HKSAR v. Lam Rogerio Sou Fung
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CACC000619/2002 CACC619/2002 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO.619 OF 2002 (ON APPEAL FROM DCCC NO. 1043 OF 2001) ----------------------
______________ Coram: Hon Ma CJHC, Stuart-Moore V-P and Stock JA in Court Date of Hearing: 16 December 2003 Date of Judgment: 16 December 2003 Date of Handing Down Reasons: 14 January 2004 ------------------------------------- REASONS FOR JUDGMENT ------------------------------------- Hon Stock JA (giving the judgment of the Court): Introduction 1.The applicant faced trial in the District Court upon two charges of using a copy of a false instrument, contrary to section 74 of the Crimes Ordinance. The offences were said to have been committed together with one Ho Sui-shing, who was the first defendant at trial (D1). The applicant was the second defendant (D2). Ho did not appear, and so the trial proceeded against the applicant alone. On 22 November 2002 he was convicted on both charges by HH Judge Whaley and sentenced to a term of twenty months' imprisonment. He applied to this Court for leave to appeal against conviction. On 16 December 2002, we dismissed the appeal and said that we would provide reasons later. These are our reasons. The facts 2.The case centred upon a guarantee in the sum of US$600 million which purported to have been issued by Deutsche Bank Frankfurt in favour of a company called Natural Max Investment Ltd ("Natural Max"). That is an offshore company which had originally been owned by one Joshua Cheung, an architect. His evidence was that in February or March 2000, the applicant, whom he knew because he had worked with him on building projects, told him that Ho, whom Cheung had met and whom he understood to be a business man of considerable substance with important contacts on the Mainland, was about to arrange substantial funds, and that an offshore company was needed for the receipt of the funds. Cheung had previously purchased Natural Max and after a meeting between the applicant, Ho and a man called Cheng, that company was transferred to Ho and a bank account opened in its name. 3.Cheung shared offices with one Samuel Briskin who is a fund broker who acts as a financial middleman, introducing those holding financial instruments to others who are willing to discount them or to provide credit with the instruments as security. He had met Lily Hong who said she had an acquaintance who had a US$600 million guarantee which he wished to use as the basis for funding, and Samuel Briskin was introduced to her and agreed to seek funding from an Australian company called MFC. However, Briskin pressed for confirmation from Deutsche Bank of the guarantee and this resulted in the receipt by Briskin of two documents faxed to him on 5 May. One of the documents was a confirmation of the guarantee on behalf of Natural Max in favour of such beneficiary as was nominated by Natural Max. This purported to be signed by Rolf Breuer, Managing Director of Deutsche Bank, Frankfurt, and Josef Ackermann a Director there. The other document was headed "Verbiage of Bank Guarantee", again purporting to be issued by the Deutsche Bank Head Office in Frankfurt. However, when Briskin sent these documents to MFC in Australia, there was no reply, and Briskin was suspicious that all was not well with the documents. Therefore on 12 May 2000 he took the documents to Deutsche Bank in Hong Kong and was told that they were not genuine. Briskin informed Ho, Lily Hong and Cheng of this development and, not surprisingly, there followed a row and the agreement with Briskin was cancelled. 4.Joshua Cheung learned of what had transpired from Briskin, and he accompanied Briskin to Deutsche Bank on 19 May when bank officials showed Briskin and Cheung signatures in a signature record book which demonstrated that the signatures of Breuer and Ackermann on the confirmation were false. Cheung's evidence of what then transpired is very important to this case, for it was on the basis of this evidence, which the judge accepted, that the applicant was convicted. Cheung's evidence was that very soon after this meeting at the bank, on the same day, he telephoned the applicant to warn him not to waste any more time with Ho whom he felt was cheating everyone, and told the applicant that he, Cheung, had just ascertained first hand that the bank instruments were false, and that the signatures on them differed from the specimen signatures held by the bank. The applicant replied to the effect that he understood. The fact that Cheung attended a meeting at Deutsche Bank on 19 May with Briskin at which they were told that the signatures were forgeries was confirmed by the testimony of a senior legal counsel employed by the bank. 5.The evidence of Cheung was unequivocal in its effect. He was cross-examined about it, and the effect of the cross-examination was to suggest that what Cheung had been concerned to point out to the applicant was merely that caution should be exercised about Ho, that Ho was someone to be watched, and he was a person not to be trusted. Cheung insisted that that was not the point of the call:
6.This was not new information from Cheung, advanced for the first time at trial. He had said, as emerged in cross-examination, much the same to the investigating officers in the statement which he had made:
7.It is against this background that we move to 1 June 2000, which is the date alleged in the third charge. There were three charges on the charge sheet, the first against Ho alone; the second and third against Ho and the applicant. The third charge alleged an offence on 1 June 2000, and the second charge an offence on 5 June 2000. 8.On 1 June 2000, Mr Edward Chan who is the head of Corporate Banking in Credit Lyonnais in Hong Kong received a message from his Securities Office that Ho had approached their office and asked to open an account and to borrow US$200 million based upon a bank guarantee of US$600 million which had been issued by Deutsche Bank. An appointment was made for Ho to come to Mr Chan's offices that afternoon, and the meeting was attended by Mr Chan, Ho and the applicant. The applicant took an active part in the discussions, and Ho and the applicant spoke of a bridge project involving Hong Kong, Macau and Zhuhai. Ho and the applicant said that they wanted to open an account and to borrow US$200 million on the strength of the guarantee, and they showed the guarantee to Chan which bore the signatures of Breuer and Ackermann. They said that they wanted to use the US$200 million for the bridge project. After the meeting, Chan checked with Deutsche Bank and ascertained that the guarantee was false. 9.This meeting on 1 June led to the third charge which ran as follows: Statement of Offence
10.The genesis of the second charge goes back to 25 May. A telephone call was received by Deutsche Bank in Hong Kong from a man Goldner in London who said that he wanted to open an account, and that Mr Ho was his representative in Hong Kong and would be making contact. Sums were due to Ho, it was said, and an account was needed for their receipt. 11.On the same day, the applicant telephoned Mr Chung of Deutsche Bank, Hong Kong, and said that he would be bringing in Ho; and the two of them, Ho and the applicant, went to that bank and they said - the applicant doing most of the talking - that they wanted to open an account in the name of Natural Max and that Ho had substantial funds coming in through building projects. Ho said that he had accounts with Deutsche Bank in Frankfurt and he mentioned that Ackermann was his fund manager. This aroused the suspicion of the bank officers, because they knew that Ackermann was very senior indeed at Head Office, and not a fund manager. The two men were told that investigations into potential customers had to be conducted, and this was understood, and the applicant left his contact details with Chung. 12.There was further contact between the bank and the applicant, and on about 1 June the applicant handed Chung a copy of Ho's passport. 13.On 5 June, the applicant went to the Deutsche Bank offices and saw Mr Chung and produced to him a copy of the bank guarantee. The bank officials knew at once that it was not genuine because they knew that Breuer and Ackermann would not sign such a document. Chung told the applicant that the document did not look genuine to which the applicant responded that he understood, and that he was only assisting Ho, and that he had no idea whence Ho would be receiving his money. 14.The applicant's activities on 5 June led to the second charge, which was precisely to the same effect as the first, save that the inducement was alleged to have been directed at representatives of Deutsche Bank, Hong Kong. 15.The applicant was interviewed in October 2001, an interview at his own request. 16.The applicant, who appeared before the court as a person without previous convictions, a man in his sixties, did not give evidence at his trial. The judge's analysis 17.The facts, as we have recounted them, are none of them disputed for the purpose of this appeal. In particular, it is accepted for the purpose of this appeal that the evidence of Joshua Cheung was accurate. The sole issue in the case, as the judge expressly recognized (paragraph 73, Reasons for Verdict) was whether it had been proved that the applicant knew the guarantee documents which had been presented to Credit Lyonnais and to Deutsche Bank to be false. He addressed the obvious question, which was why this applicant, experienced in business affairs, would lend himself to the use of a false document knowing it to be false "since it would surely have been obvious to him that checks would inevitably be made by the banks, and the falsity of the documents would be very quickly discovered?" (paragraph 76). There was no evidence to suggest that the applicant would gain by this fraud; and there was no evidence that he had any contact with Samuel Briskin. 