HKSAR v. Nanik Dayaram and Another

HCCC2/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 2 OF 2014

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Transcript of the Audio Recording
of the Sentence in the above Case

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COURT: Two defendants have been convicted by a jury of nine counts of conspiracy to defraud. Evidence revealed during the trial indicated that in the beginning of 2011, companies owned and managed by both the defendants applied to various banks for increasing credit facilities. New credit facilities were granted in March 2011. The combined new and existing credit facilities available for the companies’ use at the time reached several hundred million Hong Kong dollars.

Following the grant of these new credit facilities, false invoices and false bills of lading were submitted to banks to obtain loans. Soon, these loans became overdue and outstanding. As to where the proceeds of these loans had gone, the jury could only be sure of one thing, that the money did not go to any of the two defendants’ electronic goods businesses.

At all material times, the 1st defendant was, and still is, the head of the family and the Days Group. The 1st defendant may not be involved in the day-to-day operation of the conspiracy, nevertheless, he was found to be fully aware of this criminal scheme and involved himself in signing various facilities and, ultimately, gave his approval for its implementation. D1, the 1st defendant, stood to benefit hugely from this conspiracy.

D2 was the head of the Finance Department. He was responsible for handling all the financial matters of the Days Group. The 2nd defendant participated in this conspiracy on a day-to-day basis. Bearing in mind that this was a family-run business, D2, in my view, undoubtedly, also stood to benefit hugely from this conspiracy.

Counts 1 and 2 relate to false invoices submitted to HSBC for import loan applications and the amounts involved were 15.9 million and 4.1 million US dollars respectively. That is 124 million and 32 million Hong Kong dollars.

Counts 3 and 4 relate to false invoices submitted to Hang Seng Bank for import loan applications and the amounts involved were 4.8 million and 16.8 mullion US dollars respectively. That is 37 million and 131 million Hong Kong dollars.

Counts 5 and 6 relate to false invoices submitted to Bank of Baroda for import loan applications and the amounts involved were respectively 3.7 million and 4.9 million US dollars. That is 28 and 38 million Hong Kong dollars.

Counts 7 to 9 relate to false invoices and false bills of lading submitted to HSBC, Bank of Baroda, and UCO Bank for export loan applications and the amounts involved were, respectively, 2.4 million, 1.2 million and 1.3 million US dollars. That is 18 million, 9 million and 10 million Hong Kong dollars.

The amounts of gross loss to HSBC, Hang Seng Bank and Bank of Baroda in respect of import loans were 146 million, 161 million and 51 million Hong Kong dollars respectively. Amounts of gross loss to HSBC, Bank of Baroda and UCO Bank in respect of export loans were 18 million, 9 million and 10 million Hong Kong dollars.

After realisation of all the securities pledged with various banks, the net loss for the above four banks was estimated to be in the region of 200 to 250 million Hong Kong dollars. In other words, a huge amount was lost. The scale in this case was a massive one. Direct victims in this case, of course, were the four banks but, as Line J pointed out in HKSAR v Ma Bo Kee & Others, HCCC 352/2009 and subsequently CACC 458/2010:

“They (the banks and financial institutions) pass on the loss. Eventually, the burden falls on individual shoulders, ie, increased costs or diminution of services, or both, and it is the least well-off which will feel that the most.”

The public demand that the courts therefore punish hard for white-collar crime. When considering the two defendants’ sentences, I bear in mind that the two defendants had never committed any offence in their entire lives. The business empire that both of them inherited and built upon is now practically ruined.

Their convictions also bring shame to their family. Inevitably, their family’s reputation within such a small community in Hong Kong will be damaged. Needless to say, the family, at the end of the day, will suffer greatly. Naturally, they ask for leniency from this court. The family have my full sympathy but I also have a duty to perform.

In sentencing, I have also considered the 1st defendant’s age and health. The 1st defendant is not young and is suffering from various ailments but those ailments are, in my view, common amongst our senior citizens. At this juncture, there is little ground to justify any reduction based on any humanitarian grounds. In a case as serious as the present one, personal circumstances in fact pale into insignificance.

In this case, the role played by the 1st defendant, in my view, is just as pivotal and significant as the 2nd defendant. In sentencing, I therefore will not make any difference as to their respective roles and their respective culpabilities in this case.

In HKSAR v Hui Po Keung & Others, CACC 40/2010, Mr Hui and one Mr Leung were convicted of 14 counts of fraud. In a period of slightly over six months, they submitted 301 import loan applications to 14 banks with false invoices. A total of HK$153 million was advanced by the banks. At the end, the banks suffered a loss of 21.47 million. Mr Leung, being the mastermind behind the fraudulent scheme, was sentenced to 8 years and 3 months’ imprisonment. His appeal to the Court of Appeal against sentence was dismissed.

I first deal with the individual count, the individual sentence and then I shall deal with the totality of the sentence.

In view of the amounts of loan released and the loss to the banks, in respect of Count 1 and 4, a starting point of 6 years’ imprisonment will be adopted. In respect of Count 2, 3, 5 and 6, a starting point of 5 years’ imprisonment will be adopted. In respect of Count 7, 8 and 9, a starting point of 4 years’ imprisonment will be adopted.

Since Count 1, 2 and 7 relate to HSBC, the sentence imposed on each count will run concurrently, ie, 6 years.

Since Count 3 and 4 relate to Hang Seng Bank, the sentence imposed on each count will also run concurrently, ie, 6 years.

Since Count 5, 6 and 8 relate to Bank of Baroda, the sentence imposed on each count will also run concurrently, ie, 5 years.

Count 9 stands on its own, ie, 4 years.

Having considered the totality principle, I am of the view that a total of 10 years’ imprisonment will be appropriate in this case. This will be achieved by ordering 16 months of Count 3 and 4, 16 months of Count 5, 6 and 8 and 16 months of Count 9 to run consecutively to each other and also consecutively to the 6 years imposed on Counts 1, 2 and 7.

D1 and D2, please stand up, the 1st and the 2nd accused.

In respect of Count 1 to 9 that you have been convicted of by the jury, each of you will serve a period of 10 years’ imprisonment. In view of the length of the sentence, I will not order any disqualification order.