HKSAR v. Mo Yuk Ping and Others
Read the full judgment text of DCCC 367/2004 on BabelCite. This District Court judgment.
1. The District Court Ordinance requires that I deliver the reasons for the verdicts orally. It is clear that that will take a substantial time, perhaps longer than just today. In the circumstances I intend to deliver the Verdicts at this stage and then the Reasons.
Cites 4 cases
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IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NOS. 367, 1334, 1360 OF 2004 & DCCC 636 OF 2005 HKSAR against (D1) MO Yuk-ping (D2) CHUNG Sau-ling (D3) LAM Kai-sing, Sammy (D4) CHEUNG Pak-yau (D5) WONG Pui-fai (D6) LO Po-wing _________________ _________________ 1.The District Court Ordinance requires that I deliver the reasons for the verdicts orally. It is clear that that will take a substantial time, perhaps longer than just today. In the circumstances I intend to deliver the Verdicts at this stage and then the Reasons. 2.The First Accused is convicted on Charges 1, 2 and 3 but acquitted on Charge 9. The Second Accused is convicted on Charges 1, 3, 4 and 5. The Fifth Accused is convicted on Charges 3 and 4. Bail of the Second and Fifth Accused is revoked and each is remanded in custody. 3.This has been a lengthy matter extending over nearly four months during which oral evidence was heard from 17 prosecution and four defence witnesses on a total of 38 days. Statements of 25 prosecution witnesses were produced pursuant to the provisions of s. 65B of the Criminal Procedure Ordinance. There are several thousands of pages of documents. The proceedings commenced on 1 August 2005 with a number of applications in respect of each of which I have given separate and distinct rulings. I do not propose to revisit those. After a number of false starts, evidence actually commenced on 7 September 2005. 4.There were originally eight charges faced by six Accused in varying combinations. On 1 August 2005 the Third and Fourth Accused pleaded guilty to certain of the charges against them, whilst others were left on the court file. In due course, the trial proper started. After two days of evidence from the first prosecution witness I allowed an application by the prosecution to add an additional charge: they made that application after considering comments which I passed on the evidence which had been led that far and in the light of my intimation that, in a matter of this nature, the longer an application for amendment were left the more reluctant a court may be to entertain it for fear of prejudice to the Accused. 5.At the conclusion of the testimony of those witnesses whose evidence related to the sole charge faced by the Sixth Accused, the prosecution, responsibly, closed its case against him. I considered the evidence against him in the light of the test laid down in R v Galbraith 73 Cr. App. R. 124, CA. The inculpatory evidence against the Sixth Accused effectively came solely from the Third Accused although evidence from other witnesses provided a background to it. It was his evidence alone that dealt with what was supposed to have been said to the Sixth Accused: it was that which was said that would have rendered the Sixth Accused criminally liable. 6.The Third Accused is a witness whose evidence need be approached with an abundance of caution, especially when it comes to his testimony concerning the Sixth Accused. In essence, on the first occasion when the Third Accused briefly met the Sixth Accused, the only conversation that could sensibly have been regarded as founding criminal liability was an alleged reference by the Fifth Accused to the Third Accused as being a "head". The difficulty that I had with this was that there was no substantial evidence to suggest that this would have had any special meaning to the Sixth Accused especially as it seemed, from other evidence, to be a term first used by the ICAC rather than witnesses. 7.It may be self-evident, but for the sake of completeness I would indicate that it was my inability to accept this particular allegation coupled with what happened at the various meetings at which the Sixth Accused was said to be present that resulted in my holding that there was no prima facie case for the Sixth Accused to answer. 8.When it came to the content of the subsequent meetings between the Third, Fifth and Sixth Accused, I was not satisfied to the requisite standard by the evidence of the Third Accused. This concerned was heightened by his acknowledgement that at no stage had the Sixth Accused ever coached him as to the evidence he should give during his interviews with the SFC or suggested to him or encouraged him to give untrue information to the SFC. 9.The result was that the evidence against the Sixth Accused was of such a tenuous nature that no reasonable jury properly directed could, may or might have convicted him. Consequently I was satisfied that there was no prima facie case for him to answer and acquitted him. THE CHARGES 10.LUI Ching-yee, Joanne, is named as one of the conspirators in each of the conspiracy charges. 11.The first charge, now against the First and Second Accused, alleges a conspiracy to defraud of which the particulars allege that they, together with named others
12.The second charge, against the First Accused alone, alleges a separate and distinct, but concurrent, conspiracy to defraud of which the particulars allege that she, together with named others
13.The third charge, faced by each of the remaining Accused, alleges a conspiracy to pervert the course of public justice of which the particulars allege that they, together with LUI
14.The fourth charge, now faced by the Second and Fifth Accused, also alleges a conspiracy with LUI to pervert the course of public justice in generally similar terms, the effective dates being 13 and 31 May 2003, relating to share trading in the name of CHEUNG Pak-yau. 15.The fifth charge faced by the Second Accused alone alleges another conspiracy with LUI to pervert the course of public justice again in generally similar terms, the dates also being between the 13 and 31 May 2003, relating to share trading in the name of SIU Yim-wah. 16.The remaining charge, the ninth charge, is against the First Accused only and alleges an act tending and intended to pervert the course of public justice, the particulars of which are that she
THE NATURE OF A CONSPIRACY 17.A conspiracy is an agreement between two or more persons to perform an unlawful act or a lawful act unlawfully. The actus reus of the offence is the agreement itself. Assuming the necessary mens rea, once that agreement has been reached the offence is complete. (R v Aspinall (1876) 2 QB 48 @ p 58-59) It is not necessary for there to be any act in furtherance of the agreement, although in this matter it is the prosecution's case that much actually was done in pursuance of the various conspiracies and that those acts demonstrate the existence of the various conspiracies. 18.Mens rea is an essential element in common law conspiracy. There must be an intention to be a party to an agreement to do an unlawful act. In R v Anderson [1986] AC. 27, HL, Lord Bridge said, at p. 39E:
19.It is the agreement to commit the offence and the intention to take part that forms the offence. It will continue so long as there are two or more parties to it intending to carry out the agreement. (DPP v Doot [1973] AC. 807) It is not necessary that all the parties to a conspiracy reach agreement at one and the same time: it is possible for persons to join a conspiracy at various stages and times provided that that conspiracy is a single, on-going one. (R v SHEIK Abdul Rahman Bux and Others [1989] 1 HKLR 1 @ p 7) 20.By their very nature, conspiracies are often difficult to prove. A court is usually invited to infer the existence of a conspiracy from the individual acts of the alleged co-conspirators “done in pursuance of an apparent criminal purpose in common between them” (R v Brisac and Another (1803) 4 East 164 @ p 171; Churchill v Walton [1967] 1 All ER 497 @ 500): the conduct would not have occurred, had there not been an agreement. It is the prosecution's case that a number of the indemnified witnesses are able to speak directly to the fact of the various conspiracies. 21.Once there is prima facie evidence that a particular accused was a party to a conspiracy, the acts and declarations of a party to that conspiracy are admissible both against the person who made it as well as against the other members of the conspiracy if those acts and declarations are made in furtherance of that conspiracy and provided that such acts or declarations are relevant to the proceedings. (R v AU Shui-yuen [1993] 2 HKC 219). Overt acts, which are proved against some accused, may be looked at as against all of them, to show the nature and objects of the conspiracy (R. v. Stapylton, Esdaile and Brown [1857] 8 Cox 69). 22.I have borne in mind, however, the necessity to distinguish between admissibility of different aspects of the evidence in respect of different conspiracies: merely because there are common co-conspirators in some of the charges this would not render evidence which is admissible on, for example, the third charge by one co-conspirator against another admissible on, for example, the fifth charge which is a separate and distinct conspiracy. 23.Obviously, it is necessary for me to consider the evidence touching upon each Accused on each charge separately and to arrive at a distinct decision in respect of each. In the light of the evidence in this matter I have had to give careful consideration as to whether there was one, overall, ongoing conspiracy with different conspirators joining in at different stages or whether there were, indeed, a number of separate conspiracies which effectively flowed from a consecutive series of events: I am satisfied that the latter is the case bearing in mind that the different conspirators involved in the different conspiracies would be aware, on the facts of this matter as they emerged in the evidence, of the overall background against which any particular conspiracy is set. 24.In view of the evidence of expert witnesses called on behalf of the First Accused it is worth emphasizing that the first and second charges are common law conspiracies to defraud. Although there has been extensive reference to the share trading as “market manipulation”, and in purely linguistic terms that indeed might be a consequential facet of that trading, the Accused are not charged with any such offence or a conspiracy to commit any such offence. 25.In regard to the two conspiracies to defraud contrary to common law I must be satisfied that the respective Accused became a party to each separate agreement, each of which was intended to practice the described fraud, intended to act to the prejudice of the rights of potential investors in the shares or the rights of BOC. It is sufficient for the prosecution to prove that the conspirators had dishonestly agreed to bring about a state of affairs which they realised might deceive potential investors or BOC into acting so that they or it will suffer economic loss or so that their or its economic interests will be put at risk. It is not necessary for them to actually have agreed to harm, or to have foreseen actual harm to, the potential investors’ or BOC’s interests: it is enough for me to be satisfied that the Accused took the risk of such harm, knowing that he or she had no right to do so. 26.The conspiracies to pervert the course of public justice are statutory conspiracies contrary to sec. 159A and 159C of the Crimes Ordinance to commit the common law offence of perverting the course of public justice. Sec. 159A provides:
27.Once again I must be satisfied that the respective Accused each became a party to each separate agreement each of which, to his or her knowledge, would result in the pursuit of a course of conduct which would necessarily involve any one of them committing the offence and that each intended to play some part, whether active or not, in furtherance of the criminal purpose which the agreement intended to achieve. I shall return to the elements of the offence of perverting the course of justice at the appropriate time. DISHONESTY 28.Each of the first and second charges alleges dishonesty on the part of the conspirators. Whether that is proven falls to be considered in the light of the test set out in the well known decision in GHOSH [1982] 3 WLR 110:
THE WITNESSES 29.LUI, PW1, was called to testify, under an immunity from prosecution. A number of other prosecution witnesses also testified under immunities. Those immunities are in the usual terms and remain on file. Two of the witnesses, the Third and Fourth Accused, PW2 and PW5 respectively, are still to be sentenced consequent upon their pleas of guilty. 30.At the risk of stating the obvious, almost all of the evidence has to be approached with considerable circumspection. Much of the oral evidence comes from witnesses who may accurately be described, perhaps conservatively, as tainted: they testify from behind the shelter of immunities granted to them because of their apparent participation in the very offences to which they are to speak. Plainly they, but especially PW1, PW2, PW5 and PW6, were deeply involved in the acts being undertaken, showing a willingness to engage in dishonest conduct and to distort the truth both in and out of court. Each, whether she or he admits the fact, has her or his own agenda and interests to serve. 31.However, merely because someone lacks a blameless history or can be demonstrated to have been untruthful or dishonest does not mean that all evidence must be rejected automatically. 32.Apart from the issue of their own involvement in the offence or offences, several of the witnesses were or are friends of the First Accused. One, SZE Kwok-wing, PW7, has apparent reason, financial, to be embittered towards the First and Second Accused. 33.The indemnities mean that the witness will not be prosecuted for his or her involvement in any offence about which he or she testifies provided that evidence in these proceedings is truthful. The prosecution position is that the indemnity would provide each witness with a real incentive to try to testify truthfully as best he or she can, bearing in mind the lapse of time since these events occurred. Even so, commonsense suggests that a witness in such a situation may seek to minimize his or her role in the events, but otherwise be fundamentally truthful in evidence. 34.Conversely, the defence position is that the fact of the indemnities and the fact that each was up to his or her neck in the conspiracies provides each with a motive for lying, to exaggerate the evidence, to falsely implicate the various Accused in the respective events so as to satisfy the demands of the prosecuting authorities. These are issues which I keep carefully in mind in considering their credibility as witnesses, the reliability of their evidence and the weight which I should attach to it. 35.As Power, V.-P, observed in R v FOK Tin-yau [1995] 2 HKC 450:
36.There are, as is inevitable in a matter of this nature, inconsistencies within the evidence of any given witness and between that of the various witnesses: it is appropriate to read the evidence with some common sense and understanding of the way people actually speak, rather than as a statutory instrument to be dissected as such. (HKSAR v CHENG Man To CACC423/2003) 37.Much emphasis has been placed on the possible meaning of individual words or phrases: a shining example of this is to be found in the cross-examination of FUNG Sau-hong, PW17, the prosecution expert witness, who was referred to individual sentences and, even half-sentences, in her comprehensive report. Little is to be gained by such an approach. Justifiable criticisms are capable of being passed in respect of many of the witness individually. It may be that the evidence of any one witness taken in isolation would be insufficient to justify a conviction on any one of the charges but this is a matter in which it is especially important to stand back and look at what is often called “the big picture”, at the events and the actions of the individuals in the overall context. 38.The prosecution relies in part upon inferences which may be drawn from the proven evidence. It is trite that the requirement of proof beyond all reasonable doubt does not prevent the drawing of an inference of some further fact, from facts that have been the subject of direct evidence, but the inference must be compelling – one (and the only one) that no reasonable man could fail to draw from the direct facts proved. (R v KWAN Ping-bong and Another [1979] HKLR 1) CHARACTER OF THE ACCUSED 39.Each of the Accused is free of any previous criminal conviction. I bear that in mind on the bases I am so required. EVIDENCE BY THE ACCUSED 40.The First Accused called three persons, tendered as experts, to testify regarding, essentially, the issue of volume of trade in Shanghai Land shares. 41.Each of the First and Second Accused elected, as is her right, not to give evidence. The failure of an accused to give or call evidence is no evidence of guilt: it proves nothing one way or the other. The consequence of doing so is to leave the prosecution case enjoying the advantage of not being undermined, contradicted or explained by any testimony from the Accused. (per Bokhary, PJ, in LI Defan and Another v HKSAR (2002) 5 HKCFAR 320 @324). 42.That said, the evidence of the prosecution must be sufficient to prove each charge to the requisite standard. It is worth observing, also, that what is put to a witness during cross-examination is not evidence: these are mere assertions on behalf of an accused which remain unsubstantiated if the accused elects not to give evidence or unless accepted by the witness. 43.The Fifth Accused elected to testify. THE BACKGROUND 44.It is helpful to set out some of the undisputed background. From April 2002 to April 2004, the First Accused was the Chairperson of, but not a shareholder in, Shanghai Merchants Holdings Limited, a company listed on the Stock Exchange of Hong Kong. Shanghai Merchants in due course was to share premises with the company which became Shanghai Land Holdings Ltd. 45.The First Accused and her husband CHAU Ching-ngai (CHAU) were the two registered Directors and shareholders of Win Victory Holdings Limited. The First Accused and CHAU were each also directors of, inter alia, Shun Loong Holdings Ltd., which was the holding company of 11 subsidiaries including Shun Loong Securities Co Ltd. 46.The Second Accused was the personal assistant of the First Accused until 12 June 2003. PW1 and YU Ge (PW8) both went to work for Win Victory in 2000. 47.On 21 January 2002, Global Town Limited was incorporated in the British Virgin Islands. Global Town was registered as an overseas company in Hong Kong: the First Accused was appointed as the, sole, authorized representative of Global Town in Hong Kong as required under the Companies Ordinance. CHAU was the sole Director and shareholder of Global Town. Subsequently Global Town was renamed as New Nongkai Global Investments Limited. 48.On 23 April 2002, the Bank of China (Hong Kong) Limited (BOC) approved a loan facility of up to $2,156 million to Global Town to facilitate the takeover of a listed company, imGO Limited. Two supplementary loan agreements were concluded. A term of the agreements was that the shares acquired in imGO would be pledged to BOC as security for the indebtedness. The unchallenged evidence of LAI Chui Yi a senior officer in BOC is that the First Accused was present at some of the discussion meetings of BOC and Global Town before the loan agreement was reached. 49.The First Accused and CHAU together signed a notice [Exh. P1077] dated 12 June 2002 on behalf of Global Town to BOC requesting the drawdown of HK$1,100 million for the purpose of the acquisition of imGO. The First Accused alone thereafter signed four notices [Exhs. P1078 to 1081] requesting further drawdowns totalling HK$676 million. Because she will feature from time to time it is appropriate to note here that the third person authorised to sign documents to effect drawdowns of amounts payable in terms of the loan was GONG Beiying, Angela. 50.On 13 June 2002, Global Town obtained 57.98% shareholding of imGO, the name of which was changed to Shanghai Land Holdings Limited on 26 August 2002. CHAU became the Chairman and an Executive Director of Shanghai Land as well as a member of the subsequently formed executive committee of directors. It is an admitted fact that the First Accused was appointed general manager of Shanghai Land at a monthly salary of HK$9,000.00: she was neither a director of nor a shareholder in Shanghai Land. 51.After acquiring the 57.98% shareholding of imGO Global Town made a general offer to acquire all the remaining shares in the market: it raised its shareholding to 85.01%. To comply with a requirement under the Listing Rules, three share placements were conducted to lower Global Town’s shareholding to not more than 75%. The second of the placements occurred on 30 September 2002 and featured during the evidence. 52.For the sake of convenience I propose to refer to the collection of companies in general terms as "the group" unless it is necessary to refer to a particular company. 53.It is an admitted fact that between September 2000 and February 2003, in excess of 42 securities trading accounts were opened in the name of at least 12 persons with 13 different securities companies. Those persons included
When it is necessary to refer collectively to these people or a number of them, I shall refer to them as "the traders". 54.The securities companies involved were ASG Brokerage Ltd, China Everbright Securities (HK) Ltd., Chung Tak & Co., Golden Fountain Securities Ltd., ICEA Securities Ltd., Kingston Securities Ltd., Sincere Securities Ltd., Sinomax Securities Ltd., Taiwan Concord Capital Securities (HK) Ltd., Tanrich Securities Ltd., TIS Securities (HK) Ltd., Topmore Securities Ltd. and Young Champion Securities Ltd. When it is necessary to refer collectively to these companies or a number of them, I shall refer to them as "the securities companies". 55.It is the evidence of PW1 that it was she who, on a day-to-day basis, ran the share trading activities in regard to Shanghai Land in the name of the traders with the securities companies. That evidence has not been disputed during cross-examination and I accept it. 56.The First, Second and Third Accused were arrested by the ICAC on 1 June 2003. The Fourth Accused was arrested the following day. On each of those days various searches were carried out and documents seized. Their nature appears from the admitted facts. CREDIBILITY AND DEMEANOUR 57.It is safe to say in this matter that, in respect of the indemnified witnesses, not all that I have heard is the truth, nor is what I have heard all of the truth. 58.The credibility and reliability of the witnesses, particularly the indemnified witnesses, is fundamental in this matter. There were, sensibly, substantial areas of admitted evidence in respect of all of the charges. There is no real dispute, in respect of the first and second charges, relating to the transactions or to the acts performed by PW1. 59.An enormous number of issues and amount of ground was covered by the witnesses during the course of the trial. It is simply not practical in the course of these reasons for verdict for me to attempt to cover every aspect of events covered by every witness; to identify individually and discuss every discrepancy, real or perceived; to deal with every argument or submission made or comment passed by counsel for the prosecution or all of the Accused. 60.However, I have carefully borne in mind all of the evidence by all of the witnesses, the strengths, the weaknesses, the contradictions, the discrepancies, and the support for one another that is to be found amongst their evidence, and all of the points that have been made both for and against the prosecution and all of the Accused. 61.That I do not mention a particular piece of evidence or facet does not mean that I have not considered it or factored it into my decision making. I have had the benefit of transcripts as well as of detailed analyses of the evidence given by each of the prosecution witnesses prepared by Counsel relevant to their respective clients and the charges which they face. The closing submission on behalf of the First Accused is highly detailed and cross-referenced: those on behalf of the Second and Fifth Accused are as comprehensive as they need be. I have borne in mind each of the criticisms, and points made, when arriving at my decisions. 62.It is likely to make these reasons for verdict less unwieldy and more readily comprehensible if I deal separately with all of the evidence which relates to each charge, rather than simply to traverse the evidence of each witness. Given that events occurred in an almost continuous flow and that the charges are in chronological order, I accordingly propose to adopt a pattern of identifying the admitted facts as they relate to a given charge and then the additional evidence relating to that charge. In particular, I intend to relate in detail and discuss the evidence of PW1 as she is the one witness who speaks to each of the charges, save the Ninth, and then to supplement or contrast it with salient features of the evidence from other witnesses. 63.It will be necessary for me to deal with the question of credibility and demeanour of the various witnesses as a separate issue. I propose to comment at this unusually early stage upon the impression which the various witnesses made on me and to provide an indication of my views upon them. Inevitably there will be discrete matters calling for particular comment when looking at the evidence for any particular charge or given by any particular witness. In respect of the first, and to a lesser extent, second charges there are two particular issues where the evidence of a number of witnesses may conveniently be considered together – they are the opening of various share trading and bank accounts and the second share placement. 64.In this matter a number of the prosecution witnesses were in the witness box for extended periods: PW1 for some 10 days; the Third Accused for some eight days; the Fourth Accused for four days and PW6 for three days. Each was subjected to extensive cross examination which afforded me the real advantage of seeing and listening to them over an extended period, especially PW1. That said, I am fully alive to the observations of the Court of Appeal in HKSAR v CHENG Kam Fai and Another CACC263/2001 in regard to the question of demeanour. PW1: LUI Ching-yee, Joanne 65.Much of the cross-examination of PW1was directed towards her general credibility: the attacks ranged widely, especially on behalf of the Fifth Accused. She accepted that she had recently been involved in the purchase of a village house but disputed that she had in any way misrepresented her salary to a potential mortgagee: nothing was adduced to contradict her denial. She was shown documents [Exhs. D9 and D10] in which she had provided references for PW12, her husband, in which the period of time for which she had known him was suggested to be at variance with her earlier evidence in court and within those documents. She was shown her own application to the SFC for a licence [Exh. D12] which it was suggested contained incorrect information. Those being statutory documents, she elected not to reply to certain questions where truthful answers may have tended to incriminate her. 66.Another particular aspect relating to PW1’s credibility is the evidence concerning her employment. She accepted in cross-examination that after being employed by Win Victory her employment had been "transferred" to a company called Profitex Investments, a subsidiary of Shanghai Land. I would pause to observe parenthetically that it seems that the First Accused was the general manager of this company, employed in terms of a contract of employment which was signed on behalf of Profitex by PW10, LI Yung, its director and friend of several decades standing of the First Accused [Exh. D65]. 67.PW1 said that although her employment had been terminated by Profitex Investments in June 2002 she had continued to work there. It was clear from the evidence as a whole that what happened is that she was not employed after that month on a written contract of employment. It was suggested to her that she had followed this course to avoid payment of salaries tax: she denied this and said that she had simply been following suggestions of the First Accused that it would be “more convenient” for her not to sign an employment contract because she would be trading in shares. She was criticised for having told the ICAC that her employment had ceased but repeated that, insofar as she were concerned, it actually had ceased at that time. This is mere semantics which in no way detracts from her credibility. 68.Other criticisms were made of what she had or had not told the ICAC in the course of statements. For example, after a lengthy period of cross-examination concerning specific identified accounts she was asked why she had told the ICAC that the First Accused "in June 2002" had instructed her to open stock investors accounts whereas the accounts were in fact opened as a consequence, according to her oral evidence, of instructions given between February and the end of May 2002: her response to that was that she could not clearly remember the dates the accounts were opened and that, in any event, she was responding to questions from the ICAC and was not being questioned about being given separate instructions at that time. 69.Another example is to be found in her evidence regarding the opening of the account for SIU Yim-wah, PW6, with Taiwan Concord [Exh. P459]: in her evidence in court she had identified the writing on the various documents as being that of PW6 yet in a statement to the ICAC she had said that she could not identify the writing. She gave the obvious explanation - that she had been unable to do so at the time of making the statement but was able to do so now. These matters in no way impinge upon her overall credibility. 70.Considerable emphasis has been put on what PW1 and, indeed, other witnesses omitted to tell the ICAC during the course of communications with or interviews by them. In my judgment this aspect tends to be over emphasised. I recognise that, despite PW1 saying in evidence that she had made a "full " disclosure to the ICAC, it is clear that she was holding back on some matters: I keep that in mind but do not regard it as necessarily sinister conduct on the part of a person in her position. I also recognise that witnesses generally frequently do not volunteer information, in interviews or even in court, about which they are not asked: this may be intentional or simply because they do not realise the significance of a particular event. Moreover, it is readily understandable that the contents of interviews will reflect the area of most interest to the interviewer at a particular time, rather than the interviewee. 71.I keep in mind that PW1 - more so than any of the other witnesses - was involved in many hundreds, if not thousands, of transactions on a day-to-day ongoing basis, dealt with enormous volumes of documents, participated in any number of conversations with large numbers of people. Inevitably there will be areas in her evidence where she erred in her recollection. 