HKSAR v. Kong Kwai Choi and Another

DCCC 1005/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1005 OF 2015

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REASONS FOR VERDICT

1.D1 and D2 are jointly charged with 1 offence of "Conspiracy to make false instruments" (Charge 1) and 1 offence of " Doing an act tending and intended to pervert the course of public justice" (Charge 2). They each pleaded not guilty to both charges.

The Prosecution Case

Background

2.Globalway Corporation Limited ("Globalway") is a company registered under the Companies Ordinance in Hong Kong.  Since 1 September 2008, D1 became one of the directors of Globalway.

3.Eagle View Company Limited ("Eagle View") is also a company registered under the Companies Ordinance in Hong Kong.  During the offence period, Mr. SO (PW4) was a director of Eagle View.

Charge 1 (against D1 & D2)

4.Prior to his arrest in September 2014, PW4 was the proprietor of Eagle View, which engaged in the business of cargo surveying. PW4 has been in the same trade since 1972.

5.PW4 first met D1 in 1995.  At that time, PW4 understood that D1 was running a company under the name of Kwong Cheong Hong. Shortly after they met, D1 began to engage PW4 for his cargo surveying service (in particular, oil).

6.Some time in 2001, D1 asked PW4 to prepare survey reports (respectively on weight and quality) on lard to be exported by D1's company to Taiwan.  To do so, PW4 had to inspect and weigh the containers as well as the goods.  He also had to attend the factory to draw samples of the lard and send them to a laboratory for analysis.  When the results came back, he would incorporate the relevant figures into his report.  PW4 charged $500 per report.  D1 was also required to pay other related expenses (laboratory charges, notary public fees and endorsement fees of Chung Hwa Travel Service[1]) on a consumption basis.

7.About 1 month after the 1^st set of survey reports was prepared, D1 asked for PW4's service again.  He wanted PW4 to prepare another set of survey reports on lard to be exported from Hong Kong. D1, however, expressed that it took too long for the chemical analysis.  He told PW4 to refer to the previous results and no need to do the lab test.  After consideration, PW4 agreed to do so.

8.From the 2^nd set of survey reports onwards, PW4 did not send samples of the lard for laboratory analysis.  He relied on the figures from the previous reports and varied them slightly each time.  And from the 2^nd time onwards, PW4 would receive faxes which contained the relevant data (such as dates, weights and wording) from Globalway[2].  All subsequent survey reports were prepared by PW4 without any actual inspection, weighing or laboratory analysis.

Charge 2 (against D1 and D2)

9.On 9 September 2014, Mr. TSANG (PW1) and Madam LEUNG (PW2) of the Food and Environmental Hygiene Department ("FEHD") were tasked to investigate a matter concerning import/export of lard from/to Taiwan.

10.PW1 visited the office of Globalway regarding its export of lard to a company in Taiwan in March and May 2014.  Upon PW1's request, D1 produced some documents which included an invoice issued by Upswing Company in relation to the supply of "fodder lard" to Globalway (see p.73 of Exhibit Bundle 1).

11.In the same evening, PW1 phoned D1 informing him that there were some inconsistencies between the Upswing invoice and the invoice issued by Globalway.

12.On 10 September 2014, both PW1 and PW2 went to the office of Globalway.  In the conference room, D1 first asked PW1 to give him back the documents he had given to PW1 the day before.  D1 took those documents with him and left the conference room.  When D1 came back, he returned the documents to PW1.  PW1 then discovered that the Upswing invoice was replaced by a similar one which simply state "lard" (see p.72 of Exhibit Bundle 1).

13.The prosecution alleged that D1, with the assistance of D2, had secretly replaced the Upswing invoice which contained the description "fodder lard" in order to deflect or interfere with the FEHD investigation.

The Defence Case

14.Both D1 and D2 elected not to give evidence or call any defence witnesses.  This is their right; I drew no adverse inference against them in this regard.

Assessment and Analysis of Evidence

15.The burden of proof is on the prosecution to prove each element of each offence beyond reasonable doubt. I have reminded myself to assess the evidence of each charge against each defendant separately. Both D1 and D2 have a clear record. I have directed myself on their good character accordingly.

16.The documentary evidence in this case seems substantial, but the issues involved in each charge are straightforward. For Charge 1, the key issue is the credibility and reliability of the evidence of PW4. For Charge 2, the issue is primarily whether the evidence supports an irresistible inference to be drawn.

Charge 1

17.I am aware of PW4's status as an accomplice witness. In August 2015, he pleaded guilty to a charge of "Conspiracy to make false instruments", in which D1 and D2 were named as co-conspirators. He was sentenced to 2 years' imprisonment in September 2015. In the present trial, PW4 gave evidence under immunity (see Exhibit P385). I have carefully assessed his evidence and observed his demeanour in the witness box. In my view, he has tried his best to tell the court what he knows.

18.Defence did not take issue that PW4 did not inspect or weigh the lard containers or submit any lard samples for laboratory analysis before he issued the survey reports (which came in pairs) for each shipment of lard. There is also no dispute that between 2001 and 2014 (up to the point when PW4 was arrested), PW4 carried out this fraudulent practice each time when he received instructions from Globalway by fax.

19.The crux of the matter is who told PW4 not to conduct the actual testing. On this subject, PW4 gave several versions[3]. As a juror, I was given the impression that due to lapse of time, PW4 could not be certain that whether it was D1 or a staff member of Globalway who told him so. According to PW4's evidence, it appears that he was told only once not to conduct the actual testing. Afterwards, the modus operandi of receiving fax which contained the necessary data and preparation of false survey reports was established. Hence, it remains a genuine possibility that D1 did not tell PW4 not to conduct the actual testing.

20.In my view, as one of the directors of Globalway, D1 is highly suspicious (at least in terms of knowledge of PW4's fraudulent practice). On the other hand, if D1 did not tell PW4 not to conduct the actual testing, it became possible that D1 did not have subsequent knowledge of the fraudulent practice since no one from Globalway seemed to have mentioned it again to PW4 after the initial request.

21.By the same token, there is insufficient evidence to prove that D2 had any knowledge of PW4's fraudulent practice because at most, she would just be sending faxes to PW4. Needless to say, there is insufficient evidence to prove that D2 is the Ms. LAI who sent those faxes to PW4. PW4 said he might not have even met Ms. LAI in person. According to PW4, his contact with Globalway (including D1, if any) in relation to the subject survey reports was in the form of phone conversations and faxes.

22.Based on the reasons stated above, with some reluctance, I find D1 and D2 not guilty of this charge.

Charge 2

23.I need not dwell into the evidence in great details. I accept that D1 should have informed PW1 that he wishes to replace a document he had submitted the day before instead of switching the invoices (from p.73 to p.72 of Exhibit Bundle 1) secretly. I understand that PWs 1 and 2 are FEHD officers and their focus at that time was perhaps on obtaining the necessary documents from Globalway. But the fact remains that neither PW1 nor PW2 detected at first sight any impropriety in relation to D1's act of switching the invoices. Furthermore, they seemed to have accepted D1's explanation of Upswing having made a mistake and concluded that the documents provided by Globalway were in order.

24.On this basis, as a juror, I am unable to draw the irresistible inference that by switching the invoices (albeit secretly), D1's intention was to deflect or interfere with the FEHD investigation. One possible explanation is that he simply did not know any better. The same analysis applies to D2.

25.Based on the reasons stated above, I find D1 and D2 not guilty of this charge.