the Trust Receipts for the banks relating to the
N N
LCs. The Trust Receipts would then be given to D1 and Kam Shing for
O
signing before they were sent to the banks. O
P P
46. It should be noted that when D3 was cross-examined about
Q the contact person for Famous Capital, ie “Ye” in the collection orders, D3 Q
said PW1 is also surnamed Ip. In as much as PW1 shares the same
R R
surname “Ip” with D3, it has never been put/suggested to PW1 that she
S was the contact person for Famous Capital “Ye” in the collection orders or S
that PW1 worked for Famous Capital.
T T
U U
V V
- 17 -
A A
B PW2 Mr Lo Sek Chiu B
C C
47. I find PW2’s evidence credible and reliable. He joined Wing
D Fai in December 1993 and by August 2001, he had been with Wing Fai for D
over 7 years. He was a director of Wing Fai at the material time. I accept
E E
PW2’s evidence that his duties involved looking after all the construction
F works, which included making tender, buying construction materials, site F
management and supervising progress at site.
G G
H 48. I accept PW2’s evidence that he was familiar with the 5 H
government projects undertaken by Wing Fai at the material time. PW2’s
I I
evidence on this subject is consistent with the evidence of Mr Chim
J (PW5). J
K K
49. I accept also PW2’s evidence on the subject of the suppliers
L L
of concrete mix, asphalt and steel bars. PW2 is able to provide the court
M
with the names of the suppliers of these materials engaged by Wing Fai at M
the time. His evidence is supported by the evidence of PW5. For the
N N
complaints made by Mr Chan about the witness statements of PW2, I
O
accept PW2’s explanation that when he gave his statement, his memory O
was still fresh and he gave his answers based on his recollection, not as
P P
Mr Chan suggested, PW2 just went along with the suggestion by the
Q police. Q
R R
50. I accept PW2’s explanation that he did not mention the
S identity of the asphalt suppliers in his 2 statements because the invoices S
shown to him were about concrete mix and steel bars; the police did not
T T
U U
V V
- 18 -
A A
B ask him about asphalt hence he did not mention the asphalt suppliers. B
Mr Lo’s explanation makes good sense to me.
C C
D 51. I accept Mr Lo’s evidence that at the material time in 2001 D
and 2002, apart from the 5 government projects, Wing Fai had only some
E E
small projects which were still active, but these small projects were
F basically completed and what remained were only some minor works. F
Mr Lo’s evidence in this regard is supported by Mr Chim.
G G
H 52. I accept Mr. Lo’s evidence that he had never heard of Famous H
Capital and King Capital and Wing Fai had never ordered concrete mix,
I I
steel bars and asphalt from these 2 companies. PW1’s evidence on this
J matter is supported by the evidence of Mr Chim, and to a lesser extent by J
the evidence of PW6, the Government Engineer. Given the uncontested
K K
evidence that suppliers of building materials for government projects had
L L
to be approved by the Government, it really defies common sense that if
M
Famous Capital and King Capital were amongst the authorized suppliers M
of building materials in Wing Fai’s projects, they would escape Mr Lo’s
N N
attention.
O O
53. It is clear from Mr Lo’s evidence that all the projects
P P
undertaken by Wing Fai were in Hong Kong, Wing Fai had no reason to
Q order building materials in Hong Kong and transport them to the Mainland. Q
China Rich Properties or other subsidiaries of China Rich might have
R R
construction projects on the Mainland which required the use of concrete
S mix, steel bars and asphalt but Wing Fai was not involved in these S
transactions and had no reason to apply for the LCs in question.
T T
U U
V V
- 19 -
A A
B 54. Mr. Lo’s evidence about the technical or physical B
impossibility or impracticality of transporting concrete mix, asphalt and
C C
steel bars from Hong Kong to the Mainland makes a lot of good sense to
D me but the more important evidence of Mr Lo’s evidence is that all the D
projects of Wing Fai were projects in Hong Kong, government projects or
E E
otherwise. It has never been suggested to Mr Lo that Wing Fai had any
F construction projects on the Mainland, hence to some extent, Mr Lo’s F
evidence about the technical or physical impossibility or impracticality of
G G
transporting materials to the Mainland, is academic to a large extent.
H H
55. I am aware that Mr Lo did not mention it in his witness
I I
statements the absence of important details in the invoices of Famous
J Capital and King Capital, for the reason that the focus of the statements J
was whether Wing Fai had ordered materials from Famous Capital and
K K
King Capital, not the absence of important information that one would
L L
normally expect to see in an invoice from a supplier of Wing Fai. In my
M
judgment, the observations made by Mr. Lo are all valid. M
N N
56. I accept the evidence of Mr Lo that he had not heard of
O
situations that China Rich Holdings would purchase construction materials O
for its subsidiaries’ construction projects in Hong Kong. The procedure
P P
was the one as stated by Mr Lo in his evidence, ie Wing Fai would be the
Q purchaser of the construction materials; as for the suppliers, they had to be Q
approved by the government.
R R
S S
T T
U U
V V
- 20 -
A A
B PW5 Mr Chim Kam Fai B
C C
57. Mr Chim’s evidence that D3 was not part of the Accounts
D Department of Wing Fai is not consistent with paragraph 10 of the D
Admitted Facts.
E E
F F
58. Mr Chim’s evidence about the suppliers to Wing Fai is
G consistent with the evidence of Mr Lo, the names of the government G
approved suppliers of concrete mix, asphalt and steel bars recited by
H H
Mr Chim are consistent with those mentioned by Mr Lo. I find Mr Chim’s
I evidence on the subject credible and reliable. I accept Mr Chim’s evidence I
that he had never placed any order in relation to the projects he handled on
J J
behalf of Wing Fai with Famous Capital and King Capital.
