HKSAR v. Lam Tze Leung

CACC 476/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 476 OF 2004

(ON APPEAL FROM HCCC NO. 3 OF 2004)

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BETWEEN

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Before : Hon Stuart-Moore V-P, Stock JA and McMahon J in Court

Dates of Hearing: 16 November 2005

Date of Judgment (re: conviction): 16 November 2005

Date of Handing Down Reasons for Judgment (re: conviction): 8 December 2005

Date of Handing Down Judgment (re: sentence): 8 December 2005

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J U D G M E N T

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Hon Stock JA:

Introduction

1.These are applications for leave to appeal against conviction and sentence.  The applicant was convicted on 29 October 2004 after trial before Deputy Judge Wright and a jury and sentenced to a total of seven years nine months imprisonment.  On 16 November 2005 we dismissed the application for leave to appeal against conviction and said that we would provide reasons, which we now do; and we reserved judgment as to sentence.

2.The applicant was at all material times a senior credit manager at the Hang Seng Bank in charge of Team 3 of its Corporate Finance Division.  Denis Chan Tak Wing was above him in the Bank's rankings and was an assistant general manager above whom, in turn, was Sau Ming a deputy manager of the Bank, in charge of Corporate Finance.  Lo Pui Shing worked in Team 3 under the applicant; and Wong Tai Wai was a marketing manager at the Bank.

3.The offences spanned a number of years.  It was alleged that the applicant accepted bribes for facilitating the granting and maintenance of credit arrangements in favour of two property investment companies, and in facilitating the issue, on the applications of those companies, of letters of credit in respect of underlying transactions which he knew to be non-existent.  Au Kiang International Ltd (Au Kiang) and Dero Enterprises (Dero) were the two property investment companies and they were owned and operated by Ho Chi Chun and his two sons, one of whom was Ho Siu Hoi.  Karen Yin Hueh Lan was their financial controller and gave evidence as an accomplice.

The indictment

4.The indictment contained 13 counts.  The first seven counts alleged that the applicant accepted an advantage as an agent contrary to section 9(1)(a) of the Prevention of Bribery Ordinance Cap 210:

(1)  The first count alleged that as an agent of the Bank on or about the 13 May 1994 without lawful authority or reasonable excuse he accepted a Rolex watch from Ho Siu Hoi as an inducement to or as a reward for or otherwise on account of his doing or having done an act in relation to his principal’s affairs or business, namely, in facilitating the granting of credit arrangements by the Bank to Au Kiang.

(2)  The second count was to the same effect; the date of the offence was 18 July 1994; and the bribe was two Rolex watches.

(3)  The third count alleged a bribe accepted by him in December 1994 of $50,000 from the same source.

(4)  The fourth count alleged the acceptance of a bribe from Ho on 22 August 1995 to the tune of $10,000.

(5)  The fifth count alleged the acceptance by the applicant on 14 February 1996 of another $50,000 from Ho.

(6)  The sixth and seventh counts alleged further bribes of $50,000 each, but we need not be concerned about these for present purposes, since the applicant was acquitted in relation to those counts. 

The applicant admitted receipt of the items or cash stipulated in Counts 1, 3, 4 and 5; but denied any criminal intent in so doing.

5.Each of the 8th to 13th counts inclusive alleged against the applicant that he was party to a conspiracy to defraud the Bank by dishonestly causing Au Kiang (or, in some instances, Dero) to apply for and utilise credit facilities from the Bank in the form of letters of credit and to submit false documentation to the Bank purportedly evidencing genuine underlying commercial transactions between Au Kiang (or Dero, as the case may be) and a named beneficiary; when in fact there were no such transactions.  The evidence showed that upon the release of funds, monies went straight back from the supposed beneficiaries to the applicant company.

The contending cases

6.The trial judge, in the opening passages of his summing up summarised the respective cases as follows:

“The prosecution says in respect of the first seven charges of acceptance of an advantage, that the accused took expensive gifts in various forms – watches and cash – which he knew when he accepted them were either to induce him to or reward him for having played a part in the granting or extension of financing for the Au Kiang Group.  In respect of the six remaining charges of conspiracy to defraud, the prosecution says that he conspired or agreed with the other people named in each of the charges – and those include the first two prosecution witnesses – to defraud Hang Seng Bank by Au Kiang and Dero Enterprises applying for letters of credit purportedly to pay for goods which it had purchased when to his, the accused’s, knowledge, in truth, there were no goods and the funds were to be used for general business.

The accused says that he did not receive all seven gifts as set out in the charges, but only four of them and he says that that is exactly what they were - gifts, plain and simple, from a grateful client received by him without any ulterior motive.  He says that Karen Yin, the first prosecution witness, is untruthful in regard to the remaining gifts.  He said that he acted throughout in the decision-making process in respect of the Au Kiang Group in the same manner as he acted in respect of other clients and that the thought that there was anything behind the giving of gifts, simply had never crossed his mind.

In respect of the conspiracy charges, the accused says that whilst he and indeed other bank officials including both Denis Chan and Eddie Tam who testified – both of them for the prosecution – may have had suspicions that Au Kiang and Dero might not have been using the funds from the letters of credit as they claimed, he, the accused, is not party to any agreement that that is what was to be done.  At the most, he simply did nothing about investigating the suspicions and that that was because his seniors appeared willing to tolerate the situation.”