72.In my judgment, PW1 was doing her best overall to truthfully relate events as she recalled them. There were numerous instances where it would have been open to her to have exaggerated the role of an Accused and probably to have escaped detection yet she appeared to be at pains to avoid doing so: I shall identify examples, but by no means all, of these when I come to the evidence. There were a number of instances where her evidence received considerable support either from other witnesses or documents: again I shall give examples of these. PW2: LAM Kai-sing, Sammy, the Third Accused 73.PW2, the Third Accused, was a very different witness from PW1. I am satisfied that he is a man who will be untruthful and dissemble, including during his appearance in court, when he perceives it to be in his own interests to do so. That said, he was plainly far less astute than many of the other witnesses: I was left with the real impression that on occasions he would simply react to a question rather than consider his answer before responding. It also seemed to me that he was simply so keen to ingratiate himself with the First Accused in the hope of some of her foreign exchange dealing spinning off to his benefit, a fact which he readily acknowledged, that he went along with anything that was suggested to him without paying particular attention to detail. This would account for much of the vagueness in his evidence. 74.I appreciate the force of the submission on behalf of the Fifth Accused that I would have to give myself "the strongest of warnings" before relying on the evidence of the various witnesses but especially the Third Accused. I do so. 75.I recognise that his evidence has to be approached with especial caution. There were numerous instances where he contradicted himself between his evidence in chief and his evidence when cross-examined. There were numerous instances where his evidence was at variance with that of other witnesses: in this latter instance, I accept the evidence of the other witnesses rather than his unless I specifically indicate to the contrary. 76.There are several areas of his evidence which deserve specific comment at this stage. His evidence regarding going to see Selina MAK at TIS Securities in March 2003 so that she could explain share trading activities through his account simply does not make any sense: his evidence regarding this aspect of the matter was disjointed and particularly contradictory when it came to the role of the Second Accused. He initially claimed that he had gone to see MAK at the request of the Second Accused: he then both rejected, accepted and then appears again to have rejected the suggestion that this did not happen at her request. I cannot rely on any of his evidence in respect of this incident insofar as the Second Accused is concerned. 77.There was also considerable uncertainty surrounding what documents [Exh. P932 and P933 in particular] he thought he had been given during his meeting with MAK - particularly as some of those documents were dated in April 2003 yet he was "sure" that his meeting with MAK had been in March 2003. Whether he was wrong about the date, was wrong about being given documents by MAK or any other combination of possibilities is unclear. His evidence on this aspect was particularly poor. Once again, I cannot rely on his evidence regarding his acquisition of those documents. 78.There was the issue of why he used different signatures. He gave explanations which, on the face of them, may appear to be odd, to say the least. However, the explanations become understandable in the overall context bearing in mind that he plainly appreciated, even if he would not accept directly, that his conduct was dishonest - by which I refer not only to allowing others to use his name for the purpose of share trading activities but his various other dealings with, amongst others, PW6 in regard to illegal foreign exchange trading in Macao, operation of bank accounts, and the use of accounts in others' names for that trading. The use of different signatures for different purposes is entirely consistent with his persona as it emerged generally in the evidence. 79.All these, and the other, criticisms being made, there were instances where he plainly was telling the truth and in which his evidence may properly be relied upon. A small, but telling, example occurred when he was cross-examined on behalf of the Second Accused about certain of the documents forming part of Exh. P1: he was able to distinguish between certain of the documents which had been explained to him by both PW1 and the Second Accused and others which he said had been explained to him only by PW1. That was a notable distinction for him to make: it was obviously an event which had impressed itself on his memory. 80.His evidence in respect of events prior to the commencement of the SFC investigation was generally poor but he improved in respect of events subsequent to the commencement of the investigation. He suggested, and I have no difficulty in accepting this, that the threat of the SFC investigation alarmed him substantially: he was aware of the fact that trading had been done in his name, he had no details concerning it and yet he was expected to go to face what was apparently a serious inquiry. He feared that he may be prosecuted. In the circumstances, it seems to me entirely understandable that he would have contacted PW6 and turn to him, or those with whom he was involved, for assistance: it is understandable that the events which occurred thereafter would be more likely to be impressed on his memory. In short, he was a better and more reliable witness in respect of events surrounding the SFC enquiry than the opening of share trading accounts. PW3: LEE Chuen-tak, Joseph and PW4: Richard YAT 81.PW3 was the senior partner of the firm of solicitors where the Fifth Accused worked. The prosecution and the Second Accused appear to have taken the view that the contents of the file opened by the Fifth Accused in respect of his dealings with the Third Accused, or at least the file notes and debit note contained in the file, was, in some ways, a fiction. I am satisfied that that is so: that, although the notes contained elements of fact, they were generated to act as cover for the Fifth Accused and not as genuine attendance notes. I am also satisfied that the debit note was never rendered, or intended to be rendered to the Third Accused. 82.I am not suggesting that the explanations which PW3 provided were untruthful, but his evidence went only to generalities. I would accept that, in some instances, the situation that he postulated in regard to, specifically, numbering of a bill, dating of it and raising of an appropriate charge may well occur. That would have been known to the Fifth Accused and, I am satisfied, he sought to turn that knowledge to his own use. 83.Consequently, whilst I accept the evidence of PW3 in regard to general procedures that evidence does not go to the instant matter. I accept also the evidence as well, insofar as it takes matters any further, of PW4. PW5: CHEUNG Pak-yau, the Fourth Accused 84.PW5 was the Fourth Accused. He gave evidence for some four days. He readily acknowledged his role in the overall events and appeared to me to be making a genuine attempt to relate events honestly and accurately. He accepted, unhesitatingly, that his previous conduct had been dishonest, that he had regularly been untruthful and that, as a result, he had made substantial financial gains. He was certainly a loquacious witness: in my judgment this was in an endeavour to express himself accurately and completely. 85.As a general observation it was clear from his evidence that the First Accused wielded considerable influence over the conduct of both himself and PW6, a view which was largely supported by the evidence of PW6: the Fourth Accused accepted that he had had numerous opportunities to disengage himself from his conduct, which he appreciated was dishonest at best or unlawful at worst, but that he had refrained consciously from doing so. He explained that he was largely motivated by his own avarice but that he was also concerned about offending the First Accused - with what he perceived, rightly or wrongly, as potentially unhealthy consequences - and also causing adverse financial consequences to PW6. 86.Once again, much store was placed on what he accepted he had omitted to tell the ICAC in the course of his interview for the purposes of preparing his witness statement. He disagreed that he had deliberately concealed, for example, facts concerning a company known as Best Easy Profits Ltd which was to be a subscriber to the second share placement exercise. I accept his evidence that he had first met the Second Accused before the end of September 2002 when, at the suggestion of PW6, he had gone to see her to obtain an explanation regarding share placements in general: this was another matter that he had not mentioned to the ICAC but there is simply no logical reason for him to have fabricated this evidence. 87.It is quite clear from his evidence that he was involved in a wide range of nefarious activities: with respect, it is simply unrealistic to expect him to have anticipated every aspect of his conduct which might be of greater or lesser interest at a later date either to the ICAC or to cross-examining counsel. 88.He, like PW1, avoided a number of opportunities of worsening the position of any of the Accused. A striking example of this was when he was being cross-examined concerning what have become known as the “coaching” meeting which he testified having attended with PW1 and the Second Accused: he accepted the suggestion that neither of them had suggested any explanation that he should give to the SFC and also accepted that he had not told either of them during that meeting that he was contemplating telling lies at the forthcoming interview. He would have been able to testify untruthfully on both these aspects without any real prospect of being detected. 89.When he was being cross-examined on behalf of the Second Accused concerning events surrounding a share placement which occurred in September 2002 he testified that he was not aware that Taiwan Concord had procured the placement of 136 million shares in Shanghai Land. He also testified that he was not aware that "the vast majority" of those shares were placed with a company in which his wife has an interest. Factually, that suggestion is incorrect: see Exh. P1133. 90.Overall, I was impressed by the Fourth Accused as a witness. In my judgment his evidence is reliable, although obviously not free from error, and he sought to honestly relate matters as best he could. PW6: SIU Yim-wah 91.PW6 was another witness who testified under an immunity from prosecution. It was he, and there does not appear to be any dispute about this, who played an active role as a go-between in recruiting the Third and Fourth Accused. All three of them were foreign exchange brokers of varying degrees of success. It emerged from their evidence that there was a symbiotic relationship between them with referral and cross-referral of dealers and clients, opening of accounts, use of companies, cross-use of bank accounts and similar mutual accommodations both within and without Hong Kong. The Fourth Accused acknowledged that PW6 was one of his closest friends during the period 2000 to 2003. 92.It emerged in his evidence that, like the Fourth Accused, he had made a substantial amount of money out of foreign exchange dealings on behalf of the First Accused. He seems to have expended considerable effort on her behalf. He accepted when he was cross-examined on behalf of the First Accused that he had signed numerous documents in connection with the business affairs of the First Accused. Of particular note is his acceptance that he was willing to act as a nominee on her behalf and on behalf of CHAU even to the extent that he would not have objected if trading accounts had been opened in his name without his prior consent. 93.This evidence shows not only the wide-ranging nature of the background to the events to which these charges relate but also gives a clear indicator of the extent of the influence exerted over him by the First Accused. It was quite clear that he was a reluctant witness, hesitant to say anything which he anticipated might be to the detriment of the First Accused. 94.Of particular importance during cross-examination on behalf of the First Accused was an issue as to when a conversation had actually taken place between him and the First Accused relating to finding persons to become involved in the placement of shares. He had said in his evidence in chief that this had occurred in “approximately mid 2002”. It was suggested to him during the course of cross-examination that this conversation had only taken place in the “final quarter of 2002”. When he was re-examined he reiterated that it had occurred, in fact, "shortly after the acquisition of" Shanghai Land. It is known that that was June 2002. It seems to me self-evident that his acceptance of the conversation as being in the final quarter of 2002 must be incorrect as the placement itself occurred at the end of the third quarter of that year and sheer commonsense requires the conversation to have taken place prior to that date. 95.When cross-examined on behalf of the Second Accused he accepted that there were conflicts between what he had said to the ICAC in a witness statement and his evidence in court over whether it had been the Second Accused who had asked him to open a bank account at Liu Chong Hing bank, thereafter to sign in blank the cheques issued to him and to surrender to her the passbook issued. He explained that he had become confused after reading his statement. He rejected the notion that he was lying in his earlier evidence. He went on to accept that he could not recall whether it had been the Second Accused or GONG who had asked him to open the account: he then indicated that both the Second Accused and GONG had asked him to pre-sign the cheques and accepted that in his second statement to the ICAC he had only mentioned the Second Accused’s name saying this was because he could not also remember the role of GONG. However, he accepted that, at the time that account was apparently opened, the Second Accused had not been employed in the group. He disputed that he had deliberately lied to the ICAC intending to implicate the Second Accused, accepting that it may indeed have been GONG who gave him these instructions. It is correct that his evidence on this aspect is not satisfactory. That said, areas of his evidence are supported by other witnesses. 96.He accepted that he had told the ICAC that the Third and Fourth Accused understood that what was being undertaken was “market manipulation” although he had not conveyed this to them in terms. He observed that their common concern was that they would be found out if the scheme went on for too long. It seems to me that this was plainly so: the effect of the conduct undertaken by them must have been self-evident to each of those involved. 97.Overall, despite some blemishes, he was generally a satisfactory, albeit reluctant, witness. PW7: SZE Kwok-wing, Wingo 98.PW7 was a decoration contractor who had met and thereafter carried out various decoration works on behalf of the First Accused and CHAU in various premises. He also testified under an immunity from prosecution. He related how he had come to have dealings with the Second Accused whom he knew to be the secretary of the First Accused. He had spoken to the Second Accused about decoration work and, on and off, about documents: some of the documents related to the work that he was doing. 99.It was suggested to him on behalf of the Second Accused that he was lying during his testimony. This came about as a result of his assertion, firstly, that it had been the Second Accused who in September 2000 had arranged for him to sign account opening forms with Chung Tak [Exh. P81] as well as for an account with HSBC [Exh. P1060] and, secondly, that it was she to whom he had spoken in July or August 2003 concerning a claim made against him by Taiwan Concord for an amount in excess of $1,100,000 being an amount claimed to be due on the share trading account operated in his name. Given that the Second Accused apparently only started employment with the group in November 2000 and that her employment was resolved by mutual agreement with effect from 12 June 2003, his assertions were not accurate. However, in my judgment he was simply mistaken and not deliberately lying. 100.He was, and I mean no disrespect to him when I say this, a man who had only received limited education, was by any standards unsophisticated and, in the circles in which he found himself, was obviously vulnerable. An illustration of his nature is to be found when he was asked why he had agreed to sign documents that were to be used to open an account in his name for trading in shares when it was not his intention to use the account: he responded that he had been working on a company project at that time, that if he was "not good to the company" there may be "problems" when he sought to collect the project fee that was due to him. His apprehensions are easily understandable. 101.I accept his testimony that, however it was that the account with Taiwan Concord came to be opened he had not used it for trading. It will be recalled that the Third and Fourth Accused had received claims from Taiwan Concord for amounts allegedly outstanding by them: they had approached PW6 for assistance and those claims had been resolved without any payment on their part. On this aspect of the matter, when a representative of Taiwan Concord, PW13, testified he confirmed that the amounts due by the Third and Fourth Accused had been discharged. He said, however, that Taiwan Concord had no record of by whom they had been discharged on behalf of those two persons. 102.I accept PW7’s evidence that, despite the resolution of the claims against the Third and Fourth Accused, when he had made a similar approach to whoever it was in the group to whom he had spoken after he had received Taiwan Concord's claim he had been brushed aside and left to his own devices to pay off the outstanding debt. Which, according to his evidence, he has been doing by way of monthly instalments. 103.In regard to the Taiwan Concord account [Exh. P570] PW7 accepted that the signatures on the account opening forms were his. He said that when he had been asked to sign the forms he had not noticed whether they had been completed: he had been told that the purpose was for trading in shares but not which particular share and that any loss would be made good by the company. It was his evidence in chief that it had been the Second Accused who had given him both the forms to sign and the reassurance. This evidence, however, is in direct contradiction of that of PW1 who, when being cross-examined on behalf of the Second Accused, testified that it had been she who had asked PW7 directly to sign the documents whilst he was in the office. It is pertinent to observe that this was another example of the care which PW1 took in her evidence for she testified that she was unable to recall whether the Second Accused was even present when this had taken place. Once again, it seems to me that PW7’s recollection is faulty: PW1 was a far more reliable witness. 104.I do not believe that PW7 was deliberately untruthful in his evidence. It seems to me that he has a general impression of events that occurred several years ago and has erroneously attributed acts to people, especially the Second Accused. His evidence is acceptable insofar as the occurrence of various events is concerned but I am unable to rely upon it to identify any particular participant in any given event. 105.PW8, too, testified under an immunity from prosecution. She had been active in the group, theoretically with Win Victory, but mainly in regard to the affairs of Shanghai Merchants. She had originally been employed by the Nongkai group in Shanghai and had moved to Hong Kong in 2000. She had come here together with GONG after CHAU had arranged for a business visa for her. 106.She testified that she had come to Hong Kong not to work but "to learn". She said she consequently had no formal employment contract with Win Victory: it will be recalled that PW1 also testified how the First Accused had dissuaded her from seeking a further formal contract of employment. PW8 said that she had not received a salary whilst engaged about the affairs of Win Victory, rather just what she called "an allowance" at the rate of $10,000 per month. I do not criticise her for tendering this naive explanation as to her status. This evidence regarding that visa and her activities after arriving in Hong Kong is relevant in that it illustrates the culture of dishonesty which can be seen to have prevailed in the business dealings of the group. 107.She was another witness who could reasonably be expected to exhibit partiality towards CHAU and the First Accused. Notwithstanding that, she gave her evidence in a forthright and believable manner. Much of her evidence was supportive of that given by PW1, particularly in regard to how PW1 received faxes detailing share trading from which she would extract figures which she would give to a PW8 to enable her to input the data into her computer. Like PW1, she testified that the documents had not passed through the hands of the Second Accused. I accept her evidence. 108.PW9, another immunity witness, related how she had moved to Hong Kong in 1991 and later married the then proprietor of Chung Tak securities, TONG On, Jimmy. Thereafter they had been introduced to the First Accused and CHAU and became friendly with them. Once again, she was a witness who may well be thought to have been reluctant to have testified adversely to the First Accused, her friend. She related how it came about that an account was opened in her name with Chung Tak at the request of the First Accused: she testified that she had done some small amounts of trading through that account but it had primarily been used by her then husband. 109.When it came to the question of the opening of further securities trading accounts in her name at ASG Securities and Kingston, she testified that these had been opened without her knowledge or consent. She testified when cross-examined on behalf on the First Accused that she remembered receiving some correspondence from ASG from time to time which either handed over or sent to the First Accused. A measure of her candour as a witness is to be found in her evidence in chief when she testified that she had not made inquiries about who may have opened the Kingston account in her name because she "knew that it might be the First Accused" but felt too embarrassed to ask her. 110.She explained her suspicions, and of course they are no more than that, as being due to the fact that she had given her personal particulars to the First Accused’s then secretary, LI Yung, PW10, at a very early stage when she had opened an HSBC bank account at the request of the First Accused but had not given those details to anyone else. The issue of this bank account is the only other aspect of her evidence which I propose to return to when discussing the evidence as a whole: her evidence is of very limited effect. 111.She was overall a reliable witness whose evidence in regard to her limited role in these matters I accept. 112.PW10 was a compelling witness. She has been a close friend of and assistant to the First Accused for some 20 years: indeed, it appears that she had been in daily contact with the First Accused even after the First Accused had made her initial appearance in court [Exh. P1067]. She had been a director of at least one company in the group. She no doubt found herself in an unenviable position in now being called upon to give evidence in this matter. Notwithstanding that, she gave her evidence in a straightforward and convincing manner. She did not seek to either protect the First Accused or worsen the position of the Second Accused. 113.Not only is the content of her evidence important in itself, particularly in regard to the events surrounding the issuing by the Bank of China of four cashier's orders which were used for payment in connection with the second share placement, but it is also supportive of certain important facets of PW1's evidence in regard to the role played by and duties allocated to the Second Accused. 114.PW10 was an honest and reliable witness whose evidence I accept. 115.This witness is the younger sister of PW9. She was not a particularly candid witness. This was demonstrated by her evidence regarding her motivation for opening a share trading account at Chung Tak and a bank account at Liu Chong Hing Bank and her lack of actual trading. 116.That said, I accept that she opened those accounts, that she signed the cheques from the bank in blank and that she knew nothing about the opening of the share trading account in her name in June 2002 with Topmore, or the use of her bank account or the share trading. I regard it as unnecessary to refer to her evidence again. PW12: HUI Ying-fung, Hideki 117.His evidence really only impacts on charge nine. That is a separate and distinct charge. I shall deal with that later. PW13: LEE Yiu-kwan and PW14: Anoop GIDWANI 118.PW13 gave largely formal evidence regarding the share trading carried out by various persons through accounts opened with Taiwan Concord as well as the allocation of shares pursuant to the second placement exercise. PW14 gave evidence in regard to the conclusions at which he had arrived following upon an analysis of the documents relating to share trading activities with a view to identifying the deposits in the accounts that funded the acquisition of Shanghai Land shares, save for those acquired during the second placement exercise, and to establish how much of the deposits may be attributed to funds originating from accounts of either the First Accused or PW10. There is no reason not to accept the evidence of these two witnesses. 119.This witness was called apparently at the request of the First Accused. He was a gentleman of many summers and an impressive witness for the prosecution. He related how he had come to know the First Accused in early 2001 and how they had become "well known" to one another as a result of sharing a common dialect. Once again, one may have anticipated reluctance to implicate the First Accused. He was a believable witness. 120.I will deal with his evidence at the appropriate stage. At this stage it is apposite to note that the venture into purchasing Shanghai Land shares was not the first unsuccessful investment introduced to him by the First Accused. He had invested $1 million, at her request, in a gambling casino venture: when that proved unsuccessful he was asked to make further payments towards it but he had refused to do so. 121.There was evidence that he had been a genuine investor in Shanghai Land shares up to 27 May 2003 but that a purchase of a huge number of shares on 28 May 2003 had been made without his authority. Although Shun Loong initially looked to him to make payment of the amount allegedly due for the purchases on 28 May 2003, in due course it abandoned any claim against him claiming that the purchase through his account was due to a “misallocation” [Exh. P1089]. The cross-examination that was addressed to the issue of the purchase of the shares on 28 May 2003 and the suggestions that were made to him on behalf of the First Accused were both entirely misconceived and inappropriate. PW16: LEE Kam-ho 122.PW16 was a representative of BOC who had been involved in the operation of the loan which it made to Global Town. In essence, he testified that once the value of Shanghai Land shares pledged to BOC dropped below a level calculated in terms of the loan agreement, Global Town became, inter alia, liable to pay certain specified amounts but that, in every instance, it had failed to make any payment. 123.Cross-examination was largely directed towards the security held by BOC in respect of the loan. With respect, even if that security were sufficient to repay the full amount of the loan, that ignores any prejudice to the economic interests of BOC either by the attempted maintenance of the share price of Shanghai Land shares above the level at which Global Town would become liable to make the additional payments or, generally, as to its right to rely upon the accuracy of the reflected volume of trading in the shares in Shanghai Land in which accuracy it had a material and substantial interest. 124.I propose to deal with the evidence of the expert witnesses after considering the factual issues on the first and second charges. I shall also deal with the evidence of the Fifth Accused when considering the third and fourth charges, although from my observations on the evidence of PW3 it will be apparent that I do not accept fundamental matters about which he testified. 125.Against the background of these remarks, I turn now to consider the individual charges. 126.I have already indicated that it is an admitted fact that a large number of share trading accounts were opened in the names of the traders with the securities companies. 127.Of the twelve persons in whose names the accounts were opened, 10 of the trading accounts were opened on occasions when five of them were outside Hong Kong. 128.Four telephone numbers registered to Profitex Investments Ltd., a subsidiary of Shanghai Land, were represented as belonging to six applicants in applications to open 14 of the trading accounts. The First Accused was a director of Profitex. Three of the four telephone numbers were said to be those of more than one applicant. As a matter of convenience I would add at this stage that the evidence of PW1 was that she had used these telephone numbers randomly in the application forms when the residential telephone number of a notional applicant was unknown to her. 129.It is quite clear from the evidence as a whole that many of the trading accounts were opened in the names of persons without their knowledge or consent. That one or more may have had no objection to such a course does not detract from the evidential value. 130.PW1 indicated that when she had become employed by Win Victory she had done so as the result of the introduction of her husband, PW12, who was familiar with the First Accused: he confirmed this. When being cross-examined on behalf of the Second Accused she indicated that she had no experience in securities trading at the time she joined Win Victory: however, when cross-examined on behalf of the Fifth Accused she accepted that she already was in possession of a certificate relating to a course in securities trading at that time. She came to know CHAU although she seldom saw him at the office and had little contact with him even when he was there. She usually saw the First Accused on average two to three times a week but spoke to her on the telephone on virtually a daily basis. 2000: Systek share trading and bank accounts 131.In September 2000 when employed at Win Victory she had been responsible for dealing with shares in Systek Information Technology Holdings Ltd. A group of the First Accused’s friends had opened securities accounts to trade in those shares and she, PW1, had liaised with the securities companies thereafter in regard to the purchase and sale of shares. She accepted that her writing on documents first appeared on 4 September 2000. In regard to the opening of some, but not all, of those accounts she would collect account opening documents from the securities companies, occasionally herself complete the personal particulars required in the forms, give them to the First Accused for signature by the applicants and return them to the securities companies after signature. 