K K
59. I accept Mr Chim’s evidence that if Wing Fai ordered
L L
construction materials which were not approved by the government, those
M materials could not be used in the government projects undertaken by M
Wing Fai, hence Yip Kwong would definitely informed the site agents like
N N
Mr Chim and Mr Lo so that they could apply to the government for
O approval to use those materials. The evidence of Mr Chim not only makes O
P
good sense, it is also consistent with the evidence of Mr Lo. P
Q Q
60. Mr. Chan criticized Mr. Chim for failing to mention in his
R
statements that Pioneer and Ling Wui were suppliers of concrete mix to R
Wing Fai. I accept PW2’s explanation that due to mergers of companies
S S
he had not mentioned all the names though he knew them all.
T T
U U
V V
- 21 -
A A
B 61. I accept Mr Chim’s evidence that the Mainland construction B
projects of China Rich were not projects of Wing Fai. There is no
C C
suggestion from the defence that Wing Fai had any construction project on
D the Mainland. D
E E
62. Whether China Rich Holdings or its subsidiaries had
F construction projects in China at the material time is one thing; whether F
Wing Fai had ordered construction materials for projects in China is a
G G
different matter. It seems to me PW5 is able to recollect clearly Wing Fai
H did not have any project in China and it had never ordered any construction H
materials from Famous Capital and King Capital.
I I
J 63. PW5’s evidence as to how Wing Fai chose its suppliers for J
government projects is consistent with the evidence given by Mr Lo: Yip
K K
Kwong did not have the final say completely, the management would
L L
make recommendations and Yip Kwong would listen to their views before
M
he made his final decision. Furthermore, the suppliers had to be approved M
by the government.
N N
O
64. Mr Chim was somewhat evasive when asked about the O
financial position of Wing Fai before it was taken over by Mr. Chim. He
P P
accepted with some reluctance that the financial position of Wing Fai was
Q not in good shape when Mr Chim took over in April 2002. It seems to me Q
Mr Chim was reluctant to admit Wing Fai was financially unsound as he
R R
still has a business stake in the company.
S S
T T
U U
V V
- 22 -
A A
B PW3 Mr Lai Kam Kwong B
C C
65. The evidence of Mr Lai is simple and straightforward. I
D accept Mr Lai’s evidence that he could not find any record, in paper or in D
electronic form, that Anderson Asphalt ever having done business with
E E
Famous Capital or King Capital. It should also be noted that Anderson
F Asphalt in the years 2000 to 2002 inclusive had not delivered any asphalt F
to the Mainland.
G G
H 66. I am aware that Anderson Asphalt was not the only asphalt H
supplier of Wing Fai.
I I
J PW6 Mr Ip Kwok Leung J
K K
67. I accept PW6’s evidence that contractor who undertook
L L
contracts from the Drainage Services Department had to use suppliers
M
approved by the government in writing. The records produced by PW6 M
(P20 to P32) show that Famous Capital and King Capital were not
N N
amongst the approved suppliers of construction materials in the contracts
O
of Wing Fai, as far as the Drainage Services Department was concerned. O
The records support the evidence of Mr Lo and Mr Chim that Famous
P P
Capital and King Capital had never been suppliers of Wing Fai.
Q Q
PW4 Mr Lam Chuen Kee
R R
S 68. Before Mr Lam took the witness stand, Mr Chan objected to S
Mr Lam’s evidence on the ground that according to section 4(3) of the
T T
Inland Revenue Ordinance, Cap 112, the return document in relation to
U U
V V
- 23 -
A A
B Famous Capital should not be produced in court. Mr Chan relied on B
section 4(3) only when he made his objection.
C C
D 69. I asked for written submissions and invited the parties to look D
carefully into the Organized and Serious Crimes Ordinance, Cap 455.
E E
F 70. At the resumed hearing, Mr Chan further drew my attention F
to section 3 and 4 of the OSCO. He submitted that despite section 3 and 4,
G G
the IRD return is still not admissible in court. I pointed out to Mr Chan that
H section 6 of the OSCO is relevant. After hearing submissions, I ruled that H
reading section 4(3) of the Inland Revenue Ordinance and sections 3, 4 and
I I
6 of the OSCO as a whole, the returns that the Prosecution sought to
J produce are clearly admissible pursuant to section 6 of the OSCO. Section J
6 clearly contemplates the obtaining of IRD information for the purpose of
K K
criminal prosecution; section 6 would be made nugatory if IRD
L L
information could only be obtained but not produced as evidence under a
M
production order. M
N N
71. The tax documents of Famous Capital are produced together
O
with the relevant Production Order. O
P P
PW8 Mr Chiu Chi Kai Walker
Q Q
72. Pursuant to a production order, PW8 of the IRD caused a
R R
search to be made of the IRD’s records to find any record of King Capital
S but none could be found. S
T T
U U
V V
- 24 -
A A
B PW7 PC52290 B
C C
73. PW7 gave his evidence in a straightforward manner. I have
D no difficulty in accepting his evidence as true and reliable. I accept PW7’s D
evidence that he searched D3’s residence in Mongkok on 14 May 2008.
E E
He found and seized 5 cheque books, ie a DBS cheque book of King
F Capital, a HSBC cheque book of Famous Capital, a Wing Hang Bank F
cheque book of Famous Capital, 2 Standard Chartered Bank cheque books
G G
of Ivy Fund, 2 company chops, one relating to Famous Capital and one
H relating to Ivy Fund, some company documents relating to Famous Capital H
and some corporate documents relating to Ivy Fund and a metal stamp for
I I
Ivy Fund. The aforesaid items were found in a paper box covered by a
J piece of plastic wrap in a room. J
K K
D3 Ms Ip Kin Man
L L
M
74. I have considered D3’s evidence carefully, bearing in mind M
the good character direction.