The prosecution evidence

7.The main prosecution witness was Yin, who testified under immunity and whom the judge described as extraordinarily avaricious and very cunning.  There was testimony also from Mona Lee, the shipping clerk of Au Kiang and Dero who processed such documents as were required to secure the issue of letters of credit for those two companies.  Then there was the testimony of Chan who was accepted by all to be a person of probity who acted properly in relation to the numerous applications made by the companies to the Bank and in relation to the Bank's responses to those applications.  It was common ground, too, that some other Bank employees did not act properly, received gifts, and recommended and secured the approval of facilities when, by any appropriate banking standards, facilities ought not have been approved.  Eddie Tam Hon Hung also gave evidence.  He became credit manager in Team 3 in the middle of 1996 and it is a reference to him as well as to Chan by the judge in his summing-up which forms the basis of the sole ground of appeal in relation to conviction.

8.The history of the case, as far as concerns the proceedings in the court below, commenced in early 1994 when the Bank was approached by Yin on behalf of Au Kiang for a loan in respect of the purchase of the 17^th floor of the Convention Plaza in Wanchai.  The application was allocated to Team 3 and the applicant recommended approval of the loan.  Chan was not minded to grant it, but whilst he was away on leave the applicant forwarded the proposal to the head of the division and it was approved in the sum of $148 million.  It was thereafter, according to the evidence, that gifts in the form of watches and cash were made to the applicant and to others at the Bank.

9.In July 1994 a further application was made, this time for a loan relating to the purchase of the 26th floor of the Convention Plaza in the sum of $180 million and, again, presents were given.  As Ms Draycott has summarised the matter:

“There followed a four-year history of banking by Au Kiang and … Dero with the Hang Seng Bank.  The accounts were located in Team 3 under the applicant throughout.  The companies use the funds raised from the bank to speculate in property and continually asked for new loans and advantageous adjustments of existing ones.  Yin gave evidence that the company had no capital of its own to fund the speculation and said that it was a constant struggle for her to juggle the finances in order to make repayments to the bank and keep the company afloat.  She said that when things were difficult Ho Chi Chun bribed the bankers, including the applicant, in order to get his way, or to thank them for past favours.”

10.In relation to the conspiracy to defraud, it was common ground that in 1994 and 1995, Au Kiang began to secure the issue of fraudulent letters of credit to bogus beneficiary companies and it was Yin’s testimony that the applicant was fully aware of the scheme and, indeed, gave advice to help the companies avoid detection and, further, warned them when honest Bank officials, such as Chan, became suspicious.  Chan gave evidence that he was concerned about the fact that the Bank had been issuing letters of credit supported by local cargo receipts and that he suspected that there might not have been any goods behind the letters of credit, and he wrote a memorandum to this effect in relation to a report, or proposal, made by the applicant.  He said that the applicant was aware that he, Chan, was, in the case of Au Kiang and Dero, concerned about local letters of credit, cargo receipts, and the poor annual reports of both the companies.

11.The question of watching out for the suspicions of those honest officers of the Bank who had a say in facilities granted to the two companies was a recurrent theme of Yin’s evidence.  It was precisely because of warnings of suspicion, that she was advised, so she said, to look for other beneficiary companies.  As the judge commented in his summing up (pages 99-100 appeal bundle):

“She said it had been necessary to pay the accused monies throughout the period of the frauds because it was necessary to keep him "sweet" because he would be the first person to know of any problems with the letters of credit.  You may think, and it is a matter for you, that Chan's evidence accords with that.”

12.Chan had said that it was the applicant’s function to look out for misuse of facilities extended by the Bank and to report to him anything abnormal or incorrect and that there were matters, in this kind of business, to be checked; for example, purchase of goods inconsistent with the client's business, or goods that carried unusual prices.  In September 1995 the applicant was on leave abroad, and the applicant’s function was assumed by Chan who became suspicious that letters of credit issued to Star Regent, a beneficiary company, were not genuine; and he instigated an inquiry, but upon the applicant's return from leave no further letters of credit were issued to Star Regent.  In about May 1996, again when the applicant was on leave and his duties were taken over by Chan, Chan was concerned that all the letters of credit issued by Au Kiang had involved local cargo receipts and, as a result, he asked for a probe into the company's business and requested that research be carried out into the structure of the beneficiary companies to ascertain whether there were common shareholders and directors as between those beneficiary companies and Au Kiang.  He told his subordinates, including the accused, to pay greater attention to the Au Kiang account.

13.Yin, in turn, said that the applicant knew of the falsity of the letters of credit and that he had told her that they should no longer use a particular company called Star Regent as a beneficiary company because the Bank was becoming suspicious.  It was also as a result of the suspicions that others in the Bank, complicit in the fraud, advised Yin not only to look for more beneficiary companies but also to vary the nature of the goods, the subject matter of the letters of credit.  She herself took the view that Chan suspected that the letters of credit were not lawful.  Tam joined Team 3 only in mid-1996 and his evidence was that it was only within a matter of months that he became suspicious of the transactions.

