HKSAR v. Sau Ming and Another

CACC 145/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 145 OF 2003

(ON APPEAL FROM DCCC NO. 26 OF 2002)

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BETWEEN

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Before : Hon Ma CJHC, Stuart-Moore and Woo VPP in Court

Dates of Hearing : 11 and 12 January 2005

Date of Judgment : 20 January 2005

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J U D G M E N T

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Hon Woo VP (giving the judgment of the Court):

Introduction

1.The first applicant Sau Ming and the second applicant Lo Pui Shing (also known as Leo Lo), who were respectively D2 and D3 at trial, faced a number of charges of accepting an advantage as an agent contrary to sections 9(1)(a), 9(1)(b) and 12(1) of the Prevention of Bribery Ordinance, Cap 201.  D1 Ho Siu-hoi faced 10 charges of conspiracy to offer advantage to an agent, contrary to common law or (as the case may be) section 159A of the Crimes Ordinance, Cap 200, and sections 9(2)(a), 9(2)(b) and 12(1) of the Prevention of Bribery Ordinance. 

2.D1 faced ten charges, being Charges 1 to 10, D2 (the first applicant) faced five charges, Charges 11 to 15 and D3 (the second applicant) faced four charges, Charges 16 to 19. 

3.The three defendants pleaded not guilty to the charges and were tried in the District Court before Judge Chua.  The trial took about 66 days.

4.At the close of the prosecution’s case, the prosecution conceded that there was no evidence to support Charge 13 and so D2 was acquitted of that charge.  D2 did not testify whilst D3 did, and no defence witness was called. 

5.On 24 March 2003, the judge convicted D1 on Charges 1 to 10 (ten charges), D2 on Charges 11, 12, 14 and 15 (four charges), and D3 on Charges 16 to 19 (four charges).  

6.On 26 March 2003, the judge sentenced D2 to 3½ years’ imprisonment in respect of each of the four charges, with two months on Charges 12, 14 and 15 being made consecutive to the sentence on Charge 11 and on each other, resulting in a total sentence of 4 years’ imprisonment.  She sentenced D3 to 18 months’ imprisonment in respect of each charge, with one month of each being made consecutive to the others, resulting in a total of sentence of 21 months. 

7.D2 and D3 now seek leave to appeal against their convictions.  D1 has made no application. 

Background

8.Au Kiang International Co Ltd (“AK”) was owned and operated by Ho Chi-chun (“CC Ho”), D1’s father.  PW1, Karen Yin Hueh-lan (“Karen”), was AK’s financial controller, and reported to CC Ho.  It was commonly recognised by the prosecution, the defence and the judge that Karen was the main witness in respect of all the charges. 

9.In 1994, D2 was the deputy general manager of the Hang Seng Bank (“the Bank”) and the head of the Corporate Banking Division which was composed of 11 departments.  One of the departments was the Trade Finance Credit Department, headed by one of D2’s immediate subordinates, PW11 Dennis Chan Tak-wing (“Chan”).  In January 1996, D2 was promoted to general manager of the Bank. 

10.Lam Tse-keung (“Lam”) and D3 were part of the Bank’s Credit Team 3 working under Chan.  David Wong Tai-wai (“Wong”) was a marketing officer for the Bank. 

11.Wong introduced AK to the Bank.  The first request by AK for lending from the Bank was in late March 1994.  In time, AK became a big customer of the Bank. 

12.The prosecution’s case against D1 was that he conspired with Karen and others to give gifts of watches and money to the officers of the Bank in order to facilitate AK’s lending facilities.  The prosecution’s case against D2 and D3 was that they, as agents for the Bank, received gifts of watches and sums of money from AK.  Ms Charlotte Draycott, who appears for the respondent before us and who appeared for the prosecution before the judge, has prepared a very useful chart relating to the charges, the donors, the gifts, the donees and the dates of the crucial documentary evidence relating thereto.  The chart was before the judge, and is reproduced below:

Grounds of appeal

13.On behalf of the applicants D2 and D3, a number of grounds of appeal are raised.  Some of the grounds are common to both applicants and they will be dealt with together, whilst those grounds that are referable to a particular applicant will be dealt with separately. 

D3’s grounds 2, 3(b) and 3(d) – quality of evidence

14.All these are grounds raised on behalf of the 2^nd applicant, ie D3.  Ground 2 challenges the conviction against D3 as being unsafe or unsatisfactory because the evidence of his receipts of the advantages particularised in the charges, namely, Charges 16, 17, 18 and 19, was “so flawed, vague and contradictory” that the judge erred to rely on it to found the convictions.  Ground 3(b) alleges that the judge erred in her evaluation of the flaws in Karen’s testimony identified by counsel for D3 at the trial.  Under this ground, various instances of the alleged flaws are mentioned.  Ground 3(d) alleges that the judge erred for failing to have refused to convict except in cases where there was corroboration of Karen’s testimony from an untainted witness. 

15.Mr Andrew Bruce SC, for D3, urges us to hold that D3’s convictions are unsafe or unsatisfactory notwithstanding that we do not have the advantage that the judge had in evaluating the credibility and reliability of witnesses, on the basis of some lurking doubts: see R v Cooper [1969] 1 QB 267, at 271, per Lord Widgery CJ. 

16.Mr Bruce also refers us to M v R [1994] 181 CLR 487, where Mason CJ, Deane Dawson and Toohey JJ stated:

“In most cases, a doubt experienced by an appellate court would be a doubt which a jury ought also to have experienced.  It is only where a jury’s advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred.  That is to say, where the evidence lacks creditability for reasons which are not explained by the manner in which it was given, a reasonable doubt experienced by the court is a doubt which a reasonable jury ought to have experienced.  If the evidence, upon the record itself, contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force in such a way as to lead the court of criminal appeal to conclude that, even making full allowance for the advantages enjoyed by the jury, there is a significant possibility that an innocent person has been convicted, then the court is bound to act and to set aside a verdict based upon that evidence.”

17.Mr Bruce draws our attention to the fact that Karen, the main witness against all defendants, has been shown by the evidence at the trial or by her own admissions to be guilty of a number of crimes of dishonesty, including conspiracies to defraud the Bank and other banks, letter of credit (“LC”) frauds, offering advantages to bank officers, false accounting, and obtaining secret profits from her employer AK.  She has not been prosecuted for any of the offences because of the immunities granted to her and there is no likelihood that she would be charged.  There is also evidence to show that she had personally profited from some of the crimes but there is no evidence that her assets have been restrained by the authorities.  There were serious discrepancies and inconsistencies between what she said to the ICAC when she was first arrested and what she told them later in the course of being granted immunity or immunity having been granted to her.  She had altered or withdrawn allegations in her earlier statements to the ICAC after documents obtained by the ICAC were shown to her or where her allegations were found not to be supported by those documents.  In particular, while D3’s knowledge in the LC frauds was never alluded to in Karen’s non-prejudicial statements (“NPS”) and the debriefing notes (“DBN”) that recorded her statements to the ICAC, this was only mentioned by her in cross-examination at trial. 

18.We do not feel it necessary to deal with each and every item of the complaints.  As pointed out by Ms Draycott, all the matters now raised had been canvassed in the submissions of counsel for D3 at length during the course of the trial, both as half-time submissions and at the end of all the evidence.  All such submissions were given in writing and orally and the matters under consideration were precisely those now canvassed.  The judge cannot have failed to take them into account and was in the best position, having heard and observed the witnesses, to judge them. 