N N
O
The Admitted Facts O
P P
75. D3’s evidence that she was an employee of China Rich
Q Properties, a subsidiary of China Rich Holdings, is contradictory to Q
paragraph 10 of the Admitted Facts, which states that D3 worked in the
R R
Accounts Department of Wing Fai.
S S
T T
U U
V V
- 25 -
A A
B Why D3 was Chosen B
C C
76. I find it inherently improbable that D3, be she an employee at
D the Accounts Department of Wing Fai or as D3 testifies, an accounting D
clerk of China Rich Properties, would be asked to become a director of
E E
Famous Capital in the circumstances depicted by D3. From the evidence
F of D3, there was very little that D3 could contribute to Famous Capital, she F
did not know about the operation of Famous Capital, other than that the
G G
company was to buy construction materials for projects of China Rich.
H She was a junior employee of China Rich Holdings, be it Wing Fai or H
China Rich Properties. She had no expert knowledge in the field, she did
I I
not even know the English word for asphalt. If Famous Capital was set up
J for the bona fides purpose of purchase of construction materials for J
construction projects in China, it really defies common sense that someone
K K
like D3 would be asked to become a director.
L L
M
Unreasonable Explanation M
N N
77. In my judgement, all the aforesaid inherent improbabilities
O
must be known, and were known to D3 at the material time. I reject as O
unreasonable the explanation put forward by D3, ie she agreed to be a
P P
director because she trusted the company and if she did not agree she
Q might lose her job. It must be obvious to D3 that if Famous Capital was Q
set up for the purpose of buying construction materials for projects of
R R
China Rich Properties, the appropriate candidates for the company
S directorship must be those who had experience in construction projects S
and/or procurement of construction materials, not someone like D3 who
T T
professed to know nothing about the matter.
U U
V V
- 26 -
A A
B B
Vague Recollection of Important Details
C C
D 78. D3’s recollection of the circumstances under which she was D
asked to be a director of Famous Capital was vague and unreliable. She
E E
cannot recall who it was in the senior management who asked her to
F become a director of Famous Capital; she cannot even recall the gender of F
the asking party. D3 did not even ask why she was chosen.
G G
H Ignorance Claimed by D3 H
I I
79. D3 tried to portrait herself as a person who was ignorant
J about many matters; she was not clear about her duties as a director of J
Famous Capital; she signed the documents and cheques without
K K
questioning; for the cheques she signed, she would only look at the
L L
voucher to make sure that approval had been given by someone. She did
M
not read the contents of the documents as they were in English, yet she had M
never asked others in the company about the contents of the documents
N N
that she was asked to sign. I do not believe D3 would continue signing
O
documents contents of which she did not understand and cheques purposes O
for which she did not know.
P P
Q 80. When D3 was questioned about her signing of the IRD Q
documentation, she had to admit that she knew a person would be
R R
responsible for a document she signed.
S S
T T
U U
V V
- 27 -
A A
B Subsidiaries of China Rich Holdings B
C C
81. D3 fails to explain why she believed Famous Capital and Ivy
D Fund were subsidiaries of China Rich Holdings. D
E E
The Vouchers Accompanying the Cheques
F F
82. When asked about the reasons for issuing the cheques in
G G
question, D3 kept saying the reasons should be apparent in the payment
H vouchers that accompanied the cheques. Yet not one voucher was H
produced as evidence and we only have the evidence of D3 which is
I I
unsatisfactory on this issue, since according to D3, she did not read the
J reasons, she just looked at the approval. J
K K
The Purchase of Shares for Mr Cheung
L L
M 83. For the 2 cheques issued to Pacific Challenge Securities M
(cheque number 1) and Christfund Securities (cheque number 2) and the 2
N N
cash cheques (cheque number 6 and 24), D3 said they were all related to
O the shares that she purchased on Mr Cheung’s behalf, and it was done with O
P
the consent of the company, hence contract sums due to Mr Cheung were P
paid instead to the securities firms or in the form of cash cheques.
Q Q
R
84. I find D3’s account most convoluted and unreasonable. D3 R
has to concede that it would be much simpler for Mr Cheung to deal with
S S
Mr Ip Kwong directly. Furthermore, I see no reason why D3 would agree
T to purchase shares for Mr Cheung, someone who she knew just “average”, T
U U
V V
- 28 -
A A
B using her own word. As D3 says, she would not have lost her job even if B
she were to refuse to buy the shares for Mr Cheung.
C C
D 85. If cheque number 6 was issued to reimburse D3 for the money D
she had paid on Mr. Cheung’s behalf, I do not understand why a cash
E E
cheque was issued. I find D3’s explanation unconvincing.
F F
The Contact Person “Miss Ye” in the Collection Orders
G G
H 86. A Miss Ye was put forward as the contact person of Famous H
Capital. D3 agrees that the contact numbers on the collection orders
I I
signed by her was that of Famous Capital; she also agrees that Ye is the
J Mandarin spelling of Ip. D3 was quite evasive when asked if there could J
be another Miss Ip/Ye in Famous Capital. She even suggested PW1 is also
K K
surnamed Ip, hence PW1 might be the Miss Ye referred to in the collection
L
orders. During Mr Chan’s cross-examination of PW1, Mr Chan put to L
M
PW1 and she agreed she was the Miss Ip, ie the contact person of Wing Fai M
in all 11 LCs. In my judgement, it is inherently improbable that PW1
N N
would be made the contact person both for Wing Fai and Famous Capital.