14.Matters came to a head in April 1998 when Yin, realising that the companies could not keep up the repayments, went to Tam and confessed the fraudulent letter of credit scheme.

Verdicts

15.The jury found the applicant guilty in respect of all the counts upon the indictment, save for Counts 6, 7, 9, and 11.

The ground of appeal against conviction

16.There is but one ground of appeal against conviction and it reads as follows:

“The Deputy Judge erred in directing the jury that: (1) the “suspicions” of prosecution witnesses, Chan and Tam constituted “evidence” which could support the evidence of accomplices, Yin and Mona Lee; and (2) even if the jury did not accept the evidence of Yin and Lee, the jury could use the “suspicions” of Chan and Tam to draw the inference that the applicant was involved in the conspiracies to defraud charged in counts 8 – 13 of the Indictment.”

17.It was said in argument that since the evidence of Yin and Lee was central also to the bribery charges encapsulated by Counts 1-7 of the indictment, and since the judge had told the jury that they were entitled, in coming to a conclusion in respect of any particular count, to look at the overall evidence, the suggested material misdirection as to how the jury could use the suspicions of Chan and Tam rendered the convictions on all the counts unsafe or unsatisfactory.

18.Our attention was drawn by Mr Blanchflower SC, for the applicant, to the following particular passages in the summing up (pages 110-111, appeal bundle):

“Chan told you in his evidence that during one period when the accused was away on leave between 22 April and 9 May 1996, an application had been received from Au Kiang requesting that the time for repayment of letters of credit be extended from 90 to 120 days and also seeking credit for a letter of credit in an amount of $3.9 million, that is Exhibit 443.  When that was referred to him by Lo he recorded in a note on that document that all of the previous letters of credit issued by Au Kiang had involved local cargo receipts.  He asked that a greater understanding of the company's business be obtained.

Now, also at that time, April 96, whilst the accused was on leave, Chan had asked for the preparation of the document setting out the nature of the letters of credit issued.  That is Exhibit 420.  When he saw the names of several prominent companies appearing on that schedule, he wondered whether his suspicions were right because he was of the view that those companies would not get involved in underhand dealing.

He thought that perhaps Au Kiang was doing genuine business after all but, notwithstanding that, he requested that research be done into the structure of the beneficiary companies to ascertain whether there were shareholders and/or directors common to them and to Au Kiang.  Yin told you that outsiders had always been used.  Because of his suspicions but lack of proof, Chan had told his subordinates, including Lo, the accused and Tam, to pay greater attention to the Au Kiang account.

….

Now, I explained to you that the prosecution also relied on other evidence from which it had asked you to draw the inference that the accused was a party to the conspiracy, but there are two ways that you should consider that evidence: firstly, you should look at it to see whether it provides support for the evidence of Yin and Lee as it might assist you in deciding whether to accept their evidence; and secondly, even if you do not accept their evidence, you may still find yourselves able to draw the inference that the accused was involved.

Now, that evidence is the suspicions expressed by Chan and Tam and the way in which they were dealt with.  I have just related to you how Chan became suspicious.”

The italics and the underlining are those supplied by Mr Blanchflower, intending to highlight the matter about which complaint is made.  He points out that the judge then went on to discuss the suspicions to which he had made reference, the cause of those suspicions, and the applicant’s reaction when he was told by Tam about Tam's suspicions.

19.We are then taken to a further passage, a few pages on in the summing up (page 114 appeal bundle):

“Now, the prosecution says that the real effect of Tam’s evidence is that it demonstrates just how obvious the fraud was for him to have spotted it within a month or two.  He says that you add to this Chan's previous suspicions and investigations as well as the accused’s conduct in showing his report Tam, which the prosecution suggest was an effort to put Tam off, and you add to this the accused’s personal inaction, and the only inference which you can draw, particularly given the accused’s years of experience in matters involving bills, is that the accused was a party to the conspiracy.  That is a matter for you whether you conclude that you are able to draw that inference.”

The emphasis is again that provided by Mr Blanchflower.

Analysis

20.The complaint is this: that suspicion is not evidence and cannot be used to support the testimony of other witnesses.  Nor can the suspicions of witnesses be used as a basis upon which a fact may be inferred.  It is said that the judge told the jury that Chan's suspicion and Tam's suspicion was evidence that could support the evidence of Yin and Lee and that that in itself is an error of law.  It is a further error of law, so it is contended, for the judge to have told the jury that those suspicions – the suspicions of Chan and Tam – were factors from which they were entitled to draw the inference that the applicant was involved in the conspiracies to defraud.

21.This is to misunderstand what the judge was saying.  His use of the word “suspicion” and his directions to the jury as to the use that might be made of it must be looked at in proper context.  Context is invariably vital when examining passages in a summing up which are under attack, and this case is an obvious example of why that is so.