19.The judge had, indeed, given very detailed Reasons for Verdict, covering 62 pages.  After setting out the relevant persons’ positions and status, reciting the charges, mentioning the relevant law on the giving and accepting of advantage, the judge went on to set out a chronology of the alleged bribes and banking events, together with the evidence given by Karen and the relevant documentary evidence relating to each of the charges.  She also dealt specifically with the fraudulent LCs where there were no underlying goods.  She then went on to deal with the credibility and reliability of witnesses.  Having dealt with this aspect in respect of other witnesses, she focused on Karen.

20.In dealing with Karen’s testimony, the judge was especially cautious.  She said:

“Karen Yin, Mona Lee and Stephanie Cheung [the latter two witnesses were employees of AK and working under Karen] are accomplices who gave evidence under an immunity from prosecution.  With the obvious dangers in mind, I approached the testimony with ‘sustained suspicion’ (Ng Tat Ching, Cheung Kuen Yuen v R CA 56/1979). 

Did Karen Yin realising C C Ho, Wong and Lam had flown the coop, make false allegations against those still in Hong Kong to gain immunity?  There is no doubt the alternative to her giving evidence for the prosecution was a long gaol sentence for she was C C Ho’s right-hand person.  

Mr Marash [for D3] asked me to view her video interviews for demeanour.  She was a far more transparent person than was D3.  In attempting to convince the interviewer she was little involved, she was unconvincing.  In the witness-box she was very different. ….

In her interviews during which she admittedly lied to protect herself, she does not volunteer anything.  In answering the questions put to her, she distanced herself from complicity by not admitting having seen D2 accept any bribes.  She does not say anything against D3.  She does implicate Wong and Lam, but they were out of the jurisdiction.  Contrary to Mr Marash’s views, she does attempt to protect D1, as she has done in court.  In her second interview, paragraph 85, what she intended to say, as she has said consistently in court, is: C C Ho was the mastermind; all D1 did was to carry out his orders. … She has always blamed herself for getting D1 involved in the giving of the bribes to Lam, Wong and D3, for this was to protect herself from any suspicion that she might be pocketing part of the bribes. 

It is only in her 16^th non-prejudicial statement that she finally admits witnessing all but one of the payments to D2.  She said she had been threatened with harm by C C Ho’s mistress if she dared to implicate someone as senior as D2.  The immunity from prosecution was dangled for three years.  It was only after she had given evidence in So Wai-yee’s trial in October 2001 and not been prosecuted that she began to trust the ICAC and realised if she did not make a full and frank disclosure, she would jeopardise her position.  Her self-interest lay in telling the truth.  An examination of her non-prejudicial statements and debriefing notes proved it was never the case of the ICAC assisting her, or seeking to muster allegations against the defendants, by showing her sales vouchers and ledgers by which, if she was so inclined, she could create a story around them.  At each stage she did her best to recall incidents, and the vouchers were obtained after the allegations.  The ICAC checked and rechecked her assertions.  In trying to remember cold, incidents of some five [years] before, she was shown to be often inaccurate in the details, but I am satisfied she had not deliberately lied.” (Transcript pp 89-91).

21.Then the judge dealt with the inaccuracies in Karen’s statements to the ICAC, and whether and when the inadequacies were corrected, in some detail.  She went on to set out the dates of 17 NPS and 9 DBN to examine whether Karen’s many discrepancies regarding her allegations arose from invention or memory faults.  The judge concluded:

“I am satisfied beyond reasonable doubt the many discrepancies and changes in details she made were caused by her trying to remember many past events without any aide mémoire.  Yet, running through them all, there was a consistency at the core of her assertions which had the ring of truth.  What has happened is initially she forgot a pair of watches had been given and she has mixed up events as the payments of December 1994 for the July 1994 watches and the payments in August 1995 was thought to have occurred in the summer of 1996, but as to who received the gifts, the officers remain unchanged throughout.  I am ultimately convinced she could not have dreamt up and sustained this edifice of allegations, with the vignettes she attaches in the witness-box, to some events if they had not actually occurred.” (Transcript pp 96-97)

22.In our view, barring one matter relating to D2 to which we will return later, the judge had shown by her Reasons of Verdict to have been fully aware of all the submissions made on behalf of the defence and she had exercised great care in reaching her conclusions.  She had the advantage of observing Karen giving evidence before her for 19 days.  Despite the discrepancies and the inconsistencies stressed upon on behalf of the defendants, in our view, it is legitimate for the judge nonetheless to find Karen to be both truthful and reliable where it mattered.  We are satisfied that her view of the witness was neither perverse nor unreasonable. 

23.Regarding to the complaint that D3 was not mentioned in Karen’s interviews with the ICAC before the NPS and DBN, that had also been drawn to the judge’s attention.  The judge had dealt with Karen’s close relationship with Wong and D3 by referring to her evidence that while D3 was in charge of company dealing in electronics, Wong and D3 asked Karen to open an LC facility to issue legal LCs for Great Concept International Ltd, a company belonging to a friend of theirs in which they had a benefit.  There was evidence that Wong’s sister-in-law had a 15% shareholding in Great Concept and that D3 was close to one Cheung Ka-choi of Keystate whose wife was a director and shareholder of Great Concept.  The judge also pointed out that Karen always maintained that D3 did not receive money after 1995, and that this evidence was consistent with the evidence that once he moved from Team 3, and could no longer facilitate AK in any lending or LCs, CC Ho saw no need to give him further sweeteners. 

24.Mr Bruce argues that if Karen and D3 were such friends as to provoke loyalty for D3 to be omitted in her video interviews with the ICAC, that does not sit well with the evidence that D3 reduced the letter of credit facility for Glory Make (a company under the control of Karen) from $6m to $700,000.  That took place in August 1998.  However the banking documents relating to the facilities given by the Bank to Glory Make showed that at the time “Due to slow down of business, facilities were utilised at extremely low level”.  In a letter dated 8 September 1998 from the Bank to Glory Make, the Bank stated, “as per your request” the facilities were cancelled.  Mr Bruce’s point is not made out.  Indeed, Karen did not implicate D3 in all her statements given to the ICAC regarding his knowledge in the fraudulent LCs; she only mentioned D3’s involvement in Great Concept and Glory Make when she was subject to, Mr Bruce accepts, “searching and thorough” cross-examination by D3’s counsel. 

25.All the points made by Mr Bruce and all his attacks on Karen’s evidence had been one way or another dealt with by the judge in her Reasons for Verdict.  We are not persuaded that the convictions of D3 are either unsafe or unsatisfactory. 

D2’s ground 1 and D3’s ground 3(a) – use of consistent statements

26.These two grounds of appeal are raised in unison by Mr Blanchflower SC on behalf of D2 and Mr Bruce on behalf of D3.  The complaint is that the judge used or relied on Karen’s previous out-of-court statements which were consistent with her testimony to confirm such testimony.

27.The reference to Karen’s out-of-court statements arose in the following manner.  Karen testified for over 19 days before the judge, of which 12½ days were spent in cross-examination.  The majority of the cross-examination was on her video interviews, NPS and DBN, for the purpose of exposing discrepancies, inconsistencies and lies. 

28.During the cross-examination, the judge was given copies of ICAC summaries of Karen’s video interviews in order to help her follow the cross-examination.  She was also provided with Karen’s NPS and DBN.  Whilst Karen was being cross-examined by Mr Ching Wong SC, counsel for D2, D3’s counsel (Mr Daniel Marash SC) told the judge that he would present the judge with all Karen’s statements when he cross-examined Karen.  Before Mr Marash began his cross-examination of Karen, the judge asked for all of Karen’s NPS, although she already had been given some of Karen’s previous statements during her cross-examination by Mr Ching Wong.  At this time, Ms Draycott, prosecuting counsel, alerted the judge about the dangers of having the statements.  

“Ms Draycott:	Perhaps Mr Wong can take them (the bundle or documents that was before the judge) back because at the moment you have got a great number of statements there which are not in evidence.  There are all sorts of problems that might arise.  The only matters which at the moment are in evidence are those which had been put to her.  Shall I suggest we take it back for the time being and then they make up their mind how they are going to deal with it.”
…
“Mr Marash:	I was going to hand them in so you can probably understand the cross-examination.  It is not an invitation for you to read them.  You can follow the evidence of the witness as I cross-examined.”
…
“Court:	Yes, but I do not – I should not be relying upon them.” (Emphasis added)

29.The next day, prosecution counsel referred to the full set of NPS given to the judge and stated:

“We would ask you not to refer to passages that are not cross-examined on at the moment.
Court:	I have no intention doing that kind of homework, thank you.
Ms Draycott:	And eventually, a folder will be prepared for you, in which each counsel will have put those passages to which they have referred.
Court:	And that includes you, I take it?
Ms Draycott:	Yes.  I will refer to passages in re-examination, and then will then go in order, and I think it will help you when you have your notes – read your notes again.  So we would ask you not to look at that, except in the course of the proceedings.
Court:	You do not have to urge me not to do extra work.” (Emphasis added)

30.There were other passages in the notes of proceedings regarding the limited use that could be made of Karen’s out-of-court statements.  For instance, Mr Marash said:

“The fact that she [Karen] may have made a true allegations against another banker is not relevant, does not boost her credibility and is not relevant to this case.”

“The fact that she might have made true allegation against another banker, again, is neither here nor there.  Highly prejudicial and not relevant.  But a false allegation against another banker is highly relevant.  And not prejudicial; it is very probative of her own credibility.  I hope your Honour can see the distinction.”

31.Ms Draycott then said:

“I agree broadly with what my learned friend is saying.  Obviously, it wouldn’t be right for me to then introduce all the evidence and everything she has ever said and whether it was false or whether it was true.”

32.Mr Blanchflower and Mr Bruce place great emphasis on the following passages in the Reasons for Verdict, as the basis for their contention that the judge had used Karen’s previous consistent statements as evidence and in support of her testimony:

“An examination of her non-prejudicial statements and debriefing notes proved it was never the case of the ICAC assisting her, or seeking to muster allegations against the defendant, by showing her sales vouchers and ledgers by which, if she was so inclined, she could create a story around them.  At each stage she did her best to recall incidents, and the vouchers were obtained after the allegations.  The ICAC checked and rechecked her assertions.  In trying to remember cold, incidents of some five [years] before, she was shown to be often inaccurate in the details, but I am satisfied she has not deliberately lied.” (Transcript p 91) (Emphasis added)

“I am satisfied beyond reasonable doubt the many discrepancies and changes in details she made were caused by her trying to remember many past events without any aide mémoire.  Yet, running through them all, there was a consistency at the core of her assertions which had the ring of truth.  What has happened is initially she forgot a pair of watches had been given and she has mixed up events as the payments of December 1994 for the July 1994 watches and the payments in August 1995 was thought to have occurred in the summer of 1996, but as to who received the gifts, the officers remain unchanged throughout.  I am ultimately convinced she could not have dreamt up and sustained this edifice of allegations, with the vignettes she attaches in the witness-box, to some events if they had not actually occurred.” (Transcript pp 96-97) (Emphasis added)

33.Mr Blanchflower contends that the above two passages indicate that the judge used Karen’s NPS and DBN in order to find Karen a reliable witness.  The complaint is essentially that the judge allowed Karen to corroborate herself with the previous consistent statements. 

34.Mr Bruce’s contentions are the same.  He argues that the passages cited above demonstrate the judge’s reliance on the consistency between Karen’s previous statements and her testimony. 

35.We have been referred to a number of authorities, including The Nominal Defendant v Clements [1960] 104, CLR 476 at 485 and 495, Jones v South-Eastern and Chatham Railway Company’s Managing Committee [1918] 87 KBD 775 at 778-779, Fox v General Medical Council [1960] 1 WLR 1017, R v Weekes [1988] Crim LR 244, R v Beattie (1989) 89 Cr App R 320 at 306-307, R v P(GR) [1998] Crim LR 663, White v R [1999] 1 AC 210 at 217G-H, and HKSAR v Fun Tsz Yin Benny  and Chong Chuek Wah [2002] 2 HKC 406.  These authorities bear out the well-established principle that, apart from the following four exceptions, a previous statement which is consistent with a witness’s testimony is inadmissible to confirm such testimony:

(i)	recent complaints in sexual cases;
(ii)	statements of an identifying witness at the identification parade;
(iii)	statements which form part of the res gestae; and
(iv)	to rebut an allegation of recent invention.

36.Even the exceptions only permit the previous consistent statement to show a consistency in the witness’ account, not as proof of the matters stated. 

37.It is contended by Mr Blanchflower that none of the exceptions applied in present case.  

38.Mr Bruce also draws our attention to R v Coll [1889] 24 LR (Ir) 522 at 541 for the rule that merely impeaching a witness’ testimony in cross-examination does not render admissible a previous consistent statement made by him, or justify the use of it for the purpose sustaining his credit.

39.The passages in the Reasons for Verdict that are subject to attack must be viewed in their proper context.

40.Karen’s four interview records with the ICAC, her numerous NPS and DBN were introduced in cross-examination by defence counsel for two purposes, namely,

(1)	to show that Karen had lied in her previous statements and such lies, sometimes admitted, made her testimony unreliable; and
(2)	to show the discrepancies and inconsistencies between the contents of the statements themselves, and those between the statements and Karen’s testimony, in order to demonstrate that Karen was untruthful and unreliable.

41.The judge was provided with all the statements and the relevant excerpts from them for her to follow the cross-examination and understand the criticisms and suggestions made in relation to them in the proper context.

42.In R v Yip Chi Keung [1988] 1 HKLR 229, CA, at 234B-G, Hunter JA, referring to the procedure of cross-examination on previous inconsistent statements of a witness without putting the statements before the court and the jury, observed:

“Now it is perfectly possible within the terms of s.14 of the Evidence Ordinance, in a simple case, to cross-examine a witness upon his previous statement without putting that statement before the Court and the jury.  I am minded to think this is possible only in very simple cases.  Certainly where the matter is at all complex, and where critical comments and comparisons are being made by counsel between the content of two statements, it is I believe rarely fair to the witness to have his particular answers taken out of their context.  That is the first point I would desire to make.  This procedure may well be unfair to the witness.  I cannot say more than that in this case because we have not got the statements, and cannot judge the matter.  What I can see exactly is that this is a matter which it is very very difficult for a jury to follow.  I can see that in many instances in this case it is quite impossible to form any view as to the weight and validity of the criticisms, that were directed at the witnesses upon the basis of their statements so that we can judge for ourselves.  I found it extremely frustrating.