O
No suggestion was put to PW1 that she was the contact person of Famous O
Capital.
P P
Q 87. D3 in her evidence says the telephone number in the Q
collection orders was one of the numbers in the office, it is obvious that the
R R
use of Miss Ip in the applications of Wing Fai and the use of Miss Ye in the
S collection orders was a measure to make sure that PW1 would be reached S
when there were queries for Wing Fai and D3 would be approached when
T T
there were questions for Famous Capital to answer.
U U
V V
- 29 -
A A
B B
88. D3 says if anyone from the bank called and made enquiry, she
C C
would pass the telephone enquiry to other colleagues of the Accounts
D Department, if Famous Capital and Wing Fai had different office D
addresses, as the documents show, I do not see how D3 could pass the
E E
telephone to her colleagues.
F F
89. In my judgement, D3 signed all the documents of Famous
G G
Capital at China Rich’s premises at Connaught Road West when the
H documents of Famous Capital state that its office was at Great Eagle H
Centre is consistent with the Prosecution case that the there was a
I I
concerted effort to deceive the bank into believing that the buying and
J selling party for the 1st to the 10th LC were unrelated entities. J
K K
Mandy Ip as the contact person in the IRD Document
L L
M
90. If D3 was ignorant about the affairs of Famous Capital, I do M
not understand why she would be put forward as the person to answer any
N N
queries from the IRD (Pg 2889 and 2890).
O O
The Seizures of Items Related to Famous Capital and Ivy Fund at D3’s
P P
Residence
Q Q
91. There is not a ring of truth in D3’s evidence that the items
R R
found and seized were left over by the company when her brother in law
S purchased the flat form a subsidiary of China Rich Holdings, it is too much S
of a co-incidence that cheque books in relation to Famous Capital and Ivy
T T
Fund were found inside the premises occupied by D3.
U U
V V
- 30 -
A A
B B
Evasive and Contradictory Evidence
C C
D 92. I find D3 an evasive witness. She was evasive on numerous D
occasions and was unwilling to give straightforward answers to simple
E E
questions. For example, when Mr Turnbull suggested to her that as one of
F the signatories of the bank account, D3 should know where the money F
came from, D3 said these were all company matters, she suggested to
G G
Mr Turnbull that he should go and ask D2. On another occasion, D3 said
H the question put to her should be answered by Yip Kwong. H
I I
93. Her evidence is also self-contradictory at times, for example,
J In the early part of Mr Turnbull’s cross-examination, she was asked if she J
was able to read the English words “junior secretary” in her employment
K K
letter when she was offered the job in 1993 (Exh D1), she answered “Yes”.
L
When she was later asked if she knew the English word “secretary” in the L
M
account opening document of Famous Capital with Chekiang First Bank, M
D3 answered “No”
N N
O
The Credibility and Reliability of D3’s Evidence O
P P
94. Despite the fact that D3 has a clear record, I find D3’s
Q evidence both unreliable and not credible. Q
R R
D5 Mr Lo Wah
S S
95. I have borne in mind D5’s clear criminal record when I assess
T T
his evidence.
U U
V V
- 31 -
A A
B B
How D5 was asked to become a director of King Capital
C C
D 96. D5’s recollection of the circumstances under which he was D
asked to be a director of King Capital was vague, he could only say it was
E E
a manager of the Accounts Department.
F F
97. D5 admits that he was not clear about the management
G G
matters of Wing Fai at the head office and he had no knowledge in the
H finance and accounting matters about Wing Fai and China Rich Holdings, H
his background was essentially interior design and he was new to
I I
construction works, there was no logical reason why D5, a foreman of
J Wing Fai at the time, would be asked to be a director of King Capital, J
which was represented to D5 as a subsidiary of Wing Fai, when in fact it
K K
was not.
L L
M
The Reason for the Setting Up of King Capital M
N N
98. D5 said the manager told him King Capital was established
O
because the shortage of funds problem suffered by the sub-contractors of O
Wing Fai often led to delay, suspension and even abandonment of works.
P P
King Capital was set up to help the sub-contractors to solve their problem
Q of shortage of funds. Q
R R
99. I do not see how the setting up of King Capital could help to
S ease the shortage of funds problem faced by the sub-contractors. Wing Fai S
ordered construction materials from the suppliers and contractually Wing
T T
Fai was the one who had to pay the suppliers for the construction materials
U U
V V
- 32 -
A A
B it ordered. Even if the sub-contractors had to pay for the construction B
materials used in the projects undertaken by Wing Fai, King Capital was
C C
not even on the list of government approved suppliers, I do not see how the
D setting up of King Capital could help the sub-contractors with the problem D
of shortage of funds in the acquisition of materials.
E E
F The Cheque of $3.5million F
G G
100. For the cheque of $3.5 million, the subject matter of Charge
H 13, D5 was asked, to his understanding, where the money came from. D5 H
said as King Capital was a subsidiary of China Rich Holdings, definitely it
I I
would be given funds to operate though he had no idea as to the details of
J the fund flow. If the money for the cheque came from China Rich J
Holdings, as D5 suggested, then there was no need to set up King Capital
K K
at all, China Rich Holdings could have simply advanced the sum to the
L L
sub-contractors.
M M
101. D5 said the purpose of the $3.5 million cheque to Ivy Fund
N N
was to solve the problem of funding, according to what was written on the
O
piece of paper that accompanied the cheque. But the facts remain: D5 did O
not know the company Ivy Fund at all; he would not know what Ivy Fund
P P
did and he did not know how Ivy Fund processed its fund flow.