132.Similarly, in order to facilitate settlement of transactions in Systek shares bank accounts were opened in the names of the securities accounts holders and books of cheques, pre-signed by the account holder, were left in the offices of Win Victory. PW8 testified that it had been the First Accused who had handed her the pre-signed chequebooks, or some of them, with instructions that she retain them. I accept that evidence. PW1 had played no role in the opening of the bank accounts. Other witnesses supported PW1’s evidence in regard to the pre-signature of checks and the uses to which they were to be put: I accept that evidence. It will be recalled that when she was cross-examined on behalf on the Second Accused her evidence was that a similar procedure using the remainder of those cheques was followed in respect of the trading in Shanghai Land shares when that subsequently commenced: I accept that evidence. 133.PW1 had no knowledge as to the information provided to the banks when the respective accounts were opened and testified that she had not received any of the bank statements. She accepted that the addresses in the forms used to open the share trading accounts were genuine and that the share trading companies had forwarded statements directly to the account holders, not via her: the Third Accused’s evidence supported hers in that he testified that he had received correspondence from the various securities companies with which accounts had been opened in his name and had simply passed it on, unopened, to PW6. 134.The evidence of both the Third and Fourth Accused as well as PW6 supports that of PW1 in regard to the opening of share trading and bank accounts in their names during the latter portion of 2000. Both the Third and Fourth Accused testified that they had agreed to do so at the behest of PW6 who had expressed to each of them that it was the First Accused who wished the accounts to be opened for the purpose of trading in shares. 135.When PW6 was cross-examined on behalf of the Second Accused he confirmed that, indeed, he had told the Third and Fourth Accused that it was the First Accused who had made the request although, in truth, it had not been her but CHAU: PW6 explained that he had done this because CHAU had said not to use his name and because the First Accused was known to both the Third and Fourth Accused. PW6 accepted that he had lied to the Third and Fourth Accused but this aspect of his evidence demonstrates the care he took not to attribute conduct to the First Accused unjustifiably. 136.The Fourth Accused testified that PW6 told him that he himself had opened a similar account. The Fourth Accused was reluctant to do so because he was worried that he might be held liable for any losses but after considering the position of the First Accused he agreed. He did so because he thought there would be no loss involved, that PW6 might lose the First Accused as a client if he refused and that he would also lose his share of commission which he was receiving from the foreign exchange trading of the First Accused. PW6 gave him account opening forms which he signed and returned together with copies of his identity card and proof of residence. He did not see the forms again. He could not recall the name of the securities company. I accept his evidence. 137.I recognise that the evidence of PW6 is at variance with this in that he said that the Third and Fourth Accused dealt directly with the Second Accused after he, PW6, had made the request to them to open the accounts. Given the dates upon which the accounts were opened, there is no reliable evidence that the Second Accused would have been involved in this aspect of the matter: the evidence of PW6 on this aspect was less than satisfactory, with him explaining that he was confused between the Second Accused and GONG. 138.In September 2000 PW6 had told the Fourth Accused that the First Accused wanted him also to open a bank account for the transmission of moneys arising from trading in shares. He opened it at Liu Chong Hing Bank. It was a cheque account. At the request of PW6 he signed all of the blank cheques, one or two books, and handed them to PW6. He testified in cross-examination that he had deliberately used a signature for this bank account which was different from his usual signature, that he had done so because this account was "not really owned" by him. I regard that as a sensible answer and accept his evidence. 139.There is powerful support for the evidence of the Third and Fourth Accused and PW6 to be found in the documentation relating to the opening of their accounts at Liu Chong Hing Bank: the accounts opened by the Fourth Accused and PW6 were both opened on 20 September 2000 whilst that opened by the Third Accused was opened on 21 September 2000. I accept the evidence of these witnesses on this issue. Although these events occurred well in advance of the date of the commencement of the conspiracies alleged in the charges, this evidence is relevant and probative given the use to which those securities trading and bank accounts were put in pursuance of the conspiracies. 140.There was also evidence from PW7 concerning the opening of a bank account with HSBC in 2000. He had been given a form to sign so as to open a bank account: the account had been opened but he did not use it. He had been told that the bank account was to be opened in connection with the trading in shares. His evidence was that he had never deposited any money into that account or drawn any cheques on it. 141.It is instructive to look, briefly, at the transactions in that account [Exh. P1060/ pp. 14577/14612]. There are a limited number of them but they shew not only the way in which this account was used but illustrate also the manner in which other bank accounts opened by the traders were used: I cite this as an example so as to avoid having to detail the activities in each account which are ascertainable from perusing the various exhibits. It is helpful to bear in mind that PW7 was the decorating contractor who was doing work for the First Accused and CHAU from time to time and who, according to his evidence, agreed to allow his name to be used so as to avoid any problems when it came to payment of amounts due to him. His financial position is also put into perspective by remembering that he is paying off, by way of monthly instalments, the amount claimed by Taiwan Concord in respect of the share trading activities conducted in the account in his name. 142.The account was opened on 11 September 2000 with an initial deposit of $1000.00. There was a deposit of $2,947,699.27 into that account on 26 September 2000 which was comprised of two separate amounts one being a payment by way of cheque drawn by one YU Ling and another by way of cheque drawn by WONG Ha Man: the latter is the same as the name of the girlfriend of PW6 who was a resident of the First Accused’s house in Perkins Road. The following day an amount of $6,634,338.64 was transferred into that account from an account of the First Accused at Liu Chong Hing Bank. The same day all but $990.00 was withdrawn from the account by way of cheque. 143.The bank account then shows only one transaction, in the form of a deposit, between then and May 2002. From May 2002 onwards there are a number of transactions involving deposits, and cheques being drawn against them, in comparatively small amounts. The cheques were used to make payments to securities companies. On 8 October 2002 an amount of $2,160,000.00 was deposited into the account by way of a cheque drawn on the account of PW10. Those funds were used to effect payment to securities companies. The final transactions of any relevance occurred in January 2003 when an amount was credited to the account by way of cheque drawn on an account operated by one of the traders and the funds were then paid over to one of the securities companies. 144.These entries are substantial support for the evidence of the witnesses, generally, as to the fact that they made their accounts available for use by others and that those accounts were used in conjunction with the share trading accounts. They are also support for the evidence of PW1 that she had used accounts which had been opened in 2000 for the purpose of trading in Systek shares when it came to trading in the shares of Shanghai Land in 2002 to 2003. 145.The evidence of PW9 also touched on the opening of a bank account around this period. She related how she had opened one at HSBC at the request of the First Accused. That account appears to have been opened on 24 August 2000 [Exh. P1060/p. 14613]. That cheques drawn on that account were being used in 2002 to settle amounts due by traders to securities companies is established by reference to Exh. P1060/pp. 14623-14629. Perhaps the most singular aspect to her evidence regarding the opening of this account was the fact that to enable it to be opened she required a referee. That referee was one WONG Ha Man. 146.There is one aspect to PW9’s evidence which requires comment. In evidence in chief she related how, after opening this HSBC account, she had signed all of the cheques provided to her and handed them to “the First Accused” yet in cross-examination she agreed with the proposition that she had simply handed the cheques to "staff" at the group. Her assertion that the First Accused had asked her to open that bank account was not challenged. The minor conflict does nothing to undermine her general reliability. 147.PW1 continued that some of the names of the security companies at which accounts were opened in 2000 had been provided to her by the First Accused but she had also located some herself after the First Accused had asked her to look for others. 148.Buying and selling of shares in Systek lasted for in excess of three months. She accepted when cross-examined on behalf of the Fifth Accused that trading had occurred almost every day using the opened accounts and that it had been she who placed the buy and sell orders. When cross-examined on behalf of the Second Accused she testified that although she thought the trading in Systek shares to be "odd" she had not felt it to be improper at that time: she had not discussed it with her husband who, by that time, had been trading in shares for some five years. 149.She indicated in cross-examination on behalf of the Second Accused that she was aware that CHAU was a major shareholder in Systek: whilst she was able to recall that he had given her instructions on the sale and purchase of Systek shares she was unable to recall the details but testified that the occasions had been far more frequent than those on which he had given her instructions in respect of later Shanghai Land share dealing. She disputed the suggestion on behalf of the Fifth Accused that the nominal account holders had been people who could be trusted so that if they were at any stage questioned by the SFC they would claim that the shares trades were their own. 150.PW1 agreed with the suggestion put to her on behalf of the Second Accused that in addition to trading in Systek shares when employed at Win Victory she had also dealt with personnel matters during the course of which she had advertised for a receptionist. The Second Accused had applied for that post and been interviewed for it by PW1. Subsequent to the interview she was offered employment. The employment contract [Exh. D3] was signed on behalf of the employer by the First Accused. The date upon which that agreement is said to be “made” was 1 November 2000: however, nowhere in it is the date of commencement of employment stipulated. 151.PW1, and later PW8, accepted that the Second Accused had had nothing at all to do with trading in Systek shares. I accept that evidence. PW1 also accepted that the Second Accused’s employment history prior to Win Victory had been confined to the catering and hospitality trade. These factors seem to me to lend weight to the evidence of PW1 that the Second Accused had approached her for assistance when letters were received from the SFC by the Third and Fourth Accused and PW6. This is of relevance to Charges 3, 4 and 5: I take it into account, without repeating it, on those charges. 152.From the time PW1 ceased trading in Systek shares until about mid 2002 the emphasis on her employment was on personnel and administrative matters: thereafter, from about June or July 2002, she concerned herself mainly with trading in Shanghai Land shares. After Shanghai Land was created PW1 and her fellow workers had their employment transferred to a subsidiary of that company. 153.By mid-2002 the Second Accused had become the First Accused’s personal assistant taking care of her personal matters. PW1 stated that she dealt in the Shanghai Land shares on the instructions of the First Accused, who “mostly” told her how many shares to buy and sell whilst another colleague in the company, PW8, was responsible for making payment to the securities companies using the pre-signed cheques. PW8 testified that whilst she was aware of the use of the pre-signed cheques it had been PW1 and not she who had used them. 154.PW1 had retained copies of the identity cards of the friends of the First Accused who had opened accounts to trade in the Systek shares. In April 2002 the First Accused told her to use those identity cards to open some accounts but, at that stage, did not identify the shares in which those accounts would be used to trade. 155.In the course of her evidence in chief PW1 was shown a substantial number of documents which she identified as being account opening forms and supporting documents relating to 39 of the 42 accounts. She explained the procedure which she adopted. As the fact of the opening of the accounts is admitted, I see no necessity to traverse those aspects of her evidence in any detail although I bear in mind the fact that there are discrepancies between her evidence and that of other witnesses as to just when or in what circumstances certain of the accounts were opened and that there is some dispute as to the accuracy of the dates on which certain of the account opening forms were said to have been signed. 156.In my judgment, those discrepancies arise either as a result of mistake and not from untruthfulness on the part of any particular witness - there were numerous transactions which will inevitably give rise to errors of recall - or as a result of lack of knowledge on the part of a witness relating to an account opened in his or her name unbeknown to him or her. 157.PW1 set about opening the accounts generally by obtaining account opening forms and completing them so far as possible - although there were apparent exceptions to this system: where information concerning an applicant was known to her she would utilise it otherwise she would use personal information concerning the applicant provided to her by the First Accused. 158.PW1 said that she would mark the account opening forms where they required signature and then pass them on to the First Accused to obtain the necessary signatures as well as proof of address. In due course they would be returned to her, apparently signed by the prospective account holder. 159.When PW1 was cross-examined on behalf of the Second Accused on this aspect of the evidence she stated that she had also been assisted in completing some of the application forms by PW8, who confirmed this to be so during her testimony. PW1 had been quite clear that the Second Accused had played no role in this aspect of the matter. She also testified that she was unaware of the Second Accused playing any part in securing the required signatures. She said she could not recall whether she had even told the Second Accused about the trading or the accounts, that she was unable to recall whether the Second Accused had been present at the time when she had PW7 sign his account opening forms in the office. These are all examples which demonstrate her unwillingness to exaggerate the roles of the various Accused. 160.It is significant that of the 22 identified accounts referred to during the course of oral evidence 10 were acknowledged by the respective witnesses to be genuine, although the date of signature on two of them were disputed by one witness, the Fourth Accused, whilst the remaining 12 were identified as having been opened without the knowledge or consent of the ostensible account holder. 161.I draw the inference, in the light of the evidence of PW1, that the First Accused signed, or caused to be signed, the signatures necessary to complete those forms and ensure the opening of the accounts. 162.PW1 also would randomly complete certain aspects of the documents. She gave numerous examples. She accepted in cross-examination on behalf of the Fifth Accused that she made these random entries without regard to their accuracy or truthfulness, her prime objective being simply to ensure that the accounts would be opened: she recognised that if she disclosed to securities companies that an applicant were unemployed there was a risk that the account would not be opened. 163.PW1 related how the First Accused had asked her to find friends and relatives to open accounts. As a result she had arranged for an account to be opened in the name of her mother, CHAN So-man. However, she put that account only to limited use as she was worried that the SFC might query the trading as it related solely to buying and selling shares in Shanghai Land. 164.It was PW1's evidence that when she opened the various accounts she told the securities companies that the accounts were to be opened by friends of the First Accused but that it would be she who would place orders and make settlement in respect of trading. I accept this evidence. She unequivocally accepted when cross-examined on behalf on the Fifth Accused that although each of the account opening applications contained the representation that the potential account holder would be the ultimate beneficiary of the account this was untrue: she explained that it simply could not be that the First Accused could be shown as the ultimate beneficiary in respect of each of the accounts because it was "not possible" to have the same beneficiary for all of these accounts with different brokers as this would have disclosed the fraud. 165.PW1 testified that, in addition to the newly opened accounts, she also used accounts which had previously been opened for the purpose of trading in Systek shares. She had done this because the accounts "were there" which avoided the need to open new accounts. There is support to be found for her evidence on this aspect in the testimony of the Fourth Accused. He said, almost incidentally, that during 2001 he had been receiving correspondence from the brokerage where his account had been opened. Towards the end of that year he changed his residential address. In 2002 PW6 had asked him to provide proof of his new address as mail addressed to him by the brokerage had been returned undelivered. He provided his parent’s address. 166.PW1 had commenced trading in Shanghai Land shares in approximately June or July 2002. She related that at this time she had occupied a room alone in the group's offices and had a direct telephone line. It was in that room that she would conduct the share trading. PW8 also was involved in share trading in the sense that she input post-trading data into the computer system. The trading records, whether from the securities companies or computer generated in-house, were kept by her and PW8 and not shown to others. PW8 confirmed these aspects of her evidence. 167.The Fourth Accused testified that in July or August 2002 he noticed an increase in the number of transaction records being received by his parents. He noticed that mail was being sent to him every one or two days and that it related mainly to trading in Shanghai Land shares. Initially the amounts were several hundred thousand dollars, later several million dollars. 168.From this correspondence he noticed that there were some five securities companies involved. He became very worried. He told PW6 that he wanted his accounts not to be used. PW6 said he would relay this to the First and Second Accused: later PW6 told him that the First Accused could not find anyone to replace him for the time being and that “it was hoped” that he would lend his name for several more months. He agreed because he had not suffered any loss, did not want to offend the First Accused and did not want to affect his commission. I accept this evidence. PW6 had described the Second Accused to him as being the First Accused’s assistant responsible for handling the transfer of moneys. 169.It was at about this time that the Fourth Accused noticed that although the volume of trading was great there was not much change in price, which was showing a general decline. He said that it was at this stage that he guessed that there was an attempt to create active trading in shares. 170.Approximately a month after PW1 started trading in Shanghai Land shares, at the time of what she called the "penny stock" incident, she realised that what she was doing might constitute market manipulation. For the first month the trading had the appearance of being genuine: all the account holders were friends of the First Accused and as the company had just been listed she saw nothing wrong in “asking one's friends to buy shares”. This evidence suggests that her conduct in trading in Shanghai Land shares was somewhat different from that when she traded in Systek shares as she expressed no similar qualms in respect of those activities. 171.She accepted that, as time went by, she would suggest to the First Accused that more securities companies should be used as a result of which the First Accused instructed her to open further accounts. PW1 explained that she had made this recommendation on the advice of one or more brokers who had said that because of the volume of shares being traded in Shanghai Land it would be better to spread the trading more widely. I accept this evidence. One of the reasons given to her for this was that if the volume of shares traded was large but the price of the shares did not change substantially this would likely attract the attention of the SFC, more especially if the trading was concentrated in one or only a few accounts. She had also been told that some securities companies were unable to carry the amount of margin required. 172.It will be recalled that the acquisition of the shares by Global Town exceeded 75% of the shareholding of imGO. To comply with the Listing Rules three share placement exercises were conducted, the second occurring on 30 September 2002. 173.The evidence of PW6 in this connection was that around mid-2002 he had been at the house of the First Accused and had had a conversation with her in the course of which she indicated that she wished him to find someone to purchase shares and for share placement purposes. It was his evidence that the First Accused specifically suggested the Third and Fourth Accused, they being known to her through his introduction. PW6’s evidence was that he then approached the Third and Fourth Accused each of whom agreed to lend himself to it. Each confirms that it was through PW6 that they had come to meet the First Accused: each also testified that when PW6 asked him to become involved he had said that this request emanated from the First Accused. I accept this evidence which is contrary to what the First Accused said in her cautioned interview with the ICAC. 174.In addition, PW6 agreed to lend his name to the scheme and testified how, at the house of the First Accused, he had signed account opening forms belonging to Taiwan Concord [Exh. P459] but had not dated them. He had signed them at the request of the Second Accused who had contacted him and told him that the forms would be at the home of the First Accused for signature. I accept this evidence. 175.It is relevant to note that in regard to the opening of accounts in 2000 PW6 told the Third and Fourth Accused that it had been the First Accused who had requested that the accounts be opened although, in reality, it had been CHAU: in regard to these later accounts it was his evidence that it actually was the First Accused who had made the request. I accept that evidence. I have dealt earlier with the issue as to when it was that the request was made to him by the First Accused and do not propose to repeat that. 176.In his evidence in chief PW6 testified that the accounts opened in his name with Chung Tak and Sincere had not been opened by him and disputed that his signatures appearing on the account opening forms relating to those accounts. He accepted that he had signed the account opening documents for Kingston in addition to Taiwan Concord. 177.When he was cross-examined on behalf of the First Accused he accepted that he had signed "numerous" documents not only at the request of the First and Second Accused but also, on occasions, at the request of GONG. He had not considered that he was signing these documents as a favour to CHAU, but simply had signed them without applying his mind to them. He said the First Accused had told him that in connection with all matters concerning foreign exchange trading and settlement he should speak to the Second Accused and also had told him that if there were instructions for him to do anything the arrangements for executing those instructions would be conveyed to him by the Second Accused. I accept this evidence 178.In the course of that cross-examination documents were shown to him from which it was apparent that share trading accounts in a further six securities companies had been opened in his name. His evidence was that he had not signed any of the account opening forms in respect of those accounts. Given his ready acceptance that he did sign numerous documents at the request of the First and/or Second Accused, his acknowledgement of his signature on the account opening forms in respect of two particular accounts and his evidence that he and his girlfriend had allowed their names to be used by the First Accused on accounts opened for the purpose of trading in foreign exchange, there simply is no reason why he should be untruthful about whether he had been involved in the opening of the six additional accounts. I accept his evidence that these had been opened without his knowledge. 179.In respect of the share placement issue the Fourth Accused related how in September 2002 at the request of PW6 he had contacted the Second Accused who had asked him to go to Taiwan Concord. He had gone to Taiwan Concord to sign some documents in respect of the forthcoming share placement and had been presented with a document, similar to an account opening form, upon which a signature in his name was affixed: he was asked to copy that signature as being his when he was signing the share placement documents. 180.The Fourth Accused disputed that he had been to Taiwan Concord on the date, 13 May 2002, appearing on that account opening form [Exh. P425] but testified that he actually had signed that form when he went there in September 2002. He accepted that he had been the author of the signatures on the share placement documents [Exhs. P433, 434 and 435] and one of the signatures on a change of address form [Exh. P431], copying the signature previously shewn to him. In regard to the documents relating to opening accounts with TIS Securities [Exh. P622] and Topmore [Exh. P772] he testified that, once again, the signatures appearing on those documents had not been affixed by him. 181.The Fourth Accused indicated that he had received a steady supply of share trading transaction reports from a number of different brokers via his parents. His parents handed them to him, he photocopied them and then passed on the originals to PW6 who indicated that he would in turn pass them on to people on the "side" of the First Accused. I accept this evidence. There is no dispute about the transactions themselves: I see no necessity to traverse those various documents. 182.It is worthy of comment, though, that he says that he only signed the documents for Taiwan Concord account opening in September 2002 yet the copies of transaction reports sent to him by Taiwan Concord commenced in July 2002: it must be, therefore, that he was aware of the fact that this account was in operation by the time he went to Taiwan Concord in September 2002, a factor which he acknowledged during cross-examination. He explained this apparent anomaly when cross-examined on behalf of the Fifth Accused agreeing that he had taken no steps in respect of those accounts because he had wanted to continue to receive the very substantial amounts of commission coming his way from the foreign exchange trading for the First Accused. Greed makes repeated appearances in the course of the evidence in this matter: I see no reason to disbelieve the Fourth Accused’s explanation of his motivation. 183.The Fourth Accused was cross-examined at some length on behalf of the Fifth Accused particularly in regard to his involvement with the share placement as well as the involvement of his wife and a company or companies in which they had financial interests. He accepted that he, his wife and PW6 had all worked together at Emperor and had shared a room from about 1999 to June 2003. He related how he had come to know PW10 and was aware that the First Accused was using her name in connection with foreign exchange trading. 184.He described the First Accused as a "major client" of PW6. To facilitate her foreign exchange trading he had introduced a number of traders: where he did so he obtained an overriding commission. The First Accused had anywhere between “several hundred to 1000-odd” foreign exchange contracts each month: he accepted that this generated a very substantial income for him running into "hundreds of thousands of dollars a year",which he shared with PW6, but which he had not put through the books of his employer, Emperor, acknowledging that the proceeds were paid into bank accounts belonging to himself in Hong Kong and in Macao and as well as into bank accounts of relatives. Of course this demonstrates substantial dishonest conduct on his part but naked avarice, again, goes a long way to explain his eagerness to accommodate the wishes of the First Accused as expressed to him by PW6. 185.He testified that he had been aware before the placement exercise that he, the Third Accused and PW6 would be three of the placees and that there would be at least another three. He accepted that, at his wife's request, he had drafted a form which she had subsequently used for the purpose of recommending people to be used as placees. He knew that payment for the share placement need be by way of a cashier's order and the payment had to be made on the 30 September 2002. He testified that he had simply gone to Taiwan Concord and signed the various documents but did not see the cashier's order which was to pay for the shares for which he was applying. His evidence was that he did not pay particular attention to the number of shares for which he was applying, knowing that it involved several million dollars. He had "guessed" that payment would be made by persons on "the First Accused’s side". 186.The extent of the involvement in or knowledge of the share placement exercise by the Fourth Accused is an issue hotly pursued by the Fifth Accused. It is necessary to jump ahead some months in order to place this issue in context. In May 2003 the Fourth Accused received a letter [Exh. P895] from the SFC requiring him to attend an interview: his evidence, and I shall deal with this in more detail when considering the fourth charge, is that after discussing this letter with PW6 he, the Fourth Accused, eventually went to attend a "coaching" meeting with PW1 and the Second Accused in May 2003 at the Shanghai Land offices and also attended a meeting with the Fifth Accused, PW1, the Second Accused and an unknown male at the offices of the Fifth Accused. 