HKSAR v. Yip Kim Po and Others
Read the full judgment text of DCCC 960/2007 on BabelCite. This District Court judgment was delivered on 23 March 2006.
1. The defendants entered not guilty pleas to the following charges:
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DCCC960 of 2007 & 551/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NUMBER 960 OF 2007 & 551 OF 2008 ____________
Before: HH Judge Browne Date of Hearing: 6 July 2009 to 9 June 2010 Date of Verdict: 16 September 2010 ________________________ INDEX ________________________
_____________________________________________ REASONS FOR VERDICT _____________________________________________ 1.The defendants entered not guilty pleas to the following charges:
Background 2.The charges concern the activities of a publicly listed company, Ocean Grand Holdings Limited (OGH), and companies within its corporate structure. 3.D1 was the executive chairman of OGH and the beneficial owner of 31.14% of its issued share capital. 4.D2 is the sister of D1 and was a director of OGH. D2 was also the director of other companies within the group namely, Kenlap PGC Manufacturer Company Limited (Kenlap PGC), Kenlap Chemicals Limited (KCL), OG Development Company Limited ( OGD) and Hing Yip Holdings Limited (Hing Yip). D1 and D2 were authorized signatories of these companies’ bank accounts. 5.D3 was employed as a project director with the OGH group and the prosecution maintained that he reported directly to D1. 6.Zhu Weibing (Zhu), named in the first and certain other charges, was employed within the OGH group as an Assistant Financial Controller. He dealt with the fund movements of OGH and all its subsidiaries and, according to the prosecution, reported directly to D1. 7.It was alleged that D4 and D6 were nominee directors of shell companies set up for the purpose of opening bank accounts through which funds could be dishonestly diverted from OGH accounts. It was alleged that D2 had approached a long standing friend, Chung Ngai Man (PW40), to hold a company on behalf of OGH and to invite some of his friends also to do likewise. D4 and D6 were friends of PW40. 8.It was alleged that D5 is a friend of D1 and the sole director and bank signatory of a company called Good Light Limited (Good Light). It was alleged that he allowed his company’s bank account to be used for channelling monies dishonestly diverted from OGH accounts. 9.There are two groups of charges. The first group, charges 1-13, relate to an alleged conspiracy whereby OGD entered into a sham contract with a shell company called Greatson Corporation Limited (Greatson). It was alleged that monies were diverted from OGH purportedly pursuant to this sham contract. The second group, charges 14-18, alleged a similar conspiracy whereby sham contracts were entered into by Kenlap PGC with a shell company called Long Asset Limited (Long Asset) and another company called Fong Long Overseas (Industrial) Limited (Fong Long). It was alleged that monies were diverted from Kenlap PGC through the bank accounts of Long Asset and Fong Long purportedly pursuant to these sham contracts. Charges 1-13 – OGD/ Greatson Contract 10.The prosecution alleged that these charges arose from a dishonest and fraudulent scheme whereby OGD was procured to enter into a contract, (the OGD Contract), to purchase items of machinery from Greatson for some HKD153 million. It was alleged that the purchases were not made pursuant to this contract but that HKD136.7 million was paid to Greatson by OGD and Hing Yip, purportedly pursuant to the contract, and thereafter, disbursed contrary to the economic interests of OGD and Hing Yip (charge 1, D1-D3). 11.Greatson was set up in March 2004. It was alleged that D2 contacted a friend of hers, Chung Ngai Man, PW40, and arranged for him and some of his friends to act as nominee directors for certain shell companies. PW40 gave evidence under immunity. It was alleged that these nominees were put in touch with D3 who arranged for them to be appointed as sole directors of these companies and for some of them to open corporate bank accounts for which they would be the sole signatories. D4 was a friend of PW40 and it was arranged that he would become the sole director of Greatson and sole signatory of its two bank accounts. 12.Because of the amount to be paid for the machinery, the purported purchase was a discloseable transaction under the Stock Exchange Listing Rules. On the 4th November 2005 OGH published an announcement (the Announcement). The Announcement stated, inter alia, that Greatson was an independent third party and the transaction was conducted at arm’s length (charge 2, D1-D3, Charge 3, D3 only). It was alleged that D1 to D3 knew the Announcement to be false. 13.On the 21st November 2005 a circular (the Circular) was issued by OGH to its shareholders repeating the representations made in the Announcement ( Charge 4, D1). Payments pursuant to the OGD Contract 14.It was alleged that between 21 November 2005 and 21 March 2006 payments totaling HKD136.7 million were made by the OGH group to Greatson, purportedly pursuant to this contract. 15.It was alleged that HKD121.2 million of the HKD136.7 million paid to Greatson was then paid to other companies whose directors were connected to D1 and D2 and used for purposes unconnected with the OGD contract and that such payments were for a purpose other than the benefit of OGD. 16.Charges 5,9,10 11 and 12 concern funds dealt with under this illegal scheme. 17.Good Light Limited (Good Light) was purchased in the name of D5, a friend of D1, who was its sole director and shareholder and sole signatory to its bank account. It was alleged that HKD26,944,000 was moved through this account pursuant to the illegal scheme. 18.It was alleged that D3 dishonestly sent false e-mails from an OGH computer in relation to this dishonest scheme (Charges 6 to 8). Charges 14-18 – The Kenlap PGC – Long Asset/ Fong Long Contracts 19.The prosecution alleged that D1 and D3 entered into a fraudulent and dishonest scheme whereby Kenlap PGC was purported to purchase items of machinery for HKD28.2 million, a price far beyond their true value. It was alleged that monies were paid to Long Asset and Fong Long purportedly pursuant to these contracts and that the economic interests of Kenlap PGC and its shareholders were thereby adversely affected – Charge 14. 20.It was proposed that gold bonding wire machines would be purchased for a factory of Kenlap PGC in Zhuhai on the mainland. It was alleged that D3 was the person to deal with this matter. 21.The purchase was to be made via Shanghai WACmach Corporation Limited (WACmach) an agent of the European manufacturers of gold bonding wire machines. Fine wire drawing machines were to be purchased from a Swiss company, SOMA AG,and the winding machines from a German company, IWT Industrielle Wickeltechnik GmbH ( “IWT”) 22.By a contract dated the 23rd March 2006, Kenlap PGC agreed to buy five Soma fine wire drawing machines from a shell company ,Long Asset, for an amount equivalent to about HKD18.9 million. 23.D6, a friend of PW40, was the sole director and shareholder of Long Asset and the sole signatory of its bank account. It was alleged that Fong Long had three directors, two being mainland citizens and a Macau citizen. One of the mainlanders was You Shuiquing who was alleged to be a friend and associate of D1. 24.By a contract dated the 27th March 2005 Kenlap PGC agreed to buy five IWT winding machines from Fong Long for the equivalent of approximately HKD9.3 million. 25.Pursuant to these contracts, deposits of HKD7,014,016 and HKD7,580,520 were paid by Kenlap PGC to Long Asset and Fong Long respectively. 26.OGH had been in communication with the general manager of WACmach, PW63, about purchasing machinery from Soma and IWT. It was alleged that on the 4th April 2005, PW63 was asked by D3 that the contracts relating to the sale of the equipment be made in the names of Long Asset and Fong Long. 27.By a contract dated 18 April 2006, Long Asset agreed to buy five fine wire drawing machines from Soma for the equivalent of about HKD5.94 million. 28.By contract dated the 18 April 2006, Fong Long agreed to buy three IWT winding machines from IWT for the equivalent of about HKD740,000. 29.Fong Long and Long Asset allegedly distributed the money received by them in various ways. It was alleged that nearly all the money paid by Kenlap PGC to Long Asset and Fong Long was almost immediately paid back to Kenlap PGC or its subsidiary, KCL, via various companies controlled by persons connected with D1 or via a company purchased on behalf of OGH. The payments were falsely described in the books of account of Kenlap PGC and KCL as income from sales of metal salts. Evidence of Former Staff of OGH 30.A number of the former staff of OGH were called to give evidence. Before dealing with their evidence in detail I propose to set out briefly their relationships with the company and with each other at the material time. 31.PW1 , Herbert Hui Ho Ming, was the deputy Chairman of OGH. He is an accountant and joined OGH in 2001. He became Deputy Chairman in August 2002. 32.PW2 , William Kwan Man Wai, is an accountant. He joined OGH in January 2002 and in July he became Head of Communications and Corporate Development. He was mainly responsible for dealing with communications with shareholders and investors. 33.PW5, Richard Chan Wai Wong became the Financial Controller of OGH in January 2005 following the departure of Annessa Wong. Annessa Wong succeeded PW29, Daniel Tam, who was the Financial Controller of OGH from 2002 to 2004. He later joined a company called Bonseal Accounting and Secretarial Limited, (Bonseal), which he had set up with his wife in 2001. 34.PW5 was mainly concerned with the chemical side of the business until the arrival of Patrick Tong Ka Ming, PW64, who joined OGH in March 2005. In November 2005, PW6, Henry Wong Cheuk Him joined OGH and was the financial controller of the aluminium side of the business. PW64 and PW6 were both answerable to PW5. 35.PW64 had two subordinates, Cindy Wong Li Fong, PW70, and Rica Chan Wing, PW81. PW70 had a degree in accounting and joined OGH in 2002 in the accounts department working under PW29. PW81 joined OGH in June 2004 as a secretary to Annessa Wong. She assisted PW70 and Zhu also gave her work. 36.PW6 also had two subordinates, Thisbe Tang Kam Kwan, PW8 and Agnes Lam Pui Pui, PW9. PW8 qualified as an accountant in 2004 and joined OGH in February 2005 working under PW5 and later PW6. PW9 started work in 1999 as a receptionist for D2 who was then running a firm called Global Credit. In 2003 she was D1’s secretary for 2 months. In 2003 she became an accounts clerk working with Daniel Tam and started to work for Zhu in early 2004. She later worked under PW6 when he joined OGH in November 2005. Oral Evidence PW1 Hui Ho-ming, Herbert, Vice/ Deputy Chairman of OGH 37.PW1 told the court that he joined OGH as a non-executive director in 2001. He said he was invited to join the board but he was reluctant to join as an executive director as he was unfamiliar with the industry in which the company was engaged. However ,in August 2002 he became an executive director of OGH and vice-chairman of the Board of Directors (BOD). 38.He said the company went into liquidation on the 24th July 2006 and the company’s executive duties were taken over by the liquidator. He said he remains a director of the company. 39.PW1 said his major duties were concerned with corporate finance, dealing with shareholders and communications. He said the major business of the company was aluminium production and the secondary business was the production of electroplating chemicals. PW1 said the chemicals side of the business was conducted through OG Chemicals Ltd (OGC) which was separately listed and PW1 became the deputy chairman of the BOD of that company. 40.PW1 said that in 2001 aluminium production accounted for three quarters of the turnover. The chemical production accounted for the remainder. In 2003 the production of both increased and aluminium production accounted for two thirds of the turnover. 41.PW1 said he had a personal assistant, Miriam Lee. He said that he mainly dealt with William Kwan Man-wai, ( PW2), who was the head of Corporate Communications and Development Department, Olivia Chan Chik-ching (PW7), the company secretary, and Richard Chan Wai-wong ( PW5), the financial controller of the Group. He said that on an executive basis he would report to D1 who was responsible for the entire operation of OGH. 42.PW1 said he had an office in the company’s headquarters on the 28th Floor of the Admiralty Centre and his office was at the opposite end of the suite of offices to D1. 43.PW1 said that Core Bundle document 1 (CB1) showed the corporate structure of OGH at the time of its liquidation. Aluminium production came under Hing Yip and chemical production came under OGC. The Kenlap group of companies came under OGC. 44.PW1 said that aluminium production was carried out at the company’s Nanhai plant. By 2003 the business was rapidly expanding and they were hoping to attract large contracts with overseas companies such as William Bonnell in USA. It was therefore decided to acquire a new site at Sanshui in Foshan on the mainland which would have double the capacity of the Nanhai plant. The Sanshui site would be more economical as electricity charges and labour costs were cheaper and transportation was more accessible. PW1 said the person in charge of this project was Li Lee-cheung who headed a group called the Office Planning Group. The members of the group were set out in an e-mail dated the 2nd November 2005, Ex 23, p.953. PW1 said that Lau Kwok –hong, the senior engineer at Nanhai worked closely with Li on this project. PW1 said Li Lee-cheung would report on the progress of this project directly to D1 and also at internal monthly management meetings (IMMMs). 45.PW1 said D1 had good connections in Guanzhou and with the Sanshui Municipal authority. He said D1 had contacts at senior levels in the government in Sanshui, Nanhai and Foshan and was a member of the Guangdong Political Consultative Committee. 46.PW1 said the company had an electro plating chemicals plant in Hung Hom and in 2003 that plant was moved to Zhuhai. PW1 said that a Mr Yao was in charge of that side of the business and, when he died, his role was taken over by Kwan Yan and Lau Ping. Meetings 47.PW1 said that when he joined the company he was unhappy with the management style of OGH. He said management meetings were irregular, unstructured, had no agenda and no minutes were taken. He said he encouraged the group to have more regular meetings between the managers and those in charge of the operational side of the business with an agenda and minutes taken. He said initially the meetings were weekly but, as this proved too time-consuming and took key personnel away from their work, it was decided to hold monthly meetings. He said the meetings would ensure everyone was kept in the picture and the records kept would protect senior management and make them more efficient. He said under this system everyone knew where they stood. 48.PW1 said D1’s attendance at these meetings was vital and, if he was unavailable, the meeting would be rescheduled. PW1 said he would attend these meetings as an executive director and not as vice-chairman of the board. PW1 said that most of the department heads and senior staff would attend the meetings and notes would be taken by PW7. D3 attended the meetings regularly. D2 attended for the first time at the meeting held on the 15th February 2006 and she attended the next three monthly meetings. She attended to matters concerning administration. PW1 said that D2 ran a brokerage business called Global Credit in premises adjacent to OGH on the 28th Floor of the Admiralty Centre. 49.The court was taken through the minutes of all the monthly meetings from December 2003 until the last meeting in June 2006, Ex 18, pp 768-863. One of the regular agenda items was the construction of the new plant at Sanshui. PW1 said that Li Lee –cheung was principally responsible for reporting. Another person who attended these meetings was Zhu,who was responsible for the financial affairs of the company on the mainland. He reported to D1 and was later superceded by Richard Chan Wai-wong. Sometimes, when Li Lee-cheung was not present, there was either no report on the progress of Sanshui or D1 dealt with the matter. For instance at the meeting held on 16 December 2004 (p.811), D1 reported that the condition of the barrier walls at the plank and the progress of the roadworks. He reported that the State Land Certificate had been issued. He referred to the Cometal extrusion machinery, the computerized equipment of Trevisan of Italy and the spraying machinery from Almax of Japan. PW1 said it was contemplated that the best possible machinery would be purchased as the customers they would be dealing with would be very demanding. PW1 said he did not expect that a mainland supplier would be used. 50.PW1 said that at that meeting in December 2004 Kwan Man-wai, PW2, reminded those attending of the very strict Stock Exchange requirements concerning disclosure in relation to large transactions. PW2 said he would work with PW7 in making sure that management understood the situation. 51.Li Lee Chueng was again absent from the meeting held in February 2005, p.815, and the report on Sanshui was given by D1. D1 referred to a visit to be made to the plant after the Lunar New Year by supervising personnel from William Bonnell. Again, PW2 reminded the meeting of the strict stock exchange disclosure requirements for transactions exceeding HKD30 million. 52.Li did not attend the meeting on 17 May 2005, p. 824, and again the report on Sanshui was given by D1. He reported, inter alia, that the plan for purchasing production equipment was still under consideration. Yip Chun, Li’s assistant was at that meeting and he said he would be going to the USA to meet the president of Bonnell and other clients. PW2 said that fund managers had pressing concerns about the progress of the Sanshui plant. 53.Li was again absent from the next meeting in June 2005. PW1 said the report on Sanshui would have been given by D1. The minutes refer to the Stock Exchange disclosure requirements, foundation problems and the purchasing of equipment. 54.The minutes refer to Lam Kin-ping (Lin Jianping) taking up the post of supervisor of the construction work at the Sanshui plant. PW1 said that Lin had been a good friend of D1 since before PW1 joined the company. Ex 172, p.4328-4361, are the company registration documents relating to Nanfang Alloy-Sheet (Hong Kong) Company Limited (NAS) whose address was at the Dominion Centre in Wanchai and later at the Admiralty Centre. D2 and Lin were directors and shareholders of NAS with D2 holding 90 shares and Lin holding 10. Lin was married to Lisa Li who worked in the accounts department of OGH. She will be referred to later in the evidence. 55.The meeting held on 29 August 2005, p.834, was attended by D1 and D3. The minutes show that D3 was to monitor the progress of the piling work at Sanshui. Yip Chun spoke about large international orders which were being negotiated. He said OGH had to consider whether the Sanshui plant would have the capacity to tackle such orders. I noted that there was no mention at this meeting, or, at any other meeting, of the contract entered into between OG Aluminium ( Sanshui) Company Limited and Yong Chang Metal Machinery dated the 1st July 2005, Ex 12, CB11, for the acquisition of four extrusion presses of similar size to those mentioned in the OGD contract. The OGD contract referred to the purchase of four extrusion presses and handling systems from Cometal Engineering, an Italian company. After OGH went into provisional liquidation, PW56, a sales manager with Cometal, visted the Sanshui plant and inspected the extrusion presses manufactured by Yong Chang. They bore Cometal plates. He said that the presses bearing Cometal plates that he inspected were not manufactured by Cometal and he did not know why they bore the Cometal plates. A staff member of Yong Chang, PW15, who also inspected the equipment, and was also unable to say why the presses bore Cometal plates. 56.Li Lee-cheung was absent from the meeting held on 27 September 2005, , p.837. D3 was shown as being responsible for monitoring the piling work at Sanshui. It was also announced that it was expected that a contract for the purchase of equipment for the Sanshui plant valued at HKD150 million would soon be signed. D3 was shown as being responsible for this item. There was no mention of the July contract with Yong Chang and I noted that the Greatson contract with Cometal of Italy was signed on the 30th September 2005. The OGD contract with Greatson was signed on the 1st November 2005. 57.The next management meeting was held on 5 December 2005 and was attended, inter alia, by D1, Li Lee-cheung and D3. It was reported that the casting and extrusion workshops at Sanshui were being completed and that delivery of the machines could formally commence. D3 is referred to as the person responsible. D1 refers to the lighting of the Sanshui furnace taking place after the Lunar New Year and the furnace at Nanhai being used for other purposes. Subsequent meetings dealt with the progress in relation to the Sanshui plant. 58.PW1 produced Exhibit 347, p.7050, a memorandum dated the 18th June 2004 signed by D1 and directed to senior staff and OGH project leaders, including D2, D3 and Zhu, which deals with the need for strict compliance with the listing rules. PW1 said it would have been in Chinese and would have been drafted by PW7, PW1 and PW2. The memorandum refers to the purchase of machinery at Sanshui and transactions to be carried out by Kenlap. 