18.The judge correctly said that Joshua Cheung was a witness of critical importance. He noted that the content of the call with Cheung on 19 May was disputed, but not its making. The judge said that Cheung was an excellent witness, very clear in his recollection, and that he, the judge, was satisfied beyond reasonable doubt that in the course of that conversation he told the applicant that the documents were false and that he had seen the signature records which proved it. "... from that point in time", said the judge "the defendant could have been under no misapprehension as to its effect, nor did he have any reason on the evidence to doubt the truth or the accuracy of what Mr Cheung told him." (paragraph 87, Reasons for Verdict). 19.The judge was unable to answer the question posed as to why the applicant would participate in the presentation of the documents knowing that their authenticity would be checked. The same question, he said, arose in relation to Ho, because it was clear, in the light of the testimony of Briskin and others, that Ho knew well before 1st June that the guarantee document was bogus. There was, said the judge, no answer which he could provide to the question, but he was nonetheless sure that the applicant knew that the documents were false and that he had committed the offences charged. Accordingly, he convicted him. This appeal (1) The argument 20.We can conveniently compress the grounds of appeal into the contention put by Mr Macrae, S.C. in his oral argument. The contention was this: that the testimony called against the applicant was insufficient from which to draw the inference that the applicant knew or believed on 1 or 5 June 2000 that the documents which he produced were false. In particular, it was said that the judge ignored material evidence of the applicant's conduct between 19 May and 5 June which conduct, so the argument ran, suggested that the applicant's actions were inconsistent with an understanding or acceptance of what Cheung had told the applicant on 19 May. 21.So the suggestion was that the evidence about activities, particularly between 19 May and 5 June, by the applicant and by those whom he had contacted in relation to the opening of an account for Ho with Deutsche Bank in Hong Kong, and in relation to the issue of discounted guarantees, the funds from which were intended to flow to that account, tended to show that the applicant could not have taken seriously what Cheung had told him, or did not accept what Cheung had told him, or had reason to believe that what Cheung had told him may not have been accurate; so that knowledge of falsity of the instruments on the material dates was not established beyond a reasonable doubt. It was argued that the judge failed to acknowledge the importance of the evidence of events between 19 May and 5 June, and treated part of the evidence which related to that period as inadmissible evidence, when in fact it was not. That evidence was said to be:
22.To understand this argument, we need to summarise the part which these people, Mr Kading, Ms Hollenstein, and Ms Lam played in the events of those months, and the relevant correspondence. (2) Mr Kading 23.Mr Kading is a businessman operating out of Singapore. He, too, is a financial middleman. He knew the applicant from days when Kading lived in Hong Kong. In 1999 the applicant contacted him and, putting the matter shortly, he sought to interest Kading in securing discounting of the papers and there was a dinner in Hong Kong which Kading attended with Ho and the applicant. The matter was revived in late 1999, and Ms Hollenstein was brought into the picture. She has European connections which it was thought would be required to push the process further. The subject picked up in May 2000 when Lam called Kading and said that Ho had received a letter from Deutsche Bank as well as a sample guarantee in favour of Natural Max. As a result of this conversation, Kading wrote to Hollenstein who in turn, according to Kading, contacted a Dr Stratmann in Germany. Dr Stratmann, we were told, is a lawyer in Germany. We know no more about him than that. 24.On 19 May Kading received two documents from the applicant: the guarantee and the verbiage. These were sent to Hollenstein for onward transmission to Stratmann. According to Kading, Stratmann confirmed with Hollenstein that he, Stratmann, could "work with" the documents sent, and that they were acceptable, and he sent through Kading to the applicant three documents: a mandate letter, a client summary detail form, and a funds ownership declaration form. They were signed by Ho and witnessed by the applicant and returned to Kading. 25.According to Kading, on 24 May, Stratmann sent an e-mail to Kading via Hollenstein saying that the transaction could proceed and that he, Stratmann, would arrange through one Dr Rueschen of Deutsche Bank Frankfurt for Ho to open an account for Natural Max with Deutsche Bank, Hong Kong, to receive US$100 million being the discounted value of four bank guarantees at US$50 million each. Kading said in his statement that he told this to the applicant. Later that day, the applicant told Kading that Ho had sent a request to Ackermann to issue four bank guarantees valued at US$50 million each to an account in Monte Carlo which had been nominated by Stratmann. Kading's statement says that according to the applicant, Ho's request to Ackermann to issue the bank guarantees was sent by Ho and that he, the applicant, was not present. 26.However, as we have seen, the attempt in Hong Kong to open an account at Deutsche Bank, during an interview with Mr Chung, failed and this failure was reported to Kading and to Hollenstein and to Stratmann. 27.On 29 May Stratmann sent an e-mail to Pamela Lam, the applicant's daughter, encouraging the applicant to press the matter, explaining or saying that once it was appreciated by Chung that Rueschen knew Ho, the deal would proceed more smoothly. 28.The applicant sent an e-mail on 30 May to Kading in which he said that Ho was to send a letter to Ackermann and ended:
29.In the event, the guarantees did not materialise and we see that on 5 July 2000, Kading wrote to the applicant by e-mail, after Stratmann had been arrested in Germany, saying that the documents had still not been verified, and threatening action should he, Kading, be held responsible for any damages. (3) Ms Hollenstein 30.The second person whose statements were tendered under section 65 of the Criminal Procedure Ordinance, Cap 221 was Hollenstein. The proposition put to her by Kading in mid-May 2000 was for the discounting of twelve bank guarantees each in the sum of US$50 million in favour of Natural Max from Deutsche Bank. So she forwarded the documents to Stratmann in Germany for him to verify whether the documents were genuine. Stratmann contacted her a few hours later saying that he was prepared to enter into a transaction on the strength of the documents, provided that he obtained a letter of appointment (a mandate), a declaration of funds ownership, a copy of Ho's passport, and a client evaluation summary. On 22 May, she and Stratmann were appointed to act for Natural Max under the instruction of Ho to discount or to arrange other suitable financial transactions for Ho, and the applicant witnessed the appointment letter of that date. As she understood it, an initial amount of US$500 million had been reserved. 31.She spoke in a second statement of an incident on 24 May 2000 when Ho asked that Stratmann be contacted for the fax number of Messrs Breuer and Ackermann, whom he said he would contact to see that matters progressed more swiftly. A conference call was arranged with Stratmann and Deutsche Bank and the number of Breuer was provided. (4) Ms Lam 32.There is evidence that a fax was in fact sent on 24 May from the offices of the applicant's daughter, Pamela Lam. She said in a statement, again produced pursuant to the provisions of section 65B of the Criminal Procedure Ordinance, that on the afternoon of 24 May 2000, her father, the applicant, came to her office and gave to her a draft letter to be typed, that that letter was typed, and was faxed at the applicant's request to a fax number said to be that of Deutsche Bank in Germany. We have a copy of that letter. It is addressed to Mr Ackermann and says:
33.We do not have the letter of 5 May, nor any reply to the fax. Analysis 34.We were taken by Mr Macrae in detail through the evidence and the documentation and the judge's reasoning, but most particularly through the chronology of events from 19 May to 1 June 2000, concentrating on the activities of Kading, Hollenstein, Ho and the applicant, and the relevant correspondence during that period; all in order to show that the conduct of the applicant and what these people were telling him, suggested that the applicant may well have misunderstood or not accepted what he had been told by Joshua Cheung on 19 May. 35.Leaving aside altogether for the moment the hearsay aspects of those statements and the judge's treatment of Hollenstein's statements as being entirely inadmissible because of hearsay, there is a prior and vital question, which is the relevance of these documents and events to the state of mind of the applicant on 1 June and 5 June as to the genuineness of the two documents produced to Deutsche Bank on 19 May, (which were the same produced to the two banks in June). 