187.It is the position of the Fifth Accused that the Fourth Accused, together with his wife, was so deeply involved in the share placement exercise that it simply would not have been necessary for him to have attended the coaching meeting and, further, that events at the offices of the Fifth Accused had happened entirely differently from the way they were related by the Fourth Accused, particularly that there would have been no need for the Fifth Accused to coach him in any way. I bear in mind that what the SFC was investigating was trading in Shanghai Land shares generally, not just the share placement. 188.It does seem to me, looking at the evidence of the Fourth Accused on the issue relating to the share placement, that he may be seeking to minimise the extent of his knowledge concerning it. Documents located in the home of the Fourth Accused by the ICAC are indicative of more pre-placement activity by himself and his wife than the Fourth Accused was ready to concede: these included documents relating to Best Easy, a company in which both the Fourth Accused and PW6 were interested as well as cancelled documents emanating from Taiwan Concord, the placing brokerage. I have borne this carefully in mind when considering his credibility and reliability as well as the weight which I able to attach to his evidence as a whole, but especially on this aspect. 189.I intend to deal with events at the coaching meeting and the attendance of the Fourth Accused at the office of the Fifth Accused, including the issue of the sequential numbering of cashier’s orders used to pay for some of the placed shares, when considering the evidence on the fourth charge. At this stage suffice it to say that I accept that he attended each of those meetings and that events at those meetings occurred substantially as related by him. I reject the evidence of the Fifth Accused where it conflicts with that of the Fourth Accused. 190.It is not in dispute that the outcome of the share placement exercise was the allocation, inter alia, to the Third Accused of 20,000,000 shares; to the Fourth Accused, 10,000,000; to Best Easy Profits Ltd, 3,000,000; and to PW6, 33,000,000. [Exh. P1133 produced by PW13] Nor is it in dispute that for the Third and Fourth Accused, PW6 and another placee, TAI Yu Hung, who “subscribed to” a further 35,000,000 shares, the cashiers’ orders effecting payment were drawn on PW10’s account. Thus of the 136,000,000 shares which were placed 98,000,000, or some 73%, went to these four persons. 191.PW10’s account had originally been with the Po Sang Bank which was absorbed into the BOC Group in 2001. It was PW10’s unchallenged evidence that that account had been opened in about 1997 but usually had been used by the First Accused and CHAU: PW10 said that she had seldom used the account. Despite the fact that the First Accused had her own bank account in Hong Kong, she and CHAU continued to use PW10’s account even after they had moved into their substantial new residence in Perkins Road in 1999. I accept this evidence. PW10 herself had also moved into that house a short time after CHAU and the First Accused had taken occupation. 192.PW10 said that, at the outset, she had issued cheques on her account at their request: sometimes as she was asked to deposit money into the account and on other occasions CHAU would transfer money into it. She had worked for the First Accused, from home, attending to her personal affairs. From 2000 she, PW10, had simply signed cheques in blank and handed them to the Second Accused. She stated that her bank statements were sent to her at Perkins Road and she would hand them over, either directly or indirectly, to the Second Accused. I accept this evidence. 193.She related how she had also "loaned" another bank account to CHAU and the First Accused, this one being with Liu Chong Hing Bank: it had seldom been used. The evidence shows that she had, at least, two accounts with Liu Chong Hing Bank [Exh. P1059/ p. 14529 & p. 14566] one opened in June 2000 and another in June 2002. The relevance of the latter account emerges from the evidence of PW14 and the analysis which he performed in regard to payments made from the bank accounts of either the First Accused or PW10 for purchases of Shanghai Land shares made by the traders. 194.It was further the unchallenged evidence of PW10 that, at the time of this share placement exercise, CHAU had contacted her and told her of the transfer of a large sum to her bank account, sufficient to meet the payments on behalf of the placees: that she had later spoken to the First Accused who had told her that “…there was a share placement and there were friends who wanted to buy the shares, so money was lent to her friends.” In cross-examination on behalf of the First Accused she amplified this, saying that before having inquired of the First Accused she had made a similar inquiry of the Second Accused who had told her that the funds were to be loaned to friends of CHAU to buy the shares. I accept this evidence. It is clear, therefore, that the purchase of the shares by these four persons at least was funded, with the knowledge of the First Accused, by CHAU, through an account used by him and the First Accused, at a cost well in excess of $80,000,000.00. 195.At the risk of stating the obvious I appreciate that mere knowledge of activities by others does not of itself found criminal liability. Conversely in the overall context of this matter that knowledge is cogent evidence of the depth of the First Accused’s involvement in the overall conspiracy. 196.PW10 confirmed with her banker the arrival of those funds. She said that, at the request of the Second Accused, she had gone to the bank where they had met. When there, she had endorsed the respective cheques which were used to purchase the cashier's orders which, in turn, were used to pay for the share allocations: these endorsements appear on the cheques themselves. She left after effecting the endorsements and was not present when the cashier’s orders were handed over by the bank. 197.Cross-examination was directed towards the presence of the Second Accused at the bank and her involvement in the transactions, with particular reference to the time at which PW10 had gone to the bank to effect the transactions and whether, as according to her, the Second Accused had urged her to go there as a matter of urgency because the bank was shortly to close. I am entirely satisfied that, apart from the issue of the time she arrived at the bank, about which she seems to be simply mistaken, the remainder of her evidence is true and accurate: I accept her evidence, especially that she had gone to the bank at the request of the Second Accused and met her there. 198.There is a further aspect to the issue of the second share placement. It relates to the announcement published by Shanghai Land concerning its progress. It is to be found at Exh. D8. There was evidence from DW2 and DW3 that announcements of this nature are required to be made in the public interest: it does not really require their evidence to conclude, therefore, that the contents of the announcements should be truthful and accurate. 199.The relevant portion of the announcement reads
[emphasis supplied] 200.Argument has been directed towards whether the content of that statement is truthful and accurate or whether it is false and misleading. The arguments in favour of the former ignore reality. Any sensible, ordinary reading of that announcement, set against the factual background
demonstrates its falsity and misleading nature. 201.I acknowledge that the First Accused’s name does not appear on that document nor does she fit into any of the categories of persons described in the announcement: but she was, of course, the general manager of Shanghai Land. Given the evidence which I accept in regard to her overall conduct as well as the factors which I have just mentioned, I draw the inference that she was fully aware of and connived in the publication of that untruthful announcement. 202.Finally on the share placement issue, in her evidence PW1 differentiated between certain accounts which had been opened for what were said to be the “purposes of placement” of shares and those which had not. She testified in her evidence in chief that four accounts opened [Exh. P425, P475, P494 and P570] were margin accounts which had been opened with Taiwan Concord because that company was extending the greatest margin facilities at that time. She testified, and this is well supported, that the second placement itself had been funded by CHAU: she went on to say that the purpose of opening the accounts as margin accounts was to facilitate subsequent trading in Shanghai Land shares. 203.She was cross-examined on behalf of the Second Accused concerning the opening of the four accounts. She was asked why she had agreed during cross-examination on behalf of the First Accused that these four accounts had been opened for the “purpose of placement” of shares: she said that because she had been shown various documents whilst giving evidence she had noticed that these four accounts had been opened on the same day. She was then taken through the individual account opening documents and it was suggested to her that in fact two accounts had been opened on different dates, whilst the other two accounts had been opened on the 30 September 2002, the day of the second placement. 204.Be that as it may PW1 acknowledged that she may have been mistaken that she had opened the four accounts on the specific instructions of the First Accused but pointed out that the reality of the situation was that all four accounts had been used, as a matter of fact, to get placement shares and that she had simply been mistaken in regard to the fact that they had all been opened on the 30 September 2002. There was further lengthy cross-examination on the same topic on behalf the Fifth Accused which really took the matter no further. 205.It is clear from the evidence that she is correct when she says that these accounts had actually been used in connection with the placement. That is not challenged by the Accused. Given the volume of accounts and transactions that exist in this matter, it is hardly surprising for her occasionally to be muddled. I am satisfied that she is simply confused in respect of this issue and was not being deliberately untruthful. Further, in the light of the subsequent evidence of the Third and Fourth Accused relating to their accounts with Taiwan Concord, the whole issue of dates on documents appears somewhat fluid. 206.Although PW1 was unable to recall the precise margin figure offered by Taiwan Concord she did recall that it had subsequently been reduced, a fact which she had communicated to the First Accused. The placement shares had been lodged with Taiwan Concord as collateral. Subsequent to speaking to the First Accused she had spoken to one D C LEE and asked him to introduce to her companies which would make margin facilities available. He had suggested a number of companies but only two had actually offered margin facilities: both required a transfer of some of the placement shares to them as collateral. 207.I accept that the pseudo-sale of the shares consequent upon this second placement would not have affected the share trade volume in the sense alleged in the charges: the evidence is relevant insofar as it relates to the issue of credibility, the issue of dishonesty and that it is part and parcel of the overall conduct of the persons in executing the terms of the conspiracy. 208.PW1 testified that by October 2002 Taiwan Concord Capital, specifically, indicated that no further margin could be provided as margin limits had been exceeded in certain accounts. This was explained to the First Accused who told PW1 that accounts should be opened with other securities companies. As a result new accounts were opened with TIS Securities: one in the name of the Third Accused [Exh. P604] and one in the name of the Fourth Accused [Exh. P622]. According to PW1 that company insisted on meeting the account holder. PW1 related this to the First Accused who instructed her and the Second Accused to contact the potential account holders to arrange the meeting with the broker. PW1 testified that the Second Accused made that arrangement but that would appear to be incorrect. 209.The evidence of each of the Third and Fourth Accused is that the signatures reflecting their names on the account opening forms were not, in fact, theirs or signed by them. I accept that evidence. PW1 accepted in her evidence in chief that it was she who had completed the personal information on the TIS Securities account opening form which related to the Third Accused’s account which militates against the Third or Fourth Accused having gone to TIS Securities to open the accounts. I consequently disregard PW1’s evidence regarding the Second Accused’s involvement in respect of those two accounts. 210.PW1 bought and sold nothing other than Shanghai Land shares through the various accounts. She would do so on the general instructions of the First Accused who would tell her when and how many shares to buy. I accept that she qualified her evidence to a certain extent in cross-examination. The First Accused told her to decide for herself which particular account should be used for any given transaction. I accept this evidence. 211.Because it was margin trading, after she had purchased shares she would usually sell the same, or approximately the same, number of shares the following day with the result that it was unnecessary to make payment although she accepted that it was not always possible to sell all of the shares. Her evidence that this course was followed because it was margin trading renders largely irrelevant the disagreement between PW17 and the witnesses called on behalf of the First Accused as to whether these were "wash trades" and just what is meant by that term. 212.PW1 testified that, at first, she had not been told anything about volumes of trading or maintenance of the share price. At that stage, the price of the shares in Shanghai Land did not affect her trading volumes. Her intention had simply been to trade in Shanghai Land shares according to the instructions of the First Accused. She testified that she had only spoken to CHAU concerning trading in Shanghai Land shares once or twice. She was able to recall one incident at the time of the " penny stock" incident when CHAU had told her to buy a large quantity of Shanghai Land shares. He had not told her why. There was a large number of shares for sale. She had made the purchase in accordance with his instructions. The following day she had asked the First Accused whether settlement had to be made regarding those shares: after a delay the First Accused had told her effectively that all had to be sold although she was unable to recall the precise response. In accordance with the First Accused’s instructions, she placed them on the market. 213.PW1 reiterated in cross-examination on behalf of the Second Accused that whilst it was CHAU who had been the “proprietor” of Shanghai Land her contact with him had been limited. She accepted that her room had been next door to his and that at the time of what she called the “penny stock” incident, CHAU had spent some time in her office looking at the monitor which was linked to the Hong Kong stock exchange, giving her certain specific instructions. She went into some detail about how CHAU had come into and gone out of her office on this occasion and given her instructions concerning the purchase of shares after he had seen what was on the monitor. I accept this evidence: this is a break in the usual routine which appears to have impressed itself on her memory. She had contacted different securities companies to place orders. It was only after she had done so that she would decide which accounts were to be used to execute the orders. She testified that her impression was that the First Accused was not present in the offices on that occasion: another example of the care she takes not to exaggerate the role of the First Accused. 214.As a consequence of cross-examination she amplified that the day following the purchases of these shares on CHAU's instructions she had telephoned the First Accused at her residence. The First Accused had not replied immediately to her request: she, PW1, could hear the First Accused talking to an unknown person in the background before she replied. We see a similar event occur again some months later. It was suggested to PW1 that she had made that telephone call in order to obtain instructions from CHAU: she specifically denied this and said that although she had purchased the shares the previous day on CHAU’s instructions she was attempting to contact the First Accused to find out what she should do about settlement in respect of that purchase. As a result of the First Accused telling her, after her conversation with the unknown person, to sell all of the shares, she did so. 215.In re-examination she said that it was from the First Accused that she normally received instructions regarding settlement or sale of shares which thus was the reason she had contacted the First Accused, rather than CHAU, to ascertain whether those shares were to be paid for or to be sold. I accept her evidence. 216.She was shown a summary of the trading in shares of Shanghai Land by the group [Exh. P908/page E4104] covering the period 26 to 30 July 2002. She accepted that it was around this time that the "penny stocks" incident occurred but was unable to recall with any precision which day it was that CHAU had told her to make purchases. She accepted that, looking simply at the figures, it appeared she had not sold the following day all the shares which she had purchased. She also accepted that transactions which she had carried out frequently involved buying shares at a higher price than that at which, the following day, they were sold. She repeated this aspect of her evidence in more detail when cross-examined on behalf of the Sixth Accused. 217.It was only after she had been trading for a period that she had been told by the company's financial controller that the closing price of Shanghai Land shares could not be allowed to fall below 58c otherwise interest would be payable to BOC. The day after she had been told this she related it to the First Accused and asked whether she should follow these instructions. She testified that the First Accused did not give a direct answer but said that she "had to ask first". Near to closing time that day the First Accused told her that she should act in accordance with the directive. It seems that she may have accepted in cross-examination that this instruction only came the following day: nothing turns on that. 218.When she was cross-examined on behalf of the Second Accused she testified that it was the financial controller of Shanghai Land, Rahman, who had spoken to her concerning share price maintenance. She pointed out, moreover, that if CHAU had wanted to discuss matters concerning the fall in share prices there were a number of other people in Shanghai Land, all more senior to her, to whom he could turn. I accept her evidence regarding these events. 219.This second instance of the First Accused consulting another unidentified third party before giving an instruction to PW1 is consistent with her evidence regarding her telephone call to the First Accused concerning the sale of the large quantity of shares bought on CHAU's instructions. These two instances demonstrate that the First Accused played an active role in the share trading activities: they further demonstrate the involvement of another person or persons in those same activities, further indicating the existence of a conspiracy or conspiracies. 220.Thereafter PW1 attempted to keep the closing price at or above 58c. She indicated that this conversation with the First Accused had occurred around the end of March 2003, fixing the date by reference to the fact that it was at that stage that the price of Shanghai Land shares was falling. At one point in cross-examination she appeared to accept that she had been told to maintain the price during the year 2002: I am satisfied that this was simply an error. 221.In order to try to maintain the share price it was necessary for her to purchase all shares in Shanghai Land for which the asking price was below 58c. She testified that before she bought those shares she would ask the First Accused if she had to buy in all of the shares offered for sale. If the quantity were not great the First Accused would tell her to buy and the price would be able to be maintained. However if the quantity for sale were large the First Accused would instruct her not to buy and the price would drop below the target figure. 222.The point is made on behalf of the First Accused that her selling at times had the effect of putting downward pressure on the share price. That may well be so on a given day but does not detract from her evidence of intention to maintain the share price at 58 cents overall. 223.I think it accurate to say that the picture painted by PW1’s evidence on this aspect of the matter is one of her being a staff member employed for a specific purpose: her evidence is that she took her instructions almost exclusively from the First Accused in connection with Shanghai Land shares whilst recognising that CHAU gave her certain very limited instructions in very specific instances. Her evidence concerning her employment relationship with CHAU underscores this point: she assumed that CHAU knew that she was employed there, as was suggested to her, to "simply buy and sell Shanghai Land shares". Even though she accepted that the First Accused did not attend the offices of Shanghai Land for any substantial periods on a regular basis, a fact which was confirmed by PW8, she was adamant that she had regular contact with the First Accused on almost a daily basis, usually by way of telephone, during which she received direction on dealing in shares. 224.Bearing in mind the fact
I have no difficulty with her evidence. I accept it in regard both to her limited dealings with CHAU and receipt by her of regular direction from the First Accused. 225.PW1 testified that she had not consulted the various account holders before she used the 42 accounts nor had she obtained permission from them to use the accounts. It was she who had used the securities trading accounts to buy and to sell shares in Shanghai Land: in order to attempt to avoid settlement costs shares which had been purchased were sold at the prevailing price whatever it happened to be. 226.I do not regard this as contradictory of the attempt to support the share price. It simply illustrates the competing interests of, on one hand, maintaining the share price and, on the other, avoiding having to pay out large sums of money by way of settlements. 227.It is relevant to recall at this stage the unchallenged evidence of PW17 that the trading pattern adopted by PW1 inevitably would result in a loss due to the similarity between the purchase price and the selling price of the shares coupled with the fees and charges which are levied in respect of each transaction. It hardly needs an expert witness to point out what is, in truth, a matter of simple commonsense. The significance of this factor is underlined by the evidence of each of the expert witnesses who testified that the primary aim of any genuine investor is to make a profit. 228.Necessary payments to securities companies, using the pre-signed cheques of the various account holders, were made by way of depositing the appropriate cheques into the bank account of the securities company concerned. PW1 illustrated, by way of reference to exhibited cheques and deposit slips, how the system of payment to securities companies worked. Usually she would take the cheques to the bank, but she testified in her evidence in chief that she was also assisted by the Second Accused. 229.When cross-examined she disputed the proposition that the Second Accused had never helped her to do this. She initially disagreed with the proposition that she had not told the ICAC about this. An extract from one of the witness statements which she had made was read to her and she then accepted that she had not told the ICAC that the Second Accused had been involved in effecting these deposits. That was an acceptance which she could have attempted to avoid: instead, she acknowledged not having mentioned it. 230.Moneys needed to be deposited into the cheque accounts of the share trading account holders to enable cheques to be drawn in favour of the securities companies. PW1’s evidence in chief was that when payments were to be made she would tell the First Accused what cheques need be issued: the First Accused would instruct the Second Accused who then would deposit money into the relevant account, the deposit slip being passed either to PW1 or to PW8. She qualified this evidence when cross-examined on behalf the Second Accused saying that after an initial period the First Accused had instructed her, PW1, to deal directly with the Second Accused. I accept this evidence. 231.It is to be noted that PW6 related similarly that he had initially dealt with the First Accused who thereafter had instructed him to deal with the Second Accused. Moreover, when he was being cross-examined on behalf of the Second Accused in connection with whom he had contacted her after receiving a letter from the SFC he testified that he had contacted the Second Accused in regard to that letter as he had not wanted to contact the First Accused due to the fact that she had "... told me always to contact the Second Accused". There is further support for the evidence of the increasing role played by the Second Accused in 2002 in the affairs of the First Accused to be found in the evidence of PW10 as well as the statement of LAU Yuen-man, which was tendered under s. 65B of the Criminal Procedure Ordinance. 232.PW1 related that she would write out on a slip of paper the amount or amounts of moneys that were required although she could not recall whether or not she also put the bank account number on that same paper. She would pass the slip of paper to the Second Accused as a form of a request to arrange the deposit. When she was cross-examined on behalf of the Second Accused she said was unable to recall whether these slips had been returned to her or whether she had been furnished with the resulting deposit slips. 233.It was put to her that at no time had she explained to the Second Accused that the purpose of the moneys was to issue cheques to pay for the trade in Shanghai Land shares or that she was conducting those trades on the basis of buying one day and selling next: she disagreed with this proposition and stated that the Second Accused had been told, at the time she was handed the slips of paper, either orally or by way of a note on the slip of paper, whether the purpose was to repay margin, interest or the loss resulting from the sale of the shares and that she had told the Second Accused “a few times” about the trading system. She explained she had done this to make it easier for the Second Accused to tell the First Accused the purpose of payment. 234.There is, moreover, real support for PW1’s evidence that the Second Accused was regularly involved in banking activities in respect of the share trading accounts. This appears from the statements of staff from Liu Chong Hing Bank tendered in terms of s. 65B of the Criminal Procedure Ordinance, especially MAK Lai-po and NG Pui-wa each of whom describes the Second Accused as going to the bank and performing transactions involving the First Accused’s bank account “almost every day or every other day”, as well as those of LAU Yuen-man and CHU Pui-ching. In addition PW10 specifically refers to the Second Accused as having taken over the “work of depositing money”. 235.PW1 disagreed when it was put to her that none of these events had occurred. She accepted the proposition that all the Second Accused needed to know was how much to deposit into which account and did not need to know the details of either the nature of the payment or the trading system. She repeated that the reason she had given the Second Accused the payment information was to facilitate her communication with the First Accused. In the context of this matter, this appears to me to have been a course which PW1 would have been expected to have followed. I accept her evidence. 236.She acknowledged that she had not related to the ICAC, in any of her statements, the fact that this procedure had been followed nor had the fact that she had communicated to the Second Accused the purpose for which the moneys were required. She explained, as she was to go on to do on a number of occasions particularly when being cross-examined on behalf of the Fifth Accused, that she had not told the ICAC about a particular facet of events simply because she had not been asked about it. 237.It was PW1’s evidence that the First Accused made funds available for deposit into the cheque accounts of various trading account holders. By way of illustration, she referred to the notations she had made on the reverse of a cheque dated 25 July 2002 [Exh. P4/p. 472] and that appearing on a cheque dated 24 July 2002 [Exh. P4/p. 497] which she said recorded the fact that moneys had been transferred by the First Accused. She accepted that she could not recall how transfer had been effected. 238.It was put to her on behalf of the Second Accused that in the year 2000 she knew that, because CHAU had no personal bank account, the First Accused paid CHAU's personal expenses. She denied this. There is evidence from PW10 that her bank account had been used, at some unidentified stage, to defray the personal expenses of CHAU: there is no evidence that this was known to PW1 and does nothing to contradict her. 239.It was put to PW1 that it was because of this knowledge on her part that she had said that moneys had come from the First Accused when payments needed to be made in respect of Shanghai Land share trading in 2002: that she had put the various notations on cheques because they were payments made by the First Accused on behalf of CHAU. She was adamant that she had not known where the funds had come from, simply that when she had related the necessity for moneys, moneys had been made available and that she therefore assumed, not without justification in my opinion, that it was the First Accused providing the moneys which, in turn, led to her making the notations. She explained that it was because of the fact that in 2000 it had been the First Accused whom she had approached for funds for settlement that she had followed the same pattern in 2002. 240.She also explained further notations which she had inscribed on the back of various cheques. The effect of this portion of her evidence is that, on occasions, payments were made from the cheque account of one trading account holder to settle liabilities due to a securities company by another trading account holder where there were insufficient funds in the latter’s cheque account. She had used these accounts, in her words, simply because they happened to have money in them. There was no real challenge to this evidence which I accept: I see no necessity to lengthen these Reasons by traversing it in detail. 