59.PW1 produced a further memorandum, Ex 348, p.7053, which was in similar terms to Ex 347. He said it was also issued in Chinese and would have been sent to managers on the mainland so they would be aware of the situation in Hong Kong. 60.PW1 produced a series of printed e-mails, Ex 23. The first is dated the 29th August 2005 and is from PW7 to, inter alia, D1 and D3 and relates to the purchase of equipment for Sanshui and the need for Stock Exchange disclosure and, possibly, shareholder consent. Later e-mails dealt with the OGD contract of the 1st November 2005 and the need for a public announcement. 61.An e-mail dated the 1st November 2005 from PW7 to, inter alia, D1-D3 and Zhu and copied to PW6, Henry Wong the group financial controller, refers to five queries about the OGD contract from three independent non-executive directors. The had enquired as to whether a tender had been conducted; whether the price was reasonable; whether the seller was an independent third party; whether a background check on the seller had been conducted; how the purchase was to be financed and whether it would affect the daily cash flow. 62.An e-mail dealing with these queries was produced, P. 953. It is dated the 2nd November 2005 and is from PW7 to inter alia, D1, D2 and Lee Kwan Ho, PW11, an independent non-executive director. It refers to an office planning group which dealt with the Sanshui project. It stated that no tender had been conducted but the group considered what would best meet their production requirements at a reasonable price. It stated that Greatson was introduced by a fellow tradesman in the Hanhai Industial Zone which did business steadily and reliably. It stated that OGD took advantage of that company’s skills. The e-mail stated that the seller was independent and not related to OGH. As regards the background of Greatson, the e-mail stated that it was a Singaporean trading company investing in Hong Kong and specializing in the trade of machinery for metal processing companies. It stated that the machinery would be paid for in cash by the group which held about HKD 1 billion and so would not have a great impact on the daily cash flow. 63.The last e-mail produced, p. 956, was from D1 to everyone in the Hong Kong office and referred to the issuing of 5-year bonds in OGH. It sets out the development objectives of the group as explained to investors. It refers to the developments at the Sanshui plant, the Nanhai plant and the Zhuhai plant. The latter was responsible for electroplating chemicals. PW1 said he did not doubt the veracity of these e-mails. 64.PW1 produced Exhibit 28, CB3, the public announcement dated 4 November 2005, issued in compliance with the Stock Exchange discloseable transaction rules. It refers to the OGD contract with Greatson and the purchase of equipment for Sanshui in the sum of HKD153 million. It refers to extrusion products of “superb quality” including four sets of Cometal aluminium extrusion presses with profile handling system. It was sent by order of the board and under the name of D1. It refers to the seller as being independent and to the negotiations being conducted at arm’s length 65.PW1 said it was mostly drafted by PW7 and that the details would have been supplied by D3. 66.PW1 produced Ex 29, CB4, a circular to the OGH shareholders dated 21 November 2005, which refers to Ex 28 and repeats much of the information set out in Ex 28. He said he had no reason to doubt the veracity of Exhibits 28 and 29. The Chemical side of the business 67.PW1 told the court that Kenlap PGC was the company responsible for the development of this side of the business and a new business producing gold bonding wire and non-cyanide plating through Kenlap Fine Chemicals. A new plant was being constructed at Zhuhai. This was a regular item on the agenda until the company went into provisional liquidation. It was expected that the plant would be completed by the middle of 2006. Provisional Liquidation – Monday, 24 July 2006 68.PW1 said that on 14July 2006 he had occasion to speak to D1. During the course of the morning, PW1 said he had discussed the cash flow situation with Richard Chan and William Wong. It mostly involved the operation of the subsidiaries on the mainland, Sanshui principally. PW1 said he was concerned but was guided by PW5, the group financial controller. 69.D1 was asked questions about the cash flow of their operation. PW1 said that D1 was cooperative and asked for details and where the concerns were. He said he would call the relevant parties in China. There were a series of meetings that morning which all concerned this cash flow problem. 70.PW1 said that there was a meeting at 4.30pm attended by D1, PW1, PW2 and PW5 and there were again questions asked of D1 about the cash flow situation. He said they were becoming increasingly concerned as D1 was not providing satisfactory answers. The meeting lasted about half an hour. D1 broke up the meeting and said he needed to check with sources in China and he needed to make some calls. He said they would reconvene one hour later. PW1 said they were unable to reconvene as they could not find D1. Attempts to reach him on his mobile phone were unsuccessful. 71.PW1 said that subsequently there were conference calls in which D1 participated. There were two telephone meetings in which D1 participated over the next few days. D1 had left Hong Kong. PW1 said the directors decided to apply to the courts for provisional liquidation. Board resolutions were made on the following Friday 21 July. The boards of both companies attended the meetings. The meeting was held via a conference call and PW1 heard the voice of D1. PW1 said he was still concerned about the cash flow situation. 72.PW1 said D1 returned to HK only in September 2007. PW1 had not seen D1 since 14 July and had had no conversation with D1 after the July conference calls. 73.PW1 said that on Saturday 15 July 2006, there were meetings of the boards of the two companies at which resolutions were made. PW1 said he received a fax to say that D1 had taken leave because of fatigue. Deloittes, Touche Tomasso (Deloittes) were appointed to safeguard the assets of the company and they visited the subsidiaries the following Monday and took control of the banking arrangements for those companies. 74.On Saturday evening,16July, PW1, Richard Chan and William Kwan traveled to the PRC to three different plants at Sanshui, Zhuhai and Foshan with members of Deloittes. The following day the banking activities were taken over. Later that week the board resolved to apply for provisional liquidation. Deloittes were appointed provisional liquidators. 75.PW1 agreed in cross-examination that D1 knew little English and said that documents in English were translated for his benefit. PW1 agreed that D1 was proud of OGH and that Sanshui added a lot of prestige to the group. He agreed that it was a huge development which required the co-ordination of many different departments. Lok Yeung Designing House was brought in to design the new factory. 76.PW1 said that Brian Or was the in house lawyer. He was a close friend of D1 and acted almost as a personal assistant. PW1 agreed that on the mainland value added tax was payable on machines manufactured on the mainland. He said he was not aware that if machines were exported from the mainland they would not attract such a tax. 77.PW1 said he did not normally deal with D3 on business matters but they did attend meetings together. PW1 agreed that in mid-2003 to March 2004 D3 was responsible for information technology (IT) matters. PW1 said he was a non-executive director of a company called I-MITL and its subsidiary I-Magic which dealt with with IT matters. He said he could not specifically recall introducing D3 to the group but would not be surprised if he had done so. It was suggested that when D3 failed to follow up on this introduction that PW1 reported to D1 that D3 was not doing a very good job in IT matters and D3 was taken off this kind of work. PW1 said he could not recall such matters. 78.PW1 disagreed that D3 had never had a clear job title. PW1 said D3 reported to D1 on his work and carried out the wishes of D1 on particular projects. PW1 disagreed that D3 was involved basically in interpretation and liaison work. He said D3 did not report to him. PW2 KWAN Man –wai, William, former Executive Director and Head of Communications and Corporate Development Division 79.PW2 told the court that he is an accountant and currently the development director of a law firm. He previously worked for OGH. He joined OGH in January 2002 as a financial controller. Six months later he was transferred to be head of the Communications and Corporate Development Division (CCDD). 80.In early 2005 he was appointed executive director of OGH and remained in that position until it went into provisional liquidation in 2006.He remained as head of CCDD when made executive director and his duties remained the same. 81.PW2 said his duties were to communicate with investors and shareholders on behalf of OGH and explain the operation of the company and its latest developments. He would also explain the company’s annual results to investors. Apart from that he would also communicate with analysts from financial institutions and explain operations of OGH. He said that if corporate financing was required he would deal with that. PW2 said he had to keep abreast of what the company was doing and planning to do. 82.PW2 said he would make arrangements to meet up individually with institutional investors and those controlling fund companies. Communication with shareholders was through annual reports and public announcements. PW2 said that he would prepare presentations for meetings with large investors and D1 and D2 would be present to answer questions. 83.PW2 said he reported to PW1. PW2 said he interacted with D1. He said they would meet from time to time. He said some investors would like to meet with the chairman and he would be present at such meetings. PW2 said he would regularly speak to D1 if he was in Hong Kong. He said D1 would spend more than half his time in Hong Kong. 84.PW2 said he had an office in Admiralty Centre. He knew the senior managers and learnt what sort of work they did. His main duty was to maintain contact with the financial controllers in the finance departments in relation to the development of the group and he obtained most of his information from monthly management meetings. PW2 said it was part of his duties to attend such meetings. 85.PW2 said that during 2003 he became aware of the proposed construction of new plant at Sanshui. He said that D1 had a personal investment in Sanshui and had a good relationship with its local government which was why the group was able to acquire a good plot of land there. PW2 said the transportation facilities were also very good and that it was close to the plant in Nanhai, less than one hour by car so it was very convenient. 86.PW2 said that D1’s personal investment in Sanshui related to a galvanized steel plate factory. 87.PW2 said that OGH decided to build the new plant at Sanshui because production level at the Nanhai plant (600,000 square meters) had reached saturation point and they could not meet customer demand. The group was unable to find further land in Nanhai. The Sanshui plant was to be 8-9 times the size of Nanhai with a capacity two to three times greater. It was expected that the annual output would be in the region of 150,000 tonnes of extrusion press aluminium. 88.In HKD terms the expected capital to be devoted to this project was in the region of 6/700 million. It would involve the acquisition of new machinery. This project was a very significant one for the group. PW2 said that, as it got underway, D1 was involved and was very conversant with the project. D1 travelled frequently to the mainland to keep abreast of developments. Whether D1 remained at the Sanshui project all the time he was not aware. It took one hour 15 minutes by train plus half an hour by car. PW2 said he went there with D1 only once by car for the foundation laying ceremony. 89.PW2 said he knew Li Lee-cheung. Li normally worked half time in HK and half time on the mainland and he attended the management meetings. 90.PW2 said D3 attended the monthly meetings. His position was project director or project manager. D3 reported to D1 mainly and dealt with projects for D1. 91.PW2 said D1 would attend the monthly management meetings most of the time and they would accommodate his schedule to ensure his attendance. At meetings there would be reports on the progress of Sanshui. They were normally given by Li Lee-cheung and, if he was not there, D1 would report to the meeting the latest developments of the project. D1 appeared to be very familiar with the project development. D1 was very familiar with the overall strategy which he had designed. In relation to the detailed execution D1 was very familiar. By way of example, PW2 said at some stage the Sanshui project development was behind schedule and D1 explained how this matter was handled. 92.In relation to the Sanshui project, PW2 said that D3 helped the staff from the mainland to liaise with machinery suppliers from overseas. Mainland staff did not know English and he would provide support in negotiations with the overseas suppliers. He said D3 would seldom report on the progress of the Sanshui project. Only when the machinery was about to arrive D3 reported that the machinery would be shipped to the site on certain days. 93.PW2 said that at the meetings D1 would talk about the purchase of equipment at the beginning and said they would buy state of the art equipment and import machinery from Europe and Japan. 94.PW2 said that assisting in the purchase of the equipment would be technicians from the Nanhai plant and D3 would help in liaising with the overseas suppliers. At the beginning of the project the marketing personnel were approached to supply opinions as to which machinery would best meet customer demands. 95.Ex 28, CB3, is the Public Announcement of the discloseable transaction dated the 1st November 2005 in relation to the OGD contract for the Sanshui project. He said that in September and October 2005 PW2 was involved in the proposed bonds issue by OGH. PW2 said this involved a great deal of preparation. 96.PW2 said he came to learn that OGD was to purchase machinery for the Sanshui plant. The cost was such that an announcement would have to be made in accordance with the SE Listing Rules. A draft was prepared. PW2 did not participate in its preparation but he was given a copy. It was drafted by PW7, the company secretary, and other colleagues but he did not know which ones. 97.PW2 said the draft announcement was circulated amongst the directors by PW7. After circulation some independent non-executive directors (INEDS) raised questions. 98.PW2 said that Ex 23, p. 953/2, p. 952 is an e-mail from PW7 dated the 1st November 2005 referring to the draft announcement and stating the questions raised by the INED’s. It is addressed to D1, D2, D3, Richard Chan and others and a number were copied in including PW2 and Vincent Lee, an INED, and David Ng, a colleague in the banking department who liaised with the bank staff. PW2 said it was copied to him in the course of his duties with OGH. 99.PW2 said that the second e-mail at p.953 from PW7 to D1 - D3, PW’s 1 and 2 dated 2 November 2005 dealt with the questions raised by the INED’s. The e-mail refers to the members of the Office Planning Group involved in the Sanshui project. PW2 said that this was sent to him in the course of his duties with OGH. 100.PW2 said that one of his duties was to check the accuracy of information supplied to potential investors in connection with the bonds issue. 101.PW2 said that Ex 284, 6286 to 6289, were pages from the November 2005 offering memorandum sent out to potential investors. PW2 and colleagues had to satisfy themselves that the information was accurate. PW2 said he was satisfied the information was true. 102.Page 95 of the memorandum commences with the business strategy in relation to the aluminum business and sets out the key elements of the Group’s business strategy. It refers to premium value-added aluminium extrusion products for industrial and household applications and reference is made to the overseas market. 103.One paragraph deals with increased production capacity and upgrading of production capabilities. It refers to Sanshui acquiring top-of–the–line direct extrusion presses. It later refers to the electroplating chemicals (EPC) business, the broadening the product mix and the strengthening of the Kenlap brand name. 104.The next heading of the memorandum refers to products of the aluminium industry with a number of sub-headings. First is the global aluminium industry and PRC aluminium industry and the Group’s aluminium business with three sub-headings; alumium extrusion products, aluminium ingots and aluminium extrusion production process. It deals with the Nanhai plant, smelting, extrusion, anodizing, powder coating, fabrication and machination. 105.It then deals with the Sanshui plant having additional facilities, bright dip and paint coating. Page 98 shows diagrams dealing with the extrusion process.The next section of the memorandum deals with the electroplating chemicals industry. 106.PW2 said that in 2003 OGC Holdings Ltd spun off as a separate listed company. PW2 said that the progress of the chemicals business was reported at the management meetings. The reporting was mainly done by Miss Qi Li ping and, if she was not there, the chairman would report on the main progress of the EPC business. PW2 said that D1 appeared to be quite familiar with the progress of the EPC business. PW2 said that the decision for the Zhuhai factory to produce gold bonding wire was not made in internal management meetings but that they were told about this at such a meeting. 107.PW2 said that at an earlier stage it was reported at a meeting that the factory in Zhuhai would consider the production of new products. Since the listing of OGC and the Zhuhai plant development, the group strategy had been to broaden the product base as this was reported at the management meetings by D1 and Kwan Yan. This included the production of gold bonding wire as reported at the meeting by D1. This required an extension of the Zhuhai plant facility and the purchase of certain machinery. The purchase of machinery was mainly handled by the technicians in the mainland factory and D3 helped them liaise with overseas suppliers. PW2 said be believed that D3 was assigned this task by D1. 108.PW2 said that the reporting by D1 concerning the gold bonding wire production would have been around the fourth quarter of 2005. OGH Personnel D2 109.PW2 said that D2 is the younger sister of D1 and an executive director of OGH. Before mid-2005, D2 was seldom involved in the operations of the group. He said that some of the company bank accounts could only be signed by D1 or D2. If D1 was absent D2 would sign. Initially she did not have an office in OGH. After mid-2005 she moved her office to OGH and started to manage administration and personnel at the Hong Kong office. In relation to the factories of OGH subsidiaries on the mainland, he never saw D2 handling those matters. PW2 said that D2 reported to D1. 110.PW2 said that in relation to the chemical sector of the group for HK companies, Miss Qi could sign bank documents. Zhu Weibing 111.PW2 said that Zhu Wei- bing was the company’s assistant financial controller. He was responsible for the cash flow of the group and the recovery of receivables. He looked after treasury matters such as what would happen to funds when they came in. 112.PW2 said that for that part of his work Zhu would report to the financial controller. If D1 assigned him to do something he would report back to D1 on those jobs. PW2 was not sure of the details of his daily responsibilities. Zhu was not there in 2002 when PW2 joined. D1 hired him. Zhu joined in about 2004. A few weeks before it went into provisional liquidation Zhu went to the mainland and could not be contacted. PW2 said Zhu reported on matters to D1 and would often accompany him to the mainland. 113.PW2 said that Zhu had a business relationship with D1. Zhu and D1 were good friends. Zhu told PW2 that before he joined OGH he had known D1 back on the mainland for some time. Lin Jianping 114.PW2 said that Lin Jianping was a director of OGC from the time of its listing within the Group. PW2 did not know if he had an employment contract. Lin spent most of his time on the mainland. Lin was a director when OGH went into liquidation in 2006. He was engaged by D1. Before he was a director of OGC, D1 told him Lin was a banker on the mainland and that he was the governor of a branch of a mainland bank. Lin came to Hong Kong on occasions. PW2 saw him in Admiralty every two to three months since the OGC listing. Lin would look for D1 and PW2 would see them together. After the meetings in the conference room they would leave together to have lunch. This continued until the time of the liquidation but less frequently for the year before it went into liquidation. PW2 said he saw Lin less frequently then but he may have come to the office. 