Q Q
Matters Not Put to Witnesses
R R
S 102. If it is D5’s case that the shortage of funds problem on the S
part of the sub-contractors had led to delay, suspension in Wing Fai works,
T T
and even abandonment of works at the sites, these matters must be within
U U
V V
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A A
B the knowledge of Mr Lo and Mr Chim. At no time did Mr Chan put these B
matters to the witnesses during Mr Chan’s cross-examination of Mr Lo
C C
and Mr Chim.
D D
Assessment of D5’s Evidence
E E
F 103. Despite the fact that D5 has a clear record, I find his evidence F
both unreliable and not credible.
G G
H FINDINGS H
I I
Conspiracy to Defraud
J J
Were Famous Capital and King Capital Suppliers of Wing Fai?
K K
L L
104. I accept the evidence of Mr Lo and Mr Chim that they had not
M
heard of Famous Capital and King Capital and these 2 companies had M
never supplied concrete mix, asphalt and steel bars to Wing Fai. Given
N N
Mr Lo and Mr Chim’s positions in Wing Fai and their experience with the
O
company, I am sure that they know who were among the suppliers of Wing O
Fai at the material time.
P P
Q 105. The IRDs’ records of Famous Capital and the absence of Q
record in relation to King Capital go some way to support Mr Lo and
R R
Mr Chim’s evidence that Wing Fai did not have any dealings with Famous
S Capital and King Capital. S
T T
U U
V V
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A A
B 106. The records kept by the Drainage Services Department B
support Mr Lo and Mr Chim’s evidence that Famous Capital and King
C C
Capital were not Wing Fai’s suppliers for the projects of the Drainage
D Services Department. D
E E
107. I accept Mr Lo and Mr Chim’s evidence that Famous Capital
F and King Capital were not on the list of government approved suppliers. F
Wing Fai had no reason to order materials could not be used at its 5
G G
government projects. For the small works that remained at the material
H time. They would not require use of large amount of concrete mix, asphalt H
and steel bars.
I I
J 108. As Wing Fai did not have any construction project on the J
Mainland at the material time, it is impossible that Wing Fai would order
K K
the construction materials of the 11 LCs and transport them to the
L L
Mainland, the issue of technical feasibility apart.
M M
109. I find as a fact Famous Capital and King Capital were not,
N N
and had never been suppliers of construction materials to Wing Fai.
O O
Did the Underlying Transaction relating to the 11 LCs exist?
P P
Q 110. It follows from the preceding discussion that the underlying Q
transactions relating to the 11 LCs did not exist, in other words, the 11
R R
transactions were all bogus in nature.
S S
T T
U U
V V
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A A
B Economic Loss/Risk of Economic Loss/Non-economic Loss B
C C
111. I do not agree with the Prosecution’s submissions that the
D issuing banks had suffered economic loss in that the banks had been D
deprived of the use of the funds which, but for the fraud, would have been
E E
available for use by the banks. Given the fact that all the 11 LCs had been
F settled and the banks had charged and received interest payment for the F
credit facilities used by Wing Fai, I do not think it can be said that the
G G
banks had suffered economic loss.
H H
112. I find that as the underlying transactions were bogus and the
I I
goods referred to in the 11 LCs did not exist, the economic interests of
J each of the issuing banks were put at risk. I accept as true the contents of J
the bankers’ affirmations that the banks would look to the goods, the
K K
subject of the LCs, in the first instance to secure repayment of the funds
L
advanced under the LCs. If the goods did not exist, the banks’ economic L
M
interests were put at risk in that they might not be able to secure total M
reimbursement of the funds owed to them.
N N
O
113. I appreciate that construction materials, like concrete mix, O
asphalt and steel bars, once used, cannot be seized by the issuing banks.
P P
The very nature of concrete mix, asphalt and steel bars makes the risk more
Q apparent and realistic in that, without the goods, the issuing banks could Q
only resort to collaterals put up by the applicant.
R R
S 114. I agree, therefore, with the Prosecution’s submissions that the S
fact that the banks suffered no loss does not mean that at the time the LCs
T T
were issued and payment made thereunder they were not at risk of
U U
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A A
B economic loss. The collaterals and guarantees put up by China Rich B
Holdings would only be as good as they were at the time of the
C C
enforcement. There was no guarantee that China Rich would remain in a
D sound financial position, after all we are concerned with risk of economic D
loss, not actual loss to the issuing banks. On the part of Wing Fai, the
E E
applicant of the LCs, its financial situation was not in good shape when it
F was sold in April 2002. In July 2002, a winding up petition was presented F
by its creditor.
G G
H 115. I find that each of the issuing banks had also suffered H
non-economic loss as a result of the fraud practiced on the banks; the
I I
banks’ rights had clearly been prejudiced. A state of affairs had been
J brought about as a result of which each of the issuing banks was deceived J
into acting to the prejudice of its rights. As a result of the fraudulent acts in
K K
the course of the application, negotiation and payment procedure in
L L
relation to each LC, the issuing bank concerned had acted to the prejudice
M
of its rights by the issue of the LC, the acceptance of the negotiation and M
the payment made thereunder. Had the true state of affairs been known to
N N
the issuing bank, it would not have issued the LC, accepted negotiation and
O
made payment under it when called upon to do so. O
P P
Dishonesty
Q Q
116. In my judgement, an agreement which involved:-
R R
S (i) Causing and permitting application to be made to a S
bank for the issue of a LC in favour of a company;
T T
U U
V V
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A A
B (ii) Causing and permitting the falsification of B
documentation required for the negotiation of the said
C C
LC; and
D D
(iii) Casuing and permitting payment to be made to the
E E
aforesaid company pursuant to the negotiation of the
F said LC F
G G
where there was no underlying commercial transaction relating to the said
H LC, must be dishonest according to the two-stage test as set out in Ghosh. H
I I
Intent to Defraud
J J
117. In my judgement, a person who participated in an agreement
K K
to do the overt acts in the preceding paragraph with the knowledge that
L L
there was no underlying commercial transaction relating to the LC
M
intended to practice a fraud on the issuing bank in question, that person M
also intended to act to the prejudice of the rights of the issuing bank.