22.There are two facets to the complaint.  The first is the suggestion that the judge said that Chan’s suspicions and Tam’s suspicions could be used to provide supporting evidence for Yin and Lee, and that that was erroneous.  We see nothing wrong in what the judge told the jury in this regard.  First, he did not tell them that mere suspicion, without more, might provide support.  What he said is that what might provide support were the suspicions expressed by Chan and Tam and the way in which they were dealt with.  The summing up is peppered with references to certain aspects of the evidence of Yin, in particular, and other evidence, that tended to correlate with her testimony; and it is, in our judgment, this correlation to which the judge is referring.  So, for example, the judge referred (see pages 99-100 of the appeal bundle) to the testimony of Yin that bribes had to be paid to the applicant “because he would be the first person to know of any problems with the letters of credit.  You may think, and it is a matter for you, that Chan's evidence accords with that.”  In other words, Chan’s evidence as to the applicant’s position in the Bank and his role sat at one with that part of the testimony of Yin.  In similar vein, the judge reminded the jury (page 103, appeal bundle) that the applicant had told Yin, according to her evidence, that Au Kiang and Dero should no longer use Star Regent as a beneficiary company because the Bank was becoming suspicious.  The judge went on to say:

“You may think, although this is a matter for you, that there is some support for her evidence in the fact that the final letter of credit was issued by the bank on 3 October 1995.  Chan told you in his evidence that in September 1995, the time when the accused was away from office on leave, he, Chan, had instructed Lo to keep an eye on the Au Kiang account and to obtain copies of banking transactions between Au Kiang and beneficiary companies.  He wanted to establish whether there was a pattern of deposits and withdrawals and to see if there was a relationship between money received by the beneficiaries and that paid to Au Kiang.  As a result of Chan's request Lo had gathered together the data relating to Star Regent.  After perusing the schedules, Chan told his colleagues, including Lo, to pay particular attention to this account.”

23.So, as to this limb of the complaint, it is not the mere fact of Chan's suspicion or Tam's suspicion, placed in cold isolation, which provides support for anything.  Rather, it is the fact that the suspicions were conveyed to their subordinates that supports Yin’s account, which was that there came a time when those subordinates warned her that bank officials were suspicious and that the companies ought to take action accordingly to allay the suspicions.

24.The judge reminded the jury (page 109, appeal bundle) that Yin’s testimony had been that she made an appointment to see Tam to ask what could be done to rescue the situation of the companies, for they had reached the point where they became unable to repay their loans.  Her testimony was that all along Tam had known about the falsity of the letters of credit and, in this regard, the judge reminded the jury that Tam himself had said that he had become suspicious of the transactions within a matter of a few months after joining Team 3.  Clearly, in this regard, the testimony of Tam tallied, and to that extent gave support, to that of Yin.  The judge went on – and this precedes by only a paragraph or two the passages about which complaint is made – to remind the jury (page 109, appeal bundle) of Yin’s evidence that Chan had caused problems over the years in Au Kiang’s dealings with the Bank; that he had telephoned and asked for bills of lading; that she believed that he, Chan, suspected that the letters of credit were not lawful; and that there was an incident when the marketing officer, Wong, had warned her that the applicant was taking a vacation and that she should be careful in submitting applications for letters of credit as such applications would be referred directly to Chan.  All of this tallied with the testimony of Chan about his suspicions and the action that he took in an attempt to allay them.  This is the context in which the judge suggested that the suspicions expressed by Chan and Tam and the way in which they were dealt with might lend support to the testimony of Yin and Lee.  It was never a suggestion by the judge that the mere fact that Chan and Tam nurtured suspicions of itself supported the evidence of Yin and Lee that the applicant was involved in fraudulent activity, or that fraudulent activity was taking place.  There is nothing in this limb of the complaint.

25.The second limb of the complaint is similarly misconceived.  The suggestion is that the judge directed the jury that they could use the suspicions of Chan and Tam to draw the inference that the applicant was involved in the conspiracies to defraud.  This is not what the judge said.  The suspicions to which he referred were but part of, and the necessary prelude to, the various factors and actions to which referred.  They were part of a picture which the prosecution had painted, that experienced and honest bankers were alerted to something amiss and must surely, so the contention was put, have alerted the applicant too, since he was an experienced banker as well, and was intimately involved with the letter of credit applications of Au Kiang and Dero: indeed he was the team leader and it was his responsibility to watch out for fraud and to take measures to detect it and to make enquiries when put on notice.  And the point was not only that the applicant, like others, ought to have been put on notice, as were they, but that he was expressly put on notice by these banker witnesses and yet did not take the steps that they described they took to make checks during the short periods of their stewardship of these accounts.  What the judge pointed to as evidence from which the jury might infer that the accused was involved in the conspiracy was not the mere fact of the suspicions nurtured by Chan, but was the way in which those suspicions were dealt with by these honest experienced bankers.

26.One of the ways in which those suspicions were dealt with was that they were conveyed both by Chan and by Tam to the applicant.  More than that, both Chan and Tam took action upon their suspicion; action, it was suggested, that was not taken by the applicant even though he was the person most directly connected with the applications for the letters of credit.  Chan had been with the Bank since 1964 and the applicant was no novice himself: by 1966 he had twenty years experience in dealing with bills.  Chan’s suspicions, following which he directed investigations to be made, were aroused on more than one occasion whilst he was taking the applicant’s place when the applicant was on leave.  And Tam too became acutely concerned about the facilities being granted to Au Kiang, a concern that was aroused after only a matter of two or three months as a member of a team that had been headed by the applicant for much longer.  There was a conflict of evidence between Chan and Tam, on the one hand, and that of the applicant, on the other, as to the likely attitude of the Bank once there was suspicion, in relation to any client, of accommodating finance – that is to say, if it were thought that there were no goods behind the letters of credit being issued (page 132, appeal bundle).  What the judge was comparing, or inviting the jury to compare, was the conduct of experienced and honest bankers, with the conduct of the applicant, also an experienced banker, experienced in dealing with bills.  The context in which he made the comments now under attack was not that of a mere suspicion; but, rather, the fact that those who were suspicious caused investigations to be made and specific attention to be paid to the account of Au Kiang, as well as the drawing of their views to the attention of the applicant.

