HKSAR v. Gurbani Robert C and Another

DCCC 713/2017

[2018] HKDC 779

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 713 OF 2017

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Reasons for Verdict

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Charges

1.D1 and D2 deny 7 charges of using a copy of a false instrument (1^st – 7^th Charges) and 1 charge of attempting to use a copy of a false instrument (8^th Charge).

Subject-matter of the Charges

2.The prosecution says that in make application on behalf of a company relating to D1 and D2 to the bank for loan, D1 and D2 had used, or attempted to use, as the case may be, a copy of a false bill of lading, which was, and which they knew or believed to be false, with the intention of inducing a staff member of the bank to accept it as genuine and by reason of so accepting it to do or not to do some act to the bank’s own prejudice or another person’s prejudice, namely to approve the loan application in favour of the company. 

Defence Stance

3.D1 gives evidence in court.  He has no witnesses to call. He has a clear record.  He had received a strong degree in business administration in U.S.A.  Through a path of informal internship in his father’s international trading business he had become a successful entrepreneur. 

4.D2 does not give evidence in court.  She has no witnesses to call.  She has a clear record.  In her RI she denies procuring the BLs or having any knowledge of their contents. 

My findings

5.D1 was the sole director and sole shareholder of BRL. CILs 1 – 8 were vehicles by which BRL got the financial backing from HSBC to operate.  CILs 1 – 8 each designated a supplier as the recipient of the proceeds.  There were 7 suppliers, ie 3 in Hong Kong, 3 in China and 1 in USA, to be paid according to the 8 invoices to BRL.

6.If crime proceeds were generated by the use of false BLs, D1 would have to involve 7 suppliers in different countries to have D1’s share of proceeds from the scam re-directed to D1. 

7.It is trite that the more accomplices involved in a scam, the more complex and risky it would be to implement, the more so for one with an international element.  Such complexity and risk appear to be prohibitive even though possible. 

8.Although not an ingredient of the offence, it is relevant to consider whether there were genuine transactions underlying the 8 CIL applications because there has to be a very special reason for a person to use a false instrument if he has a genuine underlying transaction.  D1 was a well-educated man with a stable family and a prosperous business venture.  He had no criminal record.  His financial credentials reflect that he was not under financial pressure.  While saying so, I am aware of fraud committed by very well-off people not in a financial plight since greed was a vice that did not appeal only to the needy. 

9.His proof of genuine transactions, ie remittance advices by customers to BRL, was only made available in the middle of the trial.  Those were pre-existing documents which he could have made available before trial. 

10.In Transactions 1, 3 – 6 and 8, the consignees named on the BLs were not precisely the payers named on the remittance advices.  D1’s explanation varies, such as a buyer being a subsidiary company of the consignee, the consignee sub-selling the goods to some others who therefore became the payer, or the BL being wrong in the consignee’s name.   Especially convoluted is Transaction 4 where the shipper Kewalram issued an Invoice to BRL.  Given that BRL was only to act as a financier of the buyer, it was a very strange arrangement for a financier to be issued an Invoice.  A parallel example will be HSBC, in its financing of a buyer, is being issued an Invoice by Kewalram naming HSBC as the buyer. 

11.I am of the view that these 6 sets of remittance advices purportedly for Transactions 1, 3 – 6 and 8 do not relate to the same transactions of the Invoices. 

12.I come to consider whether it was D1 or D2 or both D1 and D2 who had procured BLs 1 – 8.  D1 was the only one in possession of shipping data for BLs.  However, being a busy travelling businessman, he would be physically unable to make the enquiries and the booking with ZIM by himself. Being his shipping clerk, D2 must have been the one to make the enquiries and the booking with ZIM.  In doing so, she would have to ask D1 for the shipping information.  D1’s case is that he did not take part in the provenance of the BLs whereas D2’s case is that she did not take part in the provenance of the BLs.  In my view, D1 and D2 were mutually dependent on one other for procuring BLs 1 – 8.  D1 was the only one who had all the commercial information in hand.  D2 was the one who contacted ZIM to make enquiries and the booking with ZIM.  They had to collaborate.  D1 says that he did not pay attention to the final version of the BLs except for the monetary value.  I do not find this credible but I cannot say for sure what contents D1 would be looking at.     

13.In his VRI on 20/3/2015 he stated that D2 would on his behalf sign the application documents for CIL by using the electronic signature provided by him.  According to HSBC witnesses, they would not accept electronic signature for CIL applications.  It is incorrect for him to state firstly that D2 signed for him in the CIL applications and secondly that HSBC would or did accept any electronic signature by him.  Such incorrect allegations are put in there to seek to distance himself from the CIL applications.     

14.There is no way to verify the transactions or the BLs as he had lost all documentary records due to closure of office and change of mobile phones despite his being questioned by HSBC for his CIL applications from late 2013 onwards.  That was well before his voluntary disposal of documentary records at BRL’s closing down of its Hong Kong office on 23/5/2014.  There was no promise by HSBC that HSBC would not escalate the enquiries or report to the police.  He was aware of HSBC reporting to the police in 3/2015.  He was interviewed by the police on 20/3/2015.  The timing and the fact of his losing relevant documentary records at a juncture when they would be most helpful to prove his innocence look most suspicious.  It takes him to the middle of the trial to disclose documents he says that are helpful to prove his innocence.

15.D2’s case also looks very suspicious as she stated that she did not procure the BLs at all.  I find this at odds with her job nature.   

16.D1’s and D2’s suspicion aside, the prosecution still has to prove the case.  There is no evidence of what information was provided by D2 to ZIM, what the draft printed by ZIM for D2’s amendment or confirmation contained, what information was provided by D2 to ZIM for the final printing, or whether D2 had somehow included the draft instead of the finals in the 8 CIL applications.  There is no evidence of the proper working condition of ZIM’s computer at the time of the offences, ie in 2013 when PW5 Hui Sui-kuen (but not PW4 Chiu In-leng) was working there.  Computer errors can lead to irregular contents being printed.  That can result in misprinted drafts or misprinted finals being forwarded to D2, who passed them onto D1, neither of them checking sufficiently or at all for the accuracy of contents before sending them over to HSBC in the 8 CIL applications.  The evidence to prove knowledge of the BLs on the part of D1 and D2 is not abundantly clear.  I acquit D1 and D2 of all charges.