N N
O
Agreements to Defraud the Banks (Charges 1 to 11) O
P P
118. For the 11 LCs relating to Charges 1 to 11, a fraud had
Q successfully been practiced on the issuing bank concerned. In my Q
judgement, a fraud like the ones in this case could not be practiced
R R
single-handedly by a person. Each of the 11 LCs required the use of a
S beneficiary company, Famous Capital for Charges 1 to 10 and King S
Capital for Charge 11. Each fraud also required the use of an applicant
T T
company, ie Wing Fai for all 11 LCs in question. Each fraud, in order to
U U
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A A
B succeed, required participation by and co-operation between at least one B
person from Wing Fai, the applicant company, and one from the
C C
beneficiary company.
D D
119. I have no doubt that for each of the 11 fraudulent LC
E E
transactions, D1 was a participant, she caused applications be prepared by
F PW1 Miss Ip and she signed on Wing Fai’s documentation, eg the F
application forms and the trust receipts. I am sure that D1, as the Financial
G G
Controller and Deputy Chairman of China Rich Holdings, and one of its
H Executive Directors, was aware that the underlying transactions for all 11 H
LCs were all bogus in nature. From the evidence before me, I have no
I I
doubt that at the material times for Charges 1 to 11, D1 had participated in
J each of the 11 agreements to defraud the issuing banks and she remained in J
all the agreements throughout.
K K
L L
120. I am sure that the participant(s) from the beneficiary company
M
for each of the LCs, be it Famous Capital or King Capital, must be trusted M
with the knowledge that there was no transaction throughout. If the
N N
handler of the beneficiary company thought all along the transactions were
O
genuine, and handled the LC applications as if they were genuine, there O
was every chance that he or she might find out the true colors of the
P P
transactions and report the fraud to the police.
Q Q
121. I am sure that for each of the 11 LCs, it was a fraud
R R
committed by at least 2 persons, not by a lone fraudster.
S S
122. I am sure that for each of the fraud, there was an agreement to
T T
defraud the issuing bank in question
U U
V V
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A A
B B
Was D3 a Party to Any Agreement to Defraud the Banks (Charges 1 to
C C
10)?
D D
123. The evidence of D3 reveals that she had contact with D1 after
E E
she joined Wing Fai. D3 says she was employed by China Rich Properties
F but paragraph 10 of the Admitted Facts states that she worked in the F
Accounts Department of Wing Fai. D3 admits D1 had given her
G G
instructions in the past.
H H
124. D3 was a director of Famous Capital and a signatory to
I I
Famous Capital’s bank account. D2, the daughter of D1, was also a
J director of Famous Capital and a signatory to Famous Capital’s bank J
account.
K K
L L
125. D3 could sign singly on the bank account. She signed a total
M
of 28 cheques of Famous Capital relevant to Charges 1 to 10. M
N N
126. In respect of the 1st to the 10th LC, the Application for Bills of
O
Collection or Negotiation for each of them was signed by D3 on behalf of O
Famous Capital. D3 also signed the invoices on behalf of Famous Capital.
P P
Q 127. I reject D3’s claim that she did not understand the contents Q
and nature of the documents she signed. I agree with the Prosecution’s
R R
submissions at paragraph 87(d) of its closing submissions that “If she did
S not have such knowledge it could be possibly disastrous for the S
co-conspirators if an honest person was unknowingly participating in the
T T
scheme may discover the criminal activity half way through. This may
U U
V V
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A A
B cause the scheme to unravel and result in matters being reported to the B
authorities…”
C C
D 128. I agree with the Prosecution’s submissions that it would be D
inconceivable for D3 to be put forward as the person to whom the IRD
E E
should make enquiries if they so wished concerning the matters of Famous
F Capital if D3 was ignorant about the affairs of Famous Capital, as she F
sought to portrait in her evidence.
G G
H 129. In my judgement, D3 was the contact person “Miss Ye” in the H
collection forms. D3 was the only person in Famous Capital with the
I I
surname “Ip”. “Ye” is the Mandarin word for “Ip”. In my judgement, a
J Miss “Ye” was put forward as the contact person in the collection forms J
because PW1 Miss Ip Ngai Man was made the contact person for Wing Fai
K K
in the LC applications; For the purpose of diverting any enquiry telephone
L L
call to the right person and not to cause any suspicion, it was necessary to
M
differentiate between the two contact persons, ie PW1 for Wing Fai and M
D3 for Famous Capital, hence, the use of “Miss Ye” for Famous Capital.
N N
For the correspondence between the IRD and Famous Capital, there was
O
no need to differentiate between the Ips, therefore the name of Mandy Ip O
was used.
P P
Q 130. Looking at the fund flow set out in paragraphs 34 to 48 of the Q
Admitted Facts, one can see that some of the proceeds were used to pay for
R R
the purchase of the shares of China Rich Holdings by D3, a person named
S Wong Hon Wah and D1(paragraphs 19 and 46 of the Admitted Facts). S
T T
U U
V V
- 41 -
A A
B 131. Godfrey Mak, one of the payees, was one of the two B
authorized signatories to GreaterChinaherbs.com’s bank account with
C C
Standard Chartered Bank. D1 was the other authorized signatory (D1 and
D D3 were authorized signatories to GreaterChinaherbs.com’s bank account D
with DBS Kwong On Bank).