27.Tam’s testimony was that his duty was the same as the applicant’s, namely, to watch out for suspicious cases and that he, Tam, did so, and that after only a short time, he found several suspicious cases and drew them to the applicant’s attention.  In this context, as the judge pointed out (pages 111-112, appeal bundle), Tam:

“… had noted in regard to Au Kiang’s account that all the letters of credit had been local.  The purpose of purchasing the goods would have been for resale in respect of which he usually would have expected at least some payments to have been made by other letters of credit from the purchaser. This happened so rarely with Au Kiang, that it made him suspicious.

Another factor which alerted him was the fact that Au Kiang also used its credit to the limit.  You will recall that that is also Lee’s evidence.  A third factor was that he had caused inquiries to be made in the trade as to the repute of the beneficiary companies to which Au Kiang’s letters of credit were being issued.  He told you that no one in the same trade knew of them.  Then he sent a colleague to check on the offices of Sunmex [another beneficiary company].  At the address visited, there was no-one there who worked for Sunmex but an offer was made to pass on the request to contact the bank ….

Now, he did not broach Au Kiang but went, as was his duty, to the accused.  Although Tam was satisfied in his own mind that the transactions were fraudulent, he had no actual proof.

He said in re-examination that he had told the accused the nature of his suspicions if not the precise details.  He regarded it as a serious matter which he was bringing to the attention of the accused.  The message which he got from the accused was that this was an ongoing situation about which the superiors at the bank knew and which should be allowed to continue.

The accused produced and showed him exhibit P 450 which was the report that he had written in August 96….”

Here, then, is once again recitation and emphasis not on the mere fact of suspicion but, rather, the actions that one would expect an honest banker, finding himself surrounded by suspicious circumstances, to take.  None of these steps, so ran the prosecution case, was taken or mirrored by the applicant.

28.Then a little later comes the passage with its reference to suspicions upon which word Mr Blanchflower concentrates.  There is no warrant for choosing that word – “suspicion” – to the exclusion of all else.  The passage runs as follows:

“… the prosecution says that the real effect of Tam’s evidence is that it demonstrates just how obvious the fraud was for him to have spotted it within a month or two.  He says that you add to this Chan's previous suspicions and investigations as well as the accused’s conduct … and you add to this the accused’s personal inaction, and the only inference which you can draw, particularly given the accused’s years of experience in matters involving bills, is that the accused was a party to the conspiracy.”

We have there emphasised the phrases which Mr Blanchflower has not emphasised and which he is bound to ignore or play down if he is to get anywhere with this ground of appeal.  Those phrases cannot be ignored and they make all the difference; and it is because of them that the judge’s direction as to inference cannot amount to a misdirection.

29.There was nothing, in our judgment, in the ground of appeal against conviction; and, accordingly, the application for leave to appeal against conviction was dismissed.

Sentence

30.The applicant was aged 52 years at the time of the trial and was a person without previous convictions.  He had worked in the Bank for many years.

31.For a period of over two years, he had accepted bribes on a number of occasions in the form of watches and cash, to an aggregate of about $330,000.  The bribes were blatant and this applicant was one of several officers of the Bank engaged in this corruption.  It is clear that the bribes were given in the expectation that he would lend whatever help he could to the attempts of the company to secure credit facilities or favourable terms.  The judge pointed out correctly that: “It cannot properly be said that the corruption offences arose out of a single course of conduct.  Each was an entirely separate and distinct event which came about as a result of a change in circumstances involving the Bank's relationship with Au Kiang.”  His conduct constituted a serious breach of trust and consistently corrupt behaviour on the part of a bank officer in an influential position.

32.136 letters of credit were issued, on Au Kiang’s application, to a value in excess of $490 million.  The overall loss sustained by the Bank from the accounts of the Group was in excess of $283 million, although the judge accepted that it was not possible to apportion that loss as between the letter of credit fraud and any other cause. But, as he rightly commented: “It illustrates admirably the scale of these events and the overall effect they had on the bank.”

33.In relation to each of Counts 1, 2, 3, 4, and 5 – the corruption counts – the trial judge adopted a starting point of three years and six months’ imprisonment.

34.In relation to each of the conspiracy counts upon which the applicant had been convicted, namely Counts 8, 10, 12 and 13, the judge took a starting point of six years’ imprisonment.