115.PW2 was shown Ex 120, p. 2813, a photocopy of an extract of the mainland passport of Lin Jianping. PW2 recognised the photograph as being of Lin. Lisa Li Quin Wen 116.Lisa Li Quin Wen was a person PW2 came across. She was employed within the group to liaise with colleagues from the mainland factory on behalf of the finance department of the group. PW2 said that Li would get information on behalf of the finance department. She would also accompany the auditors to the mainland to conduct the annual audit. Li was involved with work on the mainland. She had an office in Hong Kong in the OGH Admiralty Centre offices. PW2 said that Li was not an employee when PW2 joined the company. She joined in the second half of 2002. She was engaged by D1. She interacted with D1 and sometimes entered his room for meetings. She was from the mainland. She reported to the financial controller. PW2 said he was not able to locate her a few weeks before the two companies went into liquidation. PW2 said Ex 354, p.7096, is an image of Lisa Li. Tsui Sze-lam (Tai Shan) 117.PW2 said that a person with the nickname Tai Shan was a person he came across one or two days after he joined the group. PW2 came across him in the office in Admiralty Centre. PW2 saw him at the office 2-3 times per week, sometimes more frequently and sometimes less, from 2002 up to the time before the company went into liquidation. 118.PW2 was not sure if Tai Shan was employed by OGH. He said Tai Shan had no duties in OGH and he thought that he was the private bodyguard of D1. PW2 said that Tai Shan always followed D1 when he went into and left the office. He said Tai Shan would chat with colleagues, tea ladies and receptionists. He would sit at unoccupied seats. PW2 only knew him as Tai Shan. PW2 recognised the picture of Tai Shan in Ex 227, p. 5380, a copy of the Hong Kong Identity card of TSUI Sze-lam. D5 – Lau Hok Man, aka George Lau 119.PW2 said he came across a person called George, his last name was Lau. He identified him as D5. PW2 said that D5 was not an OGH employee. Every time he came he would either chat with D1 or enter his room or enter an unoccupied room. His impression was that he was a friend of D1. He first saw him shortly after he joined the company. He came to the office sometimes every day for a period and then he would not see him for 1-2 months. PW2 did not pay attention to him. The periods he would see him every day would sometimes be for almost a month, maybe during 2004/5. PW2 said he could not recall when he last saw him. It was at least a few months before the liquidation. Other than D1, PW2 said that D5 knew some colleagues in Admiralty and he would greet them. He would go into an unoccupied room as authorized by D1. PW2 said as far as he was concerned D5 did nothing for the OG group and he had no idea why he was in the office. You Shui-qing ( CB 10 Chart) 120.PW2 said You was a mainlander engaged in a joint venture with D1 in CCTV business. He attended the annual dinner on one or two occasions as a guest and he came across him at social gatherings. PW2 said he thougt that he was introduced to him by D3 but could not be sure. You came to the office on 1-2 occasions to see D1. PW2 said You seldom came to the office, at most 2-3 times, and he saw him with the chairman on those occasions and at the annual dinner in Hong Kong at a hotel. You was invited as a guest of D1. 121.PW2 said that the joint venture with D1 was on the mainland in Guangdong province but exactly where he did not know, it was not part of OGH business. 122.PW2 was shown Ex 129, p. 2792, a cheque dated the 10th March 2006 in favour of You Shuiquing for HKD3.542 million drawn on Strong Sense. 123.PW2 was shown p.2795, a cheque dated 10 March 2006 for HKD3.958 million drawn on BEA account of Strong Sense and payable to YOU. 124.PW2 was shown p. 2798 a cheque dated 17 March 2006 from Crown Regent to You for HKD1.3 million. Fong Long (Overseas) Industrial Ltd (Fong Long)- You 125.PW2 was shown Ex 203, p. 5072, Company Registration Documents for a company called Fong Long (Overseas) Industrial Limited incorporated on 22 June 2005. 126.The notification of the situation of the registered office,P.5073, is dated 29 July 2005 and signed by You shuiqing as a director of the company The office is state as Room 10/11 19/ F Wai Fung Commercial Building Java Road North Point. 5074/9,the Notification of First Secretary and Director shows You Shuiqing as a director and p.5079 is signed by You. P.5080 is a Consent to Act as director dated 29 July by You. 127.Pages 5083-5 are the Notification of Change of Director and Secretary dated 29 July 2005 signed as director by You. P.5086/95 is the Annual Return (AR) up to 22 June 2006 signed by You. P.5088 refers to members having a share capital (for You of 5,000 shares) and his address is 601, New Urban District, Kung Buk, Heung Zhou District Zhuhai District Guangdong Province China. The other shareholders are Hoi Cheng Soi (3000 shares), and Xiao Jianfeng (2000 shares). At page 5090 You appears as a director with the same residential address and an Chinan Identity Number 440401196508210410 and overseas passport no. G03243777 issued by China. Pp. 5096/8 are the Notification of Change of Secretary and Director dated the 2.11.06 had details of You ceasing to be a director. Page 5099 is a Consent to Act as Director. Page 5100/1 is a Notification of Resignation of secretary/director dated 2 November 2006 and signed by You. Pages 5102/5111 are the AR to June 2007. Page 5104 has details of members at the date of the return. You is shown as a member with 5000 shares transferred on 2 November 2006to address in Java Road Room 1910-1911, Wellborne Commercial Centre, North Point, 8 Java Road, Hong Kong. Nanfang Galvanised Aluminium Sheet ( Hong Kong) Company Ltd- D1 and D2 128.Exhibit 171, p. 4293 are Company Documents for Nanfang Galvanized Aluminium Sheet (Hong Kong) Company Limited. The document relating to the Registered Office in Dominion Centre Wanchai is dated 29.9.06 signed by D2 as director. PW2 said he had heard of this company which was not a member of the OG group, it was D1’s private investment. The company was part of D1’s private galvanized steel sheet company. This company dealt with the export of parts from the mainland factory called Nanfang GAS. PW2 said D1 told him he purchased this factory in Sanshui. He said it was to be wound up and the assets sold cheaply. This was in 2003/4. PW2 said that D1 told him he would be assisted by Li Lee-cheung, but he did not mention anybody else. 129.Page 4294/4303 is the Annual Return up to March 2006 dated 29th March 2006 signed by D2. Page 4296 shows members’ details as including D1, D2 and Patty Wu Siu Yu with D1 holding 155,999,999 shares. There was a transfer of 9 shares from D2 to D1 on the 15 November 2005. Page 4319 is a page included in the annual return for March 2004 dated 29th March 2004 signed by D2 as director. 4319 has details of members and 9 shares having been subscribed to on the 28th March 2003. 130.PW2 agreed in cross-examination that not everything in the company was brought to the attention of D1. He agreed D1 was friendly with everyone in the company. He was hired by D1 to join the company. PW2 was shown a number of e-mails which had not been copied to D1. 131.PW2 was taken in some detail through exhibit D1-8 which is a report on the effectiveness of the internal control system of OGH from January 2005 to the end of March 2006. He said it was prepared by the financial controller (Richard Chan – PW5) and PW2 assisted. He said it was prepared for the executive management of the Board of Directors to facilitate reporting to the shareholders and was a Stock Exchange listing requirement. The document shows that financial control and the supervision of all units were effectively implemented throughout the period. 132.PW2 said that Zhu was the assistant financial controller of the Group and reported to D1. The cheque books were locked away by Zhu and he looked after the movement of funds within the group. Item 9 of the report refers to Zhu and shows that he reports to Richard Wong ( PW5), Henry Wong (PW6) and Patrick Tong. 133.Item 11 of the report shows that production activities are carried out safely by Li Lee Cheung, Tam Lam and Kwan Yan. Item 13 shows that operational data are readily available to facilitate business decision making and the persons responsible are Richard Chan (PW5) and Henry Wong (PW6). The report mentions that the independent directors check for internal control weaknesses. 134.PW2 said that if the independent directors disagreed with any public announcement they would not make a recommendation and the board would not act contrary to the wishes of the independent directors. The report concluded that no major weaknesses were identified and that the internal control system was effective and adequate. Gold bonding wire and electroplating production 135.PW2 agreed that the traditional EPC process was harmful to the environment as it involved the use of gold cyanide chemicals. PW2 agreed that D1 was in discussions concerning the use of non-cyanide plating which was less polluting and these discussions were sensitive as they concerned trade secrets. 136.PW2 said that new technology also existed in relation to the production of gold bonding wire but PW2 said he did not understand the details. Announcement Procedures 137.PW2 said that public announcements were expensive and time-consuming. He said that he had been told that even a simple announcement would cost in the region of HKD10,000. Sanshui 138.PW2 said he visited the site on occasions. He said he was aware of the planning group and that Nanhai managers headed by Li Lee Cheung were responsible for the site and the machines required. The chief engineer was Liu Guo An. 139.PW2 said that the new factory had tax advantages granted by the Municipal Government. The first two years would be tax free and in the third year they would attract only 50% tax on their profits. D1-9 A Rating Presentation to Standard and Poors 140.PW2 said that D1-9 was prepared by the company for Standard and Poors and was mainly concerned with the proposed bond issue by the company. It described OGH as a “World Class Chinese Aluminium Products Manufacturer”. The document refers to the supply contract with William Bonnell and their advice as to the selection of machinery for the new plant. The report refers to the customers of OG, including Good Light as the main customer It also referes to Strong Sense Investment Limited as a customer concerned with the aluminium side of the business and Trump Link as a customer concerned with the electroplating chemical business. I noted that Good Light was held by D5, a friend of D1, Strong Sense by Tsui Sze Lam, D1’s bodyguard; and Trump Link was a shell company held by a friend of a friend of D2. PW2 said they were supplied with the logo of Standard and Poors after meeting them. 141.PW2 said that Qi Liping and Kwan Yan were responsible for chemical production and reported at the monthly meetings. Kwan Yan was responsible for Zhuhai and reported infrequently. 142.PW2 said that, on the mainland, new machinery production attracted VAT at the rate of 17% unless it was for export. He said that Sanshui was exempted from import duties. Tony Chan 143.PW2 said Tony Chan was responsible for marketing and he thought he reported to Li Lee Cheung. You Shuiqing 144.PW2 said You had a joint venture with D1 in CCTV on the mainland. PW2 agreed that he did not know who was the legal owner. When it was suggested that he was mistaken he said D1 told him the business was his. PW2 said that D1 told him that he wished to buy the business in early 2003 and that OGH never in fact bought it. Progress in Sanshui 145.PW2 agreed that the project was greatly delayed by rain and that D1 was unhappy about the delay. He also agreed that D1 applied pressure all round to get the project into operation. He agreed that fund managers expressed concern about the lack of progress. 146.PW2 agreed that D1 never mentioned Greatson to him. He came to know about the company through e-mails from the company secretary, Olivia Chan, PW7. PW2 was shown exhibit D1-10 an e-mail from Olivia Chan to Angela Ho (PW13) concerning the draft purchase contract. PW2 said that Angela Ho is a solicitor with PC Woo, the firm’s legal advisers, and she is the wife of PW1. The e-mail was not copied to D1. PW2 was shown other e-mails on the subject which were not copied to D1. 147.PW2 said he was a director of Kenlap with no executive duties. He said D1 was not a director of Kenlap. He said he did not know who signed the Fong Long or Long Asset contracts. 148.PW2 agreed that, at credit committee meetings, D1 stressed that the credit for new customers should be handled carefully and that more effort was required in pressing for payment of receivables. He agreed that Ex.D1-14 showed Strong Sense and Union Sheen as customers and that Strong Sense had a shorter period of Credit than other customers. 149.When questioned by counsel for D2, PW2 agreed that nominal directors were common within the group. 150.He agreed that D2 seldom interfered with OGH matters before 2006 but only signed cheques. In 2006, D2 became involved in personnel and administration. She was a signatory to most of the Group’s bank accounts and worked under D1. She would sign cheques concerning matters in which she had no involvement but she would not sign the payment approval vouchers. She would sign contracts when D1 was not available. She was a back up for signatures in the absence of D1. 151.PW2 agreed that D2 would sign loan application documents in connection with matters in which she was not involved. 152.The minutes of the Board of Directors Meeting for the 3rd November 2005, CB27, show that she and D1 attended and it that it was held in relation to the OGD contract and the draft Announcement. PW2 said notice had been given to all directors. PW2 agreed that minutes were frequently circulated with regard to meetings which had never in fact been held. The company secretary, PW7, would prepare the minutes. They concerned matters discussed by management and approved by them. 153.PW2 said that with regard to the e-mails about the OGD contract and the queries raised by the independent non-executive directors, although they were circulated to D2, she was not involved in the project and was not required to answer any queries. PW2 said up to early 2006 he did not doubt the genuineness of the OGD contract and the public announcement. 154.PW2 said it was widely known that D1 was involved in the Nanfang Galvanised companies. PW2 was shown Ex 61 a cheque drawn on Village Union dated 17 May 2006 payable to Hong Huo Trading Company Guangzhou which was chopped with D2’ s chop. PW2 agreed that D2 did not go to the mainland frequently and he was aware that Deloittes went to the mainland to seize chops. 155.PW2 did not know when D3 joined the company. D3 worked on IT projects when PW2 joined the company. PW2 agreed that D3 did not work on any specialized committees. PW2 agreed that D3 had a good command of English and assisted D1 with English documents. PW2 agreed that D3 went to the mainland frequently and would often assist the Nanhai manangers in their dealings with overseas suppliers. PW5 Richard Chan Wai-wong – Ex Financial Controller of the OGH 156.PW5 is an accountant and presently self–employed. He joined OGH in January 2005. OGH had two main businesses, aluminium and electroplating chemicals and he was mainly responsible for the financial control of the chemical side of the business, operated under OGC. In April 2005 Patrick Tong Ka-ming, PW64, joined the group and took over financial control of OGC. In November 2005 Henry Wong, PW6, joined the group and took over financial control of the aluminum side of the business under Hing Yip Holdings. PW64 and PW6 reported to PW5. Extra staff had been recruited to deal with the increasing number of projects being undertaken from the middle of 2005. 157.PW5 said that Zhu was the assistant financial controller of the Group but he reported directly to D1 and not to him. Zhu looked after the treasury function of the group and as such he oversaw the cash flow and expenditure, bank accounts and facilities. Zhu would decide which bank account was to be used in making payments. Zhu was responsible for funds in general. D1 and D2 were signatories to most of the Groups’ bank accounts. Zhu is a mailander and would deal with the Group’s mainland factories and assist in the recovery of receivables. Zhu’s usual place of work was in the main office in Admiralty but he would frequently travel to the mainland. Zhu had previously worked in the banking sector on the mainland. 158.PW5 was referred, in cross-examination, to the minutes of the meetings for May and June 2006 where, inter alia, the equipment required for the gold bonding wire was discussed. The machines were used at a factory of an OGH subsidiary in Zhuhai (Kenlap Fine Chemicals (Zhuhai) Technology Company Ltd) and PW5 said he was mainly concerned as to whether they should be treated as capital injected by Kenlap PGC and therefore belonged to the mainland subsidiary factory or whether they should be regarded as being rented or borrowed from Kenlap. PW5 said the first option would require permission from the Zhuhai government department. PW5 said he asked Zhu to discuss this matter with the government department concerned in Zhuhai as he was familiar with their personnel. He said this matter was not resolved when the company went into provisional liquidation. 159.PW5 was responsible, inter alia, for ensuring the company complied with the listing rules. He was aware of the development of the Sanshui plant and the purchase of machinery for the plant. He said that transactions over HKD35 million were discloseable. He said that D3 was responsible for the Group’s machinery purchases and would report to D1. 160.PW5 said that Ex 28 CB 3, the Public Listings Announcement dated 4 November 2005, was drafted by an outside firm of lawyers who liaised with PW7. He said he received a draft of the OGD contract and considered that is was discloseable under the listing rules. He said the contract was signed by D2. PW5 said he was aware of the terms of payment clause, clause 11. PW5 said that to make payments there had to be a Payment Approval Request form (PAR) and an accounting voucher. Both the request and the voucher are set out on the same form. 161.PW5 identified Exhibits 32 to 35 as being the request and voucher forms and supporting documents for the payment of the first 30% deposit referred to in clause 11 of the OGD contract. He said that the requests and vouchers were prepared by Agnes Lam, PW9, and were approved by D1. According to PW5 this approval was necessary before the cheque or bank transfer form was drawn. I noted that this was inconsistent with the evidence of PW64 and 6, who would both have had more immediate dealings with these documents. They both maintained that when the request and voucher forms were prepared so was the cheque or bank transfer form and both were sent with supporting documents to D1 to initial the approved by line on the request and sign the cheque or bank transfer form. All agreed that it was Zhu who would decide which account was to be used. 162.PW5 said that under Clause 11 of the OGD contract, 30% had to be paid on signing of the contract, 30% before December 2005, 30% before January 2006 when partial shipment of the goods begins and the last 10% no more than 6 months after installation. 163.PW5 said that the approved by line on the accounting voucher part of the form was signed by Zhu to confrim that the cheque/ bank transfer form could be forwarded to D1. Again PW5’s evidence was in conflict with that of PW6 and PW64 who said that the approved by line on the voucher was initialled to signify that the person in charge of finance was approving the accounting entry to be made in the books of account. They said that when the documents were prepared accounting entries were made and when the documentation reached the financial controller perhaps one or two weeks later he would check the accounting entries and “post” them, after which time no amendment could be made to the accounting entry. 164.PW5 said the checked by lines at the bottom of the exhibits were initialed by Thisby Tang, PW 8 and PW6. PW8 would have cross-checked the request voucher with the supporting documents and ensure that everything wass in order and after that the request and voucher would be passed to D1 to initial. After the cheque was dispatched, the voucher and supporting document were sent to PW6 for him to check and, if correct, he would pass it on to the accounts department to make the computer entry. PW5 said Zhu would initial his approval before the cheque was signed. PW5 said he did not monitor these documents. Exhibits 32-35 all have copies of the same Greatson invoice as a supporting document. 165.PW5 said that Ex 36, p. 1108, is a voucher dated 14 December 2005 for HKD20 million payable to Greatson stated to be part of the second deposit payable under the OGD contract. There was no Greatson invoice with the supporting documents. It was initialed by the same persons who initialed Exhibits 32-35. 166.PW5 said that Exhibit 37 was similar to Exhibit 36 and related to a payment of HKD10 million dated the 18th January 2006. The accounting voucher is in the name of Hing Yip rather than OGD but the account name is OGD. PW5 said if OGD had cash flow problems Hing Yip would make the payment in the account name of OGD and there would be a debt to Hing Yip. 167.Ex 38 is a Hing Yip voucher dated 9 March 2006 for over HKD7.8 million to be paid to Greatson. 168.Ex 39 is a Hing Yip voucher dated 14 March 2006 for HKD15,566,190 to be paid to Greatson. 169.Ex 40 is similar to ex 39 and is dated the 15th March and is for HKD 10 million. However, in Exhibit 40, the approved by line of the voucher is initialed by PW6 rather than Zhu and the request is not initialed as approved by D1. PW5 said he did not know why this was. 170.Exhibit 41 is the Hing Yip voucher dated 15 March for the payement to Greatson of over HKD 7.7 million and the initials are as in Exhibit 40. 