E E
F 132. For Ivy Fund, one of the payees, D2 was a director of Swift F
Finance Limited, which was the sole director of Ivy Fund. D2 was also the
G G
sole authorized signatory of Ivy Fund’s bank account. After the cheque in
H the sum of $1.9 million to Ivy Fund was deposited into its account, D2 H
signed a cheque in the sum of $1.4 million in favour of Asia Land. From
I I
paragraphs 14 and 22 of the Admitted Facts, one can see that D1 was a
J director of Asia Land and an authorized signatory of Asia Land’s bank J
account.
K K
L
133. Two cash cheques were deposited into D3’s bank account L
M
with Hang Seng Bank (Paragraphs 39 and 46 of the Admitted Facts). M
N N
134. 9 cheques were issued in favour of Wing Fai. Famous Capital,
O
the seller, was paying money back to Wing Fai, the buyer of the O
construction materials.
P P
Q 135. 4 cheques were issued to Fitzroya, a wholly owned subsidiary Q
of China Rich Holdings. D1 was one of the two directors of Fitzroya. D1
R R
and D3 were the authorized signatories of Fitzroya’s current account with
S DBS Kwong On Bank. D2 was also one of the authorized signatories of S
Fitzroya’s accounts with the Kwangtung Provincial Bank.
T T
U U
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- 42 -
A A
B 136. From the evidence, I find that:- B
C C
(i) the proceeds of some of the cheques were channeled to
D the securities accounts of D1 and that of D3; D
E E
(ii) 2 cash cheques were deposited into D3’s bank account
F with Hang Seng Bank; and F
G G
(iii) some of the proceeds of the LCs transactions were
H channeled to subsidiaries of China Rich Holdings by H
cheques signed by D3.
I I
J 137. The use of the proceeds of the LCs to pay for shares J
purchased in D1 and D3’s name shows that they were acting in concert.
K K
D3 had benefited financially from her participation in the fraudulent
L L
scheme.
M M
138. In my judgement, D3 who signed all the cheques in question,
N N
had to know why the cheques were issued and the use of the funds.
O O
139. The fact that cheque books, documents and chops of Famous
P P
Capital and Ivy Fund were found in the residence of D3 supports the
Q Prosecution case that D3 was a party to each of the conspiracies to defraud Q
the issuing banks in relation to Charges 1 to 10. D3 was not only trusted
R R
with the important task of signing the collection documents and invoices
S for the LC transactions, she was also trusted with the documents and chops S
of Famous Capital and Ivy Fund.
T T
U U
V V
- 43 -
A A
B 140. The only inference I can draw from the evidence is that D3 B
was a trusted employee of China Rich Holdings, and she was so trusted by
C C
D1 that she could be relied upon to carry out instructions concerning the
D LCs under which Famous Capital was the beneficiary. D
E E
141. I further draw the only irresistible inference that she had
F knowledge why Famous Capital had been established and what she was F
required to do in relation to Famous Capital. She knew that the underlying
G G
st th
transactions for the 1 to the 10 LC did not exist. She was not an innocent
H agent used by other fraudsters. She participated in the falsification of H
documentation, ie invoices of Famous Capital, used in the negotiation of
I I
process. She also caused and permitted payments to be made under the
J LCs by submitting the collection orders to the banks. All along D3 was not J
in the dark, instead, she was in the know.
K K
L L
142. I find it proved that D3 was a party to an agreement with D1
M and D2 to defraud the issuing banks as specified in Charges 1 to 10. M
N N
Dealing with Proceeds of an Indictable Offence (Charge 12 against D3)
O O
P
143. It is an admitted fact that the 28 cheques of Famous Capital P
referred to in paragraphs 39 to 47 of the Admitted Facts were all signed by
Q Q
D3.
R R
144. The Admitted Facts show that the aforesaid 28 cheques
S S
moved the proceeds of the negotiation of the 1st to the 10th LC from the
T current account of Famous Capital to the accounts of the various payees, T
saved for some cash cheques.
U U
V V
- 44 -
A A
B B
145. In my findings, D3 had dealt with the proceeds of the
C C
negotiation of the 1st to the 10th LC.
D D
146. I find that the proceeds of the negotiation of the 1st to the 10th
E E
LC were proceeds of an indictable offence (I am aware that the sum total
F of the 28 cheques signed by D3 includes proceeds of some LCs which F
were not made subject matter of any LCs charged).
G G
H 147. Given my findings that D3 was a party in the conspiracies to H
defraud the issuing banks for the 1st to the 10th LC, D3 had dealt with the
I I
proceeds of an indictable offence with knowledge.
J J
Was D5 a Party to an Agreement to Defraud Standard Chartered Bank
K K
(Charge 11)?
L L
M
148. The Prosecution concedes in its closing submissions that M
there is no evidence that D5 was involved in either (i) causing and
N N
permitting the making of the application for the 11th LC or (ii) causing and
O
permitting the falsification of documentation required for the negotiation O
of the 11th LC.
P P
Q 149. The Prosecution relies on the fact that D5 was a director of Q
King Capital, the beneficiary under the 11th LC and that he was one of the
R R
2 joint signatories to the bank account of King Capital. The Prosecution
S argues that D5 can be held responsible for causing and permitting payment S
be made to King Capital pursuant to the negotiation of the 11th LC.