…

I venture to believe that altogether too little attention is paid to the proviso of s.14: altogether too little regard is paid to the concept of fairness to the witness: and what is most important of all, too little regard is paid to the jury’s ability to follow and weigh the evidence that is being led before it.  I believe that if you want a fair and effective cross-examination on inconsistent statements in any case of any complexity the proper way is to let the jury see the statements.” (Emphasis added)

43.Yip Chi Keung was followed by the Court of Appeal in R v Lam Chi Sum [1988] HKC 137.  At page 141B, Barker J said:

“The proviso to s 14 reads as follows:

Provided always that it shall be competent for the court, at any time during the trial or hearing of the proceedings, to require the production of the writing for its inspection, and the court may thereupon make such use of it for the purposes of the trial or hearing as it may think fit.

Yip Chi-keung was a trial by jury.  The instant case was a trial in the District Court without a jury.  The same principles apply.  Unfortunately the judge was not invited to, and did not, exercise the power conferred upon him by the proviso to s 14.  Had he done so, he could have taken the whole of the statements into consideration, not with a view to treating their contents as true, but for the purpose of putting the criticisms and suggestions of counsel for D1 into their true context.  This court would then have enjoyed the same advantage.  We regret that this course was not followed.” (Emphasis added)

44.It is thus clear that the judge was provided with all the statements of Karen in order to follow the cross-examination by counsel for the defendants and see their criticisms and suggestions in the proper context.  She was reminded by counsel of the limited use that could be made of the statements, and indeed, she was provided with the excerpts at the close of evidence so that she should read them only to understand the criticisms and suggestions in context.

45.What the judge did was to follow these attacks and criticisms on Karen’s credibility and reliability.  Before those passages which are relied on by the applicants (see para 32 above), the judge said:

“To understand whether her many discrepancies regarding her allegations arise from invention or memory faults, it is necessary to see what she has said in her non-prejudicial statements (NPS) and debriefing notes (DBN) chronologically.”

46.She immediately followed this passage by setting out under 11 NPS and DBN to deal with the inconsistencies, inaccuracies and discrepancies in them.  Ms Draycott told us that these matters were within the excerpts provided to the judge and counsel for the applicants have not gainsaid this.  The judge went on to find the discrepancies and inconsistencies, where such existed, between Karen’s various statements explainable and that these did not affect her reliability and credibility.  She also found that in view of the circumstances prevailing at the time, Karen’s lies that were told to the ICAC did not affect her credibility and reliability in her testimony.  She found that despite the many inconsistencies and inaccuracies, Karen’s story in the statements followed a consistent core which had a ring of truth, so that her credibility and reliability as a witness was not affected. 

47.The attacks made by counsel for the defendants at trial were that Karen had lied in her previous statements; some of the lies she admitted.  Because of these lies and the various discrepancies and inconsistencies in her statements, she was untruthful and unreliable.  The judge examined the excerpts from the statements and came to the conclusion that despite the discrepancies and inconsistencies in the statements, there was a consistent core which had a ring of truth.  In context, this comment was and must be taken to have been in response to the attacks made by defence counsel at trial, to refute their contention that Karen was untruthful and unreliable.  Apart from the passages in the Reasons for the Verdict cited above, counsel for the applicants have not been able to direct our attention to anywhere in the Reasons for Verdict or the notes of the proceedings to show that the judge had used the consistent statements as evidence of the facts stated, or that she had used them to support Karen’s testimony. 

48.We are not persuaded that the judge, who had on various occasions been reminded by counsel of the limited use that could be made of Karen’s consistent statements, had used those statements to support or corroborate her testimony.  What the judge did was to examine the excerpts from the statements in order to form a view as to the weight and validity of the criticisms and suggestions made by defence counsel.

49.Mr Blanchflower contends that the last sentence in the cited passage in the Reasons for Verdict, namely,

“I am ultimately convinced she could not have dreamt up and sustained this edifice of allegations, with the vignettes she attaches in the witness-box, to some events if they had not actually occurred” (emphasis added)

is indicative of the judge using the “edifice of allegations” in the statements to support Karen’s testimony.  This was used to reinforce the same we have just dealt with and we disagree with it. 

50.We accept Ms Draycott’s submissions in this regard.  She submits that defence counsel explored an avenue of attack on Karen regarding the changes to the detail of her allegations over the two years and nine months covered by her statements.  The judge was called upon to compare the statements with each other and to weigh the inconsistencies amongst the statements in judging both the credibility and reliability of Karen.  The judge was “acutely aware” (to use the judge’s own term) of the problems posed by these inconsistencies and her duty to deal with them.  It was in carrying out this exercise that the judge used the expressions complained of in her Reasons for Verdict.  The judge, however, was at that stage not assessing the live testimony of Karen and certainly not comparing the statements with it.  There was thus no question of the judge using the consistency that she found between the statements as supportive of the truth of what was said in court.  Regarding the complaint of the judge’s remark that “there was a consistency at the core of her assertions that had a ring of truth”, Ms Draycott submits that these words were no more than a finding that despite obvious inconsistencies there did exist a central narrative that had not changed.  The material was not so inconsistent as to make the story unreliable, but rather the judge found that there was a core of consistency in the statements that refuted the challenge mounted and it was this that had the ring of truth.  The judge was asked to find that Karen was a liar because she had changed her story.  To do so, the judge needed to find out why it had changed.  Having done so, she found instead, that essentially Karen’s story had not changed; and her inconsistencies were explicable in the way set out in the Reasons for Verdict and that her evidence was not impugned as suggested.  In short, Ms Draycott submits that the sentence containing the phrase “edifice of allegations” relates to Karen’s allegations in her statements, which the judge described as an “edifice” to mean that the great detail and complexity could not have been invented.  The phraseology “a ring of truth” and “if they had not actually occurred” was used by the judge to rebut the contention that because of the inconsistencies Karen must be untruthful or unreliable.

51.As pointed out before, the judge dealt with the evidence of Karen and the documentary evidence on every aspect of the charges first, linking the allegations of D1’s involvement in the conspiracy to give the bribes and D2 and D3’s acceptance of the bribes to the contemporaneous records of facilities being given by the Bank (as approved at the behest of the involved Bank officers or by them), and to the coincidental dates when sums of money were used or withdrawn (as borne out by contemporaneous documents) for the provision of the bribes.  All that was strong evidence against the defendants.  But since Karen was an accomplice and gave evidence under immunity, the judge had to exercise special caution despite the apparent strength of the evidence.  That was why she dealt in detail with the attacks on Karen’s reliability and truthfulness by making reference to Karen’s numerous inconsistent and inaccurate statements to the ICAC.  She did not use them or the consistent portions of them as evidence to support Karen’s testimony.

52.These grounds are not made out.

D2’s ground 3 and D3’s ground 3(c) – “unusually favourable treatment”

53.These two grounds contend that the judge erred in finding that the bank’s lending and credit arrangements towards AK amounted to “unusually favourable treatment”. 

54.The judge’s conclusion of the relationship between AK as the client and the Bank represented by the involved bank officers who were instrumental in getting the Bank to approve and grant banking and credit facilities to AK, which was now subject to attack under these two grounds is as follows:

“	(1)	While looking at each approval, it is arguable the increases in credit facility to Au Kiang fell within specified limits and were not so large relative to the overall lending as to be outrageous and certain to raise eyebrows, they went to the edge of the limit.
	(2)	On any view, if one looks at the entire series of approvals of credit arrangements and the successive grants of preferential terms in the course of lending accorded to Au Kiang by the bank, it has to be said Au Kiang was undoubtedly given unusually favourable treatment for a little known company without an established track record.
	(3)	Mr Ching Wong accepts rental income was never enough to match the repayment of the instalment loan.  By April 1996, when it became apparent Au Kiang was having difficulty making repayments on the LCs and overdraft facilities, even before receipt of the Chu & Chu report, the grant of more loans and preferential rates did not cease.  In my view, one cannot by this stage ascribe the uninterrupted favours to a policy of aggressive lending even on a rising market.  It raises the spectre that something is not quite right and provides support to Karen Yin’s evidence.” (Transcript pp 80-81)

55.Counsel for the applicants place heavy reliance on the evidence of PW 11 Dennis Chan Tak-wing whose position in the Bank was subordinate to D2 but above all the other involved bank officers.  The quality of Chan as a witness can be seen in the following passage in the Reasons for Verdict:

“No one disputes the honesty and integrity of Chan.  His testimony was always measured, thoughtful and fair.  Wong told Karen Yin not to bribe Chan and Tam.  Small gifts were pressed on them.  Chan accepted trinkets and dried seafood.  He returned a Dior handbag with a polite letter.  Either he has forgotten the gift of a pen, or Karen Yin is mistaken, but this discrepancy I am satisfied does not indicate dishonesty on the part of either persons.” (Transcript p 84)

56.It is contended that the judge erred in her finding that AK was “undoubtedly given unusually favourable treatment”.  Chan did not say that in evidence, and there was no banking or other evidence of what was “unusual” or “favourable” or that the treatment accorded to AK was contrary to the Bank’s or general banking practice.

57.Ms Draycott submits that the judge was fully justified in finding that unusually favourable treatment had been granted by the Bank to AK and its associated companies including Dero Enterprises Limited (“Dero”).  She submits that the prosecution case was supported by the evidence of the history of the banking relationship between AK and Dero and the Bank.  The relationship can be seen from the documents admitted as the business records of the Bank and the evidence of PW11 Chan that explained them.  In particular, the dates at which the documents showed events had happened tied in with and therefore gave support to the evidence of Karen.  Other documents like EPS and vouchers showed that purchases and cash withdrawals had been made at critical moments in the relationship, both when a favour had just been granted and when one was badly needed.

58.Ms Draycott has produced for our reference a schedule summarising the documentary evidence regarding the key transactions carried out by the Bank in respect of AK and its associated companies, which was compiled by her with amendments suggested by counsel for the defence to be produced before the judge.  This schedule shows how the related bank officers treated the applications for credit and loan facilities.  We need only to point out the following incidents as a demonstration of the unusually favourable treatment given by the Bank to AK and related companies.

59.A request for finance of $148 million was made with the security of 17/F Convention Plaza, with an appraised valuation of $148,662,000.  Chan was reluctant to endorse the terms of the financing as proposed by Lam.  Lam put the proposal to D2 containing an assertion that the matter was not put before the Credit Committee meeting because Chan and the Loans Department intended to refuse it.  Lam stated that it was a pity not to take this business.  D2 agreed to a meeting.  Despite the investigation report describing CC Ho as quite shifty and his style as quite frivolous, the lending was passed by the Credit Committee on 12 May 1994.  On the same day, Karen purchased two men’s watches which were paid for by her own EPS.  These two watches, according to Karen’s evidence, were given to D3 and Wong.  Karen purchased another man’s watch on 13 May 1994, which was given to Lam.

60.The appraised value of 26/F Convention Plaza was $180 million.  D2 increased the instalment loan on the security of the property from $110 to $120 million and decreased the general banking facilities from $20m to $10m.  D2 spoke out in favour of the loan.  The Credit Committee meeting approved this loan on 12 July 1994.  On 13 July 1994, Karen bought lady’s watches one of which was given to D3.

61.On 23 August 1994, the reappraised value of 26/F Convention Plaza was at $200m and that of 17/F Convention Plaza at $194m.  On 15 September 1994, D2 spoke out in favour of refinancing the loans, and the Credit Committee approved the new lending.  There were letters of offer of 20 September 1994 raising finance to $193,546,000 on 17/F and $199,379,890 on 26/F.  Advantageous interest rates were also approved by Lam on 17October 1994.

62.On 10 November 1994, Dero opened an account for LC facilities with the Bank (as it turned out, to carry out LC frauds).  On 24 November 1994, the request for concessionary interest rates for LCs was approved.  This was unusually dealt with in anticipation of the request reported by Lam on 26 November 1994 for reduced interest rates on LCs and instalment loans, extension of term for LC and HIBOR loan of $40m.  The HIBOR loan would release $40m for ready use.  On 3 December 1994, Lam suggested the interest rate to be prime plus 1%.  Chan increased it to prime plus 1.5%.  A note dated 6 December 1994 showed endorsement in Lam’s handwriting with “10 a.m. tell Karen HL of 40m is OK”.  This note was signed by D2 with his approval on 5 December 1994.  On 6 December 1994, cheques were drawn for $100,000 and $150,000 to pay for the bribes.  On 19 December 1994, the letter of offer of $40m HIBOR loan was issued by the Bank.

63.On 14 December 1994, Dero made a request for trade facilities which were necessary for the method of LC fraud that Wong had advised AK to perpetrate.  On 17 January 1995, Dero’s annual report for the period ended 30 September 1993 containing a remark “company may not be able to continue trading” was sent to Lam who did not forward it to the Credit Control Department until 4 April 1995.  On the same day of 17 January 1995, letters of offer for trade facilities were issued by the Bank, which enabled Dero to play its role in the LC fraud.

64.On 13 June 1995, part of 17/F Convention Plaza had been sold, so there was a need for refinancing.  The options for the Bank were to reduce the loans, to increase the net clean exposure or to accept new properties for mortgage to fill the gap.  On 8 August 1995, Lam recommended to increase the net clean exposure.  Chan had reservations but did not express his opinion.  On 18 August 1995, Lam put forward three proposals to cover the refinance, (i) to accept 4 newly mortgaged properties in Discovery Bay, (ii) to accept 2 of the properties, and (iii) not to accept the new properties which would result in a substantial reduction of the loan.  On 19 August 1995, D2 refused the Discovery Bay properties proposals and inclined to (iii).  On 1 September 1995, Lam put forward the same 4 properties.  On 7 September 1995, Lam said that the value of the properties had decreased and so to accept proposal (i) would result in an even greater clean exposure.  But D2 agreed to the proposal.  On 16 September 1995 D2 endorsed his consent.  On 18 September 1995, D3 signed the loan proposals for two of the properties in Discovery Bay.  These two properties were shown as occupied by owner and the tenancy was not declared.  Between 9 and 30 September 1995, Lam was on leave in Canada.  On 26 September 1995, Chan was acting in Lam’s place whilst Lam was on leave.  He suspected that the local LCs issued by AK might be fraudulent and requested D3 to obtain cheques issued by Star Regent (a beneficiary under an LC) between 1 August 1995 and 26 September 1995.  All the cheques were payable to either AK or Dero and very large sums were frequently paid to those companies often with several cheques on the same day.  Chan delegated the enquiry to D3 and told him to study the trading pattern for the LCs.  On 2 October 1995, after Lam had returned from leave, he signed loan proposals for the remaining Discovery Bay properties, again showing that they were occupied by the owner when in fact they were tenanted.  The failure to declare the tenancies of the fraud properties had resulted in lower interest rates charged by the Bank.