171.Exhibit 42 is a Hing Yip voucher dated 18 March 2006 for HKD 15.566,190 to be paid to Greatson and intialed the same as Exhibits 40 and 41. 172.Exhibit 43 is a Hing Yip voucher and request dated the 17th March 2006 for the payment of HKD4.4 million to Greatson and initialed as exhibits 39 to 43. No Greatson invoice was with any of the vouchers exhibits 39 to 43. 173.PW5 did not know why the payments had been made other than in compliance with the OGD contract. Kenlap/ Long Asset/ Fong Long Contracts 174.PW5 said that at the management meetings in 2005 it was reported that as regards the chemical side of the business the factory in Zhuhai would manufacture a new product, gold bonding wire. In 2006 it was reported that the machines for manufacturing this product had been ordered. 175.The minutes for the February 2006 meeting, Exhibit 18, p851, mentions that the order for equipment for gold bond wiring production was expected in April. 176.PW5 said he saw the two contracts entered into in relation to this machinery, Ex 190, CB29 and Exhibit, 189, CB30. The first is dated the 23 March 2006 and is between Kenlap PGC and Long Asset for one set of Soma Fine Wire Drawing machines and 4 Soma Fine Wire Drawing machines of a different type with a total value of Euros 3,169,000 (about HKD 18.9 million). 177.The second contract is dated the 27th March 2006 and is between Kenlap PGC and Fong Long for 5 sets of IWT Winding Machines for 1 million Euro. 178.PW5 produced Ex 201, pages 5060-4, CB31, the records relating to the payment to Fong Long. The Kenlap PGC voucher is dated the 28th March 2006 for HKD7,580,520 for the 40% deposit on the plant by way of cheque. It was prepared by Rica Chan, PW81 and checked by Cindy Wong, PW70. They did the same work for Kenlap as Agnes Lam and Thisbe Tang did for OGD. There was no invoice attached. He said the writing at the top of the invoice which states that Mr Chu will submit a contract later relates to Zhu. The cheque was signed by D1 and D2. Included with the documents is a letter from Kenlap to Fong Long stating that the money had been deposited. PW5 said the normally the accounting voucher approval line was initialed by Zhu but that this one was blank. PW5 said Zhu should initial all accounting vouchers. 179.PW5 said that Exhibit 202, p.5066-71, is the accounting vouchers for the payment to Long Asset Limited and were prepared in similar circumstances to Exhibit 201. PW5 did not know why the documents had not been initialed by PW64 who should have done the final checking. Personnel Lisa Li 180.PW5 said she was employed by OGH and had an office in Admiralty. He did not see her for the weeks before the liquidation. He said she mainly assisted in communication with the mainland plant. For example, if there was stock-taking on the mainland she would assist. She reported to D1. She was married to Lin Jianping who was a director on the chemical side of the business. He said that Ex 354,p.7096, is an image of Lisa Li. Tsui Sze Lam - Tai Shan 181.PW5 said he was the bodyguard of D1 and was not employed by the company. He saw him nearly every day at the Admiralty offices. He saw him up to a few weeks before the liquidation. He said Ex 277, p.5380 is a copy of the identity card of Tai Shan with the name Tsui Sze Lam. 182.PW5 disagreed that Zhu was not required to initial the approval column of the accounting voucher notwithstanding that he was shown some vouchers which Zhu had not initialed. 183.PW5 said that Nanfang Alloy Sheet (HK) Company Ltd and Nangang Galvanised Aluminium Sheet HK Company Ltd both belonged to D1. The former company has a subsidiary in Sanshui called Hong Li Galvanised (Sanshui) Company Ltd with a factory in Sanshui whilst the latter had a subsidiary in Sanshui called Jieli Nangfang Alloy Sheet ( Sanshui) Company Limited next to the galvanised factory in Sanshui but not yet in operation. PW5 did not know that D2 held shares in these companies on trust for D1. The Nanfang companies had a room in 2803A Admiralty Center until the provisional liquidation. These were the same premises from which Global Credit operated. The persons responsible for running those factories were Li Lee-cheung assisted by Li Jianping who were both directors of OGH. PW5 said he was not sure that Peter Lee Ka-fai and Anthony Yeung Sik-keung, who were with the banking department of OGH and were directors, assisted D1 with banking issues for the Nanfang companies. 184.PW5 said he disagreed that D3 had no particular title with OGH, he said he was the project director. He agreed that D3 acted as a liaison between the Nanhai plant personnel and Admiralty as they did not speak English and he would assist them to deal with overseas suppliers of machinery. He was aware that D3 went to Europe on a trip relating to plant machinery. He said D3 updated them on the progress of the Sanshui plant at the monthly meetings. PW64 Patrick Tong Ka Ming – Former Financial Controller of OGH 185.PW64 is an accountant. He joined OGH in March 2005 and took up the position of financial controller of OGC, a listed company within the Group which dealt with the chemical side of the business. His boss was PW5. PW 64 said that after the provisional liquidation, the group was renamed Hong Kong Resources Holdings Company in October 2008 and PW64 is the financial controller of that company. 186.PW64 produced Exhibits 201 and 202 which are the business records dated the 28th March 2006 relating to the sale of machinery to Kenlap PGC by Fong Long ( HKD7,580,520) and Long Asset (HKD7,014,166) pursuant to the contracts Exhibits 189, (CB29) and 190 ( CB30). He said the vouchers were prepared by Rica Chan Wing, PW81 and checked by Cindy Wong Lai Fong, PW70. 187.According to PW64, Zhu would not have initialed the approved by line on the accounting voucher. PW64 said that he himself would initial that line to approve the accounting entry. Zhu told PW64 that the money was needed for machinery. PW64 said he did not initial the approval line of Exhibits 201 and 202 as there were no contracts with the supporting documents. He said he saw the contracts some time in April 2006. He said he approached Zhu for the contracts and that Zhu told him to approach D3 for them. He said he approached D3 for the contracts and one or two days later he received them. PW64 said D3 was responsible for the purchase of machinery and was the project manager. He said D3 reported to D1. PW64 said the voucher numbers for Exhibits 201 and 202 were H1-40 and H1-39 respectively. 188.PW64 said the trial balance document which records these transactions, CB31a, p. 5071-1, from April 2005 to the end of March 2006 was given to him by Qi Li Ping. When he saw the entries relating to the purchase of machinery he asked Qi or her assistant for further details and she handed to him the vouchers, exhibits 201/2. PW64 said he then asked his subordinate to ask Zhu for the contracts. 189.PW64 said the purchase of the machinery for Kenlap was mentioned at the monthly meetings by Qi or Kwan and, if they were not there, by D1. 190.PW64 said that exhibit 209, p. 5358 –60, was documentation relating to a receipt by Kenlap from United Fine Holdings Limited for HKD3.25 million dated 31 March 2006. A letter confirming the payment is on the letter heading of Strong Sense Investment. The related cheque, exhibit 266, p.5984 at 5360 is drawn on the bank account of Strong Sense. PW64 said KCL dealt in the trade of precious metals and electroplating chemicals and that the sales manager was Kwok Chi Ngai. This transaction is shown on the KCL General Ledger at p.5360-3a. The relevant invoice numbers were written on the paying in slip by Rica Chan who would get the information from Cindy Wong who signed the checked by line. 191.PW64 gave evidence concerning three receipts from Foshan Dongfan Chemicals Company Ltd ( Dongfan) which are set out in Exhibit 209 p.5360 –1a, which is a ledger setting out the details of the Kenlap account with the Bangkok Bank in Hong Kong for the months of February and March 2006. The payments were made on the 30th March 2006 in the sums of HKD1,130,000, 3,612,000 and 3,393, 000 and the respective voucher numbers were H9-80, H9-80 and H9-81. The relevant accounting vouchers for the first two payments are part of exhibit 206 at pages 5342a and 5345a and the third payment was produced as exhibit 207 with the payment voucher at 5352. Attached to each are the customer’s copy of the bank deposit slips and a letter from Dongfan referring to the deposit. There is no reference to any invoice with the documents. The receipt vouchers were prepared by Rica Chan and checked by Cindy Wong. PW64 said he did not check these documents. He said it was very near the end of the accounting year and the accounts department would have been very busy. 192.PW64 said Exhibit 208,p.5355, is an OGH receipt voucher 0603008 for HKD3.22 million dated the 31st March 2006 and is shown on the General Ledger at 5360-3a. It is a payment by Strong Sense and Ex 266, p.5983 is the relevant cheque. The receipt voucher exhibit 209 dated the 31st March 2006 in respect of a payment by United Fine is also shown on the General ledger. Exhibit 266, 5884 is the related cheque. PW64 said United Fine was a customer of Kenlap PGC as was Dongfan. 193.PW64 produced a receipt voucher exhibit 292 p.6455 issued by KCL in respect of a purported payment by Trump Link Enterprises Limited in the sum of HKD4 million on 2 December 2005. The letter confirming the deposit is from Strong Sense and refers to Trump Link and the cheque is from Strong Sense, Ex 135, p.3031. 194.PW64 produced Ex 293, p.6460, a KCL receipt voucher dated the 2nd December 2005 for HKD 3 million from Union Sheen. The letter concerning the deposit is from Union Sheen (6463) but the cheque is Strong Sense cheque, Ex 135, p. 3029. There was no pay-in slip with the documents. 195.The final receipt voucher produced by PW64 was part of Exhibit 294, p. 6464-69, dated the 2nd December 2005 for HKD4.2 million from Hao Bo Trading Company Limited and supported by a covering letter. The bank credit advice (6469) has manuscript entries by Rica Chan referring to the invoices. The relevant cheque, Ex 135, p. 3033, is drawn on the Strong Sense account and the cheque number is consecutive to the cheque used in connection with exhibit Ex 292 which is also dated the 2nd December 2005. 196.PW64 said that as regards Kenlap PGC it was Qi Liping who made the computer entries. She was in charge of the chemical side. She was described as a director of Kenlap PGC. William Kwan was a director with no executive functions. 197.PW64 denied that he saw the payment vouchers and initialed them before the cheques or chats documents were signed by D1 or D2. He said that he was the last person to see the voucher and that this would be some time after the cheque had been sent out. He said that his only role was to check the accounting entry. 198.PW64 said that Qi and her husband, Lin Jianping, and Kwan Yan were all mainlanders and spoke little English. The Payment Approval Request and Accounting Voucher System for OGD 199.A number of former accounts staff of OGH were called to give evidence about the way in which vouchers were processed by OGD. There is one form used for the request and voucher, the top third relates to the payment approval request and the lower two thirds is the accounting voucher. The witnesses said that all payment requests were initiated by Zhu and he would determine which bank account was to be used and which of the companies in the Group was to be used for making payment. 200.The same type of document was used to record receipts by the Group and inter group fund movements. The accounting voucher part of the form has three boxes to indicate whether the document is to record a payment, a receipt, or a whether there is to be a “Journal” type entry to record inter-group movements of funds. I shall refer to the various types of vouchers as payment vouchers, receipt vouchers and journal accounting vouchers. 201.The witnesses who gave detailed evidence about the OGD vouchers were Henry Wong Cheuk-him, PW6, Thisbe Tang Kam Kwan, PW8, and Agnes Lam Pui Pui, PW9. PW5 had also given evidence about these vouchers but the above three witnesses had more direct involvement with their processing. 202.PW6 is a former assistant financial controller of OGH and is a Certified Accountant in Hong Kong. He joined OGH on the 1st November 2005 and he reported to Richard Wong, PW5. He remained with the company after the provisional liquidation until March 2007. He never worked for OGC. He only worked on the aluminium side of the business controlled by Hing Yip Holdings. The assistant financial controller for the chemical side of the business under OGC was PW64 who also reported to PW5. 203.PW8 is also a qualified accountant and she worked under PW6 as an assistant finance manager. She joined OGH in February 2005. 204.PW9 was an accounting assistant with OGH until she resigned in March 2007. She started work as a receptionist for D2 at Global Credit in,1999. In 2003 she worked as a secretary for D1 for 2 months at OGH and in August 2003 she became an accounting assistant. When she started that job she was responsible for filling in vouchers, issuing cheques and bank transfer documents and inputting information into the computer. When she first joined OGH as an accounts clerk her superior was Daniel Tam. He left in late 2003 or early 2004 and her superior thereafter was Zhu. She took orders from him and reported to him. 205.PW9 said that she was responsible for preparing various types of vouchers on the instructions of Zhu. She said that if it was for payment she would prepare the payment voucher, both the top part and the bottom part according to the instructions of Zhu and in accordance with any documentation he might give to her. She said that she would prepare the voucher but that she would not put in the date or the gross amount. 206.PW9 was referred to Exhibit 32, p. 1089, which relates to the first payment of a deposit of 30% of the purchase price for the ITW vertical powder and electrostatic coating system due under the contract between OGD and Greatson Corporation Limited dated the 1st November 2005, Ex 10, CB2. There were 12 payments made under this contract and the relevant payment vouchers were produced as Exhibits 32 to 43, pages 1089 to 1133. 207.In relation to the payment voucher for exhibit 32 at page 1089, PW9 said she would have been given the Greatson invoice at 1092 by Zhu with instructions to prepare the interbank fund transfer form, the customer copy of which is at 1091, and that Zhu would have told her which company to use and which bank account. 208.PW9 said she would have filled in the top part of the form, the top purpose line, the USD amount on the second purpose line and the letters “Chats” to indicate that this was to be an interbank transfer. 209.In the accounting voucher part of the document she would have filled in the words “deposit” “bank charges” and “HSBC HKD C/A” to indicate which account was to be used. She would not fill in any of the figures in this part of the document at this stage, nor would she date it. 210.PW9 said she would next prepare the interbank transfer form at 1091. Having prepared these two forms she would give them, together with the invoice, to Zhu to check and initial his approval in the approved by line of the lower part of the document and then all the documents would go to D1 for him to initial the approved by line in the upper part of the form and sign the bank transfer form. PW9 said that either Zhu would take the documents direct to D1 or they would be left with his secretary, Venise Chow, PW80, who sat at a desk just behind PW9. She said it was not necessary to put a marker on the document indicating where D1 should sign as D1 knew where to sign. If D1 was not available, D2 would be approached to sign the bank transfer form. 211.After D1 signed and initialed the documents Venise Chow would return them to PW9. PW9 said that the she would then ask Zhu if the transfer should be left for the office assistant to take to the bank in Pacific Place or whether she should take it. She said if it was urgent she would take it to the bank. PW9 said only the interbank transfer was taken to the bank; the other documents were kept by her. After the transfer had been done at the bank, the customer copy of the transfer would be kept by her with the other documents. 212.PW9 said that a few days later she would receive the bank advice by mail. When she received this document she would fill in the date on the voucher as well as the amount of the transfer and bank charges/commission. She said she would obtain this information from the bank advice, p.1090. 213.PW9 said she would record the information in the cash book and enter the details in the company computer excel file; the name of the payee, the amount, the date and the invoice number. 214.PW9 said that some time later, a batch of vouchers would be taken to PW8 for checking. PW9 said she followed a similar procedure for Exhibits 33 to 36. She said that with regard to the remaining payments she was instructed by Zhu to use the Hing Yip Holdings HSBC HKD current account and so used the vouchers bearing that company’s name. She said as the payments were made on behalf of OGD, she wrote dOGC Development in the account name section of the accounting voucher. The vouchers attached to exhibits 33 to 40 were all initialed by the same persons who initialed Ex 32. 215.PW9 did not know why the payments evidenced by exhibits 34 and 35 were payable to the same payee, for the same amount, prepared on the same day and presented to the bank at precisely the same time. 216.Exhibits 40–43 evidence the last four payments made under the Greatson contract. None of the vouchers were initialed by either Zhu or D1 in the respective approved by lines of the voucher. PW9 said that she would have been asked to prepare the bank transfer documents on an urgent basis and so would not fill in the payment voucher details until after she received the customer’s copy of the bank transfer form from the bank. She said, in urgent cases, she would usually take the transfer documents to the bank herself. She said there were no supporting documents in respect of this batch of payments. She said that the bank signatory would have only received the bank transfer form. The bank copies of the transfer forms show that D2 signed the transfers for Ex 40, 42 and 43, whereas D1 signed the transfer form for Exhibit 41. Exhibits 40 and 41 evidence two payments to Greatson made on the same day for HKD 10,000,000 and HKD 7,766,040 respectively. The copy bank transfer forms show that they were made at the same time. PW9 did not know why the payments were made at the same time nor why they were signed by different persons. PW9 said that when she later completed the payment vouchers, after the bank transfer had been done she did not approach Zhu or D1 to initial the voucher as the transaction had already been carried out and the bank transfer document already signed. 217.PW8, Thisbe Tang, who worked on the aluminium side under PW6, Henry Wong, said that some time after the bank transfers set out in the payment vouchers had been made she would receive batches of vouchers and supporting documents for her to check. She said that she did not approve the payments, this was not part of her function. She only checked the accounting entries to make sure that they were correct. If they were correct she would initial the checked by line of the accounting voucher. PW8 said that after she checked them they would be sent in batches for PW6 to conduct the final check. 218.PW6 said that, some time after the transaction had been completed, he would received batches of payment vouchers to check after they had been checked by PW8. PW6 said that he did not approve payment, that was not part of his function. He only checked the accounting entry. He said that if the entry was correct he would initial the voucher on the checked by line. He said if there was no initial on the approved by line of the accounting voucher he would initial that line but his initialing of that line was for precisely the same purpose as his initialing of the checked by line, namely to approve the accounting entry. 219.PW6 said that, before he received the documentation, details of the transaction would have been input into the office accounts computer. Before his checking of the documentation such entries were regarded as provisional and could be altered. After he checked, the computer entries were “posted” after which the computer records could not be amended. Both PW6 and 8 were adamant that they did not see the documentation before the bank signatory signed the bank transfer form. They said that the bank transfer would have been done many days before they received the related documentation. 220.PW6 said that after the payment vouchers had been completed showing payments were made by Hing Yip on behalf of OGD there would be corresponding journal accounting vouchers completed to reflect the debt owed by OGC to Hing Yip. 221.The OGD contract set out at Clause 11 the timing of the various payments to be made under the contract. PW6 said it was up to Zhu to arrange for the payments but it was part of his function to remind Zhu when payments were due so as to avoid breaches of contract. Under clause 11 the first 30% deposit payment was to be made on the signing of the contract which was dated the 1st November 2005 and the second before the 1st December 2005 when partial payment of the goods was to begin. The partial payments did not commence until the 21st November 2005. PW6 and PW8 did not know why the payments were made in the way they were. 222.PW6 said he did receive a copy of the contract to familiarize himself with its contents. He said D3 appeared to be familiar with the Sanshui project and D3 would speak about the project at meetings and he had discussions with D3 outside meetings concerning the delivery of the machinery and its installation. He said in March 2006 he introduced D3 to PWC audit staff as being the person responsible for the project. Later, the auditors required information concerning import declarations and he approached D3 for these documents. 