35.The judge recognised the applicant's history, and his efforts in rising to the position that he had occupied in the Bank and noted that the applicant and his family had, before his arrest, emigrated to Canada.  He concluded, however, that there was nothing in the applicant's personal circumstances that offered mitigation and that the applicant was convicted after a lengthy trial.  He noted too that the applicant had not contested his extradition to Hong Kong but had returned voluntarily and, further, that “the prosecution would not have been able to bring the last two counts without that having happened”: to this we shall shortly return.  He noted as well that the applicant had spent sixteen days in custody pending extradition and took the view that it was proper for the applicant to receive some credit for that.  For these two factors – that is to say, the time spent in custody awaiting his return to Hong Kong; and the fact that his voluntary return enabled the prosecution to proceed in relation to Counts 12 and 13 on the indictment – he gave a discount of three months imprisonment from the totality which he took to be appropriate.  That totality was eight years imprisonment.  To give effect to the resulting totality of seven years nine months’ imprisonment, and to the terms which he considered correct for each individual offence, he sentenced the applicant to a term of three years and six months’ imprisonment in relation to each of Counts 1 to 5 inclusive, the sentences to be served concurrently one with the other; and he sentenced him to six years’ imprisonment in relation to each of Counts 8, 10, 12 and 13, ordering those sentences to be served concurrently one with the other but ordering, further, four years and three months of those latter sentences to be served consecutively to the sentences on Counts 1 to 5 inclusive.

36.There are two grounds of appeal which are pursued in relation to sentence.

37.The first ground is that: “The deputy judge erred in giving a discount of only 2½ months’ imprisonment in respect of the applicant’s waivers of his rights under Canada's Extradition Act and the rule of specialty.”

38.The relevant facts in relation to this ground are as follows.  In August 1998, the applicant left Hong Kong and became a permanent resident in Toronto.  His family was already residing there.  A request for a provisional warrant of arrest was made in 2002 but, for reasons which are entirely unclear, the warrant was not executed until June 2003 when the applicant was arrested in Toronto and taken to court.  He was told that he was alleged to have been involved in criminal activity in Hong Kong, and that the authorities in Hong Kong requested his extradition.  He was then detained and remanded in custody until the 30 June 2003 when he was granted bail.  In mid July 2003 he was provided with a “Record of the Case” submitted by the Hong Kong authorities to the Canadian authorities pursuant to the extradition request.  That Record provided a relatively detailed overview of the prosecution case, and ran to 132 paragraphs of text.

39.The applicant then decided not to contest the extradition proceedings and agreed to be returned to Hong Kong for trial without an extradition order.  The report of the Canadian judge is to the effect that he informed the applicant of the consequences of waiver “including the consequences of waiving the protection of specialty; and that he, a person sought, will be conveyed without delay to the extradition partner.” The applicant signed a waiver and consent form by which he waived all his rights under the Extradition Act, including his right to an extradition hearing and his right to make submissions to the Minister of Justice, and he consented to return to Hong Kong to be dealt with according to law.  He arrived in Hong Kong on 5 September 2003, and was charged with the first eleven of the thirteen charges ultimately contained in the indictment.

40.Mr Blanchflower contends that waiver of extradition is a material mitigating factor to which inadequate weight was given by the sentencing judge.  He refers first to a case AG v Ling Kar Fai (No 2) [1997] 2 HKC 651, in which credit was given for the fact that an offender who had lived in Canada for many years had voluntarily returned to Hong Kong.  There is no indication in that judgment as to the circumstances of that appellant’s return and whether extradition proceedings were afoot.  Mr Blanchflower then takes us to R v Mok Sin-wah Crim App No 419 of 1984, 13 October 1984, unreported; and he takes us to it for the proposition that the surrender of those who have escaped the scene of a crime is to be encouraged in the sentencing process, a self-evident proposition for which, with respect, no authority needs citation.  That case is hardly analogous to this.  In that case, there is no suggestion that the culprit was about to be apprehended.  In this case, the applicant had been arrested.  There was no question of this applicant learning by chance of proceedings in Hong Kong and deciding himself to travel here.

41.The question that arises is whether in circumstances such as the present any credit at all should be given to an accused who has decided not to contest extradition proceedings abroad and returns to Hong Kong, not in order to plead guilty, but in order to plead not guilty.  Where a person abandons his right to fight extradition proceedings in order to return and plead guilty, that abandonment is normally part and parcel of the element of contrition of which the guilty plea is further evidence.  Where, however, as in this case, a defendant decides not to contest the extradition proceedings but to fight the trial here, contrition does not come into the picture; and, therefore, there arises the question whether any credit should be given, in the event of a conviction, for the decision to return without insisting upon the extradition proceedings running their course.  The circumstances of each case will differ and the sentencing approach, being an art that yields to the full facts of each case, must always be moulded by an assessment of those particular circumstances.

42.What is put to us by Mr Blanchflower is that there is a public interest served in encouraging those who are the subject of an extradition request to yield and to return to Hong Kong as soon as possible, even though the intention is to contest the criminal proceedings in this jurisdiction.  That public interest arises from the fact that extradition proceedings may be lengthy and costly and a burden upon personnel resources; and that they engender delay which might well enure to the disadvantage of a successful prosecution, where the evidence warrants success.  In support of his proposition, he places before us a decision of the High Court of Australia AB v The Queen (1997) 198 CLR 111.

