HKSAR v. Chiu Kit and Another

DCCC761/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 761 OF 2008

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Reasons for Sentence

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1.I convicted the defendants after trial on a charge alleging that they dealt in property known or believed to represent the proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap.455.

2.The particulars aver that between 23 June 2005 and 17 June 2006 in Hong Kong knowing or having reasonable grounds to believe that properties, namely the total sum of US$5,171,047.52, Euro currency 2,970,733.10, British pound sterling 2,496.43 and HK$28,777.50, being the total choses in action owed by the Hongkong and Shanghai Banking Corporation Limited to One Sky International Limited and Cober International Limited, in whole or in part, directly or indirectly represented any person’s proceeds of any indictable offence dealt with the said properties.  In Hong Kong currency the total amount is about HK$42 million.

3.The 1st defendant is the daughter of the 2nd defendant.  The 1st defendant is the holder of a Hong Kong identity card and the 2nd defendant is a Chinese identity card holder.

4.On 20 June 2005 One Sky International Limited (“One Sky”) and CFC International Limited (“CFC”) were incorporated in Hong Kong.  The 2nd defendant was the sole director and shareholder of both companies.  The registered office of both companies is Unit A, 14th floor, Shun On Commercial Building, 112-4 Des Voeux Road Central, Hong Kong.  This is also the registered address of Company Kit Registrations Limited (“Company Kit”), a secretarial service provider. 

5.On 29 July 2005 the name of CFC was changed to Cober International Limited, Cober.  On 27 August 2005 the 2nd defendant resigned as a director of One Sky and Cober.  A female Zhang Lanping, the holder of a China identity card, became the director of each company.  She gave an address in Shanghai as her residential address.  On 20 February 2006 One Sky was deregistered and on 12 June Cober was deregistered.

6.At all material times the 1st and 2nd defendant were directors of Success Offshore Incorporations (HK) Limited (“Success”), a secretarial service provider.  One Sky and CFC were set up on the instructions of Success Offshore to employ the Company Kit Registrations Limited, Company Kit, a secretarial service provider, as the secretary for One Sky and CFC.

7.On 24 June 2005 the 2nd defendant opened accounts for One Sky and CFC with HSBC in Hong Kong.  He was the only signatory for both accounts and he deposited $2,000 into each.  He gave his business address of both companies the registered office of Success Offshore.

8.According to information recorded in the bank opening mandates, P1 and P2, One Sky and CFC dealt in chemical materials, for example, paint, glue and refrigerant.  It is said that the sales locations for CFC were Europe and South Africa, whereas for One Sky, they were Asia, China and Hong Kong.  The mandates also record that D2 had been a director for 40 years and it was expected each company would receive 120 transactions a year, amounting to some US$0.9 million.  It is also recorded that each company had 10 staff in China and that the accounts were acquired to receive payments in Hong Kong.

9.Between 4 August 2005 and 24 December the same year there were 96 deposits into the account of One Sky.  Soon after monies were received, they were withdrawn or remitted to other bank accounts.  HSBC closed the account on 24 December 2005 following complaints from overseas senders of money.

10.Between 14 September 2005 and 20 January 2006, there were 37 deposits into the account of CFC.  Again monies paid in were soon afterwards either withdrawn or transferred to other bank accounts.  HSBC closed that account on 16 June 2006 following complaints from overseas senders.

11.The total sum paid into the two accounts is as set out in the charge, and as I indicated earlier, the total amount involves some HK$42 million.  Amounts withdrawn from the two accounts were paid into two HSBC Hong Kong accounts of two Hong Kong companies, 15 mainland bank accounts belonging to 10 mainland companies and 5 mainlanders, a Taiwan bank account of a Taiwanese company and a Swiss bank account of a Swiss national.  These deposits include two deposits into the personal bank account of the 1st defendant which were finally deposited in a mainland bank for two sums of US$26,722 deposited on 24 November 2005 and US$957 deposited on the same day.

12.At 3 pm on 24 April 2006 the 1st defendant was arrested by the police at the registered address of Success Offshore.  She was interviewed in connection with the deposits made into her personal account on 24 November 2005.  She explained to the police that her cousin’s boyfriend called Cai had business in Africa and asked her to set up some businesses in Hong Kong to transfer money from Africa to Hong Kong to the mainland.  She said she was told it was not convenient for the boyfriend to set up companies in Hong Kong.  She said that she arranged for the secretarial company in Hong Kong to set up One Sky and opened a bank account.  She said the director, she did not refer to him as the father, resigned because of his age and a mainlander she had not met took over the directorship. 

13.On 12 August 2008 the police arrested the 2nd defendant at the residence of the 1st defendant.

14.I convicted both of the defendants after trial.  And in fairness to the defendants, much of the prosecution case was not in dispute.  A number of admissions were made under the provisions of section 65C of the Criminal Procedure Ordinance, Cap.221. 

15.Both defendants have clear records.  I was told in mitigation that the 1st defendant is 39 years of age.  She was born on the mainland and came to Hong Kong in 1995.  She is a married lady with a daughter aged 12.  I was told that she worked as a company secretary for Success and earned approximately $9,000 per month from that employment and worked for two other accounting firms.  I was told that in April of this year she had become pregnant and had a termination of that pregnancy shortly before her last court appearance. 