223.PW6 said the total amount paid to Greatson came to just over HKD136 million. The full amount for the extrusions press based on the invoice Ex 32/1092 would be HKD 108,328,000. The full price of the coating system would have been HKD43,648,800, a total of HKD151,866,800. The difference between what was paid and the total is HKD15,171,680 which is 10% of the total payable under the contract. Clause 11 of the contract states that the last 10% was to be paid on the presentation of the acceptance certificate by the seller, but not later than 6 months after installation. PW6 said the balance was never paid by OGD to Greatson and he did not know why it was not paid. He said the machinery had not been installed by the date of the provisional liquidation in July 2006. There were some machines there but he did not know what they were. He said his only source of information was D3. 224.PW6 said that Li Lee Cheung was involved in the marketing side of the aluminum business and one of his functions was to oversee the operation and development of Sanshui. 225.PW6 did not agree that D3 was very sociable and outgoing. 17 Payments to Hing Yip between 23 November 2005 and 20 March 2006 226.PW9 was taken through payment vouchers relating to 17 payments to Hing Yip. These payments are shown on the Fund Flow Analysis Chart, CB10, as coming from Pioneer Lane ( 6 payments, Exhibits 46,51,47,55,52,54) amounting to HKD24,957,000, Crown Regent (5 payments, Exhibits 50,49,58,56,57) amounting to HKD23,099,000 and Good Light (6 payments Exhibits44,53,60,59,48,45) amounting to HKD26,940,000. They were booked as payments made on behalf of a number of companies. 227.PW9 said that when a payment was received by the company from a customer it was part of her duty to process the receipts. She said she would get the information from Zhu. 228.PW9 said that Exhibit 44, p.1134, is a receipt voucher dated the 23rd November 2005 from Forex Industries for HKD5,663,000. 1135 is a chopped letter dated 23 November 2005 from Forex stating it is a partial payment for the purchase of primary aluminium ingots from Hing Yip. 229.PW9 said that p.1136 is the relevant HKD account deposit form, she had pp.1135/6 when she completed the voucher. They were given to her by Zhu. She said that he would give her no instructions as she would know that it was a payment receipt. She said it was initialed by PW6 and PW8 after the documentation was completed. PW9 said that Forex dealt with ingots. There would have been no invoice. 230.PW9 said the fact that it was a partial payment was not noted on the voucher as she had not noticed. After completion, it went to PW6 and 8 for initialing, and then back to her for filing in a box file. She would not then do any accounting work relating to this receipt. It would be entered into the accounting system by a Miss Hung. 231.PW9 said Hing Yip did issue invoices according to the date of each transaction. The invoices were put in a cabinet by PW9. She said she would sometimes refer to the invoice but that she could not recall when. Someone else would look at that, Miss Hung. PW9 said that the voucher number would be entered by Miss Hung. PW9 said it was always Zhu who brought her the payment. 232.PW9 said that Ex 134 p.2959 is the related cheque. It is a BEA cheque drawn on the account of Good Light. 233.PW9 said that Ex45, p.1137 is a similar receipt voucher dated the 2nd December for HKD4.85 million and checked by PW6 and PW8. An attached letter from Forex Industries to Hing Yip stated the payment was a partial payment for ingots. 1139 is the bank deposit form. PW9 said that she would not have referred to the invoice. 234.The relevant cheque is Ex 134 p.1108, again drawn on the Good Light account with BEA. 235.PW9 was taken through exhibits 46 to 60 which relate to the remaining payments to Hing Yip by Good Light, Pioneer and Crown Regent purporting to be payment for goods ordered and with letters attached confirming deposits into the account of Hing Yip in respect of the purported purchase of aluminium ingots by Forton, Forex, Pioneer, New China Trading Ltd, Good Light and Mantex. I noted that several of the attached letters bore no address and that their contents were very similar. PW9 said she received all the documentation from Zhu. She never had contact with the staff of any of the companies concerned. 236.PW9 gave evidence of preparing 24 of the cheques or bank transfers referred to in the flow chart CB10 on the instructions of Zhu on the bank accounts of the following companies: · · OGD · Hing Yip · Greatson · Strong Sense · Pioneer Lane · Crown Regent · Good light · Nanfang Galvanised Sheet PW70 Wong Li Fong, Cindy, Ex Administrative Assistant of OGH 237.PW70 majored in accounting when studying and is familiar with accounting work. PW70commenced working for OGH inMay 2002 in the accounts department and assisted the company secretary. She worked under Daniel Tam and Olivia Chan. Daniel Tam was the financial controller and Olivia Chan was the company secretary. 238.In 2004 PW70 moved to the chemical side of the business under OGC. There were a number of subsidiaries of OGC. These included Kenlap PGC, KCL, OG Management Company, Kenlap Environmental Protection and Kenlap BVI. 239.PW70 said that when she started to work for OGC in 2004 there was a change of financial controller. She said in March 2005 she worked for Patrick Tong who was a financial controller and Zhu who was the assistant financial controller. She said that sometimes Lisa Li would ask her to do some work. I noted from Ex334, page 6912, the OGH directory as of the 29th December 2005 that Lisa Li is the first person listed in the Accounts Department but with no position stated. I also noted that Zhu Weibing is referred to as an assistant financial controller below the three financial controllers, PW5, PW6 and PW64. 240.Rica Chan Wing, PW81, joined OGC in June 2004 and worked as the secretary to Anessa Wong, who left in December 2004. After she left, Zhu asked Rica to assist in preparing payment vouchers. Rica would give the vouchers to PW70 for her to check. Patrick Tong, PW64, became the financial controller of OGC in April 2005. 241.PW70 said OGC mainly traded in chemicals such as potassium, gold cyanide, potassium silver cyanide , palladium and rhodium. Payment Vouchers 242.PW70 said that part of her work was to check payment vouchers. She said she checked Ex 201, p.5060, p. 5060a1, which is a Kenlap PGC payment voucher stated to be an advance payment for machinery in the sum of HKD7,850,520 to Fong Long. PW70 said she initialed the checked by line. It was prepared by Rica Chan, PW81. It was a 40% deposit for plant and equipment. The approved by line is initialed by D1. 243.PW70 was asked about the normal procedure for processing payment voucher. PW70 said her subordinate, PW81, would prepare the vouchers and the cheque on the instructions of Zhu. PW70 said initially the forms had no checked by line and she would check them and then give them to Patrick Wong to check. Later on, the checked by line was added and she would initial there after checking. Afterwards she would give the voucher and unsigned cheque back to PW81. Later the cheque would be signed by D1 and he would initial the approved by line on the upper part of the form. PW70 said she would not see the documentation again as it would be processed by the Kenlap accounts staff, namely, Qi Liping and MakeyYiu. Qi Liping was a director of Kenlap PGC and Makey Yiu was employed as an assistant accountant at f Kenlap. 244.PW70 was asked questions about Exhibits 201 and 202, p. 5061 and 5066, which are Kenlap PGC vouchers dated 28 March 2006 and purport to relate to part payments to Fong Long and Long Asset respectively for machinery. The related contracts were respectively Ex 189, CB 30 and 190, CB.29. She said that the vouchers for Kenlap did not follow the normal procedure as she would not check the documents until after the payments had been made. She said they had been filled in by PW81, Rica Chan. They would have the supporting documents when they came to her such as the copy cheques or bank transfer documents and letters confirming to the companies confirming payment. She said after the documents had been seen by PW64 they would be given to Madame Qi or Makey to input the details into the computer. PW70 said she did not know why Ex 189 referred to a payment of a 40% deposit when the amount paid was in fact 80% of the contract price as stipulated in the contract. 245.PW70 said that the procedure at KCL was different. She said that she checked the vouchers after PW81 prepared them as PW81 was not as experienced as the witness. 246.PW70 said that she would check the supporting documentation and, if something was missing, she would make enquiries with the person making the application for payment. Sometimes the colleague submitting the application would initial the invoice so she knew whom to contact. She said she was careful and would not initial a payment voucher if she was not satisfied that everything was in order as a wrong payment would cause many problems. She said that with Kenlap PGC documents she would not see the payment voucher until after payment had been made. 247.PW70 then dealt with five receipt vouchers, Exhibits 206, 206A, and 207 dated the 30th March 2006 and related to receipts by Kenlap PGC and 208 and 209 dated 31 March 2006 whcih were receipts by KCL. PW70 said she would receive the vouchers and supporting documents from Rica Chan and that all the information would be on the voucher except her initial and the voucher number if there was one. 248.PW70 said she did not see the contracts CB29 and 30. She agreed with counsel for D1 that payments as evidenced by exhibits 201 and 202 were not in accordance with the contracts. Ex 201 refers to the payment of 40% whereas the contract required payment of 80% and, in fact the amount paid was 80%. The payment clause required payment by TT (telegraphic transfer) and payment was made by cheque. 249.The Long Asset contract, CB 29, required payment by TT but no details were supplied as to the account number unlike the contract for Fong Long. The contract required payment in Swiss Francs and payment was made in Hong Kong dollars. PW70 said she did not recognize the signatures on the contracts and had this been a KCL contract she would have made enquiries if she did not recognize the signatures. PW70 said she received Exhibits 201 and 202 a few days after 28 March 2006. 250.Ex 206 related to a receipt from Dongfan for HKD1,130,000 and the related cheque, Ex 266, p.5982 was a BEA cheque drawn on the Strong Sense account. 251.Ex 206A related to a receipt from Dongfan for HKD 3,612,000 and the related cheque was drawn on the Union Sheen account with the Dah Sing Bank- Ex 165, p.5922. 252.Ex 207 related to a receipt from Dong Fan of HKD3,383,000 on a Union Sheen Dah Sing Bank cheque. 253.Ex 209 relates to a receipt from Strong Sense in the sum of HKD3,220,000 and Ex 209 purports to be a receipt from United Fine for HKD3,250,000 and the related cheque, Ex 266, p. 5084, is a BEA cheque drawn on the account of Strong Sense. PW70 said that Zhu had told her that Strong Sense acted as an agent for United Fine and some other companies. 254.PW70 produced three KCL receipt vouchers (Exhibits 292-4), all dated 2 November 2005. PW70 said she prepared Ex 292 and PW81 prepared the other two. 255.Ex 292, p.6455 purports to be a receipt from Trump Link for HKD4,000,000. She wrote voucher except for the voucher number. The related cheque is Ex 135, p. 3031, a BEA cheque drawn on the Strong Sense account. 256.Ex 293 was prepared by Rica Chan and checked by PW70 and purports to be a receipt from Union Sheen for HKD3,000,000. The related cheque, Ex 135, p.3029, BEA cheque drawn on the Strong Sense account. 257.Ex 294 relates to a purported payment by Hao Bo of HKD4,200,000. The related cheque, Ex 135, p.3033, is a BEA cheque drawn on the Strong Sense account. 258.PW70 said that the deposit confirmation letters with Exhibits 292 and 293, pp 6458 and 6463, purporting to come from Strong Sense and Union Sheen respectively were identically worded and both contained “Dear sir” with the first letter of the second word in the lower case instead of with a capital letter. 259.PW70 said she never met nor spoken with the staff of Foshan Dongfan Chemicals Limited, United Fine, Trump Link, Union Sheen or Foshan City Hao Bo. PW81 Chan Wing, Rica – Former secretary and accounts clerk for OGC 260.PW81 said that she joined OGH on the 21st June 2004 as a secretary to Annessa Wong Lai Ping who was then the financial controller of OGH. Zhu was the assistant financial controller and he gave her work. When she first joined the group she did secretarial work. In late 2004 or early 2005 she started to work as an accounts clerk for OGC but her title was not changed. She mainly assisted PW70, Cindy Wong. Exhibits 201 and 202 Kenlap PGC Payment Vouchers 261.PW81 said she prepared these vouchers at the request of Zhu. She said he either gave her oral instructions or gave her a document with details recorded. She also filled in the attached cheque and bank transfer document. PW 81 had no independent recollection of completing and processing these particular vouchers. She said from what she recalled, she would pass the voucher with the cheque or chats form to Cindy Wong for her to check before the authorized signatories signed the relevant bank document and D1 initialed the voucher. She said that Cindy would normally initial it. She could not recall if this voucher was initialed by Cindy before she gave it back to Zhu. She said that if it was urgent it might not be initialed but she would give it to Cindy to have a look. 262.PW81 said that Kenlap PGC documents were handled differently to those for other OGC companies. She said that when the Kenlap PGC documents came back to her after the bank transfer had been done she would pass the documents to the Kenlap PGC staff to input the data into the computer. She said that her boss, Patrick Tong, PW64, would not initial the Kenlap PGC vouchers. 263.PW81 said she did not recognize the signatures on the contracts related to exhibits 201 and 202, Exhibits at CB29 and CB30. Exhibits 206, 206A and 207 Kenlap PGC Receipt Vouchers 264.PW81 said that she prepared these three vouchers all dated the 30th March 2006 on the instructions of Zhu who would have given her the relevant paying –in slips. She said that sometimes he would give her just the paying in slip and tell her what it related to and sometimes he would give her a letter from the customer confirming payment. She said that for Kenlap PGC Patrick Tong would not necessarily initial the approved by line. She would return the documentation to Kenlap PGC accounts staff under Madame Qi for her to input the details into the computer. 265.According to the paying-in slips the amounts were paid in on the same day at 1511, 1513 and 1512 hours. Exhibits 208 and 209 KCL Receipt Vouchers dated 31.03.06 266.PW81 said that she prepared these two vouchers on the 31st March 2006 on the instructions of Zhu. She said that when the documentation had been completed she put the details into the computer and recorded the invoice numbers on the paying in slip and the voucher number on the receipt voucher. She said she would get the invoice numbers from the computer. She would have input the invoice numbers into the computer when she prepared the invoices in Excel format. Exhibits 292-294 KCL Receipt Vouchers dated 2.12.05 267.PW81 said Cindy Wong prepared Ex 292 and she prepared the other two. After they had been dealt with, she input the information into the computer after the documents were initialed by Cindy Wong and Patrick Tong and wrote the voucher number on the voucher receipt. She said when inputting the information into the computer she would record the invoice numbers on the bank paying in slips. She said that the Chinese characters for Union Sheen on Exhibit 293 and Hao Bo on exhibit 294 were written by Cindy Wong. 268.PW81 said that the payment for exhibit 292 was made into the Bank of China for crediting to the KCL account with the Nanyang Commercial Bank. PW 7 Olivia Chan Chik Ching – Ex company secretary of OGH 269.PW7 is currently employed by a company doing arbitrage work. She is a Chartered Secretary. She holds a bachelor’s degree in accounting, an LLB, and a masters degree in finance. She had worked as a company secretary for about 13-15 years before joining OGH. 270.She joined OGH in October 2001 and remained with them until July 2006 when the company went into provisional liquidation. She joined the group as an assistant director and performed the function of a company secretary. She was also the company secretary of other companies in the group, including OGC 271.Her duties included ensuring compliance with the listing rules, and some liaison work with members of OGH management. She attended meeting of boards of directors of the Group and prepared notices of meetings to be held, drafting minutes of various meetings within the group. 272.She attended OGH senior management internal management meetings which were held about once per month and which involved discussions of OGH business. At the end of 2003 she learnt that OGH was planning to build a new aluminium facility in Sanshui, Foshan. She said this was discussed at the monthly internal management meetings. She also learnt that OGH would purchase production machinery for the plant. 273.PW7 said Ex. 23, p. 949 consisted of two e-mails, the first dated 29th August 2005 from PW7 to D1, Li Lee Cheung, D3, PW1, PW5, Zhu, and Miriam Yee. The purpose of the e-mail was to remind colleagues that she had to be informed of purchases over a certain figure. She referred to the machinery and equipment for Sanshui 274.There is a supplement from PW5 referring to purchases over HKD35 million which he sent to Li Lee Cheung, D3 and Zhu and copied to others including D1. The reference to “Unit” in the e-mail in this context means the suppliers of the machinery. Purchases may be made at different stages and, if related to same matter, they would be treated as one unit if the order is placed with one supplier. 275.PW7 said that in October 2005 PW7 received a draft of the OGD contract for the purchase of machinery for a company within the OGH group. She said she received this contract as it was known the amount involved would be huge and colleagues had been reminded that if the amount exceeded a certain figure it was necessary to report the transaction to the stock exchange so she was expecting to receive a copy of this contract. 276.When she received the contract she started to prepare the public announcement. She said she approached a legal firm, PC Woo, to draft the announcement. Greatson was not known to her. She made enquiries about the background of the company from D3 and conducted a company search and the solicitor also assisted in doing that. 277.She said that she asked D3 as he was responsible for the buying and selling of machinery. This included the purchase of the machinery for Sanshui and, as he was in Hong Kong she approached him. 278.PW7 said that announcements concerning discloseable transactions were made perhaps 2-3 times a year. If they were complex, their drafting would be referred to an outside legal firm. 279.PW7 said that Ex 32, CB 22, is an e-mail from D3 to PW7 dated the 20th October 2005 stating that Greatson is an agent specializing in trading machinery used in a variety of metal processing industries. PW7 had asked D3 about the nature of the business engaged in by Greatson. 280.PW7 said she provided P C Woo with information about the OGD contract and that the contract required the consideration of the BOD of OGH. PW7 said she reported the details of the proposed contract to a number of independent non-executive directors. There were three of them, Vincent Lee, Mr Choy Tak Ho and Mr Chau Po Fan. They raised some questions which she was unable to answer. 281.PW7 said Ex. 23, CB24, is a copy of an e-mail dated the 1st November 2004 from PW7 to D1, D2, D3 Zhu and PW5 and copied to Vincent Lee, one of the INEDs, setting out the five questions raised by the independent directors. She said that the first three questions were for D3 to answer as he was the project director of this project so he was the most suitable person to answer them. The other two were for PW5 and Zhu. Zhu was a colleague in the financial department and she was not clear what he did but she knew that he assisted PW5. She said that she would approach Zhu rather than Henry Wong as he had only been with the company a short time. PW7 said Zhu would know better as he was the assistant financial controller and he attended the internal management meetings. 282.D1 was included as he was the chairman of the group and he needed to know about the progress and questions raised. She included D2 as she was one of the directors. 283.PW7 said that Ex 23, p. 954, CB 25, is an e-mail from D3 to PW7 dated the 2nd November 2005 at 11.23am concerning the OGD contract and was in response to her previous e-mail. It included answers to the first three questions raised by the independent directors. 