43.That was a case in which a teacher was extradited to Australia from the United States to face trial upon charges of serious sexual offences against schoolchildren.  Of the 67 charges in respect of which he was sentenced, prosecution in respect of no fewer than 39 was made possible only because he expressly waived his rights under the relevant extradition arrangement to return to the United States without the 39 charges being laid against him.  He had resisted extradition in the United States but once orders were made for his extradition, he co-operated fully with the police to the unusual extent that he not only made full and frank confessions in respect of the 28 offences for which his extradition had been ordered, but he volunteered information about 39 additional offences; none of which formed the basis of his extradition and, as the High Court said, at page 15: “… accordingly it may not have been possible, without more, for him to be charged with them on his arrival in Australia.”  The court also pointed out that: “Although the appellant was advised by his solicitor that his disclosure of information relating to the further offences would be likely to result in a lengthier term of imprisonment, he insisted on making it the police.  The trial judge was of the view that the additional offences ‘fairly clearly’ would not have come to light had the appellant not volunteered the information.”  A document of consent was subsequently forwarded, upon his instructions, to the United States authorities because the Government of the United States wanted confirmation from the appellant himself that he wanted to plead guilty to the post-extradition charges and that he realised the consequences of doing so.  

44.It will be seen at once how different the circumstances of that the case were from this in the approach of the respective accused to their guilt, to their trials, and in the contrition shown in the Australian case but not in this case.  Where, however, the Australian case does assist Mr Blanchflower is in the various comments of the Court as to the public interest in encouraging fugitive offenders not to insist upon extradition formalities.  In that case, extradition proceedings did take place but what the Court concentrated upon was the fact of waiver by the applicant of the requirements of specialty.  It was in that context that the Court said, at para 55:

“In our opinion the public interest in the waiver by the appellant is a relevant matter to which the sentencing Court and the Court of Criminal Appeal should have had regard.  The significance of the confession to the offences not the subject of any charge and the waiver of extradition rights in respect of them have the important public interest implications to which we have referred.  In recent times there have been at least two instances of the expenditure of considerable sums of public money and resources in attempting to extradite, ultimately unsuccessfully, persons charged with serious offences in this country.  Experience shows that it is a practical impossibility for extradition proceedings out of Australia to be conducted without the assistance and actual involvement of Australian lawyers and officials with attendant expense, inconvenience and delay.”

45.Such public interest considerations apply equally to extradition requests by Hong Kong, through the aegis of the Central Government, to foreign jurisdictions.  Extradition proceedings cost money and cause delay and – even though experience suggests that failure is rare – may be unsuccessful.  This is a factor which sentencing courts should recognise; and a decision not to contest extradition proceedings abroad may well, depending on the facts of the case, warrant some credit.  But, we repeat, whether credit is due and, in particular, the extent of that credit, will be dictated by facts which are highly case-sensitive.  It must be remembered that those who decide to contest extradition proceedings will often be advised of the cost of so doing; will be aware in many a case that the proceedings are often lengthy; will be advised that the test that has to be applied by the foreign courts and executive is not that of proof of guilt beyond reasonable doubt and, depending on the state of the evidence and the nature of the case, of the chances of success is resisting extradition.  So when we talk of an accused who decides not to contest extradition proceedings and yet to fight the criminal proceedings in Hong Kong, we are not normally talking about someone who is acting altruistically.  He has, almost certainly, taken a decision not to spend months, possibly years, awaiting trial, perhaps in custody, with the risk that the time spent in custody awaiting extradition will not count, or will not count significantly, towards such sentence as may be imposed here in the event of a conviction.  In the case of a person who has fled this jurisdiction, it would seem strange for him then to be placed in a position better than, say, a co-defendant who has not fled, and to be thus better placed simply because the former has decided not to contest extradition proceedings.  In such a circumstance a sentencing court might very well take the view that no credit at all should be given in respect of the decision to waive extradition rights.

46.In this particular case, we have an applicant who left this jurisdiction but a few months after the criminality in which he had for long been involved was exposed.  Whilst we are prepared to accept that the applicant intended, prior to April 1998 when the matter was reported, to go at some stage to live permanently in Canada, it is equally clear that at the time he did go to Canada he must have known full well that a fraud allegation had been made and that there was a far from fanciful chance that he was likely to be the subject of an investigation.  In this particular case, there can hardly be any question of contrition.  The applicant returned and contested the proceedings, proceedings which lasted some considerable time.  We note that the applicant had the benefit of legal advice in Canada; and we are bound to say, looking at the evidence that was placed before the Canadian court, that the strength of the evidence was such that the prospects of a successful contest must have been appreciated to be remote.  The offences for which his extradition was requested palpably fell within two categories of offence for which the relevant extradition arrangement permitted extradition; and none of the grounds for refusal to surrender had any prospect of being run, let alone of meeting success.  It is against that background that the judge in fact recognised the public interest factor which has been pressed upon us and chose to give it weight by deducting two and a half months from the sentence.  It may be that some judges may have given more credit than was given in this case, but we are not prepared to say that the credit given was inadequate; certainly not manifestly so.