T T
U U
V V
- 45 -
A A
B 150. In my judgement, there is insufficient evidence to prove that B
D5 knew that King Capital was involved in any LC application or that
C C
King Capital was a beneficiary under any LC. There is insufficient
D evidence to prove that D5 knew that the $3,508,739.97 that went into the D
bank account of King Capital was the proceeds of the negotiation of the
E E
th
11 LC. There is insufficient evidence to prove that D5 knew that the
F money in the bank account of King Capital was proceeds of a LC. F
G G
151. Bearing in mind the high burden of proof that the Prosecution
H has to discharge, on the evidence before me, I cannot be sure that D5 was a H
party to an agreement to defraud Standard Chartered Bank.
I I
J J
Dealing with Proceeds of an Indictable Offence (Charge 13 against D5)
K K
L L
152. As I cannot be sure that D5 had taken part in a conspiracy in
M
relation to the 11th LC, on Charge 13, it cannot be proved that D5 had M
knowledge that the property he dealt with, ie the cheque in the sum of $3.5
N N
million, represented proceeds of an indictable offence. The Prosecution,
O
in order to succeed, must prove that D5 had reasonable grounds to believe O
the property was criminal proceeds.
P P
Q Dealing With Property Q
R R
153. I have no difficulty in accepting that D5 had dealt with the
S property in question; it was D5 who signed the cheque in question which S
moved $3.5 million from King Capital’s bank account to that of Ivy Fund.
T T
U U
V V
- 46 -
A A
B Proceeds of Indictable Offence B
C C
154. I further find that the underlying transaction for the 11th LC
D did not exist and the transaction was a bogus one. From the evidence of D
Mr Lo and Mr Chiu, I am sure that King Capital had never supplied
E E
construction materials to Wing Fai.
F F
155. I accept the evidence of Mr Lo and Mr Chim that Wing Fai
G G
had no construction projects on the Mainland hence it had no reason to
H order construction materials and transport them to the Mainland. It is clear H
from the evidence that King Capital was not on the list of government
I I
approved suppliers, so Wing Fai had no reason at all to order construction
J materials from King Capital, knowing the same could not be used in the J
government projects in Hong Kong. For the other unfinished small
K K
projects of Wing Fai, they did not call for purchase of large quantities of
L L
concrete mix, asphalt and steel bars for these small projects had basically
M
been completed, subject only to some minor works. The fact that no M
record of King Capital could be found in the records of the IRD supports
N N
the finding that King Capital had not carried on any business.
O O
156. From the evidence before me, I have no difficulty in finding
P P
that there was an agreement between D1 and D4 to defraud Standard
Q Chartered Bank and the $3.5 million was proceeds that flew from the Q
negotiation of the 11th LC.
R R
S S
T T
U U
V V
- 47 -
A A
B Facts and Objective Factual Circumstances known to D5 B
C C
157. I find that the following facts and circumstances were known
D to D5 at the material time:- D
E E
(a) D5 was asked, and he agreed to become a director of
F King Capital; F
G G
(b) D5 was told that King Capital was set up to solve the
H shortage of funds problem faced by Wing Fai’s H
sub-contractors. When the sub-contractors did not
I I
have money to buy materials, King Capital would
J order the materials and pay for them on their behalf. J
When the job was completed, the money advanced
K K
would be deducted from the contract sum due to the
L L
sub-contractors;
M M
(c) D4 was the other director of King Capital, she worked
N N
in the Accounts Department of Wing Fai, a subsidiary
O
of China Rich Holdings; O
P P
(d) At that time, D5 was a foreman of Wing Fai;
Q Q
(e) D5, a relatively low ranking employee with little
R R
experience in drainage construction, was asked to
S become a director of King Capital; S
T T
U U
V V
- 48 -
A A
B (f) D4 and D5 became the joint signatories to King B
Capital’s bank account;
C C
D (g) There was no logical reason why D5 was chosen to be D
a director and a signatory of the bank account;
E E
F (h) D5, as a director of King Capital, did not have to F
concern himself with the business and administration
G G
of King Capital. He would only be asked to sign
H documentation and cheques at the head office of Wing H
Fai;
I I
J (i) The cheque of $3.5 million, the subject matter of J
Charge 13, was signed by D5; and
K K
L L
(j) D5 also signed some other cheques of King Capital.
M M
The Objective Element
N N
O 158. Processing the aforesaid facts and objective factual O
P
circumstances to the mind of a commonsense right-thinking member of the P
community, in my judgement, this person possessed of the aforesaid facts
Q Q
and objective factual circumstances, objectively would consider them
R
sufficient to lead a person to believe that the cheque in the sum of $3.5 R
million constitutes the proceeds of an indictable offence.
S S
T 159. I agree with the Prosecution’s analysis that one of the T
possibilities that would have crossed the mind of a right-thinking member
U U
V V
- 49 -
A A
B of the community is that the setting up of King Capital in the B
circumstances, be it a subsidiary of China Rich Holdings or otherwise,
C C
involving the appointment of relatively low ranking staff members of
D Wing Fai to become directors with signing rights to bank accounts to solve D
money problems may involve illegal activity.
E E
F 160. D5 emphasized in his evidence that he trusted China Rich F
Holdings as it was a listed company. In my judgement, when China Rich
G G
Holdings embarked on the aforesaid course, D5 must have detected the
H anomaly. It must have crossed the mind of D5 that, the company which he H
acted as a director and one of the signatory to its bank account, was
I I
involving in some criminal activities, hence a puppet like D5 was used to
J fill the directorship and perform the task of cheque-signing. J
K K
L L
Conclusion
M M
161. For the reasons given, I find D3 guilty of Charges 1 to 10 and
N N
12.
O O
162. I find D5 not guilty of Charge 11 but guilty of Charge 13.
P P
Q Q
R R
S ( Johnny JH Chan ) S
District Judge
T T
U U
V V