284.PW7 said that Ex 23 ,p.955, CB 26, is an e-mail from D3 to PW7 dated the 2nd November 2005 at 2.48pm asking if PW7 had any comments on his last e-mail otherwise it was ready for broadcast. Underneath the initials of SY (D3) there are the members of the preparatory office. The e-mail stated that the seller was introduced by parties involved in the same business. She said that she had no reason to doubt this was true. 285.Ex 23, p. 952/3. 952 is a copy of the e-mail dated the 1st November with the five questions and 953 is an e-mail from PW7 sent out on 2nd November at 5.09 pm to D1, D2 , Vincent Lee, PW1 and PW2 and copied to D3, Zhu and others incorporating the three answers supplied to her by D3, and the other two answers from Zhu or PW5. 286.PW7 said that Ex 28, CB 3, is a draft of the Announcement dated the 1st November 2005. Ex 306, p6680 is the Announcement as it appeared in the Standard Newspaper on the 4th November 2005. Once drafted, the Announcement was sent for clearing and approval to the Hong Exchange and Clearing Ltd, which is the corporate entity of the HK Stock Exchange. After that there would have been a meeting of the BOD of OGH and a notice of such a meeting would be issued. 287.PW7 said that Ex 335, p. 6913 is the notice dated the 31st October 2005 for a meeting on the 3rd November to consider that Announcement. Page 6914 is the Chinese version of the Announcement signed by D1. She said the notice was circulated to all members of the board. 288.At the meeting the directors agreed to the form of the Announcement, they had no objections or comment. She enclosed with the notice the proposed minutes of the meeting and the form of announcement which had not yet been cleared and approved by the Exchange. 289.The draft Announcement was later cleared and approved by the Exchange without material change. 290.PW7 said that Ex 27, CB 27, is the OGH minutes of a paper meeting dated the 3rd November 2005 which had been circulated as a draft in the same form. D1 and D2 signed the minutes which referred to the board resolution to approve the draft announcement and refers to the OGC contract. 291.PW7 said that Ex 26, CB23, is the OGD minutes of a paper meeting dated the 1st November 2005 to resolve the approval of the purchase in accordance with the draft contract. PW7 said she prepared the minutes. The contract was to be signed that day. She took the minutes to D2 and Zhu to sign. She said it depended which directors were in Hong Kong as to who would sign. The minutes would be circulated to the OGD directors. She said she had a copy of the draft contract from which to prepare the minutes. 292.PW7 said that Ex 10, CB 2, is the OGD contract. PW7 had a copy of that contract. She did not see it signed. PW7 said that the signatory of the contract for OGD was D2. She said she did not know who drafted the contract. Her company had its own legal adviser but she did not notice if drafted by them. If it had been drafted by them, their name would usually appear. 293.PW7 said that Ex 29, CB4, is a Circular by OGH to its shareholders in relation to the OGD contract drafted by the company’s solicitors and required to be issued under the discloseable transactions rules under the listing rules of the HK Stock Exchange. It incorporates a letter from the Board to the shareholders for and on behalf of D1 and covers what is set out in the Announcement and refers to all the directors. There is also an appendix. This was considered by a meeting of the BOD of OGH. International Offering of USD125 million fixed rate guaranteed notes 294.PW7 said that Ex. 336, p. 6915, is OGH minutes of an actual meeting held on 11 November 2005 to approve a circular to shareholders and public announcements relating to an international offering of USD125 million fixed rate guaranteed notes. The minutes were drafted by the company solicitors, Charltons, and she added to them. She attended the meeting. D1 was present and chaired it. D1 signed the minutes. 295.PW7 said the minutes were drafted by Charltons who were the legal advisers in connection with a proposed bonds issue by OGH with the ABNAmro Bank. PW7 said that those attending would usually have the draft minutes before the meeting. The main purpose of this meeting was to approve documentation for the issuing of the bonds. A representative from Charltons attended the meeting to explain the various documents and procedures. 296.The purpose of the proposed bonds issue was to raise funds (approximately HKD900 million) to repay existing indebtedness of approximately HKD500 million, as an intercompany loan to Kenlap PGC of approximately HKD120 million and the balance ( approximately HKD280 million) was to be used for general corporate purposes, working capital and capital expenditures such as the Sanshui project. The bond investors would be brought in by ABNAmro to buy the company’s bonds. 297.PW7 said that also tabled at that meeting was a draft circular on the discloseable transaction regarding the purchase of machinery by OGD for HKD153 million for the Sanshui plant. Meeting of the 14th July 2006 298.Before PW7 left OGH an order was made on 26th July 2006 that provisional liquidators be appointed. On Friday 14th July at 4.00pm PW7 said there was a meeting in the OGH meeting room of senior managers including, inter alia, D1, PW1, PW1,PW2, PW5, Miriam Yee, and Zhu. 299.PW7 said that financial matters were raised and the meeting was adjourned to be resumed an hour later. During an adjournment D1 was to contact staff on the mainland to get the answers to the financial queries raised. After an hour attempts were made to resume the meeting but D1 could not be located. Unsuccessful efforts were made to contact him by phone on the same day. According to what she was told, the callers on D1’s mobile phone were obtaining a China ringing tone. She said there was more than one colleague making the phone calls. She did not see D1 again that day. 300.PW7 said that on the 15th July, a Saturday, she attended the offices and came across a fax sent to the general fax line. It was from D1. It stated that he was feeling unwell and applied for leave to have rest and stated that he would pass work to other colleagues. She believed it came from D1 as the handwriting looked a bit similar and she passed it to D2 to see if it was from D1. It was signed, as far as she could recall. PW7 said D1 had shown no signs of ill-health the previous day. She passed the fax to other colleagues to look at and ultimately it should have been placed on record. She did not know now where it was. She thought it might be with the records kept by Deloitte. 301.PW7 said she tried to contact D1 by mobile phone on one or two occasions between the 15th and the 24th July. When she rang his number his phone switched to his mail box. She left messages asking him to call her back but he did not do so. Personnel You Shuiqing 302.PW7 said she saw You in the offices of OGD. He was a friend of D1. She saw him in the office at Admiralty not many times, 3-4 times. At the office he would be looking for D1. When he found him they would meet in D1’s room. Purchase of Gold Bond Wiring Machinery by Kenlap PGC 303.PW7 was referred to her witness statement which refers to the purchase of machinery for producing gold bond wiring. 304.She was referred to the minutes of the meeting for March 2006, p.851, which state that Kenlap PGC would be focusing on gold bonding wire and non-cyanide plating. Equipment had been ordered and delivery was expected in April 2006. She said Qi Laiping and Kwan Yan reported on the progress of this matter. She said there was no BOD meeting in respect of these purchases. She said when Qi and Kwan were absent from meetings, D1 would report on these matters and that he was on top of the project. 305.PW7 said that as regards 5 members of the office planning committee, that Li Lee-cheung and Tam Lam were employees of an OGH subsidiary on the mainland and Li was an executive director of OGH. They both had offices in the main Hong Kong office in Admiralty. She did not know Leung chu-kin. She said Lau Kwok on was a chief engineer at Nanhai and Liu Mengjun was a consultant in the aluminium manufacturing industry. She said that Li Lee cheung had an MBA. She said she recollected tha t it had some connection with the Murdoch University in Australia. She was aware that D3 was educated in Canada to tertiary level. 306.PW7 said that she knew Li Lee-cheung was in overall charge of the Sanshui project but that D3 was responsible for the purchase of machinery. She said that if she had questions concerning the purchase of machinery for the Sanshui plant she would approach D3. 307.She was referred to Exhibit 18, p.837 A4, the minutes of the meeting of September 2005 where it was recorded that it was expected that a purchase contract for equipment valued at about HKD150,000,000 for the Sanshui project would be signed in October and refers to D3 as the person responsible. She said that the agenda and minutes for that meeting had been prepared by D3. It was recorded at the end of the minutes for the previous meeting, Ex 279, p. 6216, that D3 was to be responsible for the agenda and minutes of the September meeting. 308.The minutes for the December meeting at page 841 A9, refers to the Sanshui project and states that the construction project and casting workshop had been basically completed and that on delivery of machines to the construction site, installation could formally commence and refers to D3 as the person responsible. PW7 denied D3 simply acted as an interpreter for the engineers involved in this project. 309.PW7 said that shell companies were purchased by OGH and used for company purposes; only a few were not used. They were part of the OGH corporate structure and their documents were kept in filing cabinets at the head office. She had never heard of Union Sheen, Crown Regent, Pioneer Lane, Trump Link or Doong Keng Sing, Grand Lucky Enterprise or Lee Chi Fai, United Fine Holding, Cheung Chi-keung or Long Asset. Greatson 310.PW7 said that she was given a copy of company documents relating to Greatson by PC Woo. She did not know if anybody conducted an IRD business records search in relation to Greatson. PW7 said that the solicitors presenting the corporate documents were Stevenson Wong and Co, a firm that was used by OGH. She said that the main secretary of OGH was Lo Hang Fong who is a partner with that firm. PW11 Vincent Marshall – Former Independent Non-Executive Director of OGH 311.PW11 is the managing director of a securities firm in Hong Kong. He joined OGH as an INED in December 2003 at the invitation of PW1. He remained in that position until the company went into provisional liquidation in July 2006. He attended meetings of the Board of Directors and was Chairman of the Audit sub-committee. 312.He became aware of the proposed new aluminium facility to be developed by OGH on the mainland at Sanshui. He was aware that machinery was to be purchased from Greatson for approximately HKD150 million and that this would need to be disclosed publicly and to shareholders under the listing rules. 313.PW11 said he did not see the draft contract but was told about it by PW7 and he was sent a copy of the draft Announcement for approval. He said when he learnt of the proposal he raised some due diligence questions which were incorporated in the first three questions set out in the e-mail Ex 23, p 954. He said he received the e-mail Ex 23. p. 953 which deals with the questions he raised. He said he had no reason to doubt what he was told and therefore had no problems with the proposed Announcement. PW80 Chow Pui Kwan, Venise, Ex Secretary to D1. 314.PW80 joined OGH in October 2000 as secretary to D1 and remained in that position until she left the company in August 2006. Her duties included passing documents to D1 for him to sign. She said she knew that Zhu worked in the accounts department but she did not know his position. She said Zhu would go to D1’s office. He would sometimes give cheques to her for D1 to sign and sometime Zhu would take the cheques directly to D1. 315.PW80 said D1 could speak English. When she gave him documents in English for him to sign, he did not ask her to read them to him. She said she was aware that D1 made some charitable donations. 316.She said that she sometimes arranged airline tickets for colleagues going overseas. Tsui Sze-lam 317.PW80 said she knew Tsui Sze Lam. She would see him almost every day. D1 would arrive at the office with Tsui and leave with him. She did not know what Tsui did. He would normally be found in the conference room at the office. D5 318.PW80 said she knew George Lau. He is a friend of D1. He would come to the office to find D1, but not often. You Shuiqing 319.PW80 said she knew You. He came to the office but not very often. She would book hotel rooms for him in Hong Kong at the request of D1. PW 37 Anthony Richard Boddington – Director of Belmont Interior Design Limited 320.PW37 said he had been involved in the interior design business for 20 years. In 2003 his company was incorporated in Hong Kong and slightly changed its name. He said that between 2003 and 2007 his company worked out of premises at 5, St Francis Yard, Wanchai, Hong Kong. He said his landlord also ran companies from those premises. 321.He was shown IRD and company registration documents in respect of Greatson. He said he had never heard of the company until he received a letter addressed to them at his company’s address in Wanchai. He said he did not know the company and had no idea why the company would use his address. 322.PW37 said that he was approached by OGH in 2004 to carry out some renovation work and provide some furniture to their offices in Admiralty. He said he dealt with a lady who introduced herself as Christie Yip. He identified her as D2. He said he was given 6-7 small jobs in total. He produced some invoices in respect of the work Ex 367-1-7. He said he downloaded the invoices from his computer at the request of the police the day before coming to court to give evidence. He said he printed out some of the invoices on stationery which bore the address of his new premises to which he moved in March or April 2007. He said he met the OGH boss, Mr Yip, at a social function and they shook hands. He said D2 was also at that function. 323.PW37 said when he dealt with D2 they spoke in English. He said he had no difficulty understanding her. He said the first time they met they spoke for about half an hour or less and he would see her sometimes at the OGH offices when he went to check up on the work. He disagreed that it was not D2 with whom he dealt. He said he had never heard of Zhu, Brian Or, D3, D4, or PW40, Chung Ngai-man. He said that D2 was the only person he spoke to at OGH. PW78 PC2315 Lam Ka Lok, CCB officer 324.He seized a number of Kenlap PGC invoices issued to Foshan Dongfan Chemicals Ltd in Foshan City. 325.PW78 produced Ex 366,p.7297, a Kenlap PGC invoice dated 3 June 2006 for HKD8,058,600 for the supply of Palladium Diammine Dichloride for Foshan Dongfan Chemicals Limited at 41 Jianwan Yi Road, 4/F, Jiangwan Building. 326.On the 15th March 2007 PW78 went to the address set out in the invoice and could find no trace of the company. PW38 Ho Wing Chip, Proprietor of Galaxy Travel Consultant – address used for Good Light Ltd, s.65B CPO, Ex 368-1 327.In 2000 he established Galaxy Travel Consultant as a sole proprietorship and leased Flat A, 13/ F, Silvercorp International Tower, 707-713, Nathan Road. D5 contacted him and asked him if he could borrow his company address to establish his own company. D5 told PW 38 that his company would be called Good Light Limited but PW38 did not ask him the details . He had known D5 for 40 years. The arrangement was that D5 would collect mail sent to Good Light, including monthly bank statements. PW38 said he never opened any of the mail. PW24 Cheung Ming Ming, Clerk of Jet Shing Transportation Limited, s.65B CPO- Ex 368-2 328.The evidence of PW24 relates to the transshipment of 2 sets of ITW Gema electrostatic powder coating equipment. The arrangement was that the equipment was to be supplied to OG Sanshui following an agreement reached in January 2006, Ex 8,p.348, with Kimbo Finishing Equipment Ltd ( Kimbo) who were the agents for Swiss ITW Gema in Hong Kong. The price was RMB1.3 million. 329.PW24 said she submitted invoices and documents relating to the transportation of 10 boxes of Powder Coating Booth Systems to the mainland consignee by Shenzen Shing Cheung Ying Enterprise Development Ltd for Kimbo Finishing Equipment Limited – Ex 95 pages 1273a to 1276. The shipper was Cosco. The machinery came from Antwerp to Hong Kong. Jet Shing made the declaration in Hong Kong and Shing Cheung Ying had to make the declaration on the mainland. They were the regular mainland agents for Kimbo. 330.PW24 said the persons handling the matter for OG Sanshiui were Liu Mengjun and Liu Shijun whose name cards had been faxed to PW24 by Shing Cheung Ying. The address on the name cards was Nanbian Industrial Area, Leping Town, Sanshui Area, Foshan City. PW35 F/ Chan Po-Chun, Advocate Solicitor of Singapore, Statement read under s.65B CPO – Ex 368-3 331.He stated that he is working as an advocate solicitor in Kuala Lumpur. In about 2003-4 he was asked by Mr Hank Lo, of Stevenson Wong and Company, to help look for a Singaporean to act as a local director for a Singapore company for his client. He knew Hank Lo from university. For a Singapore company at least one director has to be a Singaporean or permanent resident. 332.He approached Ms Cheng Siok-fui who agreed to act as the Singapore Local Director and she executed the relevant incorporation papers of a company called Daintree. He said he did not thereafter follow up on the matter. PW27, Janet Tan, Solicitor with a Law Firm in Singapore. 333.She had worked with Hank LO on various matters. In 2005 Lo enquired if they had a shelf company with registration back as far as possible. She said Daintree Pte was the only one they had. She said it was set up for a company who wanted to restructure but changed their minds. It was incorporated in January 2004. After transfer Cheng Siok-fui was the sole shareholder and the directors were Cheng and Keith Siu. Cheng said there had to be Singaporean director. Later Tan Chuan -joo replaced Cheng. 334.She said that Daintree was an investment company and continued to be so when it was transferred. No change was made to its memorandum of association. She had never heard of the other persons associated with OGH or the various companies set up in connection with this case. PW51 F/ CHENG Siok-fui, Freelance Designer, Singapore 335.PW51 said she is a Singapore resident and passport holder. The Singapore authorities record Daintree Pte was registered as a private company in Singapore and from Feb 2005 she was a director as was Keith Siu, D4. 336.She became a director when asked by a friend, PW53, a Malaysian lawyer. He asked her, as a friend, to help him out and he explained that a Singapore company needed a Singapore director. He told her it was for business extension for a HK company whose name he did not give her. She had not heard of Greatson. 337.HaShe agreed to be a director and sign the usual company documents to set up a company in Singapore. She was not paid any directors fees. The company had no activity. 338.PW51 was shown Ex 253, p. 5509, the incorporation documents and other company documents of Daintree. 339.She said the company was struck off on 8 January 2007. She asked her friend what the status was as she was not sure what was happening. She wrote to director, Keith Siu, D4. She asked if he would agree to company being struck off, she wrote twice. She wrote to him about 7-8 months prior to January 2007, about May 2006 or earlier. She received no reply and she made steps to have the company struck off. She filed to have the company struck of with only her signature as the other director did not respond. She was advised later that it was struck off on 8th January 2007. There were 2 ordinary shares of 2 Singapore dollars. She never met Keith Siu. She did a company search and only then did she learn that he was a director of the company. 340.She said she had not heard of any of the Hong Kong companies or persons connected with this case. PW35 F/ Chan Po Chu, Clerk of Sheen Friendship Ltd, s. 65 B Statement Ex 368 –5 341.In 1997 she joined Sheen. The business address was 237, Queen’s Road Central. Later the firm moved to 403, Fu Fai Commercial Centre, Sheung Wan. The company sold and set up registered companies and provided secretarial services. It would set up 100 companies in advance and mail a promotional leaflet to lawyers or accounting firms. There were some walk-in clients but not many. 342.Heidi Yu came to the company and said she was from Stevenson and Lo and was interested in purchasing Greatson. The whole set of company kit box was sent to Stevenson and Lo. One year later, after chasing them up, she received a cheque in September 2006. They had not dealt with Stevenson Wong previously. She only dealt with Heidi Yu and had never heard of OGH or any persons or companies connected with this case including Daintree. She did not know D4. PW33 M/Po Wing Kwong, Director of Crown Regent, statement admitted as Ex 368-6A 343.Since 1994 he worked as a director of Pioneer Registration Ltd. In 2001 it moved to Room 510, The Centre Mark, Queens Road Central, Hong Kong. His company deals with company formations. His company formed Crown Regent on 11 July 2003 In October 2004 Ivy Au of Bonseal asked to buy the company. They sent her all the company documents. Pioneer’s delivery note is addressed to Bonseal, Ex 281, p.6228, at their address at Room 901, Wanchai Central Building, 89 Lockhart Road, Wanchai, HK. 344.Ex 368- 6 B, his second statement, relates to the setting up of Long Asset. They set up the company in December 2004. In September 2005 they received a call from Ivy Au Yeung of Bonseal indicating their wish to buy Long Asset. The delivery note is Exhibit 211,p. 5363 dated 28 September 2005. 