65.On 2November 1995, Wong reported a request for further facilities secured on Regent in the Park and Sam Yuen Mansions properties.  Chan did not express an opinion as he was worried.  While D2 said in November not to offer the BBF portion (the secured amount held in reserve by the Bank) and no more clean exposure, on 4 December, D2 approved the loans on the properties.  An analysis of 27 May 1996 was made from Lam to D2, signed by D2, which showed that BBF was lent on these two properties.  Lam would not have included this if D2 did not know.  The letters of offer of 14 December 1995 for these two properties showed loans at 100% of the appraised value, including BBF.

66.In an endorsement dated 21 March 1996, D2 stated that 255 and 87 Discovery Bay should not be considered for re-mortgage, only Guanxin Apartments should be considered.  AK had asked the Bank to take over these mortgages.  On 25 March 1996 AK cancelled the Guanxin mortgage and replaced it with Convention Plaza apartments.  D2 changed his mind and approved the re-mortgage of 255 and 87 Discovery as well, resulting in an extra $9.8m of indebtedness.  On 29 March 1996, there were loan proposals for Convention Plaza apartments and 87 and 255 Discovery Bay, showing concessionary interest rates approved by D2.

67.On 25 May 1996, the Credit Control Department of the Bank received the Chu & Chu report containing a disclaimer.  The accountants were unable to give an opinion as to whether the financial statements gave a true and fair view of the states of the company’s affairs.  On the same day, the Credit Control Department received Dero’s annual report showing a loss.  On 5 June 1996, the Credit Control Department wrote a memo urging Team 3 to take a tougher stance.  Chan’s evidence was that on 5 June 1996, D2 went direct to CC Ho and told him to amend the report as further finance could not be granted with a disclaimer.  Chan said that this was very unusual. 

68.Between 27 May 1996 and 14 June 1996, Chan was on leave.  On 29 May 1996, there was a letter of request to increase the facilities secured on 26/F Convention Plaza and the Discovery Bay houses.  On 3 June 1996, extra finance was approved by D2 in Chan’s absence.  On 10 June 1996, D2 approved reinstatement of credit ratio on 26/F Convention Centre at 100%.  Letter of offer for Discovery Bay houses was issued on 10June 1996, and the letter of offer for reinstatement of 100% on the 26/F Convention Plaza was issued on 26 June 1996.  

69.On 17 July 1996, a loan proposal was made for further $15.3m secured on 1749 Parkview despite the poor financial situation of AK.  A note from Wong showed that this had been orally approved by D2 over the telephone.  This was unusual as being the direct dealing between Wong and D2.  On 18 July 196 the letter of offer for 1749 Parkview was issued.  There was a request dated 29 July 1996 for further lending secured on 2905 Convention Plaza endorsed by Chan, calling for consideration of the purpose of the loan, the repayment ability and why the properties were held for so short a time.  There was a report dated 5 August 1996 from Lam, recommending the lending on 2905 Convention Centre, endorsed by Chan on 6 August 1996 who pointed out the risks of further lending and the risk of accommodating finance.  D2 read this on 7 August 1996.  On 8 August 1996, the letter of offer for 2905 Convention Plaza was issued.  

70.On 23 November 1996, there was a loan proposal recording discussion between D2, Chan and Lam in which it was decided not to mortgage 73 Seabee Lane in Discovery Bay.  On 17 January 1997, the loan proposal was endorsed by Chan saying that Wong said that D2 had already approved the loan of $24.06m.  There was no reason why D2 changed his mind. 

71.A loan proposal was endorsed by D2 on 12 March 1997 refusing two properties at South Horizon.  On 12 March 1997, Karen was informed of the refusal.  On 13 March 1997, it was noted that D2 approved the loans on South Horizons overnight.

72.In her Reasons for Verdict, the judge noted that on 10 May 1999, CC Ho left Hong Kong taking with him part of the funds from the fraudulent LCs.  Wong emigrated to Canada on 27 February 1998, as did Lam on 2 August 1998.  The admitted loss to the Bank was some $283m.  Regarding the requests for facilities made through the officers of the Bank, as set out above, the judge said:

“Karen Yin has always said she never made detail requests for credit facilities; she merely gave Wong the sale and purchase agreement and asked for a mortgage loan at the highest valuation to buy the property and the lowest interest rate for charges.  This amendment by Lam [of the first analyst’s proposal, without speaking to Karen], without recourse to her, the prosecution say, supports this evidence.  I believe Karen Yin.” (Transcript p 55)

73.The judge dealt with most, if not all, of the banking facilities mentioned above, and in particular, noted a number of incidents where D2 was involved in giving unusually favourable treatment to AK, including the following:

(a)	D2 increased the instalment loan to $120 million.
(b)	D2 recommended the top-up loans and HIBOR credit facility.
(c)	The coincidence of the approval of the $40m HIBOR loan on 5 December 1994 with a withdrawal of $350,000 on 6 and 7 December 1994, which supported Karen’s evidence.
(d)	On 14 December 1994, a letter of offer was sent allocating $22m of the LC facility on the 17/F Convention Plaza to a revolving credit facility, thus providing more accessible cash to AK.
(e)	On 7 September 1995, Lam noted that the value of the Discovery Bay properties had decreased, nevertheless D2 gave the go ahead.
(f)	On 13 February 1996, D2 approved generous reductions of interest rate and extension of mortgage terms with credit facilities.  The money was withdrawn predating the letters of offer.
(g)	On 25 May 1996, the Bank received through fax the annual report for AK ending March 1995, which contained a disclaimer.  Unusually, D2 said he would speak to CC Ho for their auditors to amend the report.  On 17 July 1996, the disclaimer was ameliorated to an “except for” opinion for items which lacked information.  The judge’s comment was that “any prudent banker should have been extremely reticent to provide further lending after these reports; in particular, because by this stage the bank’s exposure was above $400 million and there was already a known problem in repaying the bank.”
(h)	On 10 June 1996, D2 approved the reinstatement of the credit ratio on 26/F Convention Plaza at 100% appraised value.  This increased the LC facility to $15.4m.

74.Despite all that, the judge declined to find that the prosecution had proved beyond reasonable doubt that D2 knew of the fraudulent LC transactions.

75.As to Mr Blanchflower’s argument that Chan, an honest person as accepted by the parties and the judge, also took part in dealing with AK and sometimes approving the loans, the judge had the following comments:

“We have seen Chan was not inclined to grant the 17^th floor lending, which approval occurred while he was on leave.  At a monthly meeting of team heads and staff in May 1994, on his return from leave, D2 derided the timidity of those who regularly turned down loan applications.  He instructed that a regular list of rejected loan applications be put before him.  Tam said although no names were mentioned, it was generally understood by those present whom D2 meant.  Chan who does not travesty truth by amplifying them said: ‘He was a little bit affected.’  The result was, as can be seen in the bank documents, he refrained from making negative comments as D2 might feel differently.  Even when he felt disquiet, his comments were muted and indirect.  It is not suggested D2 criticised Chan to facilitate favourable treatment of Au Kiang, but it had the effect of stifling Chan’s concerns for some time.” (Transcript p 84).

76.In all the circumstances of this case, looking at the cumulative effect of the evidence, we are not persuaded that the judge was wrong in concluding that AK and its subsidiary companies had been given unusually favourable treatment by the Bank.

D3’s ground 3(d) –need for corroboration

77.On this ground, Mr Bruce’s complaint is that there was no corroboration for the critical assertions made by Karen.  Corroboration here is used in a broader sense than the technical meaning that it previously had in the law of evidence.  Mr Bruce contends that Karen’s testimony is such that notwithstanding the abrogation of the former law in relation to corroboration, the judge erred in her evaluation of Karen’s credibility and reliability and should have looked for evidence which at least supported her testimony and should have refused to act on it in the absence of such evidence. 