241.Counsel for both the First and Second Accused make the point, in some detail, that there were genuine, innocent transactions passing through a number of the bank accounts, especially those belonging to the First Accused and PW10. That may well be so. It does not mean that those same accounts were not simultaneously used in connection with any conspiracy that may have existed 242.PW1 had concluded an arrangement with the various securities companies that at the close of trading each day a schedule of the day's transactions would be sent to her by fax. She testified that after she had received the daily trading records from the various securities companies she would make a record concerning the trading activities which she would pass to PW8 who would enter the data into a computer program which would generate a report, one example of which was found in her office. She went through the computer-generated report and the supporting documents in the course of her evidence: I do not see any necessity to repeat this as the documents are self-evidently what she explained them to be, simple trading records. I shall return to the fate of the bulk of those documents at the appropriate stage. SFC enquiries begin 243.It is an admitted fact that on 20 January 2003 the Securities and Futures Commission (SFC), issued enquiry letters to 14 securities companies, requesting information in respect of dealings in Shanghai Land. It was the evidence of PW1 that “shortly before Lunar New Year 2003” (which started on 31 January) she had been informed of the inquiry by some of the securities companies. She immediately had related this information to the First Accused. PW1’s evidence was that although she was unable to recall the First Accused’s actual response the tenor was that she had said that the turnover of shares in Shanghai Land had to be reduced and payment for purchased shares need be made so as to reduce the usual amount of turnover in share volume. 244.As a consequence of the First Accused’s instructions, there was an obvious reduction in volume of trading. There is compelling support for her evidence on this aspect to be found in a number of the schedules prepared by PW17 based upon the share trading activity: they show a marked drop, by up to the order of 75%, in trading in Shanghai Land shares from 17 February 2003 onwards. 245.I accept PW1’s evidence that this change in trading pattern came about in the circumstances in which she described and upon the instructions of the First Accused. This is direct evidence of the First Accused’s attempt to preserve the conspiracy, the only inference being that it was in her interests to do so because she was a part of it. 246.To comply with these instructions of the First Accused securities companies were contacted to find out what amounts were due. PW1 would tell the Second Accused the amounts required for payment. The Second Accused would arrange for money to be deposited into accounts on which cheques would be drawn. The cheques were then deposited into the securities companies’ bank accounts. PW1 testified that she was uncertain from where those moneys had emanated. 247.She began to retain more shares in the trading accounts. Certain securities companies indicated continuing concern about further inquiries from the SFC. Once again PW1 spoke to the First Accused asking if there were need to further reduce volume or even stop trading entirely. Once again, although PW1 was unable to recall the First Accused’s precise instructions the result was that she continued buying and selling shares. In re-examination she explained that she had continued trading in Shanghai Land shares despite being aware of the interest of the SFC because she had regarded herself as just an employee who would not get into trouble whereas the First Accused, who was "the boss", would have responsibility yet she, the First Accused, had not requested that PW1 cease trading. This explanation has a real ring of truth to it. 248.It was PW1’s evidence that at about this time the volume of trading through all the accounts which PW1 utilized comprised some 60 to 70% of the daily turnover in Shanghai Land shares. Support for this aspect of her evidence is to be found in the schedule prepared by PW17 [Exh. P908] the accuracy of which is not challenged, which demonstrates not only the percentage of market turnover occupied by the activities of PW1 but also the striking drop between the 13 and 17 February 2003 in the quantity of shares being bought by her. 249.A number of the securities companies indicated that no further orders were to be placed with them. This was relayed by PW1 to the First Accused. It was agreed that no further trading would be done through those companies. They also voluntarily stopped trading through one account, which anyway was only infrequently used, in the hope that it would not be checked by the SFC. 250.Other securities companies required that telephone confirmations should be effected personally by the holder of the securities trading account. PW1 also related this to the First Accused. In response, the First Accused told her that if the account holder concerned were a female she, PW1, could continue to give telephonic confirmation of orders: however, if the account holder were a male the broker should be told to contact the account holder directly to obtain confirmation. She accepted when cross-examined on behalf of the Fifth Accused that she had followed the instructions of the First Accused and impersonated the female account holders so as to mislead the various securities companies. I accept her evidence regarding this series of events. 251.PW1 testified in her evidence in chief that she and the Second Accused thereafter contacted the various account holders to warn them that the securities companies would be contacting them after close of trade to confirm the day's transactions and to advise them that their response need only be "okay": she thought that she had contacted two of the male traders. When cross-examined on behalf of the Second Accused she changed her evidence to say that she had contacted none of them but that each had been contacted by the Second Accused. She rejected the suggestion that she had not at any stage asked the Second Accused to contact the account holders but accepted that, prior to the Lunar New Year, the Second Accused had not liaised with those account holders in regard to the new confirmation requirements of brokers. 252.Thereafter, PW1 continued to place orders with the brokerages which then confirmed the transactions at the end of the day with either her masquerading as one of the female account holders or directly with the respective male account holder. The recruitment of CHU Lai-ding, PW15 253.It was the evidence of PW1 that around the end of April 2003 the First Accused told her that PW15 was interested in purchasing Shanghai Land shares at around 56 to 58 cents and that after PW1 had purchased several thousand shares they could be sold to PW15. The First Accused instructed her to use Shun Loong Securities Co., of the holding company of which the First Accused and CHAU were directors. Shun Loong also had its offices on the same floor as Shanghai Land: the staff of the two companies shared the same facilities. As instructed by the First Accused she contacted a broker at Shun Loong Securities and advised him that she had placed the shares for sale. To the best of her recollection some 6 to 7 million shares were involved. 254.There is good support for her evidence on this aspect of the matter to be found in
255.I turn to PW15’s evidence. It was his clear evidence that it was the First Accused who arranged for the opening of a share trading account by him with Shun Loong. There are two significant features to this aspect of his evidence. 256.Firstly, he said that that account was opened in April 2003 as a result of his being told by the First Accused and CHAU that the price of shares in Shanghai Land would “increase by $2-$3 in about June". In fact, the account was opened in February 2003 although it can be seen from Exh. P1056 that the use of the account for trading appears only to have commenced at the very end of April 2003, by which stage, it is clear from other evidence, the share price of Shanghai Land had been steadily falling, a fact which was known, upon the evidence of PW1 which I accept, to the First Accused. 257.Secondly, PW15 testified that the account opening documents had been brought to him by staff of Shun Loong, one of whom he recalled to be a female named GONG: PW15’s recollection is confirmed by the unchallenged evidence of FUNG Chi-leung and KO Yu-chun whose witness statement also was produced in terms of s. 65B of the Criminal Procedure Ordinance. It is pertinent to bear in mind the evidence of PW1 and PW8 that GONG was also involved, at the same time, in the affairs of the group – and played an active role in destruction of Shanghai Land records at the end of May 2003. 258.There is no doubt, from PW15’s evidence, that his initial intention was to invest in Shanghai Land shares. That intention was induced by the promise of performance made to him by the First Accused and CHAU. Of course, the fact that his intentions may have been to make genuine investments does not mean that he was not being used by the First Accused or CHAU for any purchases he made would benefit any scheme to maintain the volume of share trades. I have already indicated that I accept that the First Accused well knew of the continued slide in the price of shares in Shanghai Land: consequently the fact that his account only commenced trading at the end of April 2003 despite being opened in February 2002 demonstrates her attitude towards PW15. 259.PW15 related how after having deposited an initial $600,000 he was approached on subsequent occasions until he had made available a total of $2,600,000. His evidence was that he had paid this amount because "they said the shares had a good prospect". Although he was then approached for further moneys, he declined. 260.I do not propose to repeat here the issue of the unauthorised use of his account, the attempt to recover moneys from him and the subsequent capitulation by Shun Loong to which I adverted when commenting upon his credibility. I take it into account. 261.PW1 had been told, first by the financial controller of Shanghai Land and thereafter by the First Accused, that the share price of Shanghai Land should not be allowed to fall below 58 cents per share. At the risk of stating the obvious, the fact that she had been given these instructions and plainly did make attempts to carry them out does not mean that she would necessarily be successful in those attempts. She plainly was not. However, from the evidence of PW1, PW15 and the witness FUNG, I am satisfied that PW15’s account was used in an attempt to support the price of Shanghai Land shares. 262.PW1 testified that the share prices of Shanghai Land continued to drop. The First Accused had told her that PW15 would continue to buy in shares at a price below 58 cents. There were large quantities of shares for sale due to newspaper reports relating to CHAU as a result of which PW1 had made substantial purchases. The share price fell to below 50 cents and continued to fall. There is support for her evidence in this regard in Exh. D7, tendered on behalf of the Fifth Accused, which is an extract from the South China Morning Post dated 29 May 2003. Because there were margin calls from various securities companies PW1 spoke to the First Accused: although she was unable to recall the First Accused’s response, the First Accused paid the amounts due to the brokerages once she had been informed of them by PW1. May 2003 banking transactions by the Fourth Accused 263.It was the evidence of the Fourth Accused that the Second Accused had telephoned him and asked him to go to Liu Chong Hing bank on the 12th of May 2003 in order to withdraw, from his account, $185,000 in cash. He testified that he had complied with her request because he knew that because of the large sum involved identification of the person who was making the withdrawal was required. As he knew that the money in fact was that of the First Accused, and not his, he followed the Second Accused’s instructions. 264.At the end of May 2003, he being non-specific about the date, the Fourth Accused was told by the Second Accused to go to HSBC Central in order to deposit $150,000 in cash into his share trading account with Taiwan Concord. He did as requested. The Second Accused gave him the cash to enable him to effect the deposit. 265.I accept his evidence in regard to these two transactions. They demonstrate, specifically, the Second Accused’s intimate involvement with the banking affairs relating to the share trading accounts and, generally, her complicity in the conspiracy. 266.PW1 testified that although she had maintained records of transactions for the full period of trading, only one set of documents had been found in her office which included some of the trading activity reports faxed to her as well as computer printouts generated by PW8. In her evidence in chief she said that she was unable to account for either the absence of the other documents or the presence of those. She contradicted this when she was cross-examined on behalf of the Fifth Accused, when she said that she had destroyed the documents relating to market manipulation of Shanghai Land shares which had been in her office either by putting some into garbage bags or by shredding others. She fixed this as having occurred during May 2003. She had done so because GONG, a more senior employee, had directed her to do so. At that time she had appreciated that GONG's instruction related to the earlier information which she had received from various securities companies about the SFC making inquiries of them. 267.She went on to accept that had the documents not been destroyed the fraud would have been discovered and that their destruction was in her interests. She agreed that she had not told the ICAC in any of her statements about the destruction of the documents but explained that this was because she had not been asked about them. In re-examination she said that PW8 had also assisted, to a limited extent, in the destruction process but was unable to recall whether anyone else had also been involved. 268.PW8 testified in some detail about the destruction of documents at the end of May 2003. She related how she had received a telephone call from the Second Accused who had told her that GONG wanted her to go to the office earlier than usual to "sort out” information in her charge. She complied with this request. When she arrived at the offices of Shanghai Land on 67th floor of The Center in Central she saw the Second Accused, PW1, other colleagues and a female cleaning worker. She made arrangements for designated documents to be "removed from the office" although her documents did not relate to the trading activities of Shanghai Land. However, her evidence generally supports that of PW1 concerning the destruction of documents and also describes the involvement of the Second Accused. 269.After preparing the removal of the documents for some while as directed she, PW1, the Second Accused and the cleaning worker took them downstairs to the car park where they were met by GONG and a vehicle driven by a person she recognised as being a driver for the First Accused. The documents were placed into the vehicle which departed. 270.Although PW8 testified when cross-examined by the Second Accused that her understanding was that this incident related only to BVI companies and that the only documents she, herself, took away related to such companies, that does nothing to undermine the evidence of PW1 that documents under her control relating to Shanghai Land were similarly destroyed or removed: this is particularly so when one bears in mind PW8’s evidence that neither PW1 nor the Second Accused were in any way involved with the BVI companies. 271.There is no suggestion that there was more than one incident at the end of May 2003 when documents in the offices of Shanghai Land were obliterated. The only sensible conclusion that can be drawn from this evidence is there was but one incident when documents, including those relating to the trading in shares of Shanghai Land, were disposed of and that this had been done on the instructions of GONG as relayed by the Second Accused to, at least, PW8 and in which event PW1 and the Second Accused subsequently participated. 272.On behalf of the First Accused PW1 was taken, at length, through certain of the exhibits. The contents of a number of the documents were read to her, particularly that dealing with the downward trend of the share price of Shanghai Land, and she was asked to confirm that what was being read to her is what appeared in the document: she had no difficulty in agreeing with that proposition. She maintained that CHAU had not discussed with her the steady decline in price, reiterating however that he had contacted her to ascertain what the price was. Conversely, she said she would talk to the First Accused about the daily price of Shanghai Land shares but that she would not discuss, even with her, the drop in price or comparisons between one month and the next. The distinction she makes in each instance is clear. 273.There is support to be found in the evidence of PW8 for what PW1 says about CHAU's conduct in this regard. She testified that when she had worked for the Nongkai group in Shanghai she had provided CHAU with share price records on a weekly basis: after she had moved to Hong Kong he had asked her for regular reports in respect of share dealing in Systek. She said that at first she had thought that he would ask her for similar reports in respect of Shanghai Land share trading but that he had not done so. 274.PW1 described the difference in the information occasionally sought by CHAU - who would ask about the price of the stock, turnover in shares, the total quantities of shares in the buying and selling queues and the names of the securities companies in the queues - and that of her regular contacts with the First Accused, who had mainly talked to her about buying and selling of shares. Her discussions with the First Accused were not about the price to which the shares had dropped but about matters that had to be considered generally concerning the trading in shares. I accept this evidence. 275.The rest of PW1’s evidence relates to the other charges and I will deal with it in context. However, there were other facets to her cross-examination to which reference need be made at this stage. 276.PW1 said in cross-examination on behalf of the First Accused that her husband had been a director of a stock broking firm in September 2000 but that, insofar as she had been aware, he had not been familiar with CHAU. To her knowledge, CHAU had not dealt in shares through her husband's company. However her husband had been familiar with the First Accused and it was to her that he had introduced PW1 as a potential employee of Win Victory. At that stage Win Victory had its offices in Far East Financial Centre. 277.She accepted that the First Accused’s visits to Win Victory were infrequent; that the First Accused had no office allocated to her there; that it was rare for the First Accused to go to the office on her own, she usually being accompanied by a friend; that her visits were usually in the afternoons and were of short duration. There is unchallenged evidence from PW8 that in 2002 when Shanghai Land was in operation at The Center, the situation had changed and the First Accused had her own office. PW1 also accepted that she had never been spoken to in English by the First Accused. 278.PW1 was taken through a long list of securities companies each of which, according to her evidence, she came to know after she joined Win Victory in September 2000. Where she was able to do so, she named the person in the company with whom she dealt or relationships between different personalities whose names were suggested to her. In each instance she indicated that she was unaware as to whether CHAU was familiar with the securities company concerned. She explained that she had come to know those securities companies because she had been required to contact them in relation to the accounts for trading in Systek shares. Despite the matter being covered in the admitted facts, she was taken through a list of accounts which had been opened in the names of various persons with different securities companies as well as a list of bank accounts which had been opened. 279.There was cross-examination on behalf of the First Accused regarding her knowledge of the position, duties and even residential status of GONG. She accepted that GONG had her own room in the office and that when CHAU was absent staff members would usually contact GONG for instructions: PW8 testified to a similar effect. She accepted that GONG was responsible for the day-to-day operation of another, associated, company called Shanghai Merchants. We have seen from the evidence of PW15 that GONG was active also in the affairs of Shun Loong. 280.Some time was spent in cross-examination on behalf of the First Accused going through with PW1 what was categorised as "the history whereby CHAU acquired his interest in Shanghai Land" - and traversing various agreements. She denied familiarity with the details of the transactions in April 2002 although she was aware from news items, in general terms, of CHAU's attempts to acquire imGO. Many specific clauses contained in the various agreements were read to her and she was asked whether she had been aware of those terms: she testified that she had been unaware of them. She was aware, generally, of the necessity for CHAU to reduce his shareholding in imGO to 75% and the fact that there had been three share placements to give effect to this. She denied that CHAU had ever discussed details of the placements with her. 281.She was also quizzed as to her understanding of what is involved in a "backdoor listing". She was then taken to a number of "organisation charts " of Shanghai Land as at various dates. It was suggested to her that these demonstrated an intention to inject further assets into Shanghai Land: she was able to recall most of the proposals accepting that they were widely known amongst the staff of Shanghai Land. 282.After being shown a list of biographies of various persons involved in Shanghai Land [Exh. D1] she accepted that those identified to her were experienced in financial and share trading methods. She had seldom sought advice from one called D C LEE but had occasionally sought advice, sometimes on her own initiative and sometimes on the instructions of the First Accused, from GONG. She explained GONG sometimes visited her office to see how trading was going on although this was only at times when there were problems such as large quantities of shares being for sale or a large fluctuation in share price. However she was adamant that GONG had not given her any immediate advice nor had GONG reverted to her to relay instructions from anyone else. 283.PW1 disputed that to carry out her regular buying and selling she "hardly needed" instructions from anyone. She reiterated that on those occasions she did receive instructions either from CHAU or GONG there was always a specific reason for those instructions being given but that for routine matters involving settlement she usually spoke to the First Accused. THE EXPERT WITNESSES 284.Other than for the evidence of the expert witnesses, that is all the evidence that I propose to relate in respect of the first two charges. Two witnesses were called as experts on behalf on the prosecution, PW14 and PW17, whilst three were called on behalf of the First Accused. When dealing with evidence given by a person established to be an expert it is necessary for the court to form its own independent judgment based on the evidence proved in the case and not simply to adopt the expert's opinion. (R v CHAN Kam-tak and Another [1988] 2 HKLR 11) 285.PW14 was called to testify to the results of certain investigations which he had conducted: this is a convenient point to deal with that evidence before considering the evidence of the other experts whose evidence and expertise addressed a different issue. PW14 was asked to review the share trading accounts maintained by the traders, to identify the deposits in the accounts that funded the acquisition of Shanghai Land shares (excluding share placements) and to quantify what amount could be attributed to funds originating from either the First Accused or PW10. In the light of the evidence by PW10 regarding the use of her bank account by the First Accused and CHAU, the inclusion of that account is appropriate. 286.His analysis revealed that of a total of $62,598,474.94 deposited into 39 out of the 43 trading accounts for the purpose of settling Shanghai Land share purchases, $17,720,621.84 was attributable, on a conservative basis, to the bank account of the First Accused whilst $7,646,491.70 was attributable, on a conservative basis, to the bank account of PW10, which, on the evidence, was one used by the First Accused, aggregating $25,367,113.54 or 40.52% of the total deposits. The corollary, as is arithmetically obvious as PW14 agreed, is that the "bulk" of money came from an unknown source or sources. 287.In my judgment the relevance of PW14’s evidence is that it is yet one more tile that makes up the mosaic of the evidence as a whole to which I must have consideration. In that regard, the fact that 40% of the moneys used to fund a substantial number of what were undoubtedly bogus trading accounts is attributable to the accounts of the First Accused and PW10 is of significance. 288.I turn now to the testimony of PW17 and the three defence witnesses in connection with the effect of the trading activities of the traders and the effect of share trading volume in the marketplace. 289.To summarise, somewhat brutally, their evidence the prosecution witness indicated that the volume of trading in a share may, in some instances be a “key” consideration for an investor in deciding whether or not to invest in that share but that it would always be one factor which an investor may consider, whilst the second and third witnesses for the First Accused accepted overall that it may be a consideration but that, in their respective opinions, in most circumstances it would be a minor factor. The first witness for the First Accused vacillated in his evidence but even he may be viewed as reluctantly conceding that it may be a factor to be considered as a last resort. Whilst they may differ in the precise quantitative role that share trading volume may play, a proper summary of their testimony is that there is an overall acceptance that it may play a role. 290.There was no cross-examination as to her expertise: rightly so, as she is obviously experienced and capable in her field. I accept her expertise. She holds a number of appropriate financially oriented qualifications as well as a Masters Degree of Science in Finance and has enjoyed wide practical experience on a day-to-day basis as a research analyst and as a fund manager before joining the SFC some five years ago. 291.She was a singularly impressive witness who gave her evidence in a clear, comprehensive and compelling manner. She avoided hyperbole and gave measured, thoughtful responses, indicating sensible acceptance of propositions with which she found herself able to agree but rejecting, for cogent reasons, those with which she disagreed. I am satisfied that the opinions she expressed and conclusions at which she arrived were based upon sound principles and sensible applications of them. I accept her evidence generally. Witnesses for the First Accused 292.There is a conceptual difficulty with the reports prepared and evidence given by the second and third witnesses, Ermanno Pascutto and G J McMahon, who testified on behalf of the First Accused: for reasons which will become apparent, I do not regard the first witness as qualified as an expert or place any weight on his evidence. The difficulty is that the witnesses start from a somewhat skewed premise: although each recites the fact that the charges with which he is concerned are conspiracy to defraud charges the reports and the evidence focus upon and emphasise "market manipulation" with particular reference, either directly or by way of annexure, to the legislation dealing with that subject. 293.Indeed, PW17 also, to a limited extent, falls into the same trap in the supplementary report which she prepared albeit that her observation was in response to the report of Mr Pascutto. 294.Moreover, both Mr Pascutto and Mr McMahon dwell upon the concept of market manipulation as being an attempt to ramp the share price, although the latter accepts that "The reasons for manipulation are myriad...". There is simply no allegation of price ramping contained in either of the charges: each charge refers, as its essence, to the creation of a false or misleading appearance either of active trading or with respect to the market for or the price for Shanghai Land shares. 295.I do not suggest that, as a consequence, the evidence is entirely valueless but it does seem to me that it is necessary to have regard to their opinions and conclusions in the light of the basis from which each commences. 296.There is one further aspect common to the evidence of each of Mr Pascutto and Mr McMahon with which I may conveniently deal now. Each places some emphasis on the fact that the attention of an investor would need to be called to a particular share before that investor would consider making an investment: logically, that must be so. However, each says that the mere fact of share trading volume alone would not be enough to bring any given share to the attention of an investor. With respect, I judge that to be too sweeping a statement both in the light of Mr Pascutto’s acceptance that different investors and categories of investors will apply different considerations and also on the basis of simple commonsense. DW1: CHAN Wing-luk 297.The first witness called on behalf of the First Accused was CHAN Wing-luk, who describes himself as a financial investment adviser, publicist and radio and television presenter. His curriculum vitae sets out a chronology of working in the field of investment with particular reference to trading in stocks and shares. It is a question for me as to whether a “…witness has acquired by study or experience sufficient knowledge of the subject to render his opinion of value in resolving the issue before the court.” [R v Bonython (1984) 38 SASR 45] At the conclusion of his evidence I was not satisfied that he has gained such expertise as would properly entitle me to treat him as an expert witness in connection with the issues in this matter. 298.As a consequence I place no weight on his evidence regarding the issue of trading volume or the opinions which he expressed ancillary thereto. In the circumstances it is not necessary for me to deal with his evidence in any great detail. 299.He prepared an initial report which essentially commented upon the report prepared earlier by PW17 and amounted to little more than carping criticism and pedantic quibbles with her report and opinions. He prepared a supplementary report during the course of the trial. He was an inflexible witness who, only eventually and grudgingly, made concessions when in many instances the concession would have been made without demur by an impartial witness - or by a witness who did not dismiss any suggestion contrary to his own opinion as being an affront. 300.His rejection that trading in Shanghai Land shares for December 2002, which amounted to well in excess of 8000 separate transactions, amounted to "quite a lot of trading activity" is an obvious example. He was, eventually, obliged to concede that there had been "quite a lot" of stock in Shanghai Land sold in December 2002 and to agree that there were "a large number of trades" that month. 301.A proper reading of his first report shows that the tenor of his opinion is that the trading volume simply plays no role in the decision-making process of an investor. He sought to hedge this opinion but that this was his initial stance appears from, for example, the statements in paragraph 30