16.The 2nd defendant is 75 years of age and is retired.  He suffers from high blood pressure.  I am told that he also has listening problems and comprehension difficulties.  It was urged upon me that the 2nd defendant had played a more minor role in the offence which I convicted him of.  It is difficult to say whether or not it was a minor role, it was an essential part in this conspiracy because he went to the bank and opened the accounts telling the bank staff a pack of lies.

17.Money laundering is clearly a very serious offence.  It is an attempt to legitimize proceeds from criminal activities.  Serious criminal offences are very often motivated by financial gains of those who assist criminals in laundering money indirectly, encourage them in their criminal activities.  Successful deterrence against money laundering could be effective measures against the crime.  The maximum sentence for money laundering is a fine of $5 million and 14 years’ imprisonment which perhaps is a reflection of how such an offence is viewed.

18.Yeung JA in HKSAR v Javid Kamran CACC400/2004 noted that it was not feasible to lay down guidelines for sentence of money laundering offences as there was a very wide range of culpability. 

19.It has been urged upon me in relation to both offences that a factor that I should take into consideration in this case is the factor of delay.  The offences were committed back in 2005, 2006.  The 1st defendant was arrested by the police on 24 April 2006.  And I note that that arrest was made in relation to the deposit made into her account on 24 November 2005.  Further investigations were obviously made by the prosecution and the defendant was re-arrested on 12 August 2008 at her company’s premises.  Her father was arrested on the same day at the home of the 1st defendant.  There is no doubt that thereafter the matter proceeded with commendable expedience.  The transfer was 28 August 2008.

20.The delay that is referred to and I have been asked to take into consideration is the delay that occurred between 24 April 2006 and 12 August 2008.  Inevitably, in cases of this nature, investigations are protracted.  I note that the funds paid into the two accounts came from a variety of countries including the USA, Canada, UK, Switzerland, Germany, Australia and other places.  As I mentioned earlier, amounts withdrawn from the two accounts were paid into two HSBC Hong Kong accounts of two Hong Kong companies, 15 mainland bank accounts belonging to 10 mainland companies and 5 mainlanders, a Taiwan bank account and a Swiss bank account.

21.Inevitably, the investigation and consideration of the evidence collected during that investigation would have taken some time and in my view the delay in this case is not excessive.

22.In respect of both defendants I have had letters presented to me.  In respect of the 1st defendant, letters have been submitted by the defendant’s husband and his letter speaks of the tremendous assistance that his wife has been to him to enable him to qualify as an accountant and support the family.  It also refers to the fact that he suffered from a long-term liver disease.  Also placed before the court is a letter from a friend of the defendant who is an accountant.  She has had a working relationship with the defendant and describes her as an honest and reliable person and refers to an occasion when there had been an overpayment of HK$70,000 which the 1st defendant brought to her attention. 

23.I have had letters from the wife of the 2nd defendant.   They had been married for 50 years.  And also from the son of the defendant who is a police officer in China.  Both refer to the 2nd defendant as a man of integrity, devoted to charitable courses and a role model as far as they are concerned.  These letters make it even more regrettable the signal fall from grace which this conviction would obviously bring about. 

24.In respect of the 2nd defendant, two further matters have been urged upon me as matters of mitigation.  The first is the advanced age of the defendant and the second is his medical condition.  I have before me a medical report dated 1 June 2009 which states that the defendant had suffered from hypertension for 20 years and been treated for that on the mainland.  During his time in custody he has had occasions to be taken to hospital and treated for his hypertension problems.  He has also been treated for a lung problem.  The physical examination over his cardio vascular system, chest and abdomen revealed no major abnormality. 

25.In HKSAR v Tam Yuen Tong [2007] 1 HKLRD 894, 895-6, McMahon J said the following:

“Advanced age, it may fairly be said, is not in principle a mitigating factor but a court is entitled to take it into account where it thinks appropriate, and as an act of mercy use it as a basis for a discount on sentence.  That is particularly so when advanced age is combined with an unblemished character.”

He went on to state that:

“Ill health generally will not normally operate as a mitigating factor.   That is because prison medical facilities are regarded as adequate to deal with prisoners’ physical complaints.  Accordingly, the ill health, with the exception of perhaps very serious ill health, of an offender will not normally be a matter taken into account in mitigation.  However, in exceptional circumstances and as an act of mercy rather than a principle of mitigation, ill health may result in a reduction of sentence.”

26.In my view, this is a serious case of money laundering involving a considerable amount of money and some sophistication.  The appropriate sentence in my view for this offence is one of 5 years’ imprisonment.  As an act of mercy, in the case of the 2nd defendant, I reduce that sentence by 6 months to 4 years and 6 months. 

27.Stand up, defendants.  1st defendant, for the offence of which I have convicted you, I sentence you to 5 years’ imprisonment.  2nd defendant, I sentence you to 4 years and 6 months’ imprisonment.