HKSAR v. Li Defan and Another

CACC000520/2000

CACC 520/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. CACC 520 OF 2000

(On Appeal from District Court Case Nos. 265 & 580 of 2000)

----------

----------

Coram: Hon Mayo VP, Wong and Woo, JJA in Court

Dates of hearing: 5 and 9 July 2001

Date of handing down of judgment: 18 July 2001

------------------------

J U D G M E N T

------------------------

Hon Woo, JA (giving the judgment of the Court):

There are two applications for leave to appeal against convictions. The applicants were respectively the 1st defendant ("D1") and the 2nd defendant ("D2") on trial before District Judge Day.

Background

2.D1 and D2 faced altogether 7 charges, the particulars of which, arranged chronologically, were as follows:

The 5th charge, against D2 alone: on a date unknown in February 1997, without lawful authority or reasonable excuse, D2 offered an advantage, namely a gift, loan, fee, reward or commission (collectively called "advantage") consisting of an unspecified amount of $1,000 banknotes to an agent TSE Shu-sun, a Manager of the Bank of China, Hong Kong ("BOC"; but when a branch of BOC was other than that in Hong Kong, the place where the branch was situate will be mentioned), as an inducement to or reward for or otherwise on account of Tse Shu-sun doing or having done an act in relation to his principal's affairs or business, namely, assisting in the loan application of Shing Hung Investments Ltd ("SHIL"), contrary to s 9(2)(a) of the Prevention of Bribery Ordinance, Cap 201.

The 6th charge, against D2 alone: on a date unknown in April 1997, without lawful authority or reasonable excuse, D2 offered an advantage consisting of a gift cheque of $3,000 to an agent CHAN Yim-mui, an Officer of BOC, as an inducement to or reward for or otherwise on account of Chan Yim-mui doing or having done an act in relation to her principal's affairs or business, namely, assisting in the loan application of SHIL, contrary to s 9(2)(a) of the Ordinance.

The 3rd charge, against D2 alone: on or about 6 October 1997, without lawful authority or reasonable excuse, D2 offered an advantage consisting of $1,800,000 to an agent LI Defan (D1), an Assistant General Manager of BOC, as an inducement to or reward for or otherwise on account of D1 doing or having done an act in relation to his principal's affairs or business, namely, assisting in the application and release of loan to SHIL, contrary to s 9(2)(a) of the Ordinance.

The 1st charge, against D1 alone, what Mr Plowman SC, counsel for D2, described as the "mirror image" of the 3rd charge: on or about 6 October 1997, without lawful authority or reasonable excuse, D1 accepted an advantage of $1,800,000 from D2 in the manner and description as referred to in the 3rd charge, contrary to s 9(1)(a) of the Ordinance.

The 4th charge, against D2 alone: on or about 6 October 1997, without lawful authority or reasonable excuse, D2 offered an advantage consisting of a sum of $1,896,706 to D1 in the same manner and description as referred to in the 3rd charge, contrary to s 9(2)(a) of the Ordinance.

The 2nd charge, against D1 alone, a "mirror image" of the 4th charge: on or about 6 October 1997, without lawful authority or reasonable excuse, D1 accepted an advantage of $1,896,706 from D2 in the manner and description as referred to in the 4th charge, contrary to s 9(1)(a) of the Ordinance.

The 7th charge, against D1 alone: on or about 21 October 1997, D1, being an agent, namely an Assistant General Manager of BOC, without lawful authority or reasonable excuse, accepted an advantage consisting of about $650,000 from LAM Mui-tuen, as an inducement to or reward for or otherwise on account of D1 doing or having done an act in relation to his principal's affairs or business, namely, assisting LAM Mui-tuen in the application(s) for credit facilities or additional credit facilities from BOC, contrary to s 9(1)(a) of the Ordinance.

3.At the conclusion of the trial, the Judge dismissed the 6th charge (relating to D2) and the 7th charge (relating to D1), and found D1 guilty of the 1st and 2nd charges and D2 guilty of the 3rd, 4th and 5th charges.

4.Against the convictions, both D1 and D2 apply for leave to appeal.

The undisputed facts

5.Before the Judge, neither D1 nor D2 gave evidence. Apart from D2 calling an accountant to deal with the accounts of SHIL, the defendants adduced no other evidence. The evidence before the Judge consisted mainly of the evidence adduced by the prosecution and the statements made by D1 and D2 in interviews with officers of the ICAC, which statements were mixed in nature in that they admitted the payment into D1's bank account of $1,800,000 referred to in the 1st and 3rd charges and the payment into D1's bank account of $1,896,706 referred to in the 2nd and 4th charges. These two payments totalled a sum of $3,696,706. The statements also contained explanations as to why the sum was paid and received. Besides the admissions, there were the following undisputed facts.

6.D2 was at all material times a director and shareholder of SHIL and Rifearn Investments Ltd. He was also the sole proprietor of Hong Kong International Development Company ("HIDC"). D1 was at all material times an Assistant General Manager of BOC and he was the head of its Business Development Department ("BDD"). SHIL applied for a loan from BOC and the application was processed by BDD. Pursuant to a loan agreement made between SHIL and BOC and dated 8 September 1997, BOC agreed to advance a sum of US$40 million to SHIL in connection with a project in Zhengzhou, China. On 6 October 1997, two cheques for respectively $1,800,000 and $1,896,706 were deposited into the bank account of D1. Both cheques were drawn by HIDC. The sum total of $3,696,706 represented the total profit made in connection with the sale of 1,600,000 shares in CATIC Shenzhen, which shares were first listed and traded in Hong Kong on 29 September 1997. SHIL and HIDC had subscribed for CATIC shares and each had been allotted 800,000 such shares and they were the 1,600,000 shares sold on the first day of trading. All the monies required for the initial subscription for the shares were provided by HIDC and the sale proceeds were returned to HIDC.

The Judge's findings on the 1st to 4th charges

7.In view of the undisputed facts, the Judge set out very fairly in his judgment the issue that he had to determine. He said:

"It is apparent that the conclusion of the loan and release of the money was taking place at the same time as the CATIC deal was being done.

It is not enough for the prosecution simply to show that D1 was involved in the processing of a loan application for a company in which D2 was a director and shareholder and that he had received a payment from the company. The prosecution have to show that the money was paid 'as an inducement to or reward for or otherwise on account of [D1] doing ... an action in relation to his principal's ... business."

8.The Judge, however, found that there was no direct evidence of the casual link between the payments and D1's performance of his duties as the Assistant General Manager of BOC relating to the application and the release of the loan to SHIL. Such findings are encapsulated in the following passages of his judgment:

"... the witnesses did not, by and large, establish that D1 had behaved in any way differently towards this loan than he would towards any other, indeed there was evidence that he had suggested an increase in the interest rate applicable to the loan."

