The Queen v. Simon Yip Chun-ling
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THE COURT OF APPEAL 1987 No.250 BETWEEN: THE QUEEN and Simon YIP Chun-ling Coram: Yang, Acting C.J., Power, J.A. & Penlington, J. Date: 13th August, 1987 ______________________ J U D G M E N T ______________________ Yang, Acting C.J. 1. This is a series of prosecutions for commercial fraud arising out of the now well-known Overseas Trust Bank frauds. Except for the Chairman of the Bank, T.C. Huang, who was convicted of two counts of publishing false financial statements, all the others, as the applicant in this case, were convicted of two or more counts of conspiracy to defraud. T.C. Huang and the applicant, as well as the accused in the other prosecutions, pleaded guilty to their respective charges. 2. Except for T.C. Huang’s case, the judges adopted a starting point of about 6 years. In the cases against Patrick Chang and CHUNG Chiu-fat, the judges adopted as a starting a sentence of 6 years' imprisonment on conviction after trial. In the case of Dominic Cheung, the starting point was "a point near the statutory maximum", which was 7 years at the time. For this applicant, Mr. Justice Barnes adopted a starting point of 6½ years as he was of the view that the offences were, "the first offence in particular, so serious as to warrant a sentence pretty close to the maximum”. 3. After taking into account the pleas of guilty and other factors in mitigation, Patrick Chang was given concurrent sentences of three years' imprisonment on each of the four counts of conspiracy to defraud. 4. CHUNG Chiu-fat's concurrent sentences of 3 years on each of the two counts were reduced to 2 years on appeal. 5. Dominic Cheung was given concurrent sentences of 2 years on each of the two counts but upon the Attorney General's application for review, his sentence on the first count was reduced to 1 year and his sentence on the second count was increased to 3 years, the sentences to run consecutively, thereby making a total of 4 years. 6. Mr. Justice Barnes, in this case, imposed consecutive sentences of 5 years and 3 years on count 1 and count 4 respectively. 7. The facts of this case are very complicated, but for the purpose of this application for leave to appeal against sentence, it is necessary only to give the briefest outline of the applicant's role in the two conspiracies to defraud. 8. Count 1 alleges, inter alia, a cheque-kiting exercise initiated by the applicant to defraud the Overseas Trust Bank (“O.T.B.”) by dishonestly causing the bank to purchase from Dominican Finance Limited U.S.$ cheques drawn on an account in the name of Chung Hwa Enterprise Company at the Liu Chong Hing Bank in San Francisco, United States of America, and by crediting current accounts of Dominican Finance Limited and Chung Hwa Enterprise Company at the head office of O.T.B. with HK$ equivalent of the amount of US$ cheques so drawn when -
9. When the cheque-kiting exercise collapsed, as was inevitable sooner or later, as there were never genuine funds to cover the US$ cheques, a cover-up operation initiated by T.C. Huang and others in the senior management of O.T.B., and agreed to by the applicant, was mounted, to disguise the dire position in which the bank found itself. For, by March 1962, O.T.B. was left holding dishonoured cheques they had purchased from the applicant and his group of companies to the tune of some US$66.8M. 10. The cover-up operation is the subject matter of the fourth count. This involved the conspiracy dishonestly to cause and permit the omission from and the concealment within the books of account, records and financial returns of O.T.B. of losses of O.T.B. totalling approximately uS$66.8M. resulting from the dishonour of certain US$ cheques purchased by O.T.B. from Dominican Finance Limited. 11. The applicant was informed of the scheme and agreed to assist by forming companies so that these companies would be bogus borrowers. To this end, these companies would also prepare and sign whatever documents were required. 12. According to the agreed facts, submitted in the court below, instead of taking the proper course on the dishonour of the cheques, it. was agreed at a meeting with the applicant a short time later, to implement the cover-up scheme. 13. The cover-up scheme commenced in early March 1982 and was by way of a complicated scheme of fictitious loans and advances being recorded in the books of accounts and records of O.T.B. 14. Rather than recording the US$66.8M. as losses to O.T.B., various “reversal entries” were used to record all but a small part of the loss as loans and advances by O.T.B. to various customers. These loans and advances had no commercial substance and were used to inflate the profits of O.T.B. and to reduce the balances of the applicant's group of companies with the bank. These “reversal entries” were made under T.C. Huang’s instructions and with the applicant's agreement and support during the period 9th March, 1982 to 30th June, 1982. Many of the false entries were made several months after the initial dishonour. 15. The cover-up continued until the collapse of the bank in June 1985. The applicant, together with other co-conspirators organised to have himself and his relatives and associates sign various bogus guarantees and other loan documentation in order to make the loans look genuine. False files and documents were also prepared on the instructions of T.C. Huang. The applicant agreed to and arranged for the production of much of the bogus support documentation. 16. By 7th June, 1905, the outstanding position of these false loans was that a sum of approximately US$90M. was owed to O.T.B. This figure was made up of the initial false loans and advances which escalated as a result of capitalization of interest and foreign exchange fluctuations. On that same day, the Government acquired O.T.B. under the Overseas Trust Bank (Acquisition) Ordinance 1905. 17. On those facts it would appear that the applicant was the instigator and prime mover of the cheque-kiting scheme. When the scheme failed the bank felt it necessary to conceal the enormous losses they had suffered and devised a cover-up in which the applicant, whilst not the instigator was nevertheless willing to give his full co-operation. 18. It is, as Mr. Lloyd for the Crown submits, difficult to think of a worse case than this. The starting point of 6½ years is, in our view, perfectly justified in the circumstances. 19. The judge also took into consideration all the mitigating factors, for example, that he is now 59, that there was no attempt to escape, that he voluntarily returned to Hong Kong to “face the music”, that he readily pleaded guilty, that he gave valuable assistance to the authorities and so on. We are unable to say that the Judge failed to consider or failed to have sufficient regard for the circumstances in mitigation. 20. Then it is argued by Mr. Ching for the applicant, that the judge should have imposed concurrent rather than consecutive sentences as the facts of the two counts arose out of the same transaction. We do not share this view. These were quite separate though inter-related acts and one did not necessarily follow from the other. In our judgment, the judge was quite right in imposing consecutive sentences as he did. 21. The only matter which exercises our minds is the totality of 8 years. It is clear from the most recent authorities, namely, Attorney General v. Dominic Cheung[1] and Attorney General v.Shamsudin[2], the attitude of the courts on large commercial frauds has toughened considerably. In this context we remind ourselves of the judgment of Cons, V.P. in Shamsudin at p.12 and the judgment of Roskill, L.J. in Stroud[3] cited in that case. The maximum sentence for conspiracy to defraud has been increased to 14 years, showing the concern also of the Legislature. 22. However, in fairness to the applicant, we do not think we should entirely overlook the sentences imposed in what might compendiously be described as the other O.T.B. trials. In our view, the totality of the sentences in this case must bear some relation to the sentences in those other O.T.B. trials. 23. In the circumstances, giving due credit for all that has been said in mitigation, we think a totality of 6 years is appropriate. 24. We therefore allow the application, treat the application as the appeal proper and allow the appeal. We order that the sentence of 3 years on Count 4 to run consecutively to the sentence of 5 years in Count 1 but the 3 years sentence shall commence at the beginning of the fourth year of the five years sentence on Count 1, thereby making a total of 6 years.
C. Ching, Q.C. & P. Nguyen (K.K. & Winson Chu) for Applicant I. Lloyd & G.J.X. McCoy for Crown/Respondent [1] [1987] App. For Review No.1 [2] [1987] App. For Review No.3 [3] [1977] Cr. App. R. (Sentences) 150 |