345.They also set up United Fine Holdings in January 2004 and sold it to Ivy Au Yeung of Bonseal in December 2004. The delivery document is dated 8 December 2004. He had no knowledge of the directors of Long Asset and United Fine, respectively Tsui Pui Sze and Zhang Zhiqiang. PW34 F. NG Wai-ping Assistant Centre Manager of Modern Business Centre- relates to the setting up of New China Trading Limited- s.65 B statement - Ex 368 –7 346.Zheng Bingxiang came to their company on 23 May 2005 with a PRC Identity Card number. Under the agreement, their company would provide secretarial services to New China from February 2004 to February 2006. He paid HKD3,299 service charge in cash which included HKD299 for the deposit and HKD3,000 for the year’s fee. They did receive letters but could not reach Zheng on the contact number provided. They tried many times. PW67 M./Wong Chi-fai Manager of Wai Fai and Co- relates to the setting up of Fong Long, s.65 B statement, Ex 368- 8 347.Miss Hui of Tong King Trading Company requested Wai Fai to set up Fong Long, which was set up in June 2005 and sent in identity documents of You Shuiquing, Hoi Cheng Soi and Ziao Jianfeng – Ex 341, Pages 7000 to 7006. The green box and chops were delivered to Wellborne Commercial Plaza in North Point. He said they were only requested to set up the company, prepared the annual return and no other secretarial services were to be provided. For the annual declaration of 2006 Fong Long provided no financial information to Wai Fai for declaring and Wai Fai had no idea of the situation of Fong Long. The incorporation was all done through telephone calls. PW69, F/ Hui Kam Ming, Clerk of Tong King Trading Company at Room 10-11, 19/ F, Wellborne Commercial Centre, 8 Java Road, North Point -. s.65 statement Ex 368-9 348.Her company deals in hardware trading and customs declaration for customers. The persons in charge of Tong King are Hoi Cheng Sio and his wife Ng Chow-gar. Tong King’s name was changed to Fengxin Investment in 2006. 349.In Mid –2005 Hoi instructed her to set up Fong Long for his friend You Shuiqing. Correspondence was to be sent to her company with instructions to contact Challinton in Shenzen and a courier would be deployed to collect the correspondence. PW86 F/ LEUNG Luk-mei, Clerk Wilson House Management Company,- S. 65 B statement Ex 368 –10. 350.Her company deals with rental related work of the building such as management fee and handling tenancy agreements. According to their records they never leased 18F, Wilson House, 19-27 Wyndham Street HK to Strong Sense, Fortune Eternal Trading or Tsui Sze Lam. PW89 M/ Chu Yiu Kwong, Director of Victon Registrations Ltd, s. 65 B statement, Ex 368-11 351.His company deals in setting up of companies from premises at Room 502-3 Commercial House, 35, Queens Road Central, Hong Kong.They set up Union Sheen in March 2004, Ex 308, p. 6735 is the delivery note. 352.Ivy Au Yeung of Bonseal called their company in July 2004 to buy Union Sheen. The documents were to be sent to Union Sheen at Room B23/F Rison Commercial Building, 11, Morrison Hill Road Wanchai. Payment was made in cash of HKD2,800. PW99 M/ KWOK Tze-yi, Immigration Officer, s.65 B statement Ex 368-12 353.He is employed in the Registration of Persons Records Office 354.Ms Li Qian Wen was issued with identity card R 235422(4). The enlarged photograph was taken on the 3rd October 2003. The application states that her husband is Lin Jianping. Ex 360, p.7259 is a photocopy of the application photograph. PW31 F/ Tung Wai Sze, Business Officer of Modern Business Centre, s.65 B statement Ex 368 –13 355.The company is a secretarial company. It provided secretarial services for Forex Industries Limited between July 2005 and February 2007. 356.The company received some ordinary bank letters for Forex. A mainland male called Wan Yin Chin applied for their services and produced his People’s Republic of China identity card and paid a total of HKD3,299 – deposit $299 plus $3000 for one year service charge. He provided a telephone number and fax number. The contact telephone number supplied was 9579 6812 and no-one could be reached on that number.The charges were paid in cash. No one called Forex and no goods were ever mailed to them. 357.A man came to renew the contract. But nothing came to the company. She had not heard of OGH or connected companies. PW32 Chan Pui Yee, Jessica, Secretary of Wingate Business Centre – re Forton Development Limited, s.65B statementEx 368-14 358.Wingate was at Room 1006 World Wide House, 19 De Voeux Road Central. Ngai Wai Hung used their secretarial services for Forton Development Ltd on 30.05.03 to 31.12.06 with dedicated telephone and fax numbers. Ngai provided his mainland identity card. Ngai left his China mobile number and that of Huang Han Hui, neither had a local number. They received 15 letters for Forton. 359.In January 2007 no service fee was received. There was no response on Ngai’s number. She contacted Huang who said he knew nothing about Forton but said he did know Ngai. She said that, when asked further questions, he got angry and hung up. PW94 F/ Sham Wai Chun Branch Manageress of SBC International Bank in Dundas Street, s.65 B Statement Ex 368-15 360.Her company provides secretarial services. She provided registration information in relation to United Fine Holdings Limited. She produced Ex. 331, p. 6871-6 and onwards. 361.She said the name of the client is Cheung Chi Keung with an address in the Kwong Yuen Estate in Shatin. She said he came to their company in December 2004 when he signed a licence agreement and produced a copy of his identity card. She said the charges were HKD5980. This was paid in cash using a HKD pay-in slip dated 8th December 2004. Cheung wrote down his correspondence address and contact number. The contract was renewed until December 2006. 362.PW94 produced Exhibit 331, p. 6905, a Kenlap Delivery Note dated 22 March 2006 which purports to show the delivery to United Fine Holdings Limited, c/o Strong Sense Investment Limited at 22/F,3 Lockhart Road, Wanchai, of Palladium Diammine Dichloride, weighing 75 kg and costing HKD3,346,875.00. 363.PW94 also produced a delivery note purporting to be issued by Eagle Glory Enterprises Limited also dated the 22 March 2006 relating to the delivery of 75 kg Palladium Diammine Dicholoride to Strong Sense Investment Ltd as agent of United Fine Holdings Ltd at 22/F, 3 Lockhart Road, Wanchai. The two notes bore the stamp of Strong Sense. PW94 confirmed that her company never received these delivery notes and do not have the stamp of Strong Sense. PW94 also confirmed that her company has never had the stamp of United Fine for the collection of goods or documents. She said her company does not collect and retain oversize or large quantities of goods for United Fine. PW21 AU Yeung Po-Kui ,Ricky, General Manager, Allied Link Shipping Limited 364.PW21 told the court he works in Wai Ching Street in Jordan in Kowloon and deals with shipping of cargo for clients to and from Hong Kong. 365.In early 2006 business was referred to him by Lee Kwok Keung, the manager of Tim Logistics, PW20, for transport of machinery for Trevisan, an Italian company with a factory on the mainland. He agreed to take the business. 366.He met representatives of Trevisan on the mainland together with PW20. They met a man and a woman. The man said he was the person in charge of the plant, Trevisan. The lady said she was Madame Chan and she represented the owner of the cargo. She did not give him a name card. 367.At the meeting they discussed the component parts of the extrusion press manufactured by Trevisan. This was the Italian company. He was not aware that it was part of the Cometal firm that manufactured extrusion presses. Contact would be made with PW20 for the machinery to be shipped. His company was responsible for the shipment and also the receipt. His company was the subcontractor for business that PW20 took up. They were to arrange the shipping and PW20 acted as a go–between between his company and Trevisan. PW20 would supply the containers and tell his company when the machinery was ready to be transported. It was to be transported from Sanshan Port, Foshan to Hong Kong. When it arrived in Hong Kong it was to be shipped back to Sanshui, also in Foshan. This was discussed at the meeting. It was not discussed why this was being done. He said that, initially, all he knew was that the machinery was to come to HK and he waited to be notified as to where it should go. Sanshui and Sanshan ports are about 50-60 kilometres apart and both in Foshan. 368.PW21 was shown an image, Ex 354, p.7096. He said it was the Madame Chan he had met at the meeting. He had asked her for a name card and she said that she did not have one. I noted that other evidence established that the image was that of Lisa Li who worked in the accounts department of OGH. 369.PW21 gave evidence of shipments of 4 extrusion handling systems manufactured by Foshan Trevisan Cometal Industrial Machinery Co Ltd from the mainland to Hong Kong and then back to the mainland. He said he received details of the shipper from Madame Chan and details of the consignee from a Madame Leung who worked for an import and export trading company on the mainland called Guangdong Sky Bright Import and Export Trading Company Limited. The company shipping the goods was Foshan Trevisan Cometal Industrial Machinery Co Ltd and the goods were shipped on behalf of Greatson to OG Aluminium Sanshui. 370.PW21 also gave evidence in relation to the shipping of four aluminium extrusion presses manufactured on the mainland by Yong Chang Metal Machinery Plant (Yong Chang) to Hong Kong and then out of Hong Kong to OG Sanshui. The shipper was documented as Greatson and the consignee was OG Sanshui. Two presses arrived on the 11th May 2006 and were shipped out 2 days later and two presses were shipped in on the 20th and 30th May 2006 and shipped back to the mainland 2 days later. PW21 said that details of the shipper and consignee were given to him by Madame Chan over the phone. PW 20 M/ Lee Kwok Keung Manager of TIM Logistics, s. 65 Statement Ex 368 –16 371.The company is a shipping and forwarding company. His company has been doing business with Foshan Trevisan Cometal Industrial Machinery Company for about three years. 372.On the 7th April 2006 he went to Trevisan for a meeting attended by Trevisan staff, various shipping agents and a Miss Chan, who had previously ordered goods from Trevisan. The transportation was to be handled by Miss Chan. Miss Chan gave no name card and did not say which company she represented. From his observation Miss Chan was a Hong Kong person. 373.PW20 was to provide the containers. His company was only to be responsible for the shipment of accessories as the other equipment was too large. He was to arrange transport from the mainland to Hong Kong and then back to the mainland. He said that this obviated the need to pay value added tax and Trevisan could obtain an export rebate. Miss Chan could also thereby lower transportation costs. 374.The shipping arrangements were to be made by Allied Link. The name of the shipper was Greatson and the consignee was Hoi Shing (Wik) Aluminium Sanshui Co. Ltd. Those details were supplied by Miss Chan. PW 16 TANG Man Cheung, General Manager of Kimbo Finishing Equipment Ltd 375.PW16 said he is the proprietor of Kimbo in HK and is the sole Swiss agent for ITW Gema Industrial Powder Spraying Systems in Hong Kong and southern China. The company deals in industrial powder spraying systems and other products. In 1996-7 an office was set up in Guangzhou which still exists. The company had dealings in the past with OGH and OG Aluminium Sanshui Ltd 376.PW16 said that in January 2005 he learnt from his Guangzhou office that OG in Sanshui was interested in buying some spraying equipment and he was referred to a Mr Yip in Hong Kong and he had a meeting with D3, Yip Wai Lun. The meeting took place in HK on the 28/F of the Admiralty Centre. There were other persons present including a manager whose name he did not recall. They gave him their business cards, Ex 339, p. 6993, for Tony Chan, head of marketing and D3, project director. 377.A discussion took place about the purchase of spray coating equipment. No deal was reached on that occasion. He was given a basic idea of what was wanted and he told them what the cost would be. He was told he would be contacted later. 378.He was later told by Mr Lau of his Gaungzhou office that he had been contracted by OG Sanshui about spray coating equipment. An initial agreement was reached for the purchase of 2 sets of powder coating equipment for RMB 1,130,000. The contract was signed on the mainland and faxed to him. 379.Ex 8, p.348 is the sales contract dated 9thJanuary 2006 between OG Sanshui and Kimbo. The items to be purchased are 2 sets of ITW Gema Powder Coating Equipment. The delivery was to be in 10 weeks to Hong Kong and payment in RMB. A deposit of 60% was to be paid five days after the signing of the contract. A further 30% was to be paid after the goods were shipped from Europe. Training would be provided and there was a guarantee of repair. It was signed by Law Tin Kin for Kimbo, PW91 in Foshan City. The goods were to be manufactured in Switzerland. 380.After the contract was signed, he placed an order with ITW Gema in Switzerland and, within a month, he was provided by ITW Gema with a packing list, Ex 315, p.6758, dated 15 March 2006 addressed to Kimbo in Hong Kong for 5 wooden crates of powder coating equipment. 381.On 19 April 2006 the goods arrived in Hong Kong and, after they arrived, notification was made through Mr Law. He spoke on the telephone with D3 and told him that the goods had arrived. He told him that they would be dealt with by the factory on the mainland and he contacted his Guangdong office. The goods were to go to OG Sanshui and he arranged the means of transportation through the Guangzhou office. The goods were transported to the mainland and had company on mainland to deal with customs declaration and they would deal with transportation to the designated place. 382.They used Jet Shing Shipping company to transport the goods. He engaged Jet Shing and the cost would be borne by his company. Jet Shing later told him that the goods had been delivered to OG Sanshui and was supplied with a Drayage receipt, Ex 95, p. 1278 dated the 24th April 2006 in relation to the goods. OG Sanshui signed as consignees. 383.On 17 May 2006 he received a cheque for the sum of RMB 1,017,000 from Sanshui Ocean Grand which was 90% of the total purchase price of the goods. Ex 61, p.1185 is the cheque payable to Hong Huo Trading in Guangzhou which is one of his companies and this was paid into their mainland bank account. 384.Ex 62, p.1186, is the deposit slip for that cheque for the Guangzhou City Commercial Bank for the 18th May 2006 385.He said there are 3 chops on the cheque, the largest of which is that of OG Sanshui; the one in the middle is that of Yip Wan Fung (D2) who would be someone from OG and the third chop is Tam Lam, a representative of OGH. This was paid to his company first and then into their bank account. The balance of 10% was not paid. A reminder was sent, Ex 63,p.1187, stating as at the 8th September 2006 that there was the 10% balance outstanding. 386.He later got a response, Ex 64, p. 1188, from OG Sanshui saying that they could not pay as they were reconstructing their assets and would carry out the agreement after the reconstruction in October 2006 but they never got the balance. 387.PW16 said he had never heard of Greatson, or Siu Kin Fung, Keith (D4). PW18 Cheung Siu Tai, Managing director of Langtech Ltd 388.PW18 gave evidence concerning the RTW Ransberg Electrostatic painting equipment referred to in the OGD/ Greatson Contract. 389.PW18 said he had worked for Langtech since 1994. In 2005 he was the managing director. Langtech has an office in HK and on the mainland in Guangzhou. It deals with machinery including the sale of ITW Ransberg Electrostatic painting equipment which is one of their main businesses. ITW is an American company which manufactures electrostatic painting equipment and accessories. Langtech is an agent for ITW. 390.Staff on the mainland include Ye Jun Ming in Guangzhou and Liao Zhi-xin was also an employee. 391.In September 2005 Ye asked him to prepare a quotation in respect of the supply of some vertical coating systems. It involved the supply of machinery to the OG Group. After negotiations, a contract was signed between Lantech and OG Sanshui dated the 10th January 2006, Ex 9, CB 21. It related to the sale of 6 sets of vertical painting equipment and one central painting system at the price of USD532,000. 392.It was to be delivered on or before the 30th April 2006, 50% to be paid within 10 days of contract, 40% when the equipment was dispatched and 10% within 90 days of the completion of installation. 393.The deposit was not paid in accordance with conditions. A sum of RMB1.5 million was paid on the mainland in approximately early 2006. PW19 had the bill of lading which he referred to for the date. The money was paid in the first quarter of 2006. The buyer made no further payment under the contract.The core components of the equipment were to be manufactured in the USA and be dispatched to Hong Kong in accordance with the contract on 12th June. He said the buyer was in breach of contract even though he repeatedly chased them up.The buyer had not paid 50% of total amount within 10 days as required. The buyer had only paid RMB1.5 million. 394.PW18 said that the goods were never delivered to the buyer. They tried unsuccessfully to reach the buyer through registered mail. In the end they forfeited the deposit and the goods were sold to another client. 395.Ex 65, p.1189 is a letter of notification of performance of contract dated the 21st August 2006. A courier was engaged to deliver the letter but the premises were closed. The letters were sent to the OG Sanshui at contract address. He said he had never heard of Greatson. PW30 F/ Chan Fei Fei Proprietor of CEO Business Centre Limited re Strong Sense 65 B statements Ex.368 17A-B 396.PW30 established Crown Regent in 2001 as a secretarial company. His company was renamed CEO in late 2005 and the address is 22/F, 3 Lockhart Road, Wanchai. The company provided secretarial services for companies. Strong Sense were looked after by Debbie Kou and Joyce Kwan who cannot now be reached so she has only the documents to rely on . The contact person for Strong Sense was Mr Tsui Sze Lam. Strong Sense used CEO’s office as the company address. The arrangement started on 7 October 2003 and, as $1300 was paid in cash, Tsui must have come in person. Strong Sense is an overseas company registered in BVI. CEO provided a secretarial service address for one year. CEO did not collect any goods for Strong Sense as there would have been a charge. In September 2004 there was a request for and extension of services and HKD5,476.00 was paid in cash. The new services still did not include goods collection. After 15 October 2006 they did not hear from Tsui or Strong Sense and the agreement expired on 6 August 2006. Strong Sense used CEO from 7 October 2003 to 6 August 2006 and they never received any goods for Strong Sense. There were not many phone calls or letters for strong sense. Ex 368 –17 B second statement of PW30 re Mantex Trading Limited 397.Century Victory Holdings Limited applied to use the CEO registered address as its address and for mail collection, Ex 282, p6229A. The applicants were You Shuiqing and Poon Kin Chuen, both mainlanders. The contact telephone number was 28636976. Once a phone call was received notification would be sent by e-mail. HKD4,400 was paid in cash on 31.5.2003. 