"There was nothing to show he did any more than was expected of him."

"None [of the witnesses] persuaded me that D1 had acted in an untoward way in relation to the SHIL loan. There was no direct evidence linking the way D1 carried out his duties in relation to that loan with the payment to him of $3,696,706."

9.Bearing the absence of direct evidence in mind, the Judge continued:

"It is not necessary for the prosecution to prove that D1 favoured the loan application, he may have done no more than what was properly within his sphere of employment. The prosecution seek to prove by circumstantial evidence and statements made to the ICAC by the two defendants."

"It cannot be suggested that D1 did not assist in the application of the loan (he visited the site, asked his staff to prepare the proposal, signed the proposal before it was submitted to the next level, etc.) or that he did not assist in the release of the loan (in response to D2's request for assistance, noted on exhibit 12, he wrote to the branch indicating how the loan should be split, and when there were difficulties drawing the money he asked PW2 [D1's subordinate] to look into it, etc.)

What is disputed is the state of mind of the defendants. The corrupt purpose of D1 and 2 at the time the advantage was offered or accepted has to be proved, i.e. that it was for assisting in the application and release of the loan."

10.Before proceeding to deal with the explanations given by D1 and D2 in their statements to the ICAC, the Judge reminded himself that the contents of the statement of one defendant could not be used against the other. He also stated how he would treat the mixed statements:

"The statements were mixed and I thought I should treat any incriminating evidence found therein and any exculpatory material along with the balance of the evidence. I note ... that the interviews were lengthy, the defendants were confronted with documents, and the questions were detailed. It is nevertheless still the case that the weight afforded to exculpatory evidence provided in statements, is likely to be less than evidence given on oath in court and tested by cross examination."

11.True to his words, the Judge then dealt with the explanations given by D1 and D2 in their respective statements separately. Since the grounds of appeal raised by both defendants attack the Judge's decisions on the exculpatory statements, it is necessary to set out extensively the manner in which the Judge dealt with them. He noted that there was no challenge to the statements being admitted in evidence, that there was a good deal of repetition and irrelevancy in them, and that they were lengthy statements.

12.Relating to D1, the Judge summarised his exculpatory explanations in the following manner:

"D1 told the ICAC that he had met D2 some years earlier in Shenzhen when D1 worked for another department of the Bank of China and D2 worked at a large hotel there. They met when D1 went for meals, not through business, and were not close.

Their acquaintance was renewed when, in late 1996/early 1997, D2 came to see D1 about the loan for SHIL. He denied any wrongdoings.

D1 seemed to be at pains to show theirs was not a close relationship, saying that since D1 had come to Hong Kong he had scarcely seen D2.

When asked what personal dealings they had together, he said they were 'very rare'.

D1 supported the loan application for no other reason than because it seemed a good proposition, and, whilst during the course of the application, they may have gone for meals together to discuss the loan, this would happen only rarely and then in the company of colleagues.

It was D1 who raised the question of the CATIC flotation with D2.

He was clear about this. His previous position had been with China Development Finance Company (Hong Kong) (CDF) and they were underwriting the CATIC flotation. He told D2 the shares would be successful and said he would speak to CDF to see if D2 could apply for some. Later in his statement he repeated that the purchase was his idea, saying that D2 had not heard of the shares until D1 phoned him about them. D2 was keen and applied for shares and shortly thereafter paid $2,796,039.84 his allocation.

It then appeared that D2's two fellow directors objected to the purchase, which led D2 to approach D1 for help to get out of the deal. D1, in essence, said he would take the shares off D2's hands, but couldn't afford to pay for them.

He offered instead to give D2 the security of a fixed term deposit of RMB500,000, maturing in 2002. With interest, this deposit was worth about RMB800,000 if cashed in 1997 or RMB1,100,000 - 1,120,000 if cashed in 2002.

The deposit was in the name of D1's wife and a certificate to this effect was given to D2.

On this basis, said D1, D2 gave him the right to any profit made by the CATIC shares and expected him to pick up the loss, should there be any. In the event the shares were issued to SHIL and were sold the same day, earning a profit of $3,696,706, which was handed to D1 in pursuance of their agreement.

It was, said D1, as if D2 had loaned him $2.7 million for a week.

This, in a nutshell was D1's explanation of how it came to be that D2 gave him $3.6 million.

I do not believe him."

13.Then the Judge gave reasons for his disbelief. He said:

"The whole tenor of his statement is that his relationship with D2 was a business one. This arrangement is hardly a business arrangement. Nothing is in writing. An investment of $2.7 million is promised to D1 against the security of a fixed deposit supposedly worth RMB800,000. I am aware of D1's explanation that even if the shares lost money they would be unlikely to lose more than a third of their subscription price, but even that would be close to $1 million, a good deal more than RMB800,000.

In addition, the fixed deposit was in the name of D1's wife. How would D2 recover his money if she did not wish to cooperate? D2 may be able to prevent her withdrawing the money, but that hardly helps him.

In his second interview, D1 recalls an earlier loan which D2 had advanced to him, of $2.5 or $2.6 million, some months before the share subscription. He appeared to have forgotten this when telling the ICAC earlier about their infrequent contacts. A friend of D1 was in financial difficulties and D2 paid the sum direct to the friend at D1's request. D1 said he repaid D2, but was short some $370,000. It is not clear from the statement whether D1 owed the balance of $370,000, or the whole sum of $2.5/$2.6 million, at the time the CATIC shares were issued.

Whichever sum was owed, if this were true, it means D2 was prepared to enter this extraordinary deal passing the benefit (and risk) of the CATIC shares to D1, while D1 already owed a great deal of money from the earlier loan. D1 earns $16,000 per month, excluding housing and other benefits. In his first statement he had said if the CATIC shares lost more than was 'secured' by the fixed deposit, he would use savings from other bank accounts to cover the shortfall. He had not apparently thought to use this money to discharge his existing debt to D2.

Later in his second statement he altered his story, saying that it was not his friend who was in financial difficulties. In fact he, D1, had borrowed $2.5/$2.6 million from his friend and couldn't repay him. That is why he asked D2 to pay the sum to the friend.

When asked, if it was he who had borrowed the money, what he had used it for, he said he had intended to invest in shares but that ultimately, nothing was done with the money. As to what then happened to the money, he was entirely at a loss:

'The two point five million? Well, some of it went to -, was placed into bank, and some of it was placed into, at that time, some of it was probably placed into, placed into my, well, well ... (indistinct) account. It probably was so.'

Not an impressive explanation. Where was it? Why was it not returned to D2? D1 would have me believe that D2's fellow directors were unhappy with D2 investing in CATIC shares, and so D2 passed the right to the shares to him at such disadvantageous terms. D1 already, it would seem, owed money to D2. This was not a business deal. And yet, D1 had been at pains to explain that theirs was not a close personal friendship. After they had both come to Hong Kong they 'scarcely saw each other.'