paragraph 55
and paragraph 56
[emphasis supplied] 302.A number of the views he expressed were at variance with the two reports prepared by Mr Pascutto and Mr McMahon. His report was prepared in May 2005 and theirs in October 2005. In his oral evidence and, to a lesser extent, in his supplementary report, he sought to change his position to one more in line with the other two witnesses: the effect of this was to render his evidence as a whole ambivalent, confused and self-contradictory. 303.In addition, the copies of articles of which he was the author which were put to him in cross-examination demonstrated that indeed he had advocated considering trading volume as a factor in arriving at a decision as to whether or not to invest. This ran counter to the basic theme which he had initially sought to advance on behalf of the First Accused. His final claim that he had "never objected" to taking turnover as being a factor for consideration after considering all "fundamentals" is simply incorrect and inconsistent with his original position. His insistent references to shares in the "Top 20" as well as to "fundamentals" assumed an almost hypnotic quality. 304.With reluctance, he accepted in cross-examination that without knowing that one person was controlling the overwhelming majority of trading in Shanghai Land, the trading records themselves would have created the impression that the trades were between independent investors. He also accepted that the use of a multiplicity of brokerages would have led an investor to conclude that there were a lot of persons involved in trading. That accords with common sense. 305.Mr Pascutto also has extensive practical experience in financial markets but is qualified as a lawyer rather than holding any financially oriented professional qualifications. His report, which he adopted as his evidence in chief, is Exhibit D69. 306.He accepts that "... there can be little doubt that (trading in Shanghai Land shares) would have been "less active" in the absence of (the traders) trading." In the light of the analysis by PW17 of the trading carried on by the traders, the accuracy of which has not been called into question, it is difficult to see how he could conclude otherwise. He observed, rightly, that the traders "... clearly dominated trading in shares of Shanghai Land". 307.In cross-examination he realistically accepted that there was no definition of "active trading" and expressed the sensible view that it is a relative term which would depend on the circumstances of the situation and the circumstances of each individual looking at the situation: he illustrated his opinion by drawing a distinction between the approach which would likely be adopted by a retail investor as opposed to that adopted by an institutional investor. I have no doubt that he is correct in this view. 308.But this was an approach which was in marked contradiction of the other two witnesses called on behalf of the First Accused each of whom sought to create some technical definition of or fix some specific parameters by which the term "active trading" should be adjudged: common to each of them was a suggestion that the term should only apply to the shares which had appeared in a list of top 20 shares traded by volume for any particular day. I reject that view. 309.There is no magic in the phrase “active trading”. I am satisfied that the various schedules which form part of PW17’s evidence amply demonstrate that in the ordinary everyday sense of the word “active” trading in shares of Shanghai Land was being carried on from July 2002 until, at least, mid-February 2003 whereafter trading volumes decreased for the reasons I have already set out and trading became less active than had previously been the case. Indeed in cross-examination, Mr Pascutto accepted that the volume of trading in Shanghai Land "... looks definitely quite reasonably active". 310.Mr McMahon has extensive practical experience in securities industry regulation, a field somewhat tangential to these proceedings: he, too, is qualified as a lawyer rather than holding any financially oriented professional qualifications. His report, which he adopted as his evidence in chief, is Exhibit D70. 311.There was a further incorrect assumption underlying at least part of his report: that PW15 was a genuine, independent purchaser. The evidence adequately demonstrates that he had been seduced into making his investment by the representations made to him by CHAU and the First Accused and that there was no hesitation to use his account with Shun Loong for fraudulent transactions when the situation in regard to Shanghai Land shares became dire. I have already dealt with this aspect of the matter and I do not intend to repeat it. 312.In fairness to the witness I should indicate that when cross-examined it became apparent that those instructing him had not furnished him with the necessary witness statements to place him in possession of this knowledge. However, when he was re-examined he indicated that this new information did not cause him to change his views which he had expressed in regard to paragraph 6.6.5 of his original report. For whatever reason, he was not asked whether it would affect any of the conclusions at which he had arrived. 313.Mr McMahon also dealt with the net asset value of Shanghai Land as justifying a certain share price. With respect, that is not the issue just as it is not the issue whether any securities held by BOC were adequate to cover the debt due to it. The issue is whether the conduct created a false or misleading impression with the consequences described. 314.In dealing with PW17’s use of the term "wash sale" Mr McMahon described it as a "very technical term" and sought to provide a restrictive definition. It was plain from PW17’s report as well as her evidence that she was using the expression as a term of convenience rather than as a term of art. I do not accept the submission made on behalf of the First Accused on the “wash sales” aspect of PW17’s evidence: it is another example of the evidence being taken out of context. 315.Mr McMahon also expressed the view that the regulatory authorities would not be particularly interested in the trading activities of a person who occupied the position of general manager of the company, as did the First Accused, but rather in the activities of the directorate of the company, of a person whose capacity within the company is defined and of brokers. That may well be so. Once again, that is not the issue before me. 316.At the conclusion of Mr McMahon's evidence as a whole, but particularly his cross-examination, I had the residual impression that his evidence was not truly impartial. There were a number of instances in cross-examination when he sought to deflect questions being asked of him, did not give a direct answer to a straightforward question and appeared to hedge. That said, nothing in his evidence causes me any doubt in the findings I need make flowing from the expert evidence. Conclusion 317.I find that,
318.It follows that where the opinions or conclusions of Mr Pascutto and Mr McMahon differ from these findings I do not accept them. The First Accused’s interview 319.After her arrest the First Accused was interviewed under caution. The transcript of that interview is Exh. P947. It was admitted in evidence without objection. It is a statement which consists largely of exculpatory material with a limited number of answers, which might be regarded as inculpatory: in truth, the real effect of those answers is to support the evidence of PW1 as well as other witnesses in regard to the opening of share trading accounts. In this sense it is a mixed statement: I approach it as such. 320.I place no weight upon the exculpatory passages. There is a demonstrable, fundamental, untruth. At entry 14 the First Accused denies knowing how Global Town applied to BOC for the loan and says that no one had told her about it and, at entry 15, that she did not know about it. Not only is this is contradicted by the unchallenged evidence of PW16 but it will be recalled that it is an admitted fact that it was she who signed every one of the drawdown notices to release those funds from BOC. 321.Entries 31 to 37 supports the evidence of other witnesses that the First Accused had been instrumental in persons to open accounts in respect of the second share placement being found. Entries 42 and 43 support the evidence of PW10 in regard to the transmission to her by CHAU of moneys to be used in connection with the share placement. Ad Charge 1 322.It has been reiterated on behalf of the First Accused that CHAU appears to have been the “mastermind” of the Systek trading activities and, by extension, the Shanghai Land trading activities, whatever their object may have been: that may or may not be but it is not the issue which falls for me to determine. That issue is whether the First and Second Accused was each a party to the alleged conspiracy in respect of the Shanghai Land trading. 323.Common to each of the First and Second Accused is the observation that each of the persons who gave evidence as an expert accepted a basic, indeed obvious, proposition – that a person who genuinely trades in shares does so with a view to making a profit. The suggestion that, as a matter of sheer coincidence
is, in a word, untenable. 324.I believe that those aspects of the evidence with which I have dealt in some detail demonstrate more than adequately the involvement of and role played by each of the First and Second Accused in the trading activities of shares in Shanghai Land pursued by PW1. I do not propose to reiterate them but, in respect of the involvement of the First Accused, would briefly highlight
325.There is a further aspect, too, to the evidence concerning the Second Accused in addition to those with which I have already dealt. It is that which relates to her involvement in what have become known in the course of the trial as the “coaching” meetings and the meetings which took place with the Fifth Accused. As indicated, I deal with the evidence relating to those meetings when considering the next two charges. However, I also take that evidence into account on the first charge as this was all part and parcel of an ongoing series of acts. 326.I recognise that no witness testified explicitly to the actual object of the conspiracy as being to create the false or misleading appearance of active trading but it was clear from their evidence that they were not the prime mover or movers behind the activities. I am satisfied that, looking at the evidence as a whole, the only inference which can be drawn is that that was the intention of the conspirators, whatever the reason for it may have been. It is intention, not reason or motive, with which a court is concerned. 327.I am satisfied beyond reasonable doubt that the evidence as a whole establishes, directly and by way of necessary inference, that
328.In my judgment once it is established, and two out of three of the First Accused’s witnesses agree with the prosecution’s witness that it be so, that the turnover in trading volume in a share is a factor which an investor indeed may take into account when deciding to invest in those shares then the essential element of the offence, that an appearance of active trading might induce an investor to invest in Shanghai Land shares, is proven insofar as the first charge is concerned. 329.The essence of the offence is to prejudice or to take the risk of prejudicing the rights of investors, the offenders/s knowing that he or she has no right to do so. The rights in question are economic rights. There might well have been no intention to cause loss to any individual investor, but the economic right of each investor is to assume that the information in respect of the stock which he or she might decide to purchase or sell, and upon which, at least in part, that decision may be made, has not been adulterated by an artificially increased trading volume, that the playing field is level. Thus it is the adulteration of the material upon which an investor may base a decision, and not whether that decision results in fiscal gain or loss, which constitutes the prejudice. The artificial trading volume acts so to defraud the potential investor insofar as the first charge is concerned. Each of the First and Second Accused is convicted on the first charge. Ad Charge 2 330.The evidence of PW16, a representative of BOC, dealt in part with the terms of the loan made available to Global Town. There is no dispute that it was a term of that agreement that the value of 60% of the Shanghai Land shares pledged by Global Town would not be less than the outstanding balance of the loan due by Global Town to BOC. In the event that the value was lower, BOC was entitled to call upon Global Town to make up the differential. The effect of his evidence was that the critical figure was 58 cents per share: if the price fell below that level the provision of the agreement was triggered. 331.His unchallenged evidence was that this occurred for the first time on the 9 April 2003. Subsequent to that the share value of Shanghai Land was often below 58 cents. As a consequence he telephoned either GONG or another person at Global Town and requested payment of the differential. He went on
332.A significant feature of his evidence was that the differential was not paid in the morning because the BOC would usually wait until the close of trading that day to see whether the price had risen back to 58 cents. If this occurred again BOC did not insist upon payment of the difference. 333.In my judgment this, alone, provides sufficient reason for the conspirators to have sought to support the price of Shanghai Land shares at 58 cents per share - even ignoring the additional incentive of avoiding actual payment of the differential. PW16 testified that at no stage was any differential payment made to BOC. He set out in his first statement, which he adopted as part of his evidence in chief, a detailed calculation showing the very substantial amounts which became payable on various dates from 9 April onwards as a result of the drop in the share price. 334.I am satisfied beyond reasonable doubt, further, that the evidence as a whole establishes, directly and by way of necessary inference, that
335.In so far as the second charge is concerned, the essence of the offence is to prejudice or to take the risk of prejudicing the rights of BOC, the offender/s knowing that he or she has no right to do so. Those rights in question are also economic rights. There might well have been no intention to cause loss to BOC but it is the economic right of BOC to assume that the information in respect of the stock which it holds as security for amounts due to it has not been adulterated by an artificially increased trading volume, that third party interest in the shares of Shanghai Land are genuinely represented by the share trading volume. Thus the artificial trading volume acts to defraud BOC by the creation of a false or misleading impression of interest in the shares in Shanghai Land. The First Accused is convicted on the second charge. 336.For the purposes of clarity I indicate that I am satisfied that there were two separate and distinct conspiracies which were running in tandem during the period March to 31 May 2003. That agreement came about when the then financial controller of Shanghai Land observed to PW1 that the share price need be maintained at a level of 58 cents, consequent upon which PW1 obtained confirmation of that course from the First Accused. 337.Each of the two conspiracies was evidenced by the same acts of PW1 which were acts performed in pursuance of the execution of each of those two conspiracies: the fact that it was the same single act that had the effect of carrying out each conspiracy does not prevent there from being more than one conspiracy, the consideration being whether there were two separate and distinct agreements. The issue is the intention of the parties at the time of conclusion of the agreements. 338.Before dealing with the evidence in respect of the third, fourth and fifth charges it may be convenient to say, so as to avoid repetition, that I am satisfied that where the evidence establishes that it was the intention of the co-conspirators to mislead the Securities and Futures Commission by making false representations to it as to the identity of the actual traders controlling the various share trading accounts, that conduct, if brought to fruition, would have had a tendency to and been intended to pervert the course of public justice. 339.In HKSAR v WONG Shing-yim and Others [2003] 3 HKLRD 1046 @ 1056 the Court of Appeal said:
340.I propose to deal now with the issue of the Fifth Accused’s credibility as this is applicable to the third and fourth charges. This will involve dealing, in general terms just as for the prosecution witnesses, with some of the evidence he gave although I will deal with specific issues when I resume the chronology and my summary of the overall evidence. These observations obviously apply equally to the fourth charge. I adopt this course solely because I perceive it as being the most expedient: I do not suggest that there is any onus on the Fifth Accused. 341.The Fifth Accused did not make a favourable impression on me. His evidence was far from convincing: in instances it was illogical, self-contradictory and, simply, untrue. I have indicated earlier that I do not accept that the attendance notes relating to his meetings with the Third Accused were genuine although, plainly, they did contain certain elements of fact. 342.There was, on any account, an initial meeting with the Third Accused: for various reasons it is the Fifth Accused’s contention that that meeting occurred on 17 April 2003. In due course, he opened a file relating to the work which he was doing on behalf of the Third Accused. According to his evidence that file was only opened on 29 April 2003. On that file [Exh. P1901] the first entry is dated 21 April 2003. In cross-examination he was asked why there was no reference to the initial meeting when there was a detailed "attendance note" [Exh. D37] recording that meeting: his unconvincing response was that he could not recall. 343.He had offered as an explanation for the file only being opened on 29 April the fact that it was only at that stage that the Third Accused had "confirmed" his instructions for him to act by authorising the use of counsel. His attention was drawn to an entry in an "attendance note" dated 21 April in which appears the entry "We will instruct counsel Anthony Lo to go with him. Anthony is also handling SFC case too. Sam agreed." He was asked why, if that arrangement had been made on 21 April, he had delayed in opening the file. His response was that he could say that the file had been opened on that date. The same question was put to him a second time: he responded that he could not recall why the file had not been opened earlier. 344.Then there were the issues of conflict of interest. Firstly, he conceded that he was aware that PW1 and the Second Accused who, on his version, attended the first two meetings held with the Third Accused, were both connected with Shanghai Land yet it was about his share dealings in that very company that the Third Accused was consulting him. He claimed that he saw no conflict from such a situation and that it had not raised any suspicions on his part. I find that entirely unbelievable. Secondly, he claimed that he had refused to represent the Fourth Accused once the Fourth Accused had mentioned to him that the Third Accused had spoken about his own SFC enquiry. The Fifth Accused was entirely unable to explain why that knowledge on the part of the Fourth Accused created such a conflict of interest that he, the Fifth Accused, was unable to act in the matter. His attempted explanation verged on the absurd. It is, further, instructive to have regard to these diametrically opposed positions which he claims to have taken in respect of the Third and Fourth Accused. 345.It was his evidence that because of the perceived conflict of interest involving the Fourth Accused he had referred the Fourth Accused to another solicitor to act on his behalf. I do not doubt that he made the referral for that accords with the evidence of the Fourth Accused. However I do not accept that he did so because of this perception of a conflict of interest: I am satisfied that the only inference that may be drawn is that he did so as to conceal from the SFC the fact that he had been consulted by several persons involved in the same investigation. 346.The Fifth Accused was at pains to point out that the attendance notes were simply for the purpose of reference, that they " recorded issues discussed but not instructions given" and that they dealt only with the most salient features. This does not sit easily with the entry contained in the "attendance note" dated 17 April in which appears the entry "I always work on holidays". This is a self-serving annotation written to provide support for a future inquiry. It is utterly irrelevant to the purpose for which the Fifth Accused claims that the attendance note was created. 347.There is the issue of fees. His evidence is that he did not discuss the issue of his fees with the Third Accused until the second meeting when he indicated that counsel's fee would be approximately $5,000 per day: he sought to interpret the entry in the attendance note relating to that meeting as meaning that his fee would be similar. His explanation for the subsequent writing off of the fees due both to him and to counsel, the Sixth Accused, is simply unacceptable. It is an admitted fact that the Third Accused had been the owner of a property since 1988 in which, at the time he consulted the Fifth Accused, he was residing. And, indeed, still does so. Also the telephone number, even now current, of the Third Accused appears on the cover of the Fifth Accused’s file [Exh. P1091]. The claim by the Fifth Accused that the absence of an address on the debit note was irrelevant as is it was accompanied by a covering letter is unacceptable. I accept the evidence of the Third Accused that at no stage was the question of fees raised with him, nor had he received any debit note from the Fifth Accused. 348.I certainly accept that this would not justify any inference being drawn that the First Accused, or any other identifiable person for that matter, would be paying those fees. The issue concerning fees, in the context of this trial, is one which goes to the credibility of the Fifth Accused. 349.An important issue is that of whether the Fifth Accused told the Fourth Accused that one of the areas about which the SFC would be bound to make inquiries was the fact that the four cashier's orders used to pay for the share placement, inter alia, bore consecutive serial numbers. I deal with this elsewhere but, insofar as the Fifth Accused’s credibility is concerned, this issue was one which occasioned him visible physical discomfort in the witness box when testifying. 350.Although there are a number of other aspects to his evidence which demonstrate his lack of credit worthiness one more example will suffice: the Third Accused had contacted the Fifth Accused after his arrest by the ICAC and asked for the Fifth Accused to go to see him. The evidence of the Fifth Accused, oddly, is that he did not take this contact as an opportunity of reminding the Third Accused of his indebtedness. That is largely beside the point. He was questioned at some length about his refusal to go out to the ICAC and his arrangement for a different representative to go to see the Third Accused. He was evasive throughout his testimony regarding his reasons for not going and the nature of the arrangement that he made. It appears in detail on the record and does not need me to repeat it. 351.There is, however, one passage from cross-examination of PW1 on behalf of the Fifth Accused which bears quoting as it neatly encapsulates what lay behind the conduct that gave rise to Charges 3, 4 and 5 putting them into perspective: it occurred on 22 September 2005 and is as follows:
352.There is one final matter upon which it is appropriate to comment at this point as it affects both the third and fourth charges. As will be seen, I am satisfied that both PW1 and the Second Accused attended at least the first meetings with the Fifth Accused attended by the Third and Fourth Accused respectively. The attendance of the two women at those first meetings is entirely consistent with the evidence of PW1 that she went there so as to explain to the Fifth Accused the nature of the trading, that she told him the “true position”. I do not accept that there would have been any necessity for either of them to attend any of the meetings if those meetings had solely been concerned with basic advice on the SFC letter. THE THIRD CHARGE The admitted evidence 353.I return to the charges and the chronology. On 14 April 2003, the SFC required the Third Accused as a person under investigation to attend an interview regarding suspected offences contrary to the Securities Ordinance concerning dealings in the shares of Shanghai Land during the period 30 August 2002 to 17 January 2003. On 30 April 2003, the Third Accused was interviewed in the presence of his legal representatives, the Sixth Accused and PW4, Richard YAT, by officers of SFC. The record of interview was reduced into writing. On 13 May 2003, the Third Accused together with the Sixth Accused and PW4 attended a second interview, which, similarly, was reduced into writing. 354.Of relevance to both the third and fourth charges is the further admitted fact that the SFC required eight additional holders of the 42 trading accounts each to attend an interview as a person under investigation in respect of suspected offences concerning dealings in the shares of Shanghai Land during the same period. Six of those persons requested that the interviews be deferred. Other evidence 355.It was the evidence of PW1 that around April 2003 the Second Accused had told her that the Third Accused had received the letter from the SFC although she was unable to recall whether the Second Accused had told her face to face or over the telephone. She had been scared and did not know what action to take. She telephoned the First Accused. The response of the First Accused was to say that she, PW1, and the Second Accused should try to "get things matched" with the Third Accused because he did not know what trading had been done. She had understood these instructions to mean that she should tell the Third Accused about the trading which she had carried out in his name in order that he could relate it to the SFC. 356.It will be recalled that after PW1 was arrested by the ICAC on the 1 June 2003 she was interviewed under caution: that interview was video recorded. As the prosecution could not seek to rely on the contents of that interview in these proceedings the video recording was not initially before me as an exhibit. However, at the request of the Second Accused a portion of it was played in court to demonstrate that there was a conflict between PW1’s evidence in court - to the effect that it was the Second Accused who told her about the receipt by the Third Accused of the letter from the SFC - and what she said during that interview - that it was the First Accused who had told her about the receipt of that letter. That conflict plainly exists. 357.In cross-examination she testified that at the time she was being interviewed she had just been arrested and had to talk about a lot of things so she did not find it surprising if she made mistakes: that she was very scared and very confused, that she had "got things mixed up" and gave answers when she did not clearly understand the question. She again rejected the proposition that it had not been the Second Accused who had told her that the Third Accused had received a letter from the SFC. 358.There is support for the fact that it was the Second Accused who contacted PW1 to be found in the evidence of the Third Accused who related how, after he had received his letter from the SFC, he had contacted PW6, which is confirmed by PW6, who had told him that he, PW6, would ask the Second Accused to deal with it whereafter the Second Accused had telephoned him. 359.PW6 testified in his evidence in chief that he had contacted the Second Accused when he received a letter from the SFC in order to find out what he should do. He was aware at that stage that the Third Accused had received a similar letter as the Third Accused had contacted him previously. In turn he told the Third Accused to contact the Second Accused: of course, this is not in conflict with the evidence of the Third Accused as PW6 was not aware which of them had contacted the other. PW6 testified that he had followed this course because he believed that the Second Accused was clear about everything as "from beginning to end" it was she who had contacted him. 360.I take into account, too, the evidence regarding the Second Accused’s employment history prior to joining Win Victory with which I have already dealt in detail in considering the first and second charges: I do not repeat it. In these circumstances I accept PW1’s evidence that it was the Second Accused who had told her about the receipt of the letter from the SFC by the Third Accused. The first meeting with the Fifth Accused 361.To continue. PW1 knew a person identified only as "Wah Kor", a friend of the First Accused. As the letter from the SFC to the Third Accused had indicated that he could be accompanied by a lawyer PW1 spoke to the First Accused and asked if there was a need to arrange this. The First Accused told her to contact Wah Kor and to ask him. I accept this evidence. She did so and explained the situation to him, asking him whether he was able to recommend a lawyer. He recommended that she contact a lawyer by the name of WONG: there is no dispute that that is the Fifth Accused. The Fifth Accused accepted in his evidence that he knew a person called “Wah Kor” whose full names he confirmed were NG Kam Wah. He related how he had come to meet him but the real relevance of his evidence on this aspect is that it is quite clear that Wah Kor and NG Kam Wah are one and the same person. This plainly establishes the connection and explains how the Fifth Accused became involved in these matters. 362.It was PW1’s evidence in chief that she contacted the Fifth Accused and told him briefly on the telephone about the letter received by the Third Accused, that she was seeking advice which could be given to the Third Accused. She was cross-examined at length on behalf of the Fifth Accused about this aspect. She accepted that in the video recorded interview under caution after her arrest and in her first three witness statements thereafter she did not relate it to the ICAC. It was suggested to her that she only made mention of it to the ICAC after they had revealed to her the contents of a statement made by the Fourth Accused: that she had then further implicated the Fifth Accused by subsequently making a statement claiming to have told him of the Third Accused’s role in an attempt to appease the ICAC. She disputed this. 363.It transpired in re-examination that, omitted from cross-examination, was a passage in a statement made by her to the ICAC in which she had described to the Fifth Accused the role of the Fourth Accused as being “the same as that of the Third Accused” and that the Fourth Accused had not in fact done trading. It is clear from this that, implicitly, she in fact had told the ICAC that she had communicated previously the role of the Third Accused to the Fifth Accused. I accept that it was this to which she was referring in her evidence in court. I accept her evidence that she had contacted the Fifth Accused as she says, albeit that he denies it, and briefly indicated to him, amongst other things, that the Third Accused had not been a genuine trader. 