47.There is next taken by Mr Blanchflower a point in relation to specialty, closely connected to the point we have just addressed.  He has referred us to the fact that the request for provisional arrest and, subsequently, the formal request for extradition, represented to the Canadian authorities that the applicant was wanted for seven counts of accepting an advantage as an agent, and only four counts of conspiracy to defraud; and that what was omitted from the offences upon which his extradition was expressly requested were the last two offences upon the indictment, namely, counts 12 and 13; this is to say, the counts of conspiracy to defraud where the beneficiary was Pure Guard Industrial Limited (Pure Guard), another company with whom there had been no transactions underlying the letters of credit for which application was made.  What Mr Blanchflower says is this: that when the applicant agreed to return to Hong Kong without an extradition order, he thereby waived the agreement as to specialty in the relevant international arrangement; in other words, he waived the provision that provided that upon surrender a fugitive offender was not to be proceeded against in respect of any offence other than that for which surrender was granted.  This waiver enabled the prosecution to proceed upon counts 12 and 13 which involved letters of credit to a value very significantly greater than the value of the letters of credit covered by counts 8 and 10 of which counts the applicant was also convicted.  The judge, he argues, failed to attach sufficient importance to this feature, or to this consequence of the applicant's decision not to contest the extradition request.

48.This argument, in our judgment, carries the matter no further in the applicant’s favour.  It is particularly noteworthy that the additional counts upon the indictment arose from facts disclosed in the evidence referred to in detail in the Record of the Case.  The issue of letters of credit in favour of Pure Guard were made the subject of specific reference at paragraphs 35 to 37 inclusive of the Record.  The Pure Guard offences were of precisely the same nature as the others; they were part of the same course of conduct; and all the relevant parties to the suggested conspiracy were the same.  It could hardly have come as a surprise to the applicant that these alleged offences were included in the indictment.  Nor, in our judgment, would it be realistic to suggest – indeed, it has not been suggested – that had the applicant contemplated the addition of these two counts as a possibility, he might have resisted extradition in the first place.  And, furthermore, it is not realistic to contend that had the applicant been surrendered on the first eleven offences pursuant to contested extradition proceedings, there would have been any real prospect of resisting successfully a request to the surrendering authorities, for which procedure there is express provision in the relevant arrangement, to consent to prosecution for the additional offences.  The specialty point is inextricably bound up with the applicant’s decision not to contest the extradition proceedings, a point we have already addressed; and unlike the case of AB, no specialty right had accrued to this applicant which then he waived.  In so far as it is further contended that the culpability reflected by the 12th and 13th counts made a substantial difference to sentence, we cannot agree.  True it is that the monies covered by those two counts were significantly greater than those covered by the other counts of conspiracy; but it remains the fact that in relation to the other conspiracies to defraud, this applicant, given the nature of the scheme, the period which it covered and, in particular, the office he occupied and the role he played, could not have expected, on any view, a sentence of less than six years imprisonment.  Indeed, we would go so far as to say that the sentence of six years’ imprisonment imposed upon him in relation to the conspiracies to defraud was light; and that the overall sentence was not a day too long.  Ms Draycott has rightly remarked that this applicant was a high ranking bank official who took bribes and engaged in a gross breach of trust which went beyond turning a blind eye and involved active assistance by the applicant in a fraud involving huge sums of money.  In our judgment, he could not have complained had the sentence been longer.

49.Finally, in relation to sentence, it is suggested that the trial judge erred in failing to give any discount for the applicant’s admissions of fact which, it is said, significantly shortened the length of the trial and reduced the issues for the jury's determination.  Whether a limitation of issues constitutes a mitigating factor and, if so, to what extent, is again case-specific.  We have studied the admitted facts upon which this ground depends.  They contain admissions of the immigration records of the applicant; the date upon which he and others were on leave from the Bank; a list of letters of credit issued in favour of the various beneficiaries and an admission that none of those letters of credit was backed by a transaction in goods.  There are other admissions all of a formal nature.  It would, we think, have been an exercise in tactical folly for this applicant to put the prosecution to proof of the fact that the letters of credit were not backed by genuine transactions.  That was in any event the testimony of all the prosecution witnesses and was never an issue; not least because the applicant’s defence at trial was that he himself had, at certain times, misgivings about the transactions but had no knowledge of a conspiracy by others.  The essence of the case against him was contested by him hotly and that contest resulted in a trial lasting 25 days.  We are satisfied that the judge did not err in failing to accord the applicant credit for the formal admissions that he made.

50.The grounds raised on the applicant's behalf do not constitute grounds that warrant upsetting the sentences imposed.  Accordingly, the application for leave to appeal against sentence is also dismissed.

Addendum

51.The facts of cases such as these are invariably complex, involving numerous transactions and a substantial cast of characters.  They are cases in which the appellate court needs significant assistance from counsel in the written presentation of the background to the case and the issues.  The presentation of the case by Ms Draycott is precisely the presentation that is required: a summary of facts telling the court the story, and a summary of the evidence germane to each count; provision of a list of the characters and what role each played in the story; and a chronology related to each count upon the indictment.  Mr Blanchflower’s written submissions were similarly designed to assist; with a summary of the case and a succinct and clear exposition of his points with clear references to passages in authorities relied upon.  The presentation we see in this case should be the norm.

Mr Michael Blanchflower, SC and Ms Kelly Chan instructed by M/S George Tung, Jimmy Ng & Valent Tse for Applicant

Ms Charlotte Draycott, Counsel on fiat, Department of Justice for Respondent