There can only be one explanation. D1 accepted the profit from the sale of the CATIC shares as a reward for assisting in the loan proposal for, and the release of money to, SHIL. If the deposit was genuinely handed to D2 as security, the arrangement was so disproportionately beneficial to D1 as to be in itself a reward. If the fixed deposit had nothing to do with the CATIC shares, the more beneficial was the arrangement for D1. Whichever it be, I have no doubt the whole arrangement was set up to reward D1 for work done." (emphasis added)

14.After reminding himself that nothing in D1's statements could be taken against D2, the Judge summarised D2's extra-judicial exculpatory statements. He said:

"He was interviewed 3 times. He explained the nature of the project which required the US$40 million loan, that phase 1 had been virtually completed and that the loan was required to pay some outstanding bills from phase 1 and to finance phase 2. He had found it very difficult to raise the funds and heard that D1, who he had known in Shenzhen some years earlier, was at the Bank of China here in Hong Kong. He approached D1 with his proposal at the end of 1996/early 1997. He denied that he had received any special treatment from D1.

He told the ICAC that he had loaned D1 $2.5 million at the end of 1996 or early 1997, but was unsure whether the money was for D1 or a friend of D1's. They were old friends and he trusted him to make repayment. D2 gave a cheque to D1 direct, although he could not remember to whom it was payable. D1 repaid all but $570,000, which he repaid in February 1998. None of this, he said, had anything to do with his loan application. D2 sought to explain the CATIC arrangement. It was he who wanted to invest the shares. He had spotted the opportunity and had read widely about the CATIC flotation in the press. He asked D1 to help him buy the shares.

SHIL applied for shares and when they were allotted D2 paid for them with money from HIDC. He regarded that as being from his own funds. The shares were sold on the day they were listed and a profit of over $3 million was made which he gave to D1.

He sought to explain to the ICAC why he did this. His co-shareholders, he said, were not happy with the investment. SHIL was hoping to be listed on the HK Stock Exchange and his colleagues were worried about the effect such a deal would have on the listing. The money was his own, from HIDC, but it was meant to be used in the listing of SHIL not for gambling on the prospects of a newly listed company. (Other evidence confirmed that a flotation of SHIL was indeed in the pipeline.)

He said he asked D1 to help him withdraw his application. D1 thought it unlikely D2 could withdraw at that sage, but reassured him that the stock would not make a loss. D2 said he was concerned not to lose his capital and D1 said he would 'take care' of the investment and ensure there would be no loss. He did not, however, have the money in Hong Kong to pay to D2, but he had it in the Mainland.

What he had, as security, was a fixed deposit slip for $1 million or so. If the loss were greater, then D2 would suffer.

The deposit slip was in the name of D1's wife, but could, D2 thought, be withdrawn by using the correct password. In his second interview D2 conceded that the wife would have to go with him if he wished to make the withdrawal.

The loan for US$40 million, said D2, had already been finalized before he gave the money from the CATIC sale to D1. Giving him the profit was a 'private matter between him and me, between friends.' No bribery was involved.

During the second interview D2 was shown a copy of the fixed deposit certificate. It was for RMB500,000, not for $1+ million. He explained that with interest the total paid out of the deposit would be RMB500,000 plus interest of RMB680,000, but had to admit that this would only be available at maturity, in 2002. He did not know how much interest would be available if redeemed earlier.

To summarise still further, D2's position is that he spotted CATIC as a good investment and asked D1 to help get as many shares as he could. His fellow shareholders objected and he told them he would get out of the deal. He did this by arrangement for D1 to take over the responsibility for the shares and took the fixed deposit as security.

I do not believe D2." (emphasis added)

15.The Judge then proceeded to analyse the explanations of D2 as follows:

"D2 told the ICAC that his fellow shareholders did not want SHIL connected with the CATIC shares because they thought it might affect their own company listing. Interestingly, Mr Gidwani, an accountant giving evidence for the ICAC took me through the exhibits and demonstrated convincingly that the books of SHIL recognized the shares of CATIC as its assets and that although HIDC received the entire sale proceeds, SHIL initially recorded the profit on sale as it's (sic) income. This was later reversed by crediting D2's ledger. Mr Lam Kai cheung, an accountant called by D2, told me that he was responsible for these entries and that he had deliberately, and wrongly, sought to boost SHIL's profit and minimize it's (sic) losses before it's (sic) own listing. D2's fellow shareholders seemingly did not feel strongly enough about the CATIC shares to ensure that D2 kept the deal out of SHIL's books, despite their apparent reluctance for SHIL to be involved. It may be, however, that they had not seen these entries.

Having assured his colleagues that he would withdraw from the CATIC deal, what does D2 do? The shares are taken in the company name and he allows D1, because he is an old friend and he trusts him, to take all the benefits of the deal. Of course, he says, D1 also promised to take any losses but it will be recalled that D2 was the one who wanted to buy these shares. He had heard of their prospects and read about them in the press and was sure they would appreciate. If he really thought there may be a loss, why take as security a deposit which could only be redeemed in full 5 years later. A deposit which, particularly if redeemed early with consequent loss of interest, may not meet the loss. A deposit which could not be cashed without the consent of D1's wife. A deposit offered by D1 who, at the time of the deal, still owed D2 $570,000 from an earlier loan.

This represents, on any account an extraordinarily bad deal for D2, coming, I am supposed to accept, purely coincidentally immediately after the conclusion of a huge loan to SHIL and while the mechanics of the loan were still being fine tuned. A loan initiated by D2 approaching D1, and proposed by D1's department.

In any event if the shareholders objected to D2's involvement with CATIC, they apparently did so after the shares were allocated and paid for, after the 23rd September. The shares were listed and sold on the 29th September. One knows that share prices can go down as well as up but why the rush to divest themselves of the shares when the informed advice produced to me was that the shares would do well, as indeed they did. I have been shown newspapers from the 23rd September which reported that the CATIC flotation had been oversubscribed 650 times. D2 says his interest in the shares came in part from what he read in the newspapers. It is inconceivable that he would not keep abreast of developments after he applied for the shares.

Even if D2 was persuaded to divest himself of the responsibility for the shares, why do it in such an disadvantageous fashion?

D2 told the ICAC that he applied for the shares whilst his fellow shareholders were out of Hong Kong. The letter written by SHIL on the 10th September applying for 50 million shares is apparently signed by Li Rongshen - one of D2's two fellow shareholders - suggesting that one at least of D2's associates was indeed in Hong Kong, that he signed the application and not D2, and that he supported the application, rather than objected to it as D2 now maintains.

...

Mr Lok [counsel for D2] carries on by saying perhaps the director later changed his mind, but that is not his client's case. D2 says he applied and when Li Rongshen found out he objected to the application.

The prosecution ask me to draw inferences from the evidence I have heard. They say that the inference that the money paid to D1 by D2 was paid as a reward for D1 assisting in the application and release of the loan to SHIL is the only reasonable inference to draw from the proved facts. I agree. The purpose of D2 offering the money and the intention of D1 accepting it was corrupt.

In my view the evidence is overwhelming." (emphasis added)

The grounds of appeal

16.The grounds of appeal raised for both defendants regarding convictions of D1 on the 1st and 2nd charges and of D2 on the 3rd and 4th charges are premised, and correctly so, on the fact which the Judge accepted that there was no direct evidence of the corrupt intent on the part of either D1 or D2. Each complains that the Judge had wrongly rejected the exculpatory explanations given himself to the ICAC and that there was insufficient evidence for the Judge to draw the inference of corrupt intent even if the explanations had been correctly rejected. These are the gist of D1's grounds 1 and 2 and D2's grounds 1 and 2.

17.D1's other grounds of appeal deal more specifically with various aspects of the Judge's views and findings. It is contended that the Judge's views on the following matters were wrong, ie, that the alleged deal of transfer of the allotted shares by D2 to D1 ("the share deal") was "hardly a business arrangement" (ground 3), that the use of the fixed deposit certificate by D1 as security for the share deal was suspect and would be insufficient to cover the possible loss from the deal (grounds 4 and 5), and that the pre-existence of an earlier debt owed from D1 to D2 which was still partly outstanding made the share deal "extraordinary" (ground 6). Ground 7 contends as the Judge had rejected that the relationship between D1 and D2 was not "a close personal friendship", that rejection enhanced D1's explanation that the share deal was a genuine business transaction. Ground 8 argues that the Judge failed to address the issue that D1 knew and intended the payments as a reward. D1 also relies on certain factual errors in the judgment to say that they affected the Judge's understanding and assessment of the evidence and vitiated the inference of guilt which he drew from the evidence (ground 2A).

18.D2 also challenges the Judge's view that the alleged share deal was "an extraordinary bad deal" for D2 and contends that the Judge wrongly applied the objective approach instead of the proper subjective approach from D2's angel in holding that view (ground 1(i)). Ground 1(ii) complains about the Judge's rejection of the explanation that D2's fellow shareholders objected to the share subscription. Ground 2 contends that there was insufficient evidence for the Judge to find that the money was paid by D2 to D1 as a reward for D1 assisting in the application and the release of the loan and disputes that this finding was the only reasonable inference. It is contended that the inference drawn by the Judge was manifestly unreasonable. Mr Plowman also relies on certain mistakes or misunderstanding of the Judge in the course of the Judge's analysis of D2's explanations to submit that the same inferences would not have been drawn without such mistakes or misunderstanding. Ground 2(iv) also argues that since there was a prior loan transaction between D2 and D1, the inference that the share deal was another business transaction was a reasonable inference other than that drawn by the Judge.

19.D2's grounds 3 and 4 also challenge the conviction on the 5th charge, in that the Judge had erred in law by wrongly concluded that if D2 had offered $10,000 to Tse Shu-sun as laisee, that could not amount to a defence because of the provisions of s 19 of the Ordinance; the Judge had also wrongly reversed the burden of proof by holding that D2 had to establish a reasonable excuse.

The relevant law

20.Although the grounds of appeal raised by both defendants revolve mainly on facts, it is pertinent to recite a major part of the relevant law which is not disputed, before we address the facts.

21.It is important to bear in mind that neither of the defendants testified before the Judge. The explanations given by D1 and D2 were contained in their respective out-of-court statements made voluntarily to the ICAC. The Judge noted this and stated that the explanations were part of the evidence as the incriminating admissions and were to be considered by him, albeit the explanations bore less weight than if they had been given to the court on oath and subject to cross-examination. This is well settled law. In R v Duncan (Findlay) (1981) 73 Cr App R 359, Lord Lane CJ gave the following judgment at p 365, which was expressly approved by the House of Lords in R v Aziz [1995] 2 Cr App R 478 and R v Sharp [1988] 1 WLR 7 and followed by this Court, differently constituted, in HKSAR v Kong Siu Ming [2000] 2 HKLRD 449:

"Where a 'mixed' statement is under consideration by the jury in a case where the defendant has not given evidence, it seems to us that the simplest, and, therefore, the method most likely to produce a just result, is for the jury to be told that the whole statement, both the incriminating parts and the excuses or explanations, must be considered by them in deciding where the truth lies. It is, to say the least, not helpful to try to explain the jury that the exculpatory parts of the statement are something less than evidence of the facts they state. Equally, where appropriate, as it usually will be, the judge may, and should, point out that the incriminating parts are likely to be true (otherwise why say them?), whereas the excuses do not have the same weight. Nor is there any reason why, again where appropriate, the judge should not comment in relation to the exculpatory remarks upon the election of the accused not to give evidence."

22.As to competing inferences to be drawn, it is instructive to note the judgment of Lord Morris of Borth-y-Gest in McGreevy v DPP [1973] 1 All ER 503, at 510 which stated:

"In my view, the basic necessity before guilt of a criminal charge can be pronounced is that the jury are satisfied of guilt beyond all reasonable doubt. This is a conception that a jury can readily understand and by clear exposition can readily be made to understand. So also can a jury readily understand that from one piece of evidence which they accept various inferences might be drawn. It requires no more than ordinary common sense for a jury to understand that if one suggested inference from an accepted piece of evidence leads to a conclusion of guilt and another suggested inference to a conclusion of innocence a jury could not on that piece of evidence alone be satisfied of guilt beyond all reasonable doubt unless they wholly rejected and excluded the latter suggestion."

23.In R v LO Sui-wing & anr, Cr App 509 of 1989 (unreported), Macdougall JA said:

"Where an inference of guilt may properly be drawn from a set of facts, a jury or a judge sitting without a jury, is entitled, in the absence of a credible explanation leading to a different conclusion, to convict the accused on the basis of that inference.

If it were the law that a man may not be found guilty whenever it is possible to place an innocent explanation on his actions by assuming the existence of a state of mind or an explanation that is incompatible with guilt, then the law would be rendered powerless in a great many cases."

24.Relating to corruption charges, it is only necessary to cite the following passage in the judgment of the Court of Appeal delivered by Power VP in HKSAR v Tham Chee Seng [1998] 3 HKC 654, at p 660I-661C:

"Mr Polson, who appears for the applicant, submits ... that there is no proof of a causal link between the acceptance of the payment and the alleged favour. He relies on R v Ng Man Ho, [1993] 1 HKC 632. We do not accept that that decision correctly states the law. We are quite satisfied that the law is rightly stated by the Court of Appeal in A-G v Ling Kar Fai (No 1) [1997] 2 HKC 642. Litton VP (as he then was) delivering the judgment of the court said at 648I-649A:

Plainly s 9(1)(b) of the Prevention of Bribery Ordinance looks to the state of mind of the agent accepting the advantage. That is what the section - and the charge - says. Did the respondent (in charge 2), without lawful authority or reasonable excuse, accept from Tin $12,558 as an inducement to or reward for or otherwise on account of his showing or having shown favour in placing a purchase order on behalf of Interlock?

In offences under both s 9(1)(a) and 9(1)(b), the court must look to the state of mind of the acceptor of the advantage. The judge was satisfied that 'the defendant made the demands and accepted the money' although he did not make any specific finding as to 'the state of mind of the agent accepting the advantage' he was clearly satisfied that the applicant made the demand for tea money and accepted the $10,000 as a reward for letting the property at a reduced rent. This sufficiently proved the offence charged. ..."

D1's grounds

25.It is essential that the exculpatory statements given by D1 and those given by D2 must be considered separately though both sets of explanations were very similar and they referred to similar transactions. The Judge dealt with the explanations given by D1 and D2 separately corresponding to the particular defendant, and he correctly expressly stated that the statement of one defendant could not be taken against the other defendant.

26.The Judge said that he did not believe D1. The following pieces of material were most significant in the Judge's reasons. D1 portrayed the share deal as a business arrangement and that his relationship with D2 was not a close personal friendship. However, the share deal did not possess any characteristics of a business arrangement. There was nothing in writing and the security was not only unbelievable, but also even if true, would only be providing at most RMB800,000 against an investment of $2.7 million. D1's explanation of possible loss of a third of the subscription price did not equate with RMB800,000. The security was in the name of D1's wife and her cooperation was required for D2 to recover the money. D1 earned $16,000 a month, and he still owed D2 $370,000 from an earlier loan (see below). D1 said that if the shares lost more than was secured by the fixed deposit he would use savings from his other bank accounts to cover the shortfall. However, he had not even repaid the $370,000.

27.Ground 2A of D1 raises certain factual errors made by the Judge. The Judge described the letter of 24 September 1997 to BOC (exhibit 12) as issued by BOC Zhengzhou whereas it was in fact issued by Zhengzhou Yinji Commercial and Trading Co, a subsidiary of SHIL. However, there was a note inscribed by D2 on the letter seeking support from D1 and his senior manager. Mr Macrae SC, for D1, was unable to make use of this mistake to the advantage of his client, because the fact remained that there was difficulty with drawing down the money and D2 did use this letter, with his inscription, to seek support from D1.

28.The second alleged mistake was made when the Judge said that it was unclear whether D1 owed $370,000 or the whole of the $2.5/$2.6 million loan to D2 at the time the shares were issued, while D1 had clearly made the statement that he had paid back $2.03 million or $2.13 million almost immediately after the loan had been made, and the balance after the sale of the shares. If $2.5 million was the loan, after the repayment of $2.03 million, the remaining balance would have been $470,000, and if $2.6 was the loan, the balance after the same repayment would have been $570,000. On the other hand, if $2.13 million was the repayment, then the outstanding balance would have been $370,000 or $470,000, depending on whether it was the smaller or larger amount of the loan. These different sums mentioned in D1's statements might have made it equivocal whether it was only $370,000 or $2.5/$2.6 million that was still outstanding. However, the Judge did say that D1 said he repaid D2 but was short some $370,000. We do not think that the Judge could be justifiably criticised for what he had said on this score. We would take the least of the figures, being most favourable to D1's case, namely, $370,000, as the amount still owed by D1 to D2 out of the loan that had been made by D2 to him at the end of 1996 or early 1997. This does not affect the tenor of the Judge's comments on D1's explanations, and indeed is consistent with such comments.

29.The third mistake was that while D1 estimated the possible loss from the share deal would be unlikely to be more than 30% of the subscription price of the shares allotted ($2,796,039.84), meaning $838,811, the Judge talked about a one-third loss, meaning $932,013, and described it as a good deal more than RMB800,000 (the worth of the security). Though there was some difference between the two figures, 30% and one-third, that does not detract from the fact that security was not sufficient to cover the estimated loss stated by D1. Moreover, the security being unbelievable is not only because of its value, but also for two reasons stated by the Judge. It was in D1's wife's name and was not so readily available to D2. D1 was still owing D2 $370,000 out of an earlier loan which he had not repaid despite his intimation that he had money available in his other bank accounts. D1 accepted that the share deal was like D2 making a loan of $2.7 million to him for a week while the security provided by him was worth RMB800,000 and he had been owing D2 $370,000 for about 9 months.

30.On the above analyses, none of the mistakes pointed out by Mr Macrae, alone or jointly, assist D1, nor do they support Mr Macrae's contention that they "encouraged the Judge in the view that the fixed deposit was not used as a security and was not, therefore, part of a business arrangement" between D1 and D2.

31.Mr Macrae also submits that it is not clear whether the Judge was or was not accepting what D1 said about his relationship with D2. If the Judge considered D1 was a close friend of D2, that would have made the inference of a bribe less "tenable". It is, however, clear that D1 asserted that he and D2 were not close friends. Mr Macrae cannot rely on what D2 said in his own statement to help D1, because that was not evidence properly admissible regarding D1. D1's assertions in his statements about his relationship with D2, such as he "scarcely saw" D2 in Hong Kong, were properly considered by the Judge in his assessment of D1's explanations. Mr Macrae directed our attention to various passages in D1's statements to say that D1's relationship with D2 might have been closer than what the Judge described, and the Judge should have held that the two were close friends. This submission does not assist D1 because he had said clearly that his relationship with D2 was not close and they had personal dealings very rarely. Even if the description of the relationship between D1 and D2 were equivocally described at different places in D1's statements, as D1 had elected not to give evidence, we do not think that it fair and proper to let him choose a particular relationship that suits his case best through counsel's arguments.

32.Mr McWalters, for the respondent, submits and in our view correctly, that there was no evidential basis for concluding that D1's relationship with D2 was similar to his relationship with Lam Mui-tuen (the alleged offerer mentioned in the 7th charge, which was dismissed), which latter relationship was supported by the testimony of Lam. Relating to Lam, the Judge said:

"There was a clearly established pattern of D1 and Mr Lam investing together and lending each other money. It had been going on for years. This was not recent invention."

However, he was careful to point out the difference of that relationship from that between D1 and D2, as follows:

"Lest anyone think the same reasoning should apply to the relationship between D1 and D2, I should state that in my view the two relationship are clearly entirely different."

33.Mr Macrae also argues that if the inference drawn by the Judge that the share deal was not a business arrangement was correct, there was no reason why the fixed deposit certificate had been given by D1 to D2. Nowhere in his judgment did the Judge expressly state that he accepted that the deposit certificate was given by D1 to D2. It seemed that he doubted that that was the case. He said that he did not believe D1, and he said that even if the deposit was "genuinely" given as a security, the share deal was still beneficial to D1.

34.Mr Macrae also contends that the existence of the previous loan and the outstanding amount of $370,000 or $570,000 (as alleged by D2) works against the inference of guilt drawn by the Judge. The loan, according to D2, was $2.5 million and the amount remaining outstanding was $470,000. Eventually in February 1998, D1 paid a cheque for $570,000 to D2, consisting of the outstanding balance and interest in the sum of $100,000. Mr Macrae argues that if the profits from the CATIC shares of almost $3.7 million were paid as a bribe, there was no reason for D1 to have repaid the debt of $470,000 and the interest of $100,000. Moreover, the true loan transaction with the full repayment plus interest helps show that the share deal was but another business transaction. We do not agree. One does not and is not justified to speculate as to the nature and arrangements made by D1 and D2 regarding the loan. Though interest was apparently paid for that loan, that does not detract from the fact that while D1 implied that he had other money in his bank accounts apart from the fixed deposit owned by his wife, he had not repaid the loan fully when the share deal was allegedly carried out. The same reasoning would apply with more force if D1 in fact had no money to repay the $370,000 to $570,000 (whichever being the case) until the profit from the share deal was given to him by D2. D1 did not give evidence to support his exculpatory explanations, and there was no opportunity for such explanations and the details of the loan transaction and the share deal to be tested by cross-examination. We do not find anything with the Judge's assessment of the explanations, the loan transaction and the share deal that could give rise to any concern.

35.Mr Macrae also emphasises the credibility of the share deal, in that D2 was anxious to dislodge the shares allotted because his fellow directors in SHIL were objecting after D2 received the allotment. He submits that although the shares were 650 times oversubscribed, there was ample reason, because of the volatile price fluctuation of share prices, for a "rush to sell" the allotted shares on the first day of trading. We do not see how this helps D1's case. Indeed, we think Mr Macrae misunderstood what the Judge said. The Judge queried why "the rush to divest" the shares by D2 to D1, not over the market. The 650 times oversubscription was close to a guarantee, if not actually one, that the shares would trade at a higher price than that for the allotment, and it was this phenomenon that makes D2's allegation that he feared that he would lose part of his capital for subscribing for the shares unbelievable, when as the Judge said, he must be watching the market closely and knew the huge over-subscription. D1 would also know this phenomenon as he said he was instrumental in getting D2 and others to subscribe the shares. He must have known that profits were forthcoming. Indeed, he said in his own statement to the ICAC that he expected profit from the share deal, and the only issue was whether there was a lot or less profit.

36.We are of the view that the Judge was fully justified in rejecting the explanations given by D1 in his statements to the ICAC. As the explanations had been rejected, what remained was the undisputed evidence that D2 paid D1 the two sums set out in the 1st and 2nd charges totalling almost $3.7 million while the loan agreement between SHIL and BOC had been signed shortly before and the first drawdown on the loan was being processed. The amount D1 was paid was huge by any standard, and what he had done for D2 was to process the application of the loan and the drawdown on it. The only reasonable and indeed overwhelming inference is that the payments were made as a reward for what D1 had done and what he was doing and he knew it. The corrupt intent on his part was blatant. All the grounds advanced for D1 are without merit, and we accordingly dismiss his application.

D2's grounds on the 3rd and 4th charges

37.On behalf of D2, Mr Plowman raises a number of factual arguments in support of his grounds of appeal. The crux of the matter is, as in D1's case, the Judge did not believe D2's exculpatory explanations contained in his statements to the ICAC. The highlighted passages in his judgment in paragraphs 14 and 15 above show his reasoning. The explanations of D2 are briefly as follows. He contacted D1 whom he had learned to be with BOC to arrange a loan for SHIL's project in Zhengzhou. While the loan was being arranged, D2 spotted CATIC, which was soon to be listed, as a good investment and he asked D1 to help get as many shares as he could. He used his own money from HIDC to subscribe for the shares, but he also used SHIL for the subscription. When he paid for the shares allotted as a result of the applications for subscription, his two fellow shareholders in SHIL were out of Hong Kong. However, they objected to his paying for the allotted shares, for fear that the subscriptions might jeopardise SHIL in its listing on the Stock Exchange, which was in the pipeline. D2 also said that the money he used to subscribe for the shares was meant to be used in the listing of SHIL. He feared that he might suffer a loss of that money if the share price went down. As a result, D2 got D1 to agree to take over the shares allotted, whether there was profit or loss. D2 had paid almost $2.7 million for the allotted shares, and D1 gave him a deposit certificate for RMB500,000 as security for the share deal. The deposit would mature in 2002 but D2 did not know how much interest would be available if the deposit was redeemed earlier. Eventually, on the first day of trading of the shares on 29 September 1997, D2 caused all the allotted shares to be sold at a profit of $3,696,706 and he paid it to D1 on 6 October 1997.

38.The Judge expressed doubt that D2's two shareholders objected to the subscription of the shares. He said that while D2 said that when the applications for subscription were made, his shareholders were out of Hong Kong, in fact one of the shareholders signed the application dated 10 September 1997 for SHIL. Mr Plowman points out that the Judge misunderstood what D2 said in his statement to the ICAC, which was that when he paid for the shares allotted, his shareholders were out of Hong Kong. Mr Plowman also argues that the Judge made a second mistake, which was that the reason for the shareholders' objection was that they did not wish SHIL to be connected with CATIC. While we agree that the Judge had misunderstood what D2 said about the time when his shareholders were out of Hong Kong, we do not think it fair to pick on bits and pieces from D2's lengthy statements to the ICAC to say that the Judge made the second alleged mistake. Notwithstanding, we do not consider that if there had been no misunderstanding on the part of the Judge, there would have been any difference in his reasoning in the context of the evidence and the circumstances of this case. The reason for the alleged objection by the shareholders given by D2 was that they considered the subscription was like gambling and he feared that he might suffer a loss of the invested money if the shares went below the subscription price. But it was D2 who wished to buy as many of the shares as possible and he asked D1 to help him in doing so. D2 thought it was a good investment, and he was right as the shares were oversubscribed 650 times. Even if it be true that his shareholders objected to SHIL getting involved with the shares, he could have taken over the shares himself; anyhow HIDC, the company owned by himself alone, had already been allotted one half of the 1,600,000 CATIC shares. If he feared that he might suffer a loss from the shares, so that the subscription money, which was meant for use for SHIL's listing, would be depleted, there was no sound reason why he should have accepted D1's deposit certificate as security because he could not be sure that it was a sufficient security and he would have to bear any shortfall. It was also unbelievable that if he wanted to fully recoup his subscription capital he did not know how much interest on the deposit there would be if it was redeemed in 1997 instead of at maturity in 2002 and that he knew that D1's wife would have to go with him to withdraw the deposit - at least the withdrawal might be delayed. Further, D1 was still owing him $570,000 from a previous loan from him to D2, made after he had approached D1 in BOC for SHIL's Zhengzhou project. The whole thing just does not make sense, business or otherwise. Moreover, the profit was initially recorded as SHIL's income, though later reversed by crediting D2's ledger with SHIL. Nowhere in the books of SHIL and HIDC was the share deal between D2 and D1 reflected. The Judge did not believe this story, and on his analysis, which we consider is correct, the share deal was an extraordinarily bad deal for D2.

39.Nor do we accept Mr Plowman's submission that the Judge had approached the matter in an objective way. The Judge had taken D2's explanations in the circumstances as described by D2 and considered the explanations in those circumstances. D2 wished to buy as many of the shares as he could, considering it a good investment and he surely knew that the shares were 650 times oversubscribed when he paid for them. Though he said he feared that he might suffer a loss of the invested funds which had been intended for SHIL's listing, he gave no explanation for that fear which was apparently inconsistent with those surrounding circumstances. There was less than a week from his paying for the allotted shares to the first day of trading of the shares. His only explanation for the share deal with D1 was that his fellow shareholders objected to the share subscription. That was quite inconsistent with the SHIL application for subscription dated 10 September 1997 signed by Li Rongshen, one of the two shareholders. Mr Plowman submits that Li Rongshen might have changed his mind between 10 September 1997 and the time of payment for the allotted shares on 23 September 1997. He proffers three reasons that might have been the cause of the change of mind. However, none of these reasons was given by D2 himself in his statements to the ICAC save that his shareholders considered that the subscription was like gambling. If the genuine reason for the objection was that the subscription amounted to gambling, then it would be inconsistent with Li Rongshen actively participating in that detested gambling by signing the application.

40.Mr Plowman contends that if there was no evidence that D1 had done anything untoward regarding the loan and that there was nothing to show that D2 would be willing to pay such a large reward in the tune of $3.7 million to D1 for what D1 did pursuant to his duties towards BOC. But it is undisputed that D1 headed the department in BOC which processed the application for the loan and his department would also assist in the drawing down of the loan. It was a huge loan, as is evidenced by the loan agreement signed between SHIL and BOC on 8 September 1997, amounting to US$40 million and D2 admitted that he had found it very difficult to raise the funds. As the exculpatory explanations offered by D2 to the ICAC had been rejected by the Judge, and rightly so, why on earth did he pay D1 such a large sum of money, in all the surrounding circumstances? The Judge was correct to say that the evidence was overwhelming for him to draw the inference of a corrupt intent on D2's part.

41.Mr Plowman also prays in aid the fact that the money paid to D1 was the profits from the allotted shares and that a copy of the deposit certificate was produced by D2 to the ICAC. He argues that if the share deal between D1 and D2 was not a true transaction unconnected with the application and release of the loan granted by BOC, there was no reason for the loan transaction and share deal between D1 and D2 and documents in support to exist. He relies on the timing of the loan application and the signing of the loan agreement as compared with the timing of the subscription for the shares as well as the amount of profits being unascertainable before the first day of trading of the CATIC shares to ask the rhetorical question: how could there have been a plan to pay the profits from the sale of the shares to D1 as a bribe? We think it only necessary to quote from Mr McWalters' written argument to provide the answer, which is this:

"If the payment was a bribe then it was one that was laundered by means of the share transaction. The finding that it was a bribe is not inconsistent with the fact that a share transaction really occurred nor does it mean that the intent to use the share profits as a bribe had to have been formed in advance of the share application."

42.A defendant who has offered an exculpatory explanation in his out-of-court statement but elects not to give evidence at trial to substantiate his explanation subject to cross-examination must appreciate that less weight will be given to the explanation than where it is stated in testimony. This is just fair, for there is no way to test whether his explanation is true or reliable and on the other hand he deprives himself of an opportunity to improve upon his explanation and make clarifications about any doubt that the prosecution and the tribunal may entertain. Such improvement and clarifications could hardly be successfully made through his counsel's arguments.

43.The Court of Appeal in Lam Tsz-wah v The Queen [1984] HKLR 54 at p 63 stated:

"... since the applicant chose not to go into the witness box to explain the circumstances ... he cannot complain if a proper inference is drawn, and if it is drawn more readily in view of his election."

The above statement was an echo of the judgment in R v SUNG Shui-sing [1962] HKLR 587 at 592, where Hogan CJ in the Full Court said:

"No accused is under any compulsion to give evidence on his own behalf or, in any but the most exceptional circumstances, to shoulder the onus of proving his innocence; but where the prosecution have established facts which a tribunal might reasonably infer a fraudulent intent, it does not lie in his mouth to complain if such an inference is made and if this inference is reached more readily because of his decision not to afford to the tribunal the benefit of his version of his intentions."

44.None of the grounds of appeal and arguments advanced by Mr Plowman for D2 has been able to persuade us that there is any error in the Judge drawing the inference of the guilty intent on the part of D2 or that there is anything that makes his verdict unsafe or unsatisfactory. We think we can be excused for not reciting each and every of such grounds and arguments and dismissing them seriatim. In the result, we dismiss D2's application regarding the 3rd and 4th charges.

The 5th charge

45.The grounds of appeal relating to the conviction of the 5th charge involve questions of law. The facts are relatively simple. Tse Shu-sun was a Manager of BOC and was in D1's BDD assisting in the loan application made by SHIL referred to above. Tse's evidence was that he saw D2 around Lunar New Year in 1997 and D2 proffered a laisee packet containing a few $1,000 banknotes for Chinese New Year. Tse declined in accordance with the policy of BOC on such matters. In his statement to the ICAC, D2 admitted that he offered a laisee of $10,000 to Tse, saying that he regarded it as "only natural and normal." However, consequent upon the submission of Mr Lok, counsel for D2 at the trial, the Judge dealt with ss 19 and 24 of the Prevention of Bribery Ordinance. He said:

"Of course the giving of lai see at Lunar New Year is a part of Chinese custom, but, as Mr Lok acknowledged, section 19 of the Prevention of Bribery Ordinance expressly excludes as a defence any advantage which is said to be customary in 'any profession, trade vocation or calling'. D2 did not know Mr Tse personally, and had no private meetings or dinners with him. The lai see can only have arisen from D2 in his business capacity." (emphasis added)

46.So far we do not think that the Judge was wrong, save that he might have been misled that s 19 of the Ordinance had any application to the custom of giving laisee during Chinese New Year, as conceded by counsel before him. That section provides:

In any proceedings for an offence under this Ordinance, it shall not be a defence to show that any such advantage as is mentioned in this Ordinance is customary in any profession, trade, vocation or calling.

It specifically relates the advantage to being customary in any profession, trade, vocation or calling. The exclusion of such customs as a defence does not relate to laisee-giving at Chinese New Year, which is a custom that does not relate to any profession, trade, vocation or calling.

47.However, the Judge went on:

"Mr Lok relies, not on the customary nature of lai see but, rather, on the defence of reasonable excuse, suggesting that the existence of such a custom provides reasonable excuse for D2 offering lai see in this case. I must say I have some difficulty with this. If the custom of giving lai see is no defence, how can a defendant then say he has a reasonable excuse for giving money because he was only complying with custom? Surely it is the same thing. If I am wrong about this, in my view the defence are still in difficulties. By section 24 of the Ordinance the burden of proving reasonable excuse lies on the defendant, the standard will be the balance of probabilities."

There he started to go wrong. After examining the evidence, he continued:

"I cannot take judicial notice of the amounts generally handed out at Lunar New Year. It is bound to differ with individuals and position. The evidence I have is that this defendant intended to give Madam Cheng Oi-wah $10,000 and two other of his employees $5,000. Madam Cheng's name appears in several of the exhibits, writing ledgers, drawing cash etc. This is some evidence of the amounts he gives to his employees. It is no evidence of how much he might give to someone he has met in business on a few occasions. There is simply no evidence upon which I can say, on the balance of probabilities, that D2 had a reasonable excuse to offer $10,000 lai see to Tse. I have no doubt that this lai see was offered as a 'general sweetener', to borrow Mr Lok's phrase, to Mr Tse in connection with his work on the loan. He is guilty as charged." (emphasis added)

48.It is obvious that the Judge considered that the burden of proof was on D2 to establish a reasonable excuse for his offering the laisee to Tse, pursuant to s 24 of the Ordinance. The custom of giving laisee during Chinese New Year is, however, not a reasonable excuse, but it might cast doubt on whether D2 had a corrupt intent that was necessary to be established beyond reasonable doubt by the prosecution. It is argued by Mr Plowman that by directing his mind to whether there was evidence to prove a reasonable excuse on the balance of probabilities, the Judge had not expressly stated whether the prosecution had proved the corrupt intent on the part of D2 beyond all reasonable doubt. Mr McWalters submits, however, that the Judge must have been satisfied beyond reasonable doubt of the corrupt intent. He contends that reasonable excuse is separate from the prosecution's case being proved beyond reasonable doubt. If the prosecution cannot prove beyond reasonable doubt any of the elements of an offence which it is required to prove then the accused must be acquitted. A defence of reasonable excuse does not come into operation unless and until the prosecution has discharged its burden regarding all the elements of the offence. He submits that the Judge knew what the issue was, correctly identified the evidence that related to that issue and determined that issue by a proper assessment of the evidence. Any misapplication of s 24 of the Ordinance did not impact upon the Judge's determination of the issue to the prejudice of D2. He relies on the following utterance of the Judge:

"I have no doubt that this lai see was offered as a 'general sweetener' ... to Mr Tse in connection with his work on the loan."

49.Indeed, the Judge had also made the following finding, which is indicative of how he reached his conclusion stated above. He said:

"The lai see can only have arisen from D2 in his business capacity."

50.While the Judge did err in considering the custom of giving laisee as a defence of reasonable excuse and that the burden was on D2 to prove such an excuse, we are persuaded that he had no doubt, as he said, that the laisee was offered as a "general sweetener" to Tse in connection with Tse's work on the loan application. What we say in paragraph 42 above is again pertinent. In all the evidence produced by the prosecution, including the books of SHIL and HIDC, as the Judge summarised, there was no record of payments of laisee to non-employees of sums as much as $10,000. The mere custom of laisee-giving at Chinese New Year is not sufficient, in our judgment, to raise a reasonable doubt on the corrupt intent of D2 when he offered the laisee packet containing $10,000 to Tse in the circumstances of this case. D2 cannot now be heard to complain that he might be able to show instances of such payments to non-employees or any other explanations because he elected not to give evidence to provide himself with an opportunity to improve upon his explanation. We think this is a proper case for us to apply the proviso under s 83 of the Criminal Procedure Ordinance, Cap 221 and affirm the conviction on the 5th charge despite the Judge's mistakes.

51.We are not unmindful of the judgment drawn to our attention by Mr Plowman in Kwan Ping-bong v The Queen [1979] HKLR 1, applied in Cheung Chuen Ho v HKSAR [1997] 2 HKFCAR 198, where the Privy Council said at p 6:

"A misdirection as to the onus of proving an essential fact in issue at the trial seldom provides an appropriate case for the application of the proviso."

However, that judgment must be understood in the context of the facts of that case which can also be found on the same page of the report:

"In the instant case, however, if the jury were acting in accordance with the directions of the judge, as one must assume they were, then even though they did think that the Fong story was possible (sic) true, they were still bound to convict unless the appellants had gone further and succeeded in convincing them that, on the balance of probabilities, the Fong story was actually true."

In Cheung Chuen Ho, after citing the passage in Kwan Ping-bong referred to above, the Hong Kong Court of Final Appeal stated:

"That does not mean, however, the proviso should never be applied in a case of that type."

52.We consider that the crux of the issue for considering whether any miscarriage of justice has occurred in the present case is whether the general custom of laisee-giving during Chinese New Year could have created a reasonable doubt on D2's corrupt intent in all the surrounding circumstances. As said before, we do not think so. We consider that no miscarriage of justice has occurred and we apply the proviso. In the result, while leave is granted, the appeal against conviction on the 5th charge is also dismissed.

Conclusions

53.For the above reasons, D1's application relating to the 1st and 2nd charges and D2's application relating to the 3rd and 4th charges must be dismissed. We grant leave to D2 relating to the 5th charge, and treating the application as the appeal proper and, applying the proviso, we dismiss the appeal.

Representation:

Mr I C McWalters, SADPP, of the Department of Justice, for HKSAR (respondent).

Mr Andrew Macrae SC and Ms Maggie Wong Pui Kei, instructed by Messrs Haldanes, for the 1st defendant (1st applicant).

Mr Gary Plowman SC, instructed by Messrs Livasiri & Co, for the 2nd defendant (2nd applicant).

Remarks:
Appeal by 1st and 2nd Defendants to the Court of Final Appeal. Appeal dismissed. Please refer to the Appeal Judgment FACC000005/2001.