364.It was the evidence of the Fifth Accused that it was NG who had contacted him to make the appointment for the Third Accused and not PW1. I do not believe him. In detailing, at one stage, his knowledge concerning NG he testified that he did not know what NG’s job was, where he lived or even his telephone number but went on to say that he had not asked NG why he was referring the Third Accused to him as a client "because you don't ask a friend". Additionally, each of the Third and Fourth Accused testified that NG was unknown to him. 365.In his evidence the Third Accused related how, after he had received his letter from the SFC, he had contacted PW6 who had told him not to worry and that he, PW6, would ask the Second Accused to deal with it and that the Third Accused should wait to hear from her. Obviously the evidence of PW6 contradicts that of the Third Accused in that PW6 says that he told the Third Accused to contact the Second Accused directly. 366.In her evidence PW1 related that an appointment was made for the Fifth Accused to see the Third Accused, that the Second Accused contacted the Third Accused at the request of PW1 and arranged for him to attend the meeting with the Fifth Accused. PW1’s evidence is supported by that of the Third Accused who testified that it was the Second Accused who had contacted him about that appointment. She told him that he would be accompanied by a lawyer to go to the SFC interview and she gave him the name and telephone number of the Fifth Accused. PW1’s evidence is also supported by the fact that it was indicated to the Third Accused in cross-examination on behalf of the Second Accused that it was accepted that she had telephoned him albeit that she did not accept the contents of the conversation. 367.The letter to the Third Accused [Exh. P884] from the SFC was dated Monday 14 April 2003 referring to a meeting to be held on Tuesday 22 April 2003: Easter fell over the intervening weekend between 18 and 21 April 2003. Generally the witnesses, PW1 and the Third Accused, were unable to recall, accurately, dates of the meetings. 368.I accept that at the time of the first meeting the Third Accused had not yet postponed the meeting scheduled for 22 April 2003 and that he only did postpone that meeting by way of a telephone call at the time it was actually due to take place. The meeting was rescheduled for 30 April 2003. 369.It was suggested to PW1 on behalf of the Fifth Accused that the initial meeting had taken place at 4:30 p.m. on Thursday 17th April 2003. She was unable to recall. The attendance note [Exh. D37] found in the file seized from the office of the Fifth Accused reflects the meeting as having taken place on that date and at that time. It also shows as being present PW1, the Second and Third Accused and NG. 370.There are contradictions as to whether NG was also present at that meeting or whether he was present at the second meeting, as the Third Accused says, between PW1 and the Second, Third and Fifth Accused. Neither PW1 nor the Third Accused assert that he was present at the first meeting. Nothing turns on his presence or absence, once I have found that it was not he who set up the meeting with the Fifth Accused. 371.Much time was also spent on exactly when these various meetings occurred: the dates of the first and second meetings involving the Third Accused do not appear to me to be of any particular significance as it is not disputed that there were more than two meetings between them and it is the events at those two meetings, but particularly the first meeting, which are of relevance. It may be that the Third Accused has confused the coaching meeting with a meeting which he says occurred on a Saturday noon with the Fifth Accused. If that is so, and I do not regarded as necessary to make a finding, it is confusion rather than dishonesty. That said, I have borne the contradictions in mind in assessing the credibility and reliability of the witnesses. 372.PW1 explained in evidence in chief that she had attended that first meeting because it was up to her to tell the Fifth Accused the reason for the SFC requiring an interview. She had told the Fifth Accused about trading in Shanghai Land shares because she was the person most familiar with it. She had told him that the Third Accused had allowed his name to be used for a securities account to be opened but that it was she who had been responsible for the actual trading. I accept her evidence. She was unable to provide further detail regarding discussions at that first meeting save that she confirms that the Third Accused had been speaking during the course of that meeting although she is unable to recall what it was that he said. 373.PW1 accepted in cross-examination on behalf of the Second Accused that she had initially said to the ICAC that the Third Accused had met the Fifth Accused on his own: however she pointed out that she had given a further statement clarifying the situation, that she and the Second Accused had attended the first meeting between the Third and Fifth Accused but not a subsequent meeting between them. She rejected the suggestion that the Second Accused had never attended any meeting between the Third and Fifth Accused. I am satisfied that the Second Accused was present at that first meeting. 374.When PW1 was cross-examined on behalf of the Fifth Accused it was suggested to her that she had introduced the Third Accused to him as a person who had been trading in Shanghai Land shares: she agreed with that proposition. She explained in re-examination that she had introduced the Third Accused in this fashion because she knew the details of trading in Shanghai Land shares and his account had been used in that trading: as a consequence at the time of the meeting she had explained the role of the Third Accused to the Fifth Accused. I do not accept the construction contended for by the Fifth Accused, that this form of introduction is an indication that PW1 had introduced the Third Accused as a genuine trader in Shanghai Land shares thereby concealing his true role from the Fifth Accused. 375.Also in cross-examination on behalf of the Fifth Accused PW1 said she was unable to recall whether the SFC letter had been taken along to that meeting: in his evidence the Third Accused testified that it had been and the Fifth Accused supports that. Exh. D24 as part of the composite Exh. D38 indicates that it was. It was suggested to PW1 that she had said that the Third Accused wanted advice “on that letter” with which she disagreed. 376.The Third Accused testified that the first meeting with the Fifth Accused had lasted approximately one hour. His evidence was that he had told the Fifth Accused that his name had been used to open accounts on behalf of others to buy shares; that he had received a letter from the SFC concerning an investigation; that in fact he had never bought any shares so he did not know what to say to the SFC. He then showed the Fifth Accused the letter from the SFC. 377.The Fifth Accused told him not to be worried but to "take my time to tell things clearly". The Fifth Accused asked PW1 and the Second Accused whether there were profits or losses from trading to which one of them responded that there had been losses: it is now well established, of course, that indeed there had been losses but there is no evidence that the Third Accused knew this at that time. As a result of this the Fifth Accused had asked why so much trouble had been taken to do "volume". 378.The Fifth Accused had then asked him about his financial position to which he had indicated that he did not have sufficient assets to convince others that he would have been able to trade in such large quantities. The Fifth Accused stated that "it can be treated" as him having borrowed money to finance the share purchases. The Third Accused had asked the Fifth Accused whether it would be all right to respond in this manner to the SFC to which the Fifth Accused had indicated that the most important thing was to ensure that the SFC believed that the share trades were his own. The Fifth Accused had indicated to him that he should acquire an "understanding" of the share trading before there were any further discussions. 379.When he was cross-examined on behalf of the Fifth Accused the Third Accused acknowledged that he had asked what the penalty would be were it discovered he had lied to the SFC: he had been told that he would be fined. Reference was also made during the course of that meeting to a period of imprisonment apparently imposed in what was referred to as the "Gay Giano" case - but that appears to have been in respect of market manipulation and not the telling of lies to the SFC. The Third Accused asserted that the reason he had told lies to the SFC was because he had wished to please the First Accused and PW6. Bearing in mind the background, that evidence has a ring of truth to it. 380.He was cross-examined in respect of various particular answers that he had given during his first interview with the SFC. One aspect of cross-examination served to demonstrate that the Third Accused was attempting to be careful in giving his evidence concerning events during his first meeting. He stated that it was not the Fifth Accused who had suggested he give the answers to questions 26 and 27 [Exh. P897/p. 3733] concerning the lending of moneys for the purposes of the share placement, but this had been suggested by "someone" to which the Fifth Accused had responded that such an explanation may be similar to others. It is self-evident that had he wished to implicate the Fifth Accused he would have been able to assert that this was the suggestion of the Fifth Accused and, in the circumstances, the falsity of such an assertion would likely have escaped detection. 381.During that same cross-examination it was suggested to him that it was he or NG who had introduced PW1 and the Second Accused as "associated" with Shanghai Land: he disagreed with this and indicated that it was one of those two women who had in fact introduced him to the Fifth Accused, a fact which is confirmed by PW1. 382.When the Fifth Accused testified he said he that it was the Third Accused himself who had told him that it was he who was being investigated and then handed him the letter from the SFC; that he had read the letter to himself and then, because he was uncertain about the Ordinances referred to in that letter, obtained copies of them; that he had then explained the import of the letter, paragraph by paragraph, to the Third Accused; that the Third Accused asked the consequences of giving untrue testimony. The Third Accused indicated, during cross-examination, that it was "possible" that the Fifth Accused had indeed explained the contents of the SFC letter to him as well as referred to a computer printout. This is not inconsistent with the version of the Third Accused. 383.The Fifth Accused went on to say that one of PW1 and the Second Accused had said "something" so he had made a note concerning his acceptance of instructions and explained this to the Third Accused. The Fifth Accused said that he was unable to recall which of PW1 and the Second Accused had spoken or what it was that had been said. He testified that the Third Accused told him that he had taken part in the placement of shares and that payment had been made by way of cashier's orders. I have a difficulty with this evidence for it is clear that the coaching meeting, at which the Third Accused apparently became aware of payment by cashier’s order, occurred subsequent to the first meeting with the Fifth Accused. 384.He, the Fifth Accused, had asked the Third Accused about order placing and settlement: the Third Accused had said to him that he had just received the letter from the SFC and needed time to gather detailed information. 385.He said that he had not found it strange for PW1 and the Second Accused to be present. NG had performed the introductions when the four of them had arrived and he had introduced them as being friends of the Third Accused. He said, in evidence in chief, that he did not know that PW1 and the Second Accused were also involved in trading. This does not sit well with his evidence in cross-examination on behalf of the prosecution in which he eventually disclosed that during that meeting he had "heard from...chatting... that one of them was from Shanghai land". His attempt to suggest that he was not alarmed by this knowledge because "... that person was not a representative of... just someone working in Shanghai land" is naive. 386.Given that the letter from the SFC was specifically addressed towards the issue of the Third Accused’s supposed trading in shares in Shanghai Land, I have considerable difficulty with the testimony of the Fifth Accused that there was no discussion at all at the first meeting concerning his trading activities. 387.There is, further, the evidence of PW1 in cross-examination that the whole purpose of the meeting was to obtain legal advice based on the true facts of the way trading had been done. 388.I am satisfied that PW1, the Second and Third Accused were all actively involved in the false trading. Alarm bells had been rung by the fact that the SFC had started making inquiries with securities companies. Now the Third Accused had received a letter directed specifically towards the nature of the trading conducted in his name in Shanghai Land shares requiring him to attend an inquiry into that very topic. I am satisfied that all three of them went off to see the Fifth Accused. It simply flies in the face of commonsense, in these circumstances, to suggest, as did the Fifth Accused, that the true role of the Third Accused was concealed from him and that the Third Accused, in truth simply a pawn, went along with the two women merely to ask about the effect of the letter which he had received. 389.I accept the evidence of the Third Accused as to the course of events during that meeting. Conversely, I reject the Fifth Accused’s version. That evidence clearly demonstrates that the Fifth Accused knew full well that it was intended that the Third Accused would give false replies to questions asked by the SFC so as to mislead it into believing that the trading in Shanghai Land shares were his own trades, when, to the knowledge of the Fifth Accused, they were not. I am satisfied that he joined in the conspiracy, at the latest, at the time of this first meeting. That being so, what happened thereafter at the subsequent meetings is, to a certain extent, academic although it has the effect of showing his continuing involvement. The coaching meeting 390.PW1 related how, shortly after this first meeting, she had prepared a detailed record of trading which she had undertaken in the name of the Third Accused. The Second Accused had then contacted the Third Accused and arranged a meeting with him in their offices. I accept the evidence that it was the Second Accused who made that contact. The Third Accused was unable to recall whether it was PW1 or the Second Accused who had contacted him in regard to the coaching meeting but he, like PW1, confirmed that it had occurred after their first meeting with the Fifth Accused. 391.Some time was spent in cross-examination of PW1 as to whether she had previously said that the coaching meeting had occurred before or after the first meeting with the Fifth Accused. I am satisfied from the evidence of both PW1 and the Third Accused, from the timing of fax transmissions on various documentsand a realistic approach to the chronology of events bearing in mind the subsequent further meeting with the Fifth Accused, that the coaching meeting did occur after the first meeting with the Fifth Accused. The only real relevance of the date or timing of this meeting is that it demonstrates that PW1 was doing her best to give her evidence in court truthfully even if it meant contradicting something which she had said earlier. 392.This is a convenient point to deal with one particular matter which has been canvassed on behalf of the Fifth Accused. Emphasis has been placed on the fact that it was during this coaching meeting that the Third Accused was guided as to the detail of what he should tell the SFC. That is correct. But the essence of this offence is not that the Fifth Accused actually coached the Third Accused or provided him with details as to what to say when he went to the SFC but, rather, that he was a party to an agreement to mislead the SFC by pretending that the trades done in the Third Accused’s name were genuine trades when he knew them not to be so. It is thus irrelevant as to who it was who provided the actual details to enable the Third Accused to furnish the misleading information. It follows that to say that it was "unnecessary" for the Fifth Accused to coach or instruct the Third Accused, and therefore improbable that he would have done so, is to miss the issue. 393.PW1 testified that during the coaching meeting both she and the Second Accused had been present. She had explained the contents of the records which she had prepared: the Second Accused had explained financial matters to the Third Accused, particularly in regard to the settlement of share purchases. The presence of both of them throughout that meeting was confirmed by the Third Accused in his evidence: the tenor of his evidence was that there had been general input from both PW1 and the Second Accused. He supported the evidence of PW1 that it was the Second Accused who had explained the documents at pp. A28 and A30 to 35, part of Exh. P1. It is worthy of note that in cross-examination he remained adamant that there had only been one coaching meeting in which he had participated. 394.PW1 traversed, in detail, in her evidence in chief, documents forming Exh. P1 explaining the various entries that appear thereon. Those entries demonstrate the intimate knowledge which she, as the person controlling the account in the name of the Third Accused, would have possessed: similarly they provide the information which the Third Accused can reasonably be expected to have required prior to attending the SFC interview. She was able to identify handwriting which she had placed on them and also identified writing which, to the best of her recollection, had been placed on them by the Third Accused during the course of the explanation. The evidence of the Third Accused provides very substantial support for hers in this regard: he identified his handwriting and explained, in respect of a number of the entries made on differing documents forming part of Exh. P1, the circumstances in which they had come to be made. 395.PW1 identified the summary of Liu Chong Hing bank account transactions relating to trading in Shanghai Land shares, at p.28 of Exh. P1, as having been prepared and, at the coaching meeting, explained by the Second Accused. She was specifically challenged in cross-examination on behalf of the Second Accused on the issue of whether the Second Accused or she, PW1, had prepared this particular document and the equivalent documents which PW1 said the Second Accused had prepared in respect of the two later coaching meetings. She accepted that the Second Accused may not have had the same detailed information on her computer as would she but pointed out that she had prepared for the Second Accused, on a daily basis, the slips detailing the payments that had to be made, that the Second Accused would know of the bank account information by virtue of the fact that it was she who made those deposits and that the daily slips given to the Second Accused contained a breakdown of payments to be made by a particular person to different securities companies. 396.She accepted that she had not seen the Second Accused actually preparing any of those schedules. She disagreed with the suggestion that the Second Accused would not have had the information required to prepare these documents; that she was fabricating her evidence on this aspect; that the documents could have been prepared by PW8; and that PW8 had the necessary information to do so. No evidence was led from PW8 on this aspect. PW1 pointed out that it could not have been she, PW1, who had prepared this document as there were expenses listed in it about which she had no knowledge: in re-examination those items were detailed. 397.Although the Sixth Accused is no longer part of these proceedings the cross-examination of PW1 on his behalf is still relevant in general terms, especially as it demonstrates her level of self-interest, and is part of the evidence as a whole. PW1 accepted that before the meeting she had gone to some trouble to gather documentation, she appreciating that it was in her interests to ensure that the Third Accused was able to give a credible and convincing explanation to the SFC when questioned. She agreed that the documentation had been selected so as to concentrate on the particular period in which the SFC was interested. In particular, emphasis was placed by her on ensuring that the Third Accused understood the trading pattern of buying one day and selling the next for which, she agreed, there were two obvious explanations. 398.PW1 testified that at the coaching meeting once the documentation had been explained to the Third Accused he was advised to go through the documents again himself and to make contact if there were any matters he did not understand. To the best of her knowledge he had not contacted anyone. The Third Accused confirmed this evidence and was able to identify various documents [Exhs. P927 to P931 inclusive] which were subsequently seized from his motor vehicle which he testified had been given to him either by PW1 or the Second Accused at the coaching meeting: he identified further documents seized from his vehicle at the same time [Exhs. P932 to P940 inclusive] which had been given to him by one Selina MAK of TIS Securities on another occasion. This aspect of his evidence is further supported by the admitted facts and I accept it. 399.It is to be borne in mind that when the Third Accused was cross-examined on behalf of the Second Accused it was specifically put to him that the Second Accused accepted that there had been a meeting at the offices of Shanghai Land during which he was shown documents. PW1 rejected the suggestion made on behalf of the Second Accused that the Second Accused had not been present at this coaching meeting at all: a similar suggestion made in respect of the two similar subsequent meetings about which PW1 testified involving the Fourth Accused and then PW6 was also rejected by the respective witnesses. When a portion of her first video recorded interview was replayed to her PW1 accepted that she had not said that the Second Accused had been present at the meeting with the Third Accused but pointed out that she had no lawyer present and she was uncertain whether she should “tell the ICAC everything”. 400.I accept the evidence of PW1 that it was the Second Accused who had prepared the bank account summary Exh. P1/p. A28 as well as similar schedules in respect of the two subsequent meetings. I further accept that the Second Accused had been present at and participated in each of the coaching meetings. I do not propose to repeat this when dealing with the fourth and fifth charges. The second meeting with the Fifth Accused 401.Because of my finding that the Fifth Accused had clearly joined the conspiracy at the time of the first meeting, I do not propose to deal in any great detail with the second meeting which occurred with him, or at all with any subsequent meetings: there is no dispute that that second meeting occurred. There are certain aspects to the evidence, however, with which is necessary for me to deal briefly only because they impact on the overall credibility of PW1 and the Third and Fifth Accused. 402.In her evidence in chief PW1 said that although she was aware of the fact that there was a second meeting between the Third and Fifth Accused she had not been present. When she was cross-examined on behalf of the Fifth Accused she stated that she could not recall whether she had attended that second meeting: she accepted that she had said the same thing in an earlier witness statement and maintained that position despite her evidence in chief. I regard this issue as also being a good indicator of her desire to testify truthfully in court: had she wished in any way to worsen the position of any of the Accused it would have been simplicity itself for her to have claimed a recollection of the second meeting, her attendance at it and its contents yet she did not do so. 403.The Third Accused testified that, prior to his going to the SFC interview, there indeed was a second meeting at the offices of the Fifth Accused at which PW1 and the Second Accused were both present. The Fifth Accused accepts that. I find it to be so. 404.The evidence of the Third Accused in regard to the second meeting is detailed. It is worth noting that according to his evidence also present at that meeting was a male who was unknown to but not introduced to him although he had heard a reference to “Wah Kor”. There appears to be genuine confusion on the part of the Third Accused as it would seem that if NG were present at any meeting it would have been the first, not the second. 405.It was the Third Accused’s evidence that he had been telephoned by either PW1 or the Second Accused and asked to attend a further meeting at the Fifth Accused’s office. I accept that to be so. It is a further demonstration that the Third Accused was not himself the client of the Fifth Accused. He rejected a suggestion that the arrangement for the second meeting had been made between him and the Fifth Accused at the conclusion of the first meeting: it is worthy of comment that that meeting was not inscribed upon the business card [Exh. P1100] which the Fifth Accused had given to him and upon which he had made notes of other meetings. 406.He duly attended that second meeting, taking with him the documents with which he had been furnished during the coaching meeting. He said that he had done so in order to be able to put remarks on the documents. I find this a compelling explanation. In cross-examination it was suggested to him that at no time during the second meeting were these documents shown to the Fifth Accused. The Third Accused rejected that and asserted that he had indeed shown them to the Fifth Accused. I accept that. 407.It will be recalled that it was the Third Accused’s evidence that during the first meeting with the Fifth Accused a suggestion had been made by an unidentified person that he should claim to have borrowed moneys to enable him to participate in the share placement. This was amplified during the second meeting, according to the Third Accused, when someone at that meeting suggested that the lender of the moneys be identified as PW10. Consequently, the answers to questions 26 and 27 that he gave to the SFC during his first interview can be seen to be an amalgam of advice given to him during the two meetings. 408.An inscription which the Third Accused testified he made on the first page of Exh. P1 is of relevance. This was a document which, according to both him and PW1, was given to him during the coaching meeting. I accept that. His evidence was that during the second meeting with the Fifth Accused someone, he was unable to recall who, suggested that it be said that the interest rate which he would be expected to pay PW10 would be 5%. However, this was changed and a figure of 15% was mooted instead. Consequently he crossed out "5%" which he had first written and substituted "15%". That event simply has such a ring of truth to it and is just the type of incident that would be impressed upon one's memory, especially when there is the inscription itself as a reminder, that I accept that it happened in the manner to which he testified. 409.That this was being discussed, along with, according to his evidence, discussions about what questions the SFC would probably ask, at a meeting with the Fifth Accused, in his offices, clearly shows that the Fifth Accused was a party to the conspiracy. The testimony of the Third Accused was that the Fifth Accused repeated at this meeting that the most important thing was to have the SFC believe that the trades were his own: there were other matters discussed but he was no longer sure about them. In the circumstances his assessment that, to him, all of those present at that meeting were giving him advice is understandable. 410.When the Third Accused was cross-examined on behalf on the Fifth Accused he rejected the suggestions that were put to him. In particular he rejected the suggestion that on the day of the second meeting he had been told that a barrister would accompany him to the SFC or that the barristers fees would amount to $5,000.00 per day. There is some support to be found for him in this regard by virtue of the fact that the Fifth Accused claims this meeting to have occurred on 21 April but only to have opened his file relating to this matter on 29 April when the Third Accused had "confirmed" that he wished the Fifth Accused act for him by signing written instructions to engage the services of a barrister. The SFC meeting 411.The Third Accused testified that on the morning of the 22 April 2003, shortly before the appointed hour for his attendance at the SFC, he had telephoned the SFC and arranged for the meeting to be postponed to 30 April 2003. That does not appear to be in dispute. 412.It is not in dispute that the Fifth Accused had told the Third Accused that before he went to the SFC on 30 April 2003 he should go to the office where he would be introduced to a lawyer who would accompany him to the SFC. Accordingly he went to the Fifth Accused’s office where the Fifth Accused introduced two persons to him, the Sixth Accused and a person whose name the Third Accused could not recall although it is accepted that that was PW4, Richard YAT. The Fifth Accused had told him that the two lawyers would accompany him to the SFC. 413.The Third Accused together with the Sixth Accused and PW4 went to the SFC. He confirmed that he was interviewed on 30 April 2003 and that at the conclusion of that interview he was told that he would be required to attend a further interview. In his evidence he was taken through a record of the interview [Exh. P890] and identified a number of untruthful answers which he had provided all of which related to trading in or placement of Shanghai Land shares. In the light of the evidence as a whole, I accept his evidence that those answers were untruthful. 414.There is one facet of the evidence of PW6 which is appropriate to take into account at this stage. It was his testimony when cross-examined on behalf of the Fifth Accused that the Third Accused had related to him, after he had been to this initial interview with the SFC, how the Second Accused had "already instructed him" how to explain to the SFC particularly regarding the fact that he had borrowed moneys from PW10 to pay for the share placement. The third meeting with the Fifth Accused 415.The Third Accused testified that subsequent to that interview he received a telephone call from the Fifth Accused who asked him to go to his offices on a Saturday at noon. He identified Exh. P1100 as containing a notation which he had made of that appointment. Upon his arrival at the offices in accordance with that arrangement he found the Sixth Accused already present. There was a meeting between the three of them. The Third Accused went into detail as to what had occurred at that meeting but as it essentially dealt with the position of the Sixth Accused I do not intend to traverse it. 416.It is clear that the Third Accused attended a further interview with the SFC on 13 May 2003 during which he was accompanied, once more, by PW4 and the Sixth Accused. Once again he was taken through a record of the interview [Exh. P897] and identified a number of untruthful answers which he had further provided. Verdict – Charge 3 417.In an attempt to summarise what I have just detailed, I am satisfied that:
The Second and the Fifth Accused are consequently convicted on this charge. THE FOURTH CHARGE The admitted evidence 418.On 13 May 2003, the SFC required the Fourth Accused as a person under investigation to attend an interview concerning suspected offences concerning dealings in the shares of Shanghai Land during the same period. On 26 May 2003, the Fourth Accused was interviewed in the presence of his legal representatives by the officers of SFC. The record of interview was reduced into writing. Other evidence 419.It was the evidence of PW1 that after she had learned that the Third Accused had received his letter from the SFC, she had been informed by the Second Accused that the Fourth Accused had also been summoned to an interview. The evidence of the Fourth Accused supports this: he related how he had contacted PW6 after receipt of the SFC letter which, once again, is understandable given that it was PW6 who had involved him in the venture. PW6 had asked him to contact the Second Accused "for arrangements". He went on to say that PW6 mentioned that several weeks previously the Third Accused had received a similar letter but that he, PW6, had not mentioned it because he did not want the Fourth Accused to be worried: this has a real ring of truth to it. He had subsequently been told by the Second Accused to go to Shanghai Land offices for a meeting. The coaching meeting 420.PW1 had prepared the same type of documents for the Fourth Accused as she had previously prepared for the Third Accused, so as to let him know generally what transactions had been done through accounts opened in his name and how settlements had been effected. This was to enable the Fourth Accused to have an understanding of the trading situation before he went to the SFC interview. It was the evidence of PW1 that she had simply proceeded on the same basis as before without reference to the First Accused: another example of a missed opportunity for her to worsen the position of the First Accused had she been so minded. 421.PW1 testified that subsequent to a meeting with the Fifth Accused, an appointment was made for the Fourth Accused to attend at the offices of Shanghai Land to meet with her and the Second Accused to go through the various documents with him. The evidence of the Fourth Accused is that that meeting occurred before the three of them went to the meeting with the Fifth Accused. In my judgment, PW1 simply recalls the order of events incorrectly. 422.In particular, the Second Accused explained matters concerning capital, settlements with the securities companies and the bank account operated in the Fourth Accused’s name. The Second Accused had used a document, which she, the Second Accused, had previously prepared, to assist in her explanation. The evidence of the Fourth Accused supports that of PW1 as to the presence of and role played by the Second Accused at this coaching meeting. I accept it. 423.The Fourth Accused testified that at the end of this coaching meeting he had asked for legal advice to be arranged and for a lawyer to go with him to the SFC. The Second Accused said that she would make an arrangement for that. He made this request because he did not know any lawyers and he thought that those at Shanghai Land would have a better opportunity of contacting a lawyer. He contacted the SFC and arranged for his interview to be postponed on the grounds that he had had inadequate time to obtain legal advice. 424.When he was cross-examined on behalf of the Fifth Accused he indicated that he had wanted to see a lawyer so as to obtain advice on what would happen at the SFC interview, whether he even had to go to that interview and what would happen if he lied in his answers or was found guilty of market manipulation. In the light of these answers, his rejection of the suggestion that he had never disclosed to be the Fifth Accused that he had not actually effected the share dealing is acceptable. The first meeting with PW5 425.PW1 testified that she made an appointment for the Fourth Accused to consult the Fifth Accused. She had telephoned the Fifth Accused and informed him that, like the Third Accused, the Fourth Accused had allowed his name to be used in an account to trade in Shanghai Land shares. Precisely because the Fifth Accused knew the situation in regard to the Third Accused she had not thought it necessary to go into detail. She told the Second Accused to contact the Fourth Accused about the meeting. The evidence of the Fourth Accused confirms that it was the Second Accused who contacted him. 426.It was the evidence of the Fifth Accused that, once again, it was NG who had contacted him to arrange for the appointment which was to be attended by the Fourth Accused. I reject that and accept the evidence of PW1. It follows that I reject the explanation given by the Fifth Accused for his ability to remember the date upon which this occurred. 427.PW1 said that she, the Second and the Fourth Accused all attended the meeting in the Fifth Accused’s office: she made no mention of NG being present. She briefly told the Fifth Accused the situation concerning the Fourth Accused whilst the Second Accused, who had been responsible for matters concerning capital, explained those matters. Although she was able to recall that the Fifth Accused had furnished some advice to the Fourth Accused, she was unable to recall its content. It was put to her on behalf of the Second Accused that she had not attended any meeting at the office of the Fifth Accused when the Fourth Accused was present: PW1 disagreed with that proposition. 428.It was the evidence of the Fourth Accused that he did attend that meeting together with PW1 and the Second Accused but that there was also present an unknown male who was not introduced to him. He was unable to be specific about the date of the meeting save that it was after the date scheduled for his interview with the SFC which was 19 May 2003. The Fourth Accused related that the Fifth Accused had told him that he had already consulted with the Third Accused who had been to the SFC for an interview. This is consistent with the fact that, by 19 May 2003, the Third Accused indeed had already been interviewed by the SFC. The Fifth Accused further informed the Fourth Accused that the Third Accused had explained to the SFC that trading in Shanghai Land shares was his own investment. 429.The Fourth Accused testified that he had specifically told the Fifth Accused that he had simply loaned his name to somebody for the opening of an account and that the buying and selling through that account was not done on his instructions. The Fifth Accused told him to explain to the SFC that the orders relating to trading in Shanghai Land shares had been placed by him. I accept that evidence. 430.There is one significant aspect to the evidence of the Fourth Accused in regard to this meeting which relates to the 30 September 2002 share placement events which is of particular relevance to his credibility. It concerns the fact that the four cashier's orders which were used to pay for the share allocations to the Third and Fourth Accused, PW6 and TAI Yiu Hung were all drawn on PW10’s account with BOC and were all consecutively numbered [Exh. P1058/pages 12767-12778]. The significance of this fact is that according to the evidence in chief of the Fourth Accused it had been the Fifth Accused who had alerted him to the fact of the consecutive numbering during the course of the meeting: the Fifth Accused had raised this as a warning, that it may be a particular issue subject to investigation by the SFC. 431.I found his evidence on this aspect particularly convincing. He was asked whether in the coaching meeting he had asked PW1 where the cashier's order had come from: he said that he had no impression of having done so and that, although he guessed that the SFC might ask him the source of the funds and although he knew his own resources to be inadequate, he had not asked PW1 because he assumed the money was coming from "the First Accused’s side" and he "would not ask about the First Accused’s personal affairs". This is just the sort of answer one might anticipate in the light of his relationship with the First Accused. 432.He testified, too, that at the time of the coaching meeting he had received a series of documents relating to his share trading activities which were similar to those prepared for the Third Accused: he had gone through the documents but had subsequently destroyed them because he thought they may be incriminating. He was shown the documents prepared for the Third Accused [Exh. P1/A1- 49] and confirmed that those prepared for him were similar. Nothing in those documents contradicts his evidence that he did not know that the four cashier's orders were consecutively numbered. 433.He accepted that after he had been charged prosecution documents were served on his solicitors amongst which were contained three of the cashier orders. He accepted that he was served with a summary of facts and had read it: he could see that the case against himself and the Third Accused was much the same: that the cashier's orders were contained amongst the exhibits: that he had gone through the papers that had been served upon his solicitors. He testified that he had no impression of the fact that the cashier's orders were consecutively numbered at the time when his defence was being prepared. He pointed out that there were 10 or more bundles of documents served in connection with the charges and that there simply were too many documents for him to look at every one. 434.I accept his evidence in this regard. The fact that the cashier's orders were consecutively numbered is not a matter which, in my judgment, would have immediately commended itself to the attention of the Fourth Accused in circumstances such as these: of itself, the fact of the numbering of those documents is not of particular importance, the importance of it lies in the fact that it supports the version of the Fourth Accused as to what the Fifth Accused said during their meeting. It will be recalled, as I mentioned when dealing generally with the credibility and demeanour of the Fifth Accused, that it was over this issue that the Fifth Accused showed visible physical discomfort in court during cross-examination. 435.The fact that the Fifth Accused was in a position to impart the knowledge of the consecutive numbering of the cashier's orders is vivid illustration of the depths of his involvement in each of the conspiracies with which he is charged. For the sake of completeness I should add that it was the evidence of PW6 that the Second Accused had also mentioned to him the fact that the cashier's orders were consecutively numbered: this does not in any way detract from the reliability of the Fourth Accused as it is clear that that conversation between the Second Accused and PW6 occurred subsequent to the events involving the Fourth Accused. 436.During the course of this meeting and in connection with the share placement the Fifth Accused told him that the Third Accused had indicated to the SFC that he had borrowed money from PW10 to pay for the shares. It is a fact demonstrated by the record of the interview of the Fourth Accused that he had made that untruthful statement to the SFC. PW10 was also known to the Fourth Accused. 437.It was the evidence of the Fifth Accused that this first meeting had been extremely brief. I reject that and accept the evidence of both PW1 and the Fourth Accused. 438.The testimony of the Fifth Accused that he "gave no thought" to fact that NG and the Fourth Accused were accompanied, yet again, by PW1 and the Second Accused, verges on the nonsensical given
The second meeting with PW5 439.The evidence of the Fourth Accused was that before the conclusion of the meeting the Fifth Accused arranged for him to return for a second meeting a few days later. He attended that second meeting which took place only a day or so before he went to the SFC interview: only he and the Fifth Accused were present. The Fifth Accused had indicated to him that he anticipated that the SFC would have analysed the trading pattern in Shanghai Land shares to which the Fourth Accused had responded that he had only loaned his name to open an account and that none of the share trading was his. 440.The Fifth Accused had indicated that it was important for him to explain to the SFC that the trading orders had been placed by him; that the Third Accused had stated to the SFC that PW10 had loaned money to him; that he could say the same; that the interest rate payable to PW10 was 15% per annum. This is consistent with the issue of the supposed interest rate with which I dealt when considering the evidence of the Third Accused in respect of the third charge. Simple commonsense suggests the desirability of consistency in what was told to the SFC on an issue of this nature. 441.The Fourth Accused had reiterated that none of the share trading or the share placement exercise had been his, nor had he borrowed any money from PW10. The Fifth Accused had asked him to explain in the same manner as had the Third Accused. The Fourth Accused had asked the Fifth Accused what the consequence would be if he were caught out in misleading the SFC to which the Fifth Accused had replied he would be fined: the Fifth Accused then indicated to the Fourth Accused that it would not be "convenient" for him to go to the SFC saying he would arrange for another lawyer to accompany him to in the interview. 442.There was some issue, in respect of this charge too, of the dates upon which meetings, particularly the second meeting, took place. The Fourth Accused indicated that he was unsure of the precise date but was "inclined to say" that it was Saturday 24 May although he was certain that it was not, as was suggested to him Sunday 25 May, the day before going to the SFC for the interview. There is no apparent reason why he should be untruthful over this issue. It would have been easy for him to simply have agreed with the suggested date yet he firmly stood his ground. I take this as an example of a genuine attempt to relate events as accurately as he was able. 443.The Fifth Accused says that this meeting was terminated fairly abruptly after the Fourth Accused had mentioned to him that the Third Accused had related his earlier meeting with the SFC: that he perceived some form of "conflict" as a result of the Third Accused having related this to the Fourth Accused and that he had therefore determined to pass the matter on to another solicitor to act on behalf of the Fourth Accused. His explanation during his evidence of the reason for his perception of the "conflict" does not bear even the most gentle scrutiny. 444.The Fourth Accused gave a convincing explanation as to why he was willing to go along with the scheme to mislead the SFC. He explained that he felt that he had "already got his head wet",that the Third Accused had already given a false explanation to the SFC, that he felt that he may be under some unspecified threat if he gave an explanation that was different from that of the Third Accused and that he believed that, at worst, he would only face a fine if found out. Whether or not his apprehension of being under threat was justified is irrelevant - it is his belief at that time as rationale for his conduct that is important. This explanation is consistent with his answer during cross-examination on behalf of the Second Accused when he said that he would only decide what to say to the SFC after he had seen a lawyer. 445.When he was cross-examined on behalf of the Fifth Accused it was suggested to him that he had made up his mind to lie to the SFC before he had gone to see the Fifth Accused. He disagreed with that proposition saying that he had to establish clearly whether or not there was a prospect of jail being involved. Before finding that out he had to find out information relating to trading in Shanghai Land shares. He observed, and one may think accurately, that there would be trouble for him whether he lied to the SFC or whether he told the truth. 446.I accept the evidence of the Fourth Accused as to his two meetings with the Fifth Accused, the nature of the contents of those meetings and the specific urgings by the Fifth Accused for him to convince the SFC that the trades and share placements were genuine. The SFC interview 447.On the 26th May the Fourth Accused had gone to the office of the Fifth Accused where he had been introduced to a solicitor and barrister who then accompanied him to the SFC. His evidence was that he had based his answers during the course of his interview generally on the share trading information which he had obtained from the coaching meeting but also upon the explanations given to him by the Fifth Accused. He was taken through his interview in detail during his evidence in chief: I accept his evidence in regard to the untruthfulness of various answers. 448.He testified that after the interview finished the three of them returned to the offices of the Fifth Accused where the barrister surrendered to the Fifth Accused the notes which she had made during the interview. This was disputed in cross-examination on behalf of the Fifth Accused. There was detailed cross-examination concerning the notes which had been kept by the barrister and/or solicitor during the SFC meeting. The Fourth Accused testified that those notes had been kept in a red and black, hard covered notebook. It was specifically put to him that that was incorrect and that they had been kept in a notebook similar to a notebook which was flourished in court - which bore a soft blue-grey cover. It is exceedingly difficult to see why he would lie over such an issue. It was the specific evidence of the Fifth Accused that he had not been shown the notes made at the SFC meeting for the simple reason that no one had returned to his office after that meeting: notwithstanding this evidence the Fourth Accused was very specifically challenged over the colour of the notebook said to contain those notes. No evidence was led either concerning that notebook or how the Fifth Accused was in a position to so specifically challenge the evidence of the Fourth Accused. 449.It was the evidence of the Fourth Accused that he, like the Third Accused, had never been charged for services of the Fifth Accused or the solicitor or barrister to whom he was referred by the Fifth Accused. 450.The Fifth Accused says that no file was opened or any debit raised in respect of his two meetings with the Fourth Accused because he had not formally started to act on his behalf. I do not accept that. I am satisfied that the only inference that may be drawn from the evidence is that he passed on the Fourth Accused to another solicitor so as to conceal from the SFC that he or his firm was acting on behalf of more than one person who was subject to SFC investigation at that time. It would have been necessary for him to open or to create a file at some stage in respect of his dealings with the Third Accused as his firm actually represented the Third Accused at the SFC interview. There was no such necessity in respect of the Fourth Accused because he had been passed on to someone else. 451.In an attempt to summarise what I have just detailed, I am satisfied that:
The Second and Fifth Accused are consequently convicted on this charge. THE FIFTH CHARGE 452.It was the evidence of PW1 that after she had learned that the Third and Fourth Accused had received letters from the SFC, the Second Accused informed her that PW6, had also been summoned to an interview. PW6 testified in his evidence in chief that he had contacted the Second Accused when he received a letter from the SFC in order to find out what he should do, which supports PW1's evidence. 453.PW6 testified that he had followed this course because he believed that the Second Accused was clear about everything as "from beginning to end" it was she who had contacted him. In this connection it is worth recalling his evidence when cross-examined on behalf of the Second Accused that from February 2001 onwards he had had daily contact with the Second Accused in connection with the First Accused’s foreign exchange dealings. He said that he would call the Second Accused daily to tell her whether the First Accused had to make a margin call: if so he would tell the Second Accused the amount that had to be paid and the name of the payee whereupon the Second Accused would provide a cheque drawn either on the First Accused’s account or on PW10’s BOC account or, on occasion, cash. As a consequence it is readily understandable that PW6 would have contacted the Second Accused: it will be recalled that he had referred both the Third and Fourth Accused to the Second Accused, also, when they received their letters from the SFC. 454.Once again without reference to the First Accused PW1 had simply proceeded on the same basis as had been adopted in respect of the first two instances: she had prepared the same type of documents for PW6 as she had previously prepared for the Third and Fourth Accused so as to let him know generally what transactions had been done through accounts opened in his name and how settlements had been effected. This was to enable PW6 to have an understanding of the trading situation before he went to the SFC interview. 455.Similarly, she made an appointment for PW6 to consult the Fifth Accused. She had telephoned the Fifth Accused to make the appointment but, on this occasion, was unable to recall whether she had explained anything to the Fifth Accused about the position of PW6. This is an aspect upon which, had she been intent upon worsening the position of the Fifth Accused, it would have been open to her to lie: she did not. She had not attended the arranged meeting even if it took place: I need make no finding about that. 456.It was the evidence of PW6 that when he contacted the Second Accused she had told him to arrange for the interview to be postponed and said that "arrangements" would be made: a few days later she had contacted him telling him to go to the offices of Shanghai Land. It was put to him in cross-examination that he had not contacted the Second Accused after receipt of the letter from the SFC: he disputed this and said that he had done so because, not only had the Third and Fourth Accused already received letters and he had referred them to the Second Accused, but that he did not wish to contact the First Accused directly due to the fact that she had told him “always” to contact the Second Accused. I accept this evidence. 457.He went to the offices of Shanghai Land and met with PW1 and the Second Accused who together went through with him a document which they had prepared, with PW1 offering most of the explanations. There is some contradiction between his evidence in chief and that when cross-examined on behalf of the Fifth Accused in that he initially referred to the fact that only one document was shown to him whereas in cross-examination he referred to a number of documents. However, the evidence of PW1 largely is consistent with his, she testifying that the Second Accused explained matters concerning capital, settlements with the securities companies and the bank account operated in the name of PW6. The Second Accused had used a document, which she, the Second Accused, had previously prepared, to assist in her explanation. I am satisfied that a number of documents were shown to PW6 during this meeting. 458.When PW1 was cross-examined on behalf of the Second Accused she accepted that she had not told the ICAC in her first witness statement about meeting with the Second Accused and PW6 in the company’s office. She rejected the suggestion that she had only mentioned it in her second witness statement because she had been told by the ICAC that PW6 had made a statement in which he had a referred to a meeting between himself and PW1. She reiterated that such a meeting had taken place. 459.It was the evidence of PW6 that after they had explained the documents to him during the meeting they told him to take the documents away and study them. He had taken them away but he no longer knew the whereabouts of the documents. When he was cross-examined on behalf of the Fifth Accused he accepted that PW1 and the Second Accused had told him that “later” they would discuss with him the story that he should give to the SFC: he went on to say that the Second Accused had said that she would contact him on 1 June 2003 but that before she did so he was arrested. His interview with the SFC was scheduled for the 3 June 2003 but, obviously, did not take place. 460.In an attempt to summarise what I have just detailed, I am satisfied that:
The Second Accused is consequently convicted on this charge. THE NINTH CHARGE The admitted evidence 461.HUE Ying-fai, Hideki, PW12, is the husband of PW1. On 30 October 2003, the First Accused telephoned PW12 at his office CLSA Limited. The telephone conversation was recorded by CLSA Limited. On 6 November 2003, the First Accused again telephoned PW12 at his office. The telephone conversation was recorded. 462.The oral evidence in respect of this charge came solely from PW12: the further evidence came from the recordings of the two telephone conversations which, it is not disputed, were made by the First Accused to him. 463.It seems that PW12 previously had been offered an immunity to testify in this matter but had declined to accept it. The offer was repeated at the beginning of his evidence in chief and, again, he declined. 464.He related how he had a professional relationship with the First Accused from about the year 2000: he had spoken to her regularly about business matters on the telephone. In due course, as a result of his introduction, PW1 took up a post with Win Victory. He was aware that PW1 had assisted the First Accused by watching the prices of shares, opening accounts and placing trading orders for her. 465.He described his relationship with CHAU as being "not very well acquainted”. He testified that he "thought" that he had had a meal with him once. This evidence was very different to that of PW10 whom I regard as a far more reliable witness. Her evidence was that there were "occasions" when PW12 went to dine with CHAU at Perkins Road, although the occasions were not frequent, and they would comprise a very small dinner gathering. 466.There is a further real difficulty with PW12’s evidence. It was the evidence of both PW1 and PW10 that PW12 had approached the First Accused on at least two occasions to obtain personal loans. The size of the loans differs according to their evidence but PW10 was able to be quite specific in that upon two occasions she had handed him very substantial sums of cash which emanated from the First Accused. Conversely, PW12 flatly denied asking the First Accused at any stage for a loan. I do not believe him. 467.He was, in general, an unsatisfactory witness. It was quite plain that he was seeking to minimise his relationship with the First Accused, both in the context of its professional and personal nature. There was cross-examination on behalf of the First Accused of him relating to extracts from a recorded telephone conversation which plainly suggest that the First Accused was seeking a repayment from him: quite how that indebtedness arose is not entirely clear on the evidence but it does demonstrate his lack of candour. 468.He related how in April 2003 the First Accused had mentioned to him that the SFC was conducting an inquiry into trading in Shanghai Land shares. She spoke to him on the telephone and asked for his views. She had not told him that she was involved in market manipulation. He had given her advice about how to respond to inquiries. 469.He had heard PW1 mention the SFC investigation and had talked to her about the possibility of her being investigated by the SFC. He had explained to her that it was common for the SFC to make inquiries into trading of shares and that it could be regarded as "normal procedure". He had always advised PW1 to simply relate what had happened. He subsequently spoke to the First Accused about the advice that he had given to PW1 and indicated to her that if there really were an investigation he would advise PW1 to tell everything she knew. 470.He was aware that PW1 was arrested and later that she might become a prosecution witness. Several weeks after the First Accused was arrested he received a telephone call from her during which she inquired after PW1 and said she need "not to be frightened". He had received a number of subsequent telephone calls from her during which the First Accused had usually sought to arrange a meeting with PW1. Although he had pretended, in an attempt to fob off the First Accused, to agree to convey the message to PW1, he had not done so. 471.He was taken through the contents of the two telephone calls dated, respectively, 30th October and 6 November 2003. He expressed his opinion on what was meant by the First Accused when she was talking to him. He testified that he had not talked to his wife about these conversations because he did not want her to be affected. He thought that there had been no further conversations after that on 6 November. 472.Because of my general assessment of PW12 as a witness, I am not in a position to rely upon his evidence in regard to his understanding of the content of the telephone conversations. I have had careful regard to that content. It will be recalled that there was one particular answer which was not entirely clear and which was sought to be transcribed and, thus, interpreted differently by the prosecution and those acting on behalf of the First Accused. We have all had an opportunity of listening to that tape and, upon more than one occasion, that particular passage in court. 473.It does not seem to me that, at the end of the day, the precise words used by the First Accused at that point in the tape are of any great importance. The overall thrust of what she was saying remains the same whether the version contended for by the prosecution or by the First Accused is relied upon. Her indignation was palpable when she was speaking to PW12. 474.I have had careful regard to the tapes. I have no doubt at all that the First Accused was sounding out PW12 in an attempt to find out just to what extent PW1 had or would co-operate with the ICAC. It seems to me that she was, in the vernacular, testing the waters. 475.It may very well be that comments such as "it will be useless for you to act as a prosecution witness" [entries 92 and 98 in Exh. P1047], "you have been so well taken care of all along" [entry 87, Exh. P1049], "I don't want anything to happen to her, to your wife.... I have taken good care of both of you all along" [entry 91, Exh. P1049] and "I know that your wife listen to whatever you say" [entry 102, Exh. P1049] are not entirely innocuous and are indicators of things to come. 476.However, in my judgment the conduct of the First Accused had not advanced beyond a merely preparatory stage, not even to the stage of the commission of an attempt let alone to the commission of the full offence of performing an act tending and intended to pervert the course of public justice. 477.As a consequence the First Accused is entitled to be and is found not guilty and discharged on the ninth charge.
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Cases cited in this judgment
Further hearings and rulings under DCCC 367/2004