HKSAR v. Ko Ka Wai

HCCC 78/2018

[2019] HKCFI 385

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 78 OF 2018

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

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COURT:

All right, Mr Ko Ka-wai, please stand up. Having heard the mitigation advanced by your counsel, Mr Davies, I am going to pass the sentence on the charge which you have been convicted, and the following are the reasons for your sentence.

The defendant is charged with one count of theft. The amended indictment avers that between 23 December 2013 and 16 December 2014, he stole choses in action, namely a total sum of $37,450,000, property belonging to Birmingham International Holdings Limited. He pleaded not guilty to the charge and after trial, he was convicted by jury as charged.

The defendant’s conduct in this case was nothing short of disgraceful. It reveals a serious breach of trust and a blatant disregard of the important legal requirements and obligation imposed on a publicly listed company and all the person involved or connected with it.

At the material time, the defendant was the head of accounting department of Birmingham International, a listed company in Hong Kong. It was the holding company for Birmingham City Football Club in England. The listed company had a company account with Wing Hang Bank (“the bank”) and the purpose of this account was to remit funds to United Kingdom for the running and the operation of the football club there.

The defendant had custody of the company chequebooks and the company chops and the bank statement of the bank account were also kept in a file cabinet inside his room in the office.

The defendant abused his position in the listed company by embarking on a series of dishonest appropriation of substantial fund in the sum of over $37 million by use of 75 company cheques drawn from the bank account bearing the false signatures of two directors. All these cheques were not crossed and in 71 cheques, the payee was written as “JYC Consultant”. Those cheques, however, were not deposited into that company’s account but mostly into the defendant’s personal account in HSBC.

Only one of the cheques had the defendant’s name “Ko Ka-wai” as the payee and it was deposited into the defendant’s personal bank account in HSBC. One cheque was deposited into a watch company in Central for the defendant’s purchase of watches from that company. Another cheque was payable to another company and it was deposited into the bank’s personal bank account in HSBC. There was also finally another cheque which was written to another company as the payee and it was deposited into that company’s bank account for the repayment of the defendant’s personal loan to the director of that company as well as for the payment for the purchase of watches.

The amount on the cheques were large sums and the money stolen from the listed company’s bank account each month in the 16 months of the charging period was large, ranging from $600,000 to as much as $4.1 million. These sums were transferred to the defendant’s HSBC account when often he had only a small amount of money in his account.

A large amount of the sums was used by the defendant to buy expensive watches. The treasury accountant analysed the fund flow situation of the defendant’s bank account and his betting account in the Hong Kong Jockey Club concluded that the bets paid to the defendant’s betting account during the charging period, namely $372,425,746 were mainly funded by deposits from the listed company and reinvestment of the winnings and rebate from the Hong Kong Jockey Club.

There was a reported loss to the Hong Kong Jockey Club of $30,229,803 during the period from 1 September 2013 to 31 December 2014, and the defendant’s betting activities were found to be increasing significantly both in terms of the bets amount and the total number of bets during the period.

The offence only came to light after the defendant resigned from the listed company in October 2014. It was discovered by the administrative assistant of the listed company that large sums of money in the company bank account was missing. The management of the listed company decided to report the matter to the police after they obtained further copies of the cheques from the bank.

On 17 January 2015, the administrative assistant of the listed company called up the defendant and asked him to meet up and talk about the listed company. The defendant came out and was subsequently arrested by the police officer after he arrived at a restaurant. During a search of his wallet by the arresting officer, two more uncrossed cheques in the amount of $500,000 and $200,000 made payable again to JYC Consultants were found.

Under caution, the defendant said those two cheques were issued to him by the company. In a subsequent record of interview, the defendant explained, inter alia, that the bulk of the cheques in question was for the expenses incurred by the listed company for resumption of trade in the stock market. About 10 million to 15 million were paid for his own reward for helping the listed company with the resumption of trade and some were in fact payments for the private matters of the ex-board chairman of the listed company. All these explanations apparently have been rejected by the jury.

The mitigation

In mitigation, Mr Davies informed the court that the defendant is now 36 years old. He is still single. He is a university graduate from Australia and after graduating, he returned to Hong Kong. According to the antecedent statement, he engaged himself in the accounting field since 2005. Before he worked for the listed company from 2012 to 2014, he also worked as an accountant in a number of accounting firms.

The defendant’s parents are both retired now. His father, aged 67 years, used to be a captain of a launch and his mother, aged 65, used to work as a nurse.

Criminal record

The defendant had in the past a criminal record in respect of nine charges of theft in the Magistrate Court back in 2010, for which offence he was sentenced to a total of 160 hours’ Community Service Order and a compensation order in the sum of $95,620.

Mr Davies told the court that he had already explained to the defendant that the maximum sentence for a single offence for a theft charge is 10 years and the sentencing guideline followed by the Hong Kong court. He said that the present case is not the most serious case and therefore perhaps the maximum sentence should be reserved to those cases which is more serious than the present one. There is really not much Mr Davies has said for the defendant.