398.The service was terminated by e-mail on 1 January 2004 but a phone call was received from a Mr Yip to continue the service for another year and service fee for HKD5,800 was paid by bank transfer. The service for Victory was terminated on the 8th February 2004 and the remaining days which had been paid for up to the 31 December 2004 were transferred to Mantex. The application form from Mantax, certificate of incorporation and mainland identity cards of Ou Weiqing and Chung Man Lung and business registration certificate were submitted. They later changed the e-mail address and waived the fee of HKD300 after negotiation. A cash transfer was made of HKD5,800 for the service fee to 31 December 2005. The following year HKD5670 was paid for the period 1.1.06 to 31.10.06. CEO did receive letters for Mantex but they received no goods or parcels. PW59 M/ So Man Pui, Supervisor of Tricor EAC, s.65 B Witness Statement - Ex 366-18A and 18B- Good Light Ltd- D5- Strong Sense 399.PW59 joined BEA in 1978 and transferred to East Asia Corporate Services BVI ( EACS). The company acts as an agent to assist in setting up BVI compnies. It is a subsidiary of Tricor Services Ltd. He produced the corporate documents in relation to Good Light Ltd (GLL). The certificate of incorporation, Ex 155,p. 3246, shows that the company was incorporated in 23.5.02.It was a shelf company owned by EACS. Individual application forms were completed and signed by D5 on 24.06.2002 with a letter of guarantee from HSBC. D5 appeared personally and provided a copy of his ID card. D5 was the first director of GLL. 400.PW59’s second statement relates to Strong Sense which was established in BVI by EACS as a shelf company. Ex 225, p. 5377 shows that the company was incoporated on 19 June 2002 and the beneficial owner and director was Tsui Sze Lam of 18/F,Wilson House, 19-27 Wyndham Street, Hong Kong, telephone number 9283 3189. Tsui was the sole director and beneficial owner from the 5th November 2002. A cheque dated the 5th November 2002, drawn on the personal account of D5, p.5850, was used to settle the bill of USD750 for buying Strong Sense. A cheque was drawn on the personal account of D5 to pay HKD 5850 to pay the service providers fees. The corporate documents and chop were collected personally by Tsui. 401.Minutes of a Board of Directors Meeting of Strong Sense dated the 1st November 2004 resolved that D5 take over as director from Tsui, p. 5398. The Bank of East Asia were notified, p. 5405. EACS is required to confirm the identity of the customer and forms were sent to D5 at 22/F, No. 3 Lockhart Road, Wanchai on the 4th January 2005, without reply. EACS phoned Tsui on the 17th February 2005 and he confirmed the address was correct. That letter and reminders went unanswered and a letter sent to Tsui post marked 06.05.05 to the Wyndham Street address was returned marked return to sender. Tsui was again contacted by phone and said there was no change in the correspondence address. Further correspondence went unanswered and EACS had the company struck off in November 2007. PW93 F/ Cheung Yuen Ha, Cherry, Secretary of Multi Trade Development Company re Union Sheen-s.65 B Statement Ex.368-19 402.The records of PW93’s company show that on the 28th July 2004, a man claiming to be Ou Weiquing signed the service business application agreement effective up to 27.7.05 of behalf of Union Sheen. He produced his mainland China identity card. 403.Delivery notes for Kenlap Chemicals Limited and Eagle Glory showed goods were delivered to the address of the company. PW93 said that they only received 5 letters on behalf of Union Sheen. They never received the goods referred to in the delivery notes. The company did not keep the chop of Union Sheen which is on the delivery notes. PW26 Lo Hang Fong, partner with Stevenson Wong and Company, Solicitors – Formation of Greatson 404.PWD26 said he is the head of corporate finance. His office is in Queen’s Road in Central. 405.OGH has been a client since 1996 and he provided them with company services, including a number of company acquisitions. 406.In July 2005 he was approached by D3 from OGH. They had a lot of interaction. D3 had come to the firm on business on many occasions. 407.D3 instructed him that he had a friend or business associate who would like to set up a HK company. He turned out to be D4. Instructions in the beginning came from D3. PW26 handed the matter over to his colleagues. D3 was sent a list of company names and got back to them with the choice. Greatson Corporation Ltd was selected. The details for registration were provided by D3. He faxed to them D4’s details, phone numbers and addresses. The company was set up by their secretarial department. D3 told PW26 that said the person setting up the company would like a Singaporean company in the background. 408.PW26 got in touch with their contact in Singapore, Shook Lin and Bok, Solicitors in Singapore, whom they deal with regularly, for company names to use and he relayed that message to D3. 409.PW26 recalled there were not too many choices of company names and a company called Daintree Company Ltd, which was on their books ,was chosen and this was conveyed to D3 who agreed. 410.There were discussions about the company and he told D3 that it was required that a Singaporean be a director or shareholder and a nominee director would be provided. PW26 said he never met D4. 411.D3 agreed and told him to get a nominee director for the Singapore company. He contacted the law firm for a nominee and called a friend, Chan Siew Cheong, who is a lawyer in Kuala Lumpur, and Chan provided details of a person who would act as a nominee director. That person was called Mme Sheng Siok-fui and she became a registered director of Daintree. 412.He produced Ex168, p.4258 Company Registry Records of Greatson. The Certificate of Incorporation states that it was incorporated on 1st April 2004. A Statement of compliance was signed by Sheen Friendship, the service provider from whom the company was bought. 413.Page 4257 is the Consent to Act as Director and the name is D4’s with effect from 29 August 2005.PW26 said that the papers could have been returned signed or the signatory might have come to their office. 414.Page 4251 is the Notification of Situation of the Registered Office at ground floor, 5, St Francis Yard, Wanchai, HK. PW26 said that that information would have come from D3 he supposed as they dealt with D3 at the beginning. It is dated 29 August 2005. 415.Page 4248 is the Notification of Change of Secretary and Director prepared by PW26’s firm and deals with the secretary ceasing to act and note 9 shows the name of the resigning director was Sheen Friendship Limited. The next page shows that the new secretary is D4 and is dated the 29th August 2005 with a residential address No. 314, Shek-O Village HK and ID K199345(3) as supplied by D3. 416.4238 deals with Notification of Change of Situation of Registered Office as room 1101, Hollywood Plaza 610, Nathan Road, Mong Kok, Hong Kong signed by D4 dated the 10th May 2006. 417.The fees were paid by the company and a receipt sent to the company’s registered address. 418.Page 4239, the annual return, was prepared by his firm up to 1st April 2006. Page 4240 shows that the authorised share capital nominal was HKD10,000 and the value of each share HKD1.00 and paid up shares HKD1.00. Members having share capital as at the 28.9.05 had transferred their shareholding to Daintree, 1 Robinson Road, Singapore, the secretary is D4 with a residential address in Shek-O. The next page shows D4 as director, and the last page is signed by D4. 419.PW26 said his company started to deal with D4 in May 2006 and he did not deal with him personally. There were attendance records to show there was direct contact either on the phone or with him attending the office. 420.PW26 said his firm did company secretarial work for OGH, which was incorporated in 1997 with PW26 as the company secretary because listing rules required a natural person to be company secretary. PW7 acted as the de facto company secretary for OGH. PW7 only approached PW26 on more complex legal matters. PW26 said he continued as company secretary until OGH went into provisional liquidation, when he then resigned. 421.PW26 said when the annual reports were filed, a bill would be sent to the registered office address of the company or the contact address on the file. The bills were settled by cheque, he thought by Greatson. Bills were sent for incorporation and annual services. 422.PW26 produced his solicitor’s file in respect of this matter as Ex 370, p.7310. The company records confirmed that the instructions were given by D3 in relation to Greatson. The bills were settled by Greatson cheques. An e-mail dated 22 March 2006, p. 7483, from D3 states that D4 preferred to pick up Greatson company documents from OGH’s office in Admiralty. P.7486 is an e-mail dated 3 May 2006 from D3 stating that Greatson is not linked to OGH and that mail should be forwarded to their Hollywood Road Plaza address. 423.E-mails were sent purportedly by C Chan of Greatson to the solicitors relating to the payment of fees for registration renewal. On 22 May 2006 the lawyers wrote to D3 at the Greatson address with regard to the settlement of the outstanding bill. 424.When cross-examined by DC1, PW26 said he had known D1 for over 10 years, before he joined OG. He met him frequently. He never knew him to be dishonest. He knew that he was appointed to an office in Guangdong Political Group open only to those who make great contribution and are persons of integrity. PW26 knew D1 did much charitable work and made significant charitable contributions. 425.PW26 confirmed that he had no dealings with D4. Documents requiring signature were sent to D3 to arrange for D4 to sign and he had no confirmation that D4 did in fact sign them. 426.The bill of Stevenson Wong dated the 13th December 2005, p. 7533 was sent to Greatson c/o OGH for the attention of D3. It was apparent that Greatson was a shelf company and had never traded. 427.PW26 said that the IRD letter, dated 28 September 2005, p.7497, stating that Greatson had never traded and had no land and investments was a standard letter drafted by Stevenson and Wong and it would have been sent to D3 with other corporate documents for him to arrange signatures. The documents were returned with a hand-written note stating “here are the executed documents”, p. 7494. PW 26 said he only dealt with D3 in relation to this matter. He did not know Lisa Li whose image he was shown, Ex 354, p.7096. PW40 Chung Ngai Man, gave evidence under immunity 428.PW40 said that, at the material time, he was a nominal director of Pioneer Lane Development Ltd. He now works in a school doing curriculum development. He used to work in the insurance field. He gave evidence under immunity, Ex 353, and said he understood the terms of the immunity. 429.In 1987 he worked for National Mutual in Hong Kong, an insurance business. He stayed with them until 1992. In 1991/2 one of his subordinates was Helen Chui who was a friend of D1. Helen Chui was trying to interest D1 in taking out insurance and he was consulted. 430.He met D1 when he came to pick up Helen after work. D1 bought insurance cover which was explained to him by Helen and PW40 assisted. This was medical insurance for the company as a whole plus life insurance. The company was OGH. The life insurance was on the life of staff of the company. 431.PW40 also met D2, D1’s younger sister. Helen told him that D1 had a younger sister in Hong Kong who did not have a lot of friends here. Since they were in the insurance field and they would have gatherings, Helen asked if she could invite D2 to join in and he agreed. He came to know D2 who attended a few occasions at the evening gatherings. These were monthly meetings held after the sales cut off dates. The colleagues would have meals and prize awarding ceremonies and, very often, meals to build up team spirit. D2 was invited to such gatherings. 432.In 1992 he left National Mutual and joined Top Glory Insurance Company. He stayed at Top Glory until 1996. Helen Choi moved with him. She stayed at Top Glory only 1-2 months. D1 and Helen were boyfriend and girlfriend. When she left he took over D1 as a client but seldom had direct dealings with him. He would usually speak to D2 and later he approached someone at OGH responsible for insurance matters. He spoke to D2 about insurance matters. Before he left National Mutual D2 took out insurance through him as did her father. When he moved to Top Glory he had to follow up insurance matters with her and she asked him to approach a staff member about insurance. He also gave his personal opinion about insurance matters for her family. He changed to another company but asked them to stay at National Mutual. They did no business with Top Glory. 433.He left Top Glory in 1996. Whilst at Top Glory he seldom had contact with D1. He went up to D2’s company offices in Admiralty to visit her between 1992 and 1996. He introduced his nephew to her to get work at OGH. He said that by 1996 they were good friends. 434.When he left Top Glory in early 1997 he joined Winterthur Life Insurance Company Ltd. He remained with them until he resigned on 1.6.2004. He told D2 about his change of job, they were still good friends. 435.When he left that company he joined Hoi Tak Finance Company as an associate director. It was a finance business and did some insurance, the major part of which concerned funds. His work concerned the application for a licence for insurance and assisting the company to develop the sales team. He told D2 about this job change. 436.In November 2004, 5 months after he started at Hoi Tak, he met D2 at the Pacific Coffee shop in Admiralty. He rang her and told her he might quit his job. He said D2 mentioned that she would introduce him to a friend who had a senior post in an insurance company and he said he was not interested. They arranged to have tea. 437.When they met they had a general chat and then she asked him if he was interested in doing business and he said yes as he was ready to set up a broking company. He had been doing preparation work when working for his other company and had already rented a place in Soy Street in Mong Kok. He said he did not have much money as he had spent a lot setting up his new company. She did not say with whom the business would be. She said money was not a big problem but he said he only knew insurance. She mentioned that there were a number of businesses worth doing and she did not know a lot of friends in Hong Kong and did not trust other people very much. She told him OG was involved in aluminium metal and that paper was required for packaging. She said the money involved was not minor. PW40 said he was interested. They spoke for 40-45 minutes. It was after work and she said she would arrange someone to contact him as she was in a hurry. D2 said the money would come from her. 438.PW40 said he understood that it would involve setting up a company, renting a place, recruiting staff. He said that, during the conversation, he mentioned that he knew nothing about this business and, moreover, quotations would be mailed to OG as one could not do business by simply setting up a company. He said he thought the business would be for packaging metals. 439.PW40 said that D2 said it was not convenient to use her name because of her position in OGH and she did not have enough time either. PW40 said he told D2 he was interested. She treated him all along as her elder brother. When they got acquainted, D2 said that when she came to Hong Kong from the mainland a lot of people looked down on them and they seldom contacted persons in Hong Kong. Their social circle was not very large. PW40 said that D2 said she trusted him. 440.After that meeting in Admiralty in November 2004 he called up D2 about 2-3 days later. He was keen to do business and he spoke to her about it and asked her what he would do next, She told him not to be so anxious and that a colleague would contact him later and a new company would be set up first. D3 contacted him about a week later on his mobile and asked him if he was Chung Ngai Man and he told him he was a colleague of D2 and that there were documents for him to sign to set up a company. A time to meet was arranged. The time suggested clashed as they both had something to do and he suggested hiring a courier. PW40 said D3 asked him to copy his identity card and the courier would come directly. He said that there were various stickers indicating where he was to sign his name. He signed the documents and returned them with a copy of his ID card. He said he did not read the documents, it was his bad habit. 441.He said D2 rang him after a few days. He said when they had tea it was in October not November. He asked her what was to happen next after the company was set up. They discussed the name and address for the company. He asked what he would be doing next and D2 told him not to be so anxious and asked him to rent an office. He suggested using his office in Mong Kok but she did not agree. 442.D3 rang him 2-3 days later and asked him when he would be free. D3 told him he wanted to arrange matters for renting an office and he said that would be fine. They arranged to meet at an exit of Sheung Wan MTR before noon around 11.00 to 12.00. When he met D3, D3 was wearing a suit and carrying a brown paper bag. 443.They greeted each other and D3 led PW40 to Cheong Kin Building where PW40 was to visit an estate agent in the building. Downstairs in the building D3 took out some documents and chops from the paper bag and about HKD20,000 –30,000 in cash which was for payment of the deposit. D3 told PW40 to go to a certain floor of the building and ask for a Miss Chan whilst he would wait downstairs. He went to the estate agency and, as instructed by D3, met a staff member who appeared to know why he was there. He signed a number of documents which he did not read as they seemed standardized documents. It took about 30-40 minutes. He got a receipt for the cash and was given a key for the mail box and one for the premises. After he left he gave the keys and documents to D3. 444.PW40 said he met D3 downstairs and asked him what would happen next. PW40 said that D3 asked him to go with him to the new rented office to have a look. They went by taxi to an address in Wanchai, near the Southorn Playground. When they got there they tried the door and mail box and went in to have a look and check out the air conditioning. It was an old office in a poor state. It could not be used at once as there was nothing there. The air conditioning did work with a bit of effort. It was about 300 square feet in size. He spoke to D3 about the decoration. There was an old partition whidch he said should be demolished. D3 did not appear to be too interested. After they tried out everything D3 was not very willing to speak and they left. D3 told him that there was only one bunch of keys and that he would take them to D2 and PW40 agreed. 445.D3 took the keys back to D2. The documents he got from the lady at the estate agent were given back to D3 when he met him downstairs in Cheong Kee building. 446.PW40 produced Ex 30, p. 983 Tenancy Agreement dated 6 December 2004 for Office 603, 6/F, Wanchai Central Building, 89 Lockhart Road, Wanchai, in the name of PW40. The company was Ching Yee Holding Limited, 12/F Cheong Kin Building, 84-6, Des Voeux Road, Central. The deposit was HKD6000 and the amount outstanding was HKD27,204. It stated that all particulars of the company would be prepared in 15 days and the name in the contract would be changed to Pioneer Lane Development Ltd. 447.PW40 said that Ex 30, p.984 dated 6 December 2004 is the signed receipt of HKD6000 by way of deposit for lease for two years until December 2006 for HKD6000 per month. It states that the tenant has to present himself before the 10th December to sign the lease. He said he only went to the estate agency once. He said it was agreed the tenancy would be transferred to a limited company on condition that all required data was ready. 448.He produced page 985 translation at 983 A2, an official receipt dated 13 December for HKD14,839 in cash for the Wanchai property for one month’s rental, management fee and rate. PW40 said he paid about HKD20,000 to HKD30,000. 449.PW40 produced page 986, translation 983 A3, a copy of his indentity card. The writing on the copy refers to office 603, Wanchai Central Building with his address and his mobile phone number and Pioneer Lane Development Ltd. He could not recall when he did the writing. It was possibly when at the estate agency. 450.PW40 said the address at the top of the page was not written by him. The mobile phone number was not written by him, nor the date.He had not seen these documents since his visit to the estate agency as far as he could recall. 451.PW40 was shown Ex 40,page 987,the minutes of a meeting dated the 3rd December 2004 at 1400 hours. It states that he was present and was the chairman. He was not present. It contains a resolution to rent the premises at room 3, 6/F, Commercial Building, 89 Lockhart Road, Wanchai and refers to his ID card number. PW40 said the handwriting is not his and he did not recognize it. There is a chop at the bottom and a signature. He signed the document. He could not recall when he signed it. 452.Ex 40, page 993, is an Instrument of Transfer for Pioneer Nominees Ltd, dated 7th December 2004 to Chung Ngai Man, occupation merchant. The address given is in the Centre Mark. PW40 did not know the address.It is not signed by him. 453.PW40 was shown Ex 173 p.4362-91 the company documents for Pioneer Lane Development Ltd. The Certificate of Incorporation is dated 12 December 2003. Page 4390 is the Consent to Act as Director for PW40 dated 25.2.04 which is signed. PW40 said he did not sign it. He said that comparing this document with 990, the signature appears similar. 454.PW40 said in February 2004 he had not agreed to participate in any company. He did not sign any of the corporate documents which purport to be signed by him. He never presented any documents to the Company Registry. He never signed the annual returns and the residential address which states he lives in Wanchai was not his address. 455.He said he signed all documents relating to the tenancy agreement for the Wanchai office on his only visit to Ching Yee and he could not recall the date of that visit. 456.He said that he could not recall if he got the keys to the Wanchai office at the offices of Ching Yee or at the Wanchai Commercial Building. He said he signed on the pictures of the office premises, page 1000, at the Wanchai Commercial Building. He said he never returned to the Wanchai office or conducted any business from there. 457.He spoke to D2 2-3 days later and D2 said that the best thing to do was to open an account and she asked him if he patronized any banks. PW40 said he worked in Wanchai and was familiar with the Belgian Bank and D2 said a current account and a savings account was required and that D3 would contact him later. He discussed the decoration of the Wanchai office with her and she told him not to be so anxious. 458.D3 made contact with him a few days later. D3 rang him on his mobile phone to ask him for a time he could be free to go to the Belgian Bank on Gloucester Road to open the account. Arrangements were made shortly afterwards and the arrangement was to meet at around noon time. He recