The Queen v. Wong Seck-hung and Another

HCMA001133/1988

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 1133 OF 1988

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BETWEEN

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Coram: Hon Hooper J. In Court

Date of hearing: 15 February 1989

Date of delivery of judgment: 24 February 1989

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J U D G M E N T

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1. On the 13th September 1988 the appeallants were both convicted in the Magistrates Court at North Kowloon on three charges of offering an advantage to an agent, contrary to section 9(2)(a) of the Prevention of Bribery Ordinance. It is against these convictions that they appeal and it is said, that for a number of reasons set out in separate grounds that the convictions are unsafe and unsatisfactory.

2. In Charge A, it was alleged, inter alia, that on or about the 27th March 1987 they offered a gift, fee, commission or reward of HK$4,750 td an agent Wong Kong-sang, an employee of Nicetime Industrial Limited (Nicetime) as an inducement to or reward for, or otherwise on account of his doing or having done an act in relation to his principal's affairs or business, namely the purchase of piece goods by Nicetime from (the two appellants) of Sun Hing Trading Company (Sun Hing).

3. Charges B and C were couched in identical language except that the dates are 1st April 1987 and 1st May 1987 respectively and the amounts HK$17,580 and HK$1,650 respectively.

4. So the Crown case against the appellants was in essence that on three occasions they both offered kickbacks to WONG of Nicetime in return for WONG (as agent for Nicetime) purchasing piece goods from their company Sun Hing.

5. Most of the evidence against the appellants in the court below consisted of their own answers under caution to questions in interviews conducted by I.C.A.C. officers. As these answers could only be admissible against the maker, it is convenient first to look at the evidence of a general nature against them.

6. PW1, Ho Kin-wah, a director of Nicetime, gave evidence that there were two shareholders of Nicetime namely he himself, and a Madam Fung. However, he was the person solely in charge of the operation of Nicetime whose business was the export of garments and wholesaling of finished garments. In January 1987, he employed Wong Kong-sang whose duty was to be responsible for the wholesaling department on terms that he would obtain 30% of the profit, the other 70% going to Nicetime. Apart from Mr Wong Kong-sang there was another employee, a Mr Fong. Both were on similar terms. Each would be paid $12,000 per month to be accounted for in due course when the profits were calculated.

7. When Nicetime purchased piece goods from other suppliers, the procedure was that Mr Wong would be responsible for dealings with the other company and he would also select the piece goods and make the necessary order. When the relevant invoice was presented to Nicetime, after obtaining the goods, somebody from Nicetime usually wrote the cheques to be supplied for payment. After payment was settled, Nicetime would ask for a receipt from the supplier. None of the employees for Nicetime was authorised to solicit or accept any advantages in relation to the affairs of the company. He had never authorised WONG or FONG to accept advantages. As far as he knows, Mrs Fung did not do so.

8. He apparently had no personal recollection of these three transactions.

9. He testified "From the records kept by my company Nicetime, I was aware my company had dealing with Sun Hing."

10. He then purported to state what these transactions were but his evidence in this respect was hearsay. I do not propose to refer to it.

11. He said that when he settled payment with Sun Hing Trading Company there were three persons in Nicetime entitled to sign cheques, himself, Madam Fung and a Mr Law. He only learned from the records who had signed the cheques.

12. The business records would be kept in a particular part of his company. After he checked company 's record in relation to Sun Hing, he went to the bank and asked for photocopies of the cheques. As far as he could recall, the cheques Nicetime drew involved three banks. He went on to give evidence about his invest investigations at the banks and how he received a cheque and two certified copies of cheques. However these cheques were not produced in evidence in the court below. There was therefore no admissible evidence to establish that the cheques he was referring to related to these three transactions.

13. He produced three cash sale memos, exhibits P1, P2 and P3, which he said he found amongst his company's records when he traced back the transactions with Sun Hing.

14. He then purported to explain these invoices but of course his evidence in relation to these was hearsay.

15. He testified ''From my knowledge, I do know whether payment has been made on these three invoices, but I am not in a position to tell is the specified dates of the payments of the cheques.

16. It would appear that his evidence as to whether payment was made on these cheques is hearsay because no cheques or bank records were ever produced and his knowledge appears to have been based upon his inquiries. He said :-

"As far as I know Mr Wong Kong-sang was responsible for conducting the negotiations for Nicetime with Sun Hing. I told you Mr Wong would be, entitled to profit sharing and would not be entitled to solicit any advantage. Mr Wong is not authorised to solicit any commission arising from any transactions. Up to now there has not been any profit sharing with Mr Wong by Nicetime because our company suffered a loss. If Mr Wong had taken part of the purchase price as his profit I would not have allowed, it. He would not be allowed by Nicetime to get a portion of the purchase price as commission. Nicetime Industrial did not ever receive any money back from Mr Wong in relation to transactions with Sun Hing."

17. In cross-examination, he said, inter alia, "......the matter of negotiating with other organisation was left entirely up to Mr Wong".

18. And later ''Before Mr Wong joined our company we usually discussed on the price of cloth first, and after he joined our company we fixed the amount of capital and he was then allowed to do dealings by his own."

19. He admitted that the fixing of price levels was very much a matter of negotiation. He agreed he often received cheques to sign. Often there were a number of cheques for him to sign that had already been written out.

20. It was his accountant who was responsible for the book keeping of the company. He admitted that sometimes people associated with the company would receive money from the company and pay it into the books of the company.

21. The accountant did not give evidence. No bank records were produced and it would appear that all PW1 knew about the three transactions between Nicetime and Sun Hing was what he had gleaned from perusal of the records and from his inquiries.

22. The next witness who gave evidence of a general nature was PW2 Mr Lo Fat-yiu, an investigator of the I.C.A.C. He testified that on the 26th November 1987 he attended Sun Hing where he saw the two appellants. He executed a search warrant issued under section 17 of the Prevention of Bribery Ordinance and seized a number of document. Amongst these were exhibits P5(a) and (b) and exhibit P6, which purport to be duplicates of the three invoices, exhibits P1, P2 and P3 respectively. He also seized a cheque book of Kwong On Bank, exhibit P7, containing a cheque stub No. 145790 in which was written "27/3" and the figure "4750". He seized another cheque book of Hua Chiao Commercial Bank Limited, exhibit P8, containing a cheque stub No. 229713 on which was written "¼"and the figure ''17,580''.

23. He then returned to the I.C.A.C. offices at Murray Road Building. Between 2:10 p.m. and 5:15 p.m. he interviewed the 1st appellant. He t en produced in evidence as exhibit P9 the record of interview with the 1st appellant (who was D1 in the court below).

24. The third and last witness for the prosecution was PW3 Yeung Kwong, another investigating officer of the I.C.A.C. He merely gave evidence of his interview with the 2nd appellant (D2 in the court below) on the 26th November 1987 commencing at 1:45 p.m. It concluded, he said, at 5: p.m. He also produced it as evidence against the 2nd appellant as exhibit P10.

25. Neither appellant gave evidence or called any witness.

26. It can be seen at once that without the evidence of the statements made by the appellants, the Crown did not have a case as there was no evidence that either of them had offered any advantage to Wong or that Wong had been paid any sum at all

27. The Crown rely very much upon the individual records of interview signed by each appellant as a basis for his conviction. Mr Blanchflower, who appears for the Crown, recognises that these records did not amount to completely unequivocal confessions and concedes it was necessary for the magistrate to be selective in his approach and to draw inferences to establish the essential ingredients of the offences.

28. The task of the magistrate and that of Mr Blanchflower for the Crown has not been made any easier by the way in which the case was presented in the court below. No cheques were ever produced. No bank records were produced. No receipts were ever produced. No accountant, accounts clerk or book keeper from Nicetime or Sun Hing was called. When the magistrate reached his findings of guilt, he relied very much on inference. His findings are attacked by Mr Wong for the appellants in respect of the inferences he drew arid his alleged to consider other matters. It is also suggested that he was wrong in admitting the record of interview, exhibit P9, in evidence against the 1st appellant. It is also complained that having admitted it, he used part of one caution statement of one appellant against the other appellant in coming to his conclusion that they each knowingly involved in a  joint enterprise.

29. The first three pages of the magistrate's statement of findings consist of a summary of the evidence. He then sets out his findings of facts as folllows :-

"1. At all material times PW1 was a director of Nicetime Limited (Nicetime) and responsible for its day to day running.

2. At all material times D1 was the proprietor of Sun Hing Trading Company (Sun Hing) and responsible for its day to day running.

3. At all material times D2 was an employee of Sun Hing.

4. At all material times Wong Kong-sang (Wong) was an agent for Nicetime within the definition of agent in section 2(l) of Cap. 201.

5. Acting in his capacity as an agent Wong committed Nicetime to purchase. the goods covered by the invoices P1, P2 and P3 from Sun Hing.

6. Negotiations for those purchases were conducted between Wong on behalf of Nicetime and D2 on behalf of Sun Hing.

7. The goods the subject of P1, P2 and P3 were supplied to, and paid for by, Nicetime.

8. At the instigation of Wong the amounts on invoices P1, P2 and P3 were inflated upon terms that Wong would receive the difference between the price at which Sun Hing was prepared to sell those goods to Nicetime and the amount shown on Pl, P2 and P3.

9. Dl, and D2 were knowingly part of that scheme and both actively and directly furthered it intending thereby Wong would receive a financial benefit for himself to which he was not entitled.

10. That financial benefit to Wong would arise from and be dependant upon Wong committing Nicetime to purchase the goods covered by P1, P2 and P3 from Sun Hing.

11. D1 Dl and D2 had jointly offered Wong there advantages namely payments of $4,750, $17,580 and $1,650 representing the balance between the true price of goods to be supplied to Nicetime and the inflated prices on P1, P2 and P3 and those monies were paid to Wong on behalf of Sun Hing out of monies received from Nicetime in payment for P1, P2 and P3.

12. The three payments offered (and paid) to Wong were an 'advantage' within section 2(1) of Cap 201 and were offered (and paid) to him as an inducement to or reward for or otherwise on account of his doing or having done an act in relation to the business or affairs of his principal, Nicetime, namely placing orders for Nicetime to purchase the goods in Pl, P2 and P3 from Sun Hing.

13. Wong was not authorised or entitled by Nicetime to solicit or accept advantages from Sun Hing.

14. Neither D1 nor D2 had any lawful authority or reasonable excuse for offering either of the three advantages to Wong.

15. Wong had hot accounted to Nicetime for either of the advantages offered to and received by him.

16.   Wong had no lawful entitlement to the monies paid to him by Shun Hing as against Nicetime.''

30. It is the magistrate's act of setting out his findings of facts against the two appellants, jointly in the same paragraphs which provides the basis for the criticism this he considered the cautioned statements, exhibits P9 and P10 together. I think it would have been better had he dealt with his findings against each appellant separately, but he in his reasons for decision that he was aware that the statements were only admissible against the maker and that he did not use one appellant's statement against the other. Had he set out his findings separately in respect of each appellant, this criticism in ground 6 of the Grounds of Appeal could not have been levelled at him.

31. So far as the magistrate is criticised for failing to exclude exhibit P9 in ground 5 of the grounds of appeal, on the basis that the 1st appellant had not been properly cautioned objection was raised to the admission of this exhibit at the trial and defence counsel relied specifically upon its contents in his defence a of the 1st appellant. There is, therefore nothing in this ground of appeal.

32. The grounds of appeal specifically attack the findings of fact set out in paragraphs 8, 9, 10, 11, 12, 15 and 16 referred to above.

33. Having set out the evidence admissible generally against both appellants and the magistrate's findings of fact, it will be seen, how very much the magistrate was forced to rely upon the contents of the individual records of interview to bring in these findings.

The Record of Interview of the 1st appellant, exhibit P9

^{34. In answer (3) the 1st appellant admitted that he is the sole proprietor of Sun Hing and in answer (4) that he has a customer called Nicetime. In answer (5) he stated that Lee Shui-cheung was responsible for making business contact with Nicetime and went on to state in answer (6) that Lee Shui-cheung was his door-to-door salesman.}

35. Pausing for a moment, I think the magistrate was justified in drawing the inference from this evidence and the identification of PW2, the I.C.A.C. officer, of the 2nd appellant as one of the two persons he met in the office of Sun Hing, that the Lee Shui-cheung the 1st appellant was referring to as his salesman was in fact the 2nd appellant.

36. PW2, the interviewing officer, in the course of the interview with the 1st appellant showed him there photocopies of three cash sale memoranda marked 6127, 6142 and 6247. (i.e. the same numbers as appear on exhibits and P3 and exhibits P5 (6127, 6142) and exhibit P6 (6247)). In answer (8), the 1st appellant states that he recognises that these were related to business transactions made with Nicetime. In answer he states he did not know which person in Nicetime his company contacted when doing business and suggests that the interviewer should ask Lee Shui-cheung.

37. Now it is apparent from this answer that the 1st appellant did not have any personal knowledge of the negotiations that went on between the representative of Nicetime and Mr Lee Shui-cheung. All he knew about it was what he had been told by Lee. Thus, when he was asked in question (10) ''Did Nicetime requested to have commission or discount when doing business with Sun Hing?'' he was asked a question which invited a hearsay answer and it a hearsay answer. The answer was ''Yes, it is to overstate the amounts on the bills and to give Nicetime staff the difference between the overstated amount and the actual price related to the bill.''

38. Of course a man can confess to his own acts, knowledge or intentions, but he cannot confess as to the acts of other persons which he has not seen and of which he can only have knowledge by hearsay. Surujpaul v. R. (1958)42 Cr. App. R. 266, 273 P.C., Archbold, 43rd edn. Vol 1, paragraph 15-52.

39. Answer (10) can therefore only be an indication at the most of the 1st appellant's belief of what had happened based upon what he had been told.

40. In answer (11) the 1st appellant says that he doesn't know which staff of Nicetime would be paid, saying that he only wrote a cheque to give to Lee Shui-cheung.

41. In answer (12) he admits that it was Lee Shui Cheung who suggested to overstate the amount on the bill so as to affect the discount ''in such a manner''.

42. Question (13) was "Why, did you give discount to Nicetime staff in such a way?'' And the answer is merely a way of doing business moreover my company suffered no loss."

43. This question seems to assume that the 1st appellant had given a discount to staff of Nicetime, when the 1st appellant had not said that he personally gave the discount. The answer can be taken to mean no more than that the 1st appellant intended to give such a discount to the staff of Nicetime as it was merely a way of doing business and he would suffer no loss.

44. The interviewer then started to question the 1st appellant on the individual transactions. He referred to invoice ''6127'' (presumably exhibit Pl or 5(a)) :-

''Question (15) First of all let me talk about this '6127' memo dated 25th April 1987. One lot of goods - 58'' cotton and linen plain cloth was sold. The total quantity was 2375 yards as shown from the memo. The price per yard was $22 and the total amount was $52,250. However, $47,500 actually was written at the bottom (near the total). How was the amount $47,500 worked out?"

''Answer : The amount ($47,500) was worked out basing on the price $20 per yard: but the price stated on he memo was $22 per yard.

Question 16 : Taking the difference of $2 for a quantity of 2375 yards, the total is $4750. How was this sum of money dealt with?

Answer : It should be I who wrote a cheque and left it for the salesman and the salesman would give it to the handling person from Nicetime."

45. The words ''should be'' do not indicate that this actually happened but that it is what, should have happened or what he would have expected to happen.

46. The interviewer then turns to a book of cheque stubs.

"Question 17 : This is a book of cheque stubs of Sun Hing s current account at Shumshuipo Branch of Kwong On Bank Limited. The account is No. 7200214777. The cheque stub No. 145790 from the book dated 27.3 was with an amount of $4750. Was this cheque used to pay the staff of Nicetime the difference?

Answer : yes.''

47. In view of the reference to the account number cheque stub number, this must refer to exhibit P7.

48. It is not evidence that the cheque really was used to pay the staff of Nicetime, because the lst appellant had no dealings with the staff and did not even know who the staff was. It can only be evidence of intention as far as the 1st appellant is concerned.

49. In answer 18, the 1st appellant states that if the name of the payee is not written on the stub, it should be a cash cheque.

50. So that answer is either supposition or a statement of what he would expect to happen.

51. The interviewer then turned to a document which was not produced in evidence at the trial.

"Question 19 : This is a bank transaction book of Sun Hing which concerns transactions with Kwong On Bank Limited, as shown on page 7 Sun Hing received a cheque form Nicetime on 25th March; the amount was $52,250; its a cheque of Hong Kong Bank, Besides, there is expenditure of $4750 on 27th march with the words "discount paid to Nicetime'' written in the remarks column. Does this entry in the record correspond to the record of cash sale memo ''6127'' mentioned.

Answer : Yes.

Question 20 : Was this entry in the account record made by you?

Answer : yes.''

52. As this ''bank transaction book" was not in evidence, the assumption of facts set out in question 19 is hearsay as is the answer. The answers to both questions 19 and 20 can prove no more than that the 1st appellant records on a document not produced the words ''discount paid to Nicetime''. It is not evidence that a discount was in fact paid because the 1st appellant does not say he personally paid it or was present when it was paid. He merely made such an entry.

53. Mr Blanchflower argues that the 1st appellant accepted that he made the entry on page 7 and he agreed with that assertion of fact and had was able to do that because he was the author of those entries. With respect to Mr Blanchflower that cannot be so. Unless the 1st appellant had personal knowledge that a discount was paid to Nicetime or anybody else, he could not confess to that. At the most, it was evidence of what the 1st appellant intended should happen. Even Mr Blanchflower accepts that the statement cannot be completely accurate because it purports to say that Nicetime got the discount and it is his case that Nicetime didn't in fact get the discount. However, even here he is in difficulties because we have no accounts or bank documents of Nicetime in evidence showing what sums were paid to Nicetime during the period in question.

54. The position is the same in respect of the second transaction. The interviewer shows the lst appellant the written memo stated to be numbered 6142 dated the 28th March 1987 (presumably exhibit P2 or exhibit P5(b)).

"Question 22 : Here is another memo marked 6142 dated 28th March 1987, 44" cotton and linen were sold. The quantity was 5860 yards. The total amount was $93,760. However, $76,180 actually was also written under the total amount. Moreover, the unit price was originally written '16'but was crossed out and replaced by '13'. Can you explain the relation between the said amount of $76,180 and the unit price?

Answer : When issuing the memo, each yard of cloth costed $16, so the total amount was $93,760. Actually, only $13 was charged for each yard of cloth, so the total amount was $76,180.

Question 23 : In other words, $3 per yard had been overstated on the memo. As the quantity was 5860 yards, the difference was $17,580. How did you deal with the said difference?

Answer : I also wrote a cheque and gave it to Lee Shui-cheung for him to give to Nicetime staff."

55. So these answers indicate what the 1st appellant's understanding of the matter was and what he himself did, in other words, write out a cheque and give it to Lee.

56. The interviewer then turned to a cheque book which he stated to be Sun Hing's account opened at Un Chau Street Branch of the Hua Chiao Commercial Bank numbered 064-790-00002713, cheque stub number 229713 dated 1/4 discount for Nicetime"amount $17,580. Presumably this relates to exhibit P8. He asked in question 24 if this cheque was used to pay Nicetime staff the difference.

57. The answer was "yes". Again, this answer can only be hearsay or supposition, because the 1st appellant did not deal with the staff member of Nicetime himself. It is evidence that the 1st appellant wrote out the cheque intending that it should be used to pay the staff of Nicetime.

58. When asked in question 25 if the name of the payee was written on the cheque, the answer was "probably no", which again is supposition.

59. The interviewer then showed the 1st appellant what he called a "bank transaction book" "Hua Chiao" which was not admitted in evidence before the magistrate. Again, the answer that the 1st appellant gave to the assumption made by the interviewer from that document is of limited use to the Crown.

"Question 27 : Were these accounts entries written by you?

Answer : The accounts entry on page 7 was written by me, but the accounts entry on page 6 was made by a staff member of my company; yet I am not sure who made the entry."

60. The Crown cannot rely on these answers to prove that that a deposit of $93,760 was made in the name of Nicetime on the 30th March which the interviewer said was stated on page 6. The 1st appellant's answer concerning page 7 is evidence that the entry was written by him and that he was intending to pay $17,580 on the 1st April as a cash discount for Nicetime and was intending to refer to memo 6127.

61. The interviewer then turned to the third transaction.

"Question 28 : Here is another cash sale memo No. 6247. One lot of 'Pa Lik Silk'(brand name of cloth) was sold. The quantity was 550 yards. Each yard costed $16 and the total amount was $8,800. However, $7,150 actually collected was written under the total amount. Can you explain this?

Answer : $7,150 was worked out basing on the price $13 per yard. The price was overstated by $3 per yard, i.e. $16 per yard on the memo so the total amount was $8,800.''

62. This is evidence of the 1st appellant's intention at the time.

"Question 29 : How did you deal with the said difference in prices of $1,650?

Answer : Possibly payment of this transaction was made in cash, as there were no cheque number and (name of the) bank written on the memo. If payment was in cash, he would have been paid cash too.''

63. This is of course supposition and not evidence that payment was made at all, let alone in cash.

64. In answer to question 31, the 1st appellant supposed that Nicetime's staff made the suggestion to Sun Hing's salesman lee that Lee mentioned it to the 1st appellant and that he the 1st appellant had not objected because it did not cause loss to his company.

65. In answer to question 32, the appellant did not even know who wrote out the three memoranda.

66. In question 33, the interviewer assumes that Nicetime staff received the difference between the price on the memo and the actual price and asked if the 1st appellant knew if he gave the difference back to Nicetime. Again, the 1st appellant's answer was that he didn't know.

67. When asked in question 34 why he termed the difference in prices as ''discount",the 1st appellant replied "the difference in prices were not received by my company so they were written as discount''.

68. When asked in question 35 why he did not make a cheque payable to Nicetime, the 1st appellant replied "anyone can collect payment for a cash cheque''.

69. When asked in question 36 ''Why didn't you directly write Nicetime as the payee of the cheque'', the 1st appellant replied ''at the request of their staff''.

70. Of course, that is evidence of his understanding Since no request had been made directly to him.

71. With regard to the two cheques for $4750 and $17,580 respectively, he was asked to whom he gave them and he replied ''After I wrote out the cheques I put them in the petty cash box. However, I am not sure whether its Nicetime staff who came to collect the two cheques himself or its my staff who gave the cheques to him.''

72. So again he does riot have personal knowledge about what happened. That was the totality of the evidence against the 1st appellant.

73. Leaving aside ground 1 of the grounds of appeal, ground 2 is that there was no or no sufficient evidence for the magistrate to draw the inference ''that if the prices were not inflated, the orders would not have been placed with Sun Hing'' and to come to the conclusion that "the offer of the private benefit to Wong preceded the placing of the contracts''. Ground 4 is that there was no or no sufficient evidence to support the magistrate's finding of fact under paragraphs 8, 9, 10, 11, 12, 1 5 and 16 of his findings of fact referred to earlier.

74. With respect to the magistrate, think the 1st appellant must succeed on both these grounds. As far as the evidence against him was concerned, there was ample evidence that he intended that payment should be made to a staff member of Nicetime representing the difference between the cash price and the inflated price, but there was no admissible evidence against the 1st appellant that an offer was made to Wong Kong-sang by Lee on his behalf or that the money was ever paid to Wong Kong-sang. For that matter there was no evidence to prove that the goods were ever delivered, that the goods were ever paid for, that the discount cheque was ever cashed, or that cash was ever offered or handed over to Wong Kong Sang. With the greatest respect to Mr Blanchflower, I do not agree that there was sufficient evidence in these answers to indicate that the 1st appellant had offered anything to Wong Kong-sang. The fact that he admits agreeing to the suggestion which had been put to him by Lee, does not amount to an offer within the meaning of section 2(2)(a) of the Prevention of Bribery Ordinance. The agreement referred to in that provision means an agreement with the person to whom the offer is being made. There is no admissible evidence against the 1st appellant that he, himself, or the 2nd appellant on his behalf, agreed anything with Wong. I respectfully disagree with the submission of Mr Blanchflower that an inference can be drawn that the offer was made because of the presence of the invoices and the cheque stubs. For these reasons I allow the appeal of the 1st appellant and set aside the convictions arid sentences.

The record of interview of the 2nd appellant Exhibit

75. In answer (3) the 2nd appellant purports to admit working for three odd years with Sun Hing and that Sun Hing does business in the wholesale and retail of piece goods. There were two proprietors the 1st appellant and a person called Wong Yun-kam. The business of the company was managed by the 2nd appellant. In answer (7), he is recorded as saying that Miss Chan Pui-wah handles the daily accounts.

76. He was then asked some irrelevant questions and then asked in question (10) how long he had known Mr Wong Kong-sang of Nicetime and he replied that he got to know him about March 1987". He is then asked about the transactions : -

"Question (12) : Can you describe in details how Wong Kong-sang purchased piece goods from Sun Hing, the place where you worked for Nicetime?

Answer : I remember there were three transactions in total with Nicetime Whenever Wong Kong-sang ordered for a certain type of piece goods from me, I quoted a price to him. Wong Kong-sang said to me that the price of each order would be inflated a little and that after payment was received from Nicetime, the difference resulted from the inflation of prices was to be returned to him.''

77. In answer (13) the 2nd appellant is recorded as describing how the prices were inflated. He was asked about his own actions.

''Question (14) : What did you do when Wong Kong-sang made such suggestion to you?

Answer : I repeated the matter to boss, Wong Shek-hung, and he said that when the money Arrived a figure would be worked out to be given back."

78. It can be reasonably referred from the reference to Wong Shek-hung that the 2nd appellant was referring to the 1st appellant since he was found if the premises by PW2 when the I.C.A.C. executed a search warrant at Sun Hing's premises on the 26th November.

79. In answer (15), the 2nd appellant says he understands the words "when the money arrived'' in the answer to 14th question to bean when a cheque has been received and honoured, the difference resulting from the inflation of price and requested by Wong Kong-sang would be given back to him.

80. The 2nd appellant was asked :-

"Question (16) : Was Wong Kong-sang paid by cheque or in cash?

Answer : I don't know in what form he was paid but there was only one occasion in which payment was made to Wong Kong-sang through me in cash."

81. So the 2nd appellant purports to admit there that he actually paid cash to Wong Kong-sang representing the difference between the inflated price and the real price and that this had been agreed to by the lst appellant. The interviewer deals with the first transaction in question (17). In answer to question (17 the 1st appellant purports to admit that a cash sale memo 6127 (presumably exhibit P5(a)) was written by him and that it should be relating to March and not April, since he had made a mistake about the month. In answer (18), he says that the cash sale memo which is white in colour, which was issued to Nicetime (presumably exhibit P1) had been corrected by the accounts clerk of Nicetime.

82. He admitted in answer (19) that his is the handwriting at the bottom of the white bill (presumably exhibit P1) but the handwriting in question was not actually identified. The interviewer then showed him the duplicate the cash sale memo 6127 of Sun Hing (presumably exhibit P5 (a)) and asked him the question :-

"Question (20) : Now would you read the duplicate of the cash sale memo 6127 of Sun Hing Trading Company? At the bottom right hand corner of the duplicate, $47,500 is written with a red ballpen. Who wrote it and what did this figure represent?

Answer : The price of this batch of goods was in fact $22 per yard. Wong Kong-sang asked whether $20/yard would be accepted if payment is made in cash. I them talked this with my boss Wong Shek-hung and my boss said there is no problem. However, when the memo was prepared Wong Kong-sang said the price to be written, down would be the same $22/yard. I wrote accordingly. The total amount therefore was $52,250. After the cheque which I have received from Nicetime had been honoured and as the company knew that the actual price received for each yard was $20 and the actual amount to be received should be $47,500, I believe somebody in the company wrote down this figure for recording; purpose. However, I don't know who wrote it.

Question (21) : Do you know how much profit Wong Kong-sang had made in this transaction?

Answer : I have no idea but taking $2/yard to be received by Wong Kong-sang, $4,750 should go to Wong Kong-sang for a total of 235 yards.

Question (22) : Do you know how the sum was paid to Wong Kong-sang?

Answer : No idea.

Question (23) : Did Wong Kong-sang mention to you afterwards of his having received $4,750?

Answer : I in fact don't know whether he had received it or not but I believe he had."

83. So far as the second transaction is concerned, the interviewer asked :

"Question (24) : Now would you read the duplicate of cash sale memo No. 6142 of Sun Hing Trading Company? It concerns Nicetime purchasing 5860 yards of 44" wide cotton/linen fabrics, goods No. 6156, from Sun Hing at a price of HK$16/yard, i.e. totaling $93,760. Was this the memo for the order placed on behalf of Nicetime by Wong Kong-sang f or purchasing peice goods from Sun Hing?

Answer : Yes.

Question (25) : Can you explain why an alteration was made with a red ballpen writing down '13' in the unit price column and why $76,180 was written at the lower right corner?

Answer : What happened is the same as that mentioned in question (20), Wong Kong sang asked whether it was acceptable to pay $3 less per yard for payment made in cash. I asked my boss Wong Shek-hung did he agree and he did. I then agree to Wong Kong-sang's (request). Likewise Wong Kong-sang asked me to write the same price $16/yard for calculation when I issue the memo. The figure $93,760 was arrived at but in fact the company sold the goods to Nicetime at $l3/yard and the actual amount received was $76,180. I believe the figures written at the bottom right hand corner of the duplicate by the company was for recording purpose. I don't know who wrote the figure in red. I recall that this bill was prepared by Chan Pui-wah because I was sick at that time. However, the cheque is collected from Nicetime by me.

Question (26):  In I -your opinion, how much money did Wong Kong-sang gain n this transaction?

Answer : I have just made a calculation with a calculator. If Wong Kong sang got back $2 per yard, he should get a total of, $17,580 for the 5860 yards of cloth.

Question (27) : Do you know whether this sum was paid to Wong Kong-sang?

Answer a No idea Wong Kong-sang never mentioned it to me."

84. Although the 2nd appellant in his answers claims to have no idea whether Wong was ever paid in regard to these first two transactions, it is clear that he is admitting that the second transaction was the same as the first, and that he related Wong's request to the 1st appellant, and that after the 1st appellant had agreed, he agreed with Wong to give him the difference between the price.

85. That would be conduct which could fall within the term "offer" in section 9(2)(a) of the Prevention of Bribery Ordinance. The word "offer" as, explained in section 2(2) (a) is as follows :-

"A person offers an advantage if he, or any other person acting oh his behalf, directly or indirectly gives affords or holds out or agrees, undertakes or promises to give, afford or holdout any advantage to or for the benefit of or entrusted for any other person."

86. The 2nd appellant's answers indicate a confession that he agreed to Wong's request on both the first and second transactions to pay Wong the difference between the prices.

87. So far as the third transaction is concerned, the position is similar. He was shown by the interviewer a duplicate of cash sale memo 6247 (presumably exhibit P6) and asked the following questions :

Question 28 : would you read the duplicate of cash sale memo no. 6247 of Sun Hing Trading Company, dated May 1 87 and concerning the purchase of 550 yards of 44" wide silk, goods number 5965 from Sun Hing by Nicetime at a unit price of $16 per yard, totalling $8,800. Written on the lower right corner of the duplicate was actual amount received $7,150. Was this also an order placed with Sun Hing by Wong Kong-sang on behalf of Nicetime?

Answer : Yes. What happened was the same as that mentioned above. The real price was $16/yard but as Wong Kong-sang asked whether $13/yard was acceptable for payment made in cash, my boss Wong Shek-hung said there was no problem and agreed to sell (the goods) to Nicetime at $13 per yard. Likewise, Wong Kong-sang requested that unit price be written on the memo would be the same, $16. So the total amount arrived at was $8,800. However, as each yard was in fact sold at. $13, the actual amount received should be $7,150. I believe the $7,150 written on the duplicate was the company's own record. I recognise it as handwriting of Miss Chan Pui Wah but this memo was issued by me."

88. However, in this transaction the 2nd appellant admits in answer (29) paying the sum of $1650 in cash. So there is not only conduct which would constitute an ''offer'', but there is also payment in cash on the third transaction by this appellant.

89. Later, the interviewer probed the 2nd appellant's understanding of Wong's position in Nicetime. Wang replied ''I have no idea but I believe he might be a buyer for In question (37), the interviewer stated he stated he had tome more questions, reminded the 2nd appellant he was still under caution and asked him if he understood. On the 2nd appellant's confirmation that he did, the interviewer asked the following questions :-

''Question (38) : Is there a practice in your trade that a commission will be given to the broker of the other party who has purchased goods from your company?

Answer : Yes, if the price stated on the bill is the same as the actual amount for the goods received, i.e. taking the price $16/yard and if the payment is really received at $16/yard, the practice in our trade is to give 1% to 2% of the total payment to the broker of the other party as commission.''

90. So this shows the practice of the 2nd appellant's company in paying a commission to a broker.

91. The 2nd appellant was then asked question (39) if Sun Hing gave any commision to Wong Kong-sang in the three transactions referred to and replied 'No, because he suppressed the price. The company also knew later that the difference between the prices had to be given to him, so he company treated it as commission."

"Question (40) : Why did the company agree to sell the piece goods to Wong Kong-sang at $3/yard less?

Answer : Because payment was to be received "in cash. The company found it agreeable, so we agreed to his requests. If a postdated cheque was given, we could only get the money 90 days later.

Question (41) : Do you know that in quoting the price in this way your company caused Nicetime to suffer a loss in buying goods at an expensive price.

Answer : I have no idea, in fact the wholesale price which we offered to each of the customers is the same. If the company deems that a profit can still be made from goods paid in cash, the company might agree to sell it at a lower price as it is better than having the goods stored in the store house.

92. The 2nd appellant's reference to the rebates being in the nature of cash discounts forms the basis of the 2nd appellant's grounds l and 3 which read :-

"Ground 1 - That the learned magistrate was wrong in failing to consider that there was no or no sufficient evidence to prove that the money had riot been received by the Nicetime Limited or an agent of the Nicetime Limited as discount for payment of the purchase being made in cash.

Ground 3 - That the learned magistrate was wrong in failing to consider that even if there were any unlawfulness in the activities of the appellants, in the present case, it would be one of conspiracy to defraud and not of offering advantages to an agent as an inducement to or reward for or otherwise on account of the agent doing an act in relation to his principal's affairs or business."

93. So far as ground 1 is concerned, whilst I agree with Mr Frank Wong that the evidence was not sufficient to prove that money had not been received by Nicetime, I consider that it is irrelevant. It is the mind of the appellant that must be looked at not the mind of Mr Wong Kong-sang.

94. So far as ground 3 is concerned, I consider that the offences of conspiracy to defraud and offering an advantage to an agent, etc. can exist side by side and are not mutally exclusive.

95. When Party A enters into an agreement with the agent of Party B that the price of goods being sold by Parity A to Party B should be inflated to enable the agent of Party B to make a secret commission as an inducement to or reward for or on account of his committing his principal (Party B) to the purchase of these goods, and these facts are known to both the agent and Party A, then Party A will be guilty of the offence of conspiracy to defraud Party B (by making him suffer the loss in the difference between the inflated price and the genuine price) and Party A will also be guilty of the offence under section 9(2)(a) of the Prevention of Bribery Ordinance (because the agreement to pay the secret commission) will constitute an "offer" within the meaning of section 2(2) (a) of that ordinance.

96. The real question in this case is whether there is sufficient evidence on the record of interview, exhibit P10 to enable the magistrate to convict the 2nd appellant on these three charges.

97. In my judgment there was. The magistrate was entitled to be selective in his acceptance of the answers to the record, exhibit P10. It is a reasonable inference for him to have drawn from the admissions contained therein that the 2nd appellant knew that Wong Kong-sang was after a secret commission in respect of his placing orders on Nicetime's behalf, by reason of the suggestion that the prices should be inflated on the invoices to go to Nicetime and that payment of the difference should be made to him, Wong Kong-sang. The 2nd appellant's agreement to this with Wong (having discussed the matter with the 1st appellant) was an offer within the Meaning of the Prevention of Bribery Ordinance.

98. For these reasons, I dismiss the appeal of the 2nd appellant and uphold the convictions. There is no appeal against sentence.

Representation:

Mr M.C. Blanchflower, Sr. C.C., for Crown

Mr Frank Wong (Tang, Wang & Cheung) for both Appellants.