Sentencing principles

The present case involves a serious breach of trust. The leading authorities are R v Barrick [1985] 81 Cr App R 78 and R v Trevor Clark [1998] 2 Cr App R 137. Both cases have been followed in Hong Kong.

The Court of Appeal in HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 held that the principles laid down in Clark would apply in Hong Kong. Now, in accordance with the bands set out in Clark, the court provided the following guidelines:

(a) over $15 million, 10 years or more;

(b) 3 million to $15 million, 5 to 9 years;

(c) 1 million to $3 million, 3 to 4 years;

(d) 250,000 to $1 million, 2 to 3 years; and

(e) less than $250,000, less than 2 years.

However, in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1018, the guidelines were revised to ensure that the terms of imprisonment of each band were consistent with each other. The revised guidelines are now as follows:

(a) involving 15 million or more, 10 years or above;

(b) involving 3 million to 15 million, 5 to 10 years;

(c) involving 1 million to 3 million, 3 to 5 years;

(d) involving $250,000 to 1 million, 2 to 3 years; and

(e) involving $250,000 or less, below 2 years.

The English Court of Appeal in Barrick examined the approach to the sentencing of cases that involved a person in a position of trust who had used that privilege and trusted position to steal or defraud others. In that case, it is stated that in determining the sentence in breach-of-trust case, the court has to regard to the following matters:

(1) the quality and degree of trust reposed to the offender including his rank;

(2) the period over which the fraud or the thefts have been perpetuated;

(3) the use to which the money or property dishonestly taken was put;

(4) the effect upon the victim;

(5) the impact of the offences on the public and the public confidence;

(6) the effect upon fellow employees or partners;

(7) the effect on the offender himself;

(8) his own history;

(9) those matters of mitigation special to himself such as illness; being placed under great strain by excessive responsibility or the like; where, as happens, there has been a long delay, say over two years, between him being confronted with his dishonesty by his professional body or by the police at the start of this trial; finally, any help given by him to the police.

The court further added that in general, a term of immediate imprisonment is inevitable save in very exceptional circumstances or where the amount of money obtained is small.

Consideration

In sentencing the defendant, I have borne in mind the facts of this case and the mitigation advanced on the defendant’s behalf and the relevant sentencing principles and guidelines, in particular, the guidelines provided in Cheung Mee Kiu and Ng Kwok Wing.

As I have already said, the defendant has perpetuated a series of misappropriation by use of the 75 company cheques which were all along kept under his safe custody. He abused the position of the company accountant and the mismanagement of the listed company at the time. He breached the trust that others had reposed in him by misappropriating the funds of the listed company for his own use.

It was clearly premeditated and it lasted for about a year, during which time large sums of the listed company were subsequently transferred to the defendant’s personal bank account for him to engage in extravagant gambling on horse racing and football games, feeding his expensive habit of buying luxury watches and also for the repayment of huge personal loans in the sum of $1.7 million.

The total sum he stole in this case is huge, more than $37 million. He has treated the money of the listed company as his own and throughout the period of offence, he acted with total disregard of the interest of the company’s shareholders or the company and the investing public.

The impact on the financial standing as well as the operation of the listed company was devastating especially when there was a period during which the trading of the stocks of the company in the stock market was suspended.

The reported theft of the listed company funds certainly went further to damage the already tarnished reputation of the listed company following the conviction of its ex‑chairman on money laundering as well as the confidence of the investing public on the listed company.

Most of the money stolen was gambled by the defendant and lost. There was no offer of restitution of any kind from the defendant and there was no trace of expensive watches. He was convicted after trial and there is no sense of remorse displayed by the defendant at all during the trial. Up to now, he did not even tell the court why he would have to commit the offence.

The maximum penalty for the offence of theft, contrary to section 9 of the Theft Ordinance, Chapter 210, is 10 years’ imprisonment. This limits the court’s power to sentence the defendant for more than 10 years according to the sentencing tariff laid down by the Court of Appeal. In fact, according to the tariff, the defendant should consider himself fortunate in that the maximum sentence of the theft offence was only 10 years and not more.

According to the sentencing guidelines mentioned, he would have been sentenced to 10 years’ imprisonment already for just stealing $15 million, which is only 40 per cent of the total sum he has stolen in this case. In other words, even if he were to receive the maximum sentence, he would not be punished for the 60 per cent of the total sum which he had in fact stolen.

Defendant, Mr Davies submitted on your behalf that this is not the worst type of this case for a single offence. I disagree. It just reflects the enormity and seriousness of the present offence and why it is one of those few cases where maximum sentence should be imposed on a single offence because in my judgment, it must have been one of the worst cases of this kind.

Defendant, you are therefore sentenced to 10 years’ imprisonment. Also, I would make a criminal bankruptcy order in terms of section 84 of the Criminal Procedure Ordinance. That completes the sentence.