36.The documents to which we were taken included the instructions given to Ms Hollenstein and Dr Stratmann on 22 May; the client data summary of 22 May referring to Ho; and the funds application ownership declaration; as well as a message from Dr Stratmann to the applicant dated 29 May in which Dr Stratmann says that Dr Rueschen in Germany is a personal friend who is being very positive and there is great hope expressed that through him the bank in Hong Kong will be persuaded to permit Ho to open an account. We were also shown letters from the applicant to Dr Stratmann saying that Ho "is checking with Ackermann re the issuing of [Bank Guarantees]"; and in particular to the fax of 24 May. 37.It is important, indeed vital, to ascertain what all this documentation and activity reveal. All it reveals is that the applicant and others, Ho in particular, were seeking to raise funds, not through Samuel Briskin, a route that had failed, but through others, namely with the assistance of Kading and Hollenstein and trying, perhaps, to persuade the Head Office in Germany to put pressure on the Hong Kong Branch of Deutsche Bank to open an account for Ho. Mr Macrae argued that it was all an ongoing process of verification of the original documents. With respect, it was nothing of the sort. Indeed, the documents which we have been shown are remarkable for the very fact that they reveal no attempt whatsoever to verify the authenticity of the documents in the question. 38.We note, in particular that:
39.This is by no means an exhaustive rehearsal of the relevant documents. It suffices to say that the history and documentation that we were shown constitute red herrings, in the sense that they were not to the point of the charges, which were that on 1 and 5 June the applicant used these instruments knowing them to be false. The documents show that he and others were seeking to raise guarantees, and the opening of an account or accounts; and not that they were seeking to check what he had been told by Joshua Cheung in very clear terms, nor that he had cause to believe that what Joshua Cheung had told him might be untrue. To the contrary, they show no attempt by him at all to check what he had been told; the step which any honest man would have taken as a first step, and no attempt to tell those with whom he dealt that the authenticity of the documents had at the least seriously been questioned. 40.It was said that the message of 24 May was vitally important, and that it is beyond belief that it would have been sent to the very man whose signature had been forged, had the sender been aware of that fact. It remains the case that that message was not sent to Ackermann's address but to Breuer's, and that there is no record of its receipt, and it is accepted that there is no trace of any response to it. It was a matter of which the judge was fully aware. He referred to it and to the detail of it at paragraph 66 of his Reasons for Verdict - indeed, he devoted that entire paragraph to it and its contents and context. 41.What the judge said at the end of his Reasons for Verdict was this:
42.It is as clear as can be that the judge was aware of the kernel of the defence case, made in the absence of any evidence from the applicant, that it was extraordinary for the applicant to produce these documents to the very people who would know that they were false. There was, in the circumstances, no need for him to spell out the facts that that consideration applied also the fax suggestedly sent to Ackermann. He referred, too, to the possibility of collaboration by someone at the bank, the mere reference to which shows that he must have had this fax in mind when he made that comment. 43.The background to the scam upon which Ho was engaged and the full details of it are self-evidently very complex. The full picture will be known only to those engaged upon it. The fact that a court is not able to paint the full factual picture is by no means necessarily a passport to an acquittal. A court is not required to know all the facts. It is required to address the evidence before it, and to decide upon that evidence what it is that is proved and what is not. In some cases, inherent probabilities will lend themselves to the formation of doubt. In others, and this case is one, the background may be so sophisticated and complex that what may be inherently unlikely in one situation is overwhelmed by the evidence which presents itself. That was the effect of the evidence of Joshua Cheung in this case and, we would add, by the steps which the applicant did not take having been told by Joshua Cheung that the documents were false. This is what this judge was saying, no more and no less, and we can see no fault in his approach. Conclusion 44.Accordingly, we dismissed the application for leave to appeal against conviction.
Representation: Mr Andrew Macrae, SC leading Mr Graham Harris and Ms Maggie Wong Pui-kee instructed by Messrs K C Yung & Co. for the Applicant Mr John Reading, SC, DDPP leading Miss Ada Chan, GC of the Department of Justice for the Respondent Remarks: |
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