78.As we have referred to before, the judge had very carefully examined Karen’s out-of-court statements so as to understand fully and in proper context the attacks based on the alleged discrepancies, inconsistencies and inaccuracies in them.  The judge had also analysed the reasons behind Karen’s admitted lies and her reluctance to talk against the involved bank officers who were still in Hong Kong.  Her conclusion was that Karen emerged a reliable and truthful witness relating to most of the charges.  In this connection, the judge had examined the documentary evidence showing the relevant banking transactions that were prevailing at the time, with the withdrawal records, EPS and watch vouchers that supported Karen’s evidence to a certain extent.  She also referred to the supporting evidence of Mona Lee, Eva Poon and Stephanie Cheung.  The judge said:

“Mona Lee, Stephanie and Eva Poon (PW8) support Karen Yin’s evidence inasmuch as they have all gone to withdraw large sums of cash.  Eva said the money was over $200,000 and she has also withdrawn US dollars.  She has counted money and put them in envelopes.  She prepared the vouchers in relation to these withdrawals which C C Ho signed.  Stephanie said after the withdrawals she handed the cash to Karen Yin or, on Karen Yin’s instruction, to C C Ho.  Mona remembers helping Karen Yin count and separating the money into stacks.  She saw them placed in two or three envelopes and names written on them.  She saw D3’s name would be on one envelope.  …  This evidence does support Karen Yin’s evidence as to how the money was packed but does not prove the money went to the officers.” (Transcript p 100).

79.This ground fails.  

D2’s ground 1A – D2’s silence

80.This ground alleges that the judge erred in law in taking into account D2’s failure to testify when stating that there had been “no evidence to the contrary”, to find that Karen’s evidence against D2 was “true and reliable”. 

81.The sentence complained of is contained in the judge’s concluding remarks on D2.  She stated:

“There being no evidence to the contrary, I find myself satisfied beyond reasonable doubt that Karen Yin’s assertions against D2 are all true and reliable…” (Transcript p 109).

82.Mr Blanchflower submits that the judge made the same error in HKSAR v Chan Ka-ming, Andy, DCCC 883/2003, 2 December 2003.  There the judge was concerned with the quality of a witness’ evidence of identification of the defendant.  The judge had directed herself in accordance with Turnbull.  She then cited passages from Weissensteiner v The Queen [1993] 178 CLR 217, and also referred at length to Li Defan and Anor v HKSAR [2002] 1 HKLRD 527, both relating to the use by a tribunal of fact of an accused’s failure to testify.  The conviction was quashed by this Court because it found that there was a suspicion that the judge had used the applicant’s failure to give evidence to add strength to the identification evidence. 

83.Mr Blanchflower contends that the judge in the present case adopted a similar line of reasoning as in Chan Ka-ming, Andy.  By uttering the words “there being no evidence to the contrary”, the judge, he submits, is shown to have used D2’s failure to give evidence to bolster Karen’s evidence, which was a material irregularity amounting to a miscarriage of justice. 

84.We disagree.  This ground is based on either a wrong reading of HKSAR v Chan Ka Ming, Andy CACC 538/2003 or on a misunderstanding of judge’s use of the term “there being no evidence to the contrary”.  

85.This Court in Chan Ka Ming, Andy allowed the appeal against conviction because there was a suspicion that the judge had used the defendant’s failure to give evidence to add strength to the identification evidence.  The main reason for that suspicion was the judge’s reference to Weissensteiner and Li Defan.  In the present case, the judge did not ever indicate that she relied on either of these authorities on the subject.  Her comment that there was no evidence to the contrary is simply a statement of fact.  Having resolved the discrepancies and inconsistencies in Karen’s out-of-court statements, the judge found no evidence to the contrary as regards her testimony against D2.  There is nothing wrong with that remark, as properly understood. 

86.This ground fails.

D2’s ground 2A – the diary entry

87.This ground contends that the judge erred in interpreting an entry for 27 June 1997 in D2’s desk diary as evidence which supported Karen’s evidence.

88.The relevance of this diary entry is as follows.  Karen said in evidence on 27 June 1997, there was a withdrawal of US$20,000 which CC Ho later gave to D2.  Karen said that PW8, Eva Poon, cashed the cheque and gave the money to her.  Karen said that CC Ho did not come to the office that day, and she arranged with D2 to meet CC Ho at the Mandarin Hotel Coffee Shop around 4-4:30pm.  She took the money and went in a taxi with PW5, Mona Lee, to the hotel.  Mona Lee stayed outside while she went inside.  CC Ho and D2 were already there.  She gave the envelope containing the money to CC Ho who gave it to D2.  She had a cup of coffee while sitting with them.  After leaving the hotel, she and Mona Lee went shopping for cookies to eat on the flight to France that they were taking that evening.

89.D2’s former secretary, PW9, Ms Tsoi Sik-heung, was asked about D2’s 1997 office-desk diary.  Tsoi identified three handwritings in the diary, one was hers, and the others were of colleagues who did her duties.  There was an entry in this diary on the bottom of the column for 27 June 1997, which reads:

“Mandarin, 4.45, 233.  Bring Annual Report.”

90.Tsoi gave evidence that 233 was the registration number of one of the vehicles of the Bank and “233” indicated that D2 would take that vehicle.

91.The judge’s view on the evidence was that

“I am satisfied the entry in D2’s diary on 27 June 1997 was a reminder to him to meet C C Ho at the Mandarin Hotel at 5 pm and that was the occasion when another US$20,000 was given to him.”

92.On the basis that Tsoi’s evidence was that she wrote “Mandarin lesson” sometimes in Chinese characters and that usually D2’s Mandarin lesson was on Mondays but there were exceptions and changes, and that sometimes it was at 5 pm, sometimes at 4:30 pm, Mr Blanchflower complains that Tsoi was not asked in examination in-chief whether the word “Mandarin” in the entry referred to the lesson or the hotel.  Nor was she asked whether D2’s Mandarin lesson on the following Monday (which was a public holiday) was or could have been rescheduled to 27 June.  We do not find this submission attractive.  It would be for defence counsel to ask such questions if he considered it necessary. 

93.Mr Blanchflower complains that the judge had ignored Tsoi’s evidence about the Mandarin lessons and the timing of the hotel meeting as described by Karen and the time of the entry in the diary.  In this respect, Mr Blanchflower refers to Tsoi’s evidence that D2 had a meeting with the head of the Bank from 4:10-4:20 pm. 

94.Despite Mr Blanchflower’s contention, we are not persuaded that it was improper for the judge to regard the diary entry as a piece of real evidence that supported Karen’s evidence of the meeting at the Mandarin Hotel on 27 June amongst CC Ho, D2 and herself, during which the envelope of money was handed to D2.  

D2’s ground 2 – Charge 11 – the watches

95.This is the only ground in which we find merit.

96.Charge 11 was against D2 for his acceptance of 2 Rolex watches from CC Ho of AK.  Originally, the relevant dates were set out in the particulars of offence as between 15 May 1994 and 15 July 1994.  That was the time frame the prosecution said coincided with the 26/F Convention Plaza lending.  However, after the completion of the evidence of Karen, who could not remember the timing of the gift, the prosecution successfully applied for an amendment of the charge so that the later date in Charge 11 was extended from 15 July 1994 to 31 August 1995. 

97.A lady’s gold ruby watch was found by ICAC officers in D2’s safe deposit box with the related guarantee and sales voucher.  PW11, Mr Yeung Chi On of La Suisse Jewellers, testified that the guarantee and the sales voucher related to that gold ruby Rolex watch.  Later at the trial, prosecution counsel conceded that the gold ruby watch found in D2’s safe deposit box was not relevant to the two watches alleged to have been given to D2. 

98.The judge dealt with the watches for the banking officers and their wives quite carefully.  She dealt with the watches under various headings, namely watches for the wives of Wong and D3, Karen Yin’s watch, Lam’s wife’s watch, Lam’s watch and finally D2’s watches.  She said :

“I think it would be natural for C C Ho, having decided to reward Lam handsomely with a pair of gold and diamond watches for the 26^th floor lending, to think of an even more expensive pair for Lam’s superior, D2.  Karen Yin is unable to fix a date for this.  She has no EPS to assist her as C C Ho bought this himself.  But she recalls after they were purchased, C C Ho showed a pair of gold and ruby Rolex watches to her.  She packed them in one Au Kiang envelope and made an appointment for D2 to collect them.  One afternoon, after showing D2 to C C Ho’s office, she fetched the watches and left them on the desk.  As she left the room, she heard C C Ho say, ‘This is for you.’  When C C Ho left and she escorted D2 to the lift lobby, she saw he was carrying the envelope.  I note in that period C C Ho was away from 19 July to 3 August and D2 was in Hong Kong until 10 August.

In D2’s safety deposit box was a lady’s ruby-studded gold Rolex Watch.  The guarantee which is related to a sales voucher indicates this and a different men’s watch were purchased together from King Fook on 14 April 1995.  It is therefore unlikely this particular Rolex watch was the one C C Ho purchased.  I am not prepared to speculate that D2 made an exchange of the watches on 14 April 1995. 

The only bank book in evidence which covers this period of 1994 is the Au Kiang account with the Chartered Bank.  Au Kiang had accounts with several banks.  There was a cash withdrawal for C C Ho on 15 July 1994 for $125,000.

The prosecution say the timing of the July-August watches could only be to reward the officers for the 26^th floor lending and sweetening them for the subsequent refinancing loans on the 17^th floor and 26^th floor properties.  That the watches were bought on the day or shortly after the credit committee approved the loan is a striking coincidence.” (Transcript pp 61-62) (Emphasis added)

99.While Ms Draycott argues that the last sentence of the passage cited above must have been meant to refer to the watches given to the other bank officers, unrelated to those given to D2, Mr Blanchflower contends that the judge was referring to all the watches given.  He further submits that the judge was wrong to rely on the withdrawal of $125,000 from the Chartered Bank on 15 July 1994 as support for Karen’s evidence of the gift of two watches to D2.  Moreover, despite the amendment to Charge 11, altering the dates to 15 May 1994 to 31 August 1995, an elongation of over a year, there was no evidence in support of Karen’s testimony that CC Ho gave the two watches to D2.

100.The whole tenor of Karen’s oral evidence was that the bank officers were given watches for themselves and their wives for the lending on 26/F Convention Plaza.  She also said that cash was sometimes given.  But D2 was not charged with acceptance of any money during the relevant period, and Charge 11 was about watches.  While the other watches were purchased by her and supported by EPS records signed by her and vouchers of La Suisse Jewellers or some other documents, the two watches that she alleged had been given to D2 did not have similar documents in support.

101.What is also worrying in this respect is that Karen was shown vouchers, EPS records and bank withdrawal documents by the ICAC as well as the ruby-studded Rolex lady’s watch found in D2’s safe deposit box.  But none of this could reasonably relate to the two watches which she alleged had been given to D2.  Mr Blanchflower correctly points out that the $125,000 withdrawn from Chartered Bank on 15 July 1994 would not be sufficient to cover the alleged two watches to be given to D2, as CC Ho, according to Karen’s evidence, intended to give D2 an even more expensive pair of watches than those given to Lam.  The pair of watches for Lam and his wife cost $149,900, well over $125,000.  Mr Blanchflower submits, and we think correctly, that it was wrong for the judge to rely on the withdrawal.  On the other hand, if she did not rely on it, there would be no evidence of the withdrawal of any sum for the purchase of the alleged watches for D2.  Without being linked to the withdrawal of $125,000, a difficulty would be created as to the time when the alleged watches were bought and given to D2.  Karen’s evidence suggested, as the judge seems to have accepted, that the gifts of the watches to the bank officers including D2 were linked to the lending on 26^th floor Convention Plaza, which was approved on 12 July 1994 with a letter of offer issued on 16 July 1994.  If the time of the alleged gift was uncertain, then there is a doubt whether it was linked to that lending.  The basis for the making of the gift would thus become doubtful.  The quality of the evidence about these two alleged watches to D2 is much lower than that against the gift of watches to the other bank officers.

102.The judge had noted that in the relevant period, CC Ho was away from 19 July to 3 August and D2 was in Hong Kong till 10 August.  She was obviously considering whether the possible date of the passing of the alleged gift to D2 related to that period of time.  But there is actually no evidence in support, because Karen was not sure and could not remember the date.  The judge should obviously have noticed the difference in the quality of the evidence of the alleged gift of the two watches to D2, but eventually, when she convicted D2 on Charge 11, she seemed to have overlooked the point that she attempted to make earlier in her lengthy and detailed Reasons for Verdict, after the long interruption by her taking time to deal with the inconsistencies in Karen’s out-of-court statements. 

103.We are persuaded by Mr Blanchflower that the fact that the judge mentioned the withdrawal of $125,000 shows that it is possible that she may have relied on it being connected with the watches and the timing of their being given.  In our view, if the judge had not used this evidence for the purpose, she would have indicated that it was an irrelevance as she had done on other topics elsewhere in her Reasons for Verdict.  The judge had been very careful with the evidence of Karen, identifying one or another form of documentary evidence in support of her oral testimony, and in all incidents she was successful in doing so, except this one.

104.In all the circumstances, we feel that the conviction on Charge 11 against D2 is unsafe.

105.However, despite Mr Blanchflower’s contention to the contrary, we consider that the conviction on Charge 11 does not affect the propriety of the convictions on the other charges, because the doubt which existed about the propriety of this conviction was caused by the way the judge dealt with the evidence in relation to this particular charge.

Conclusion

106.For the above reasons, leave is granted to D2, and treating the hearing as the appeal, his appeal against conviction on Charge 11 is allowed and the conviction is quashed with the related sentence set aside.  The appeal against the convictions on Charges 12, 14 and 15 are dismissed.  The result is that D2 remains convicted of those three charges.  The sentences of 3½ years on each charge will remain.  However, as the judge imposed 3½ years’ imprisonment on each of the charges, which were consecutive to Charge 11 and each other to the extent of 2 months, making additional six months to the sentence imposed on Charge 11, it follows that D2’s sentence is now reduced by 2 months to 3 years and 10 months’ imprisonment. 

107.As far as D3 is concerned, his application for leave to appeal against his four convictions is dismissed.

Mr Michael Blanchflower SC and Mr Benny Ho, instructed by Messrs Lee Chan Cheng, for the 1^st Applicant (2^nd Defendant)

Mr Andrew Bruce SC, instructed by Messrs W I Cheung & Co, for the 2^nd Applicant (3^rd Defendant)

Ms Charlotte Draycott, on fiat, and Mr Alex Lee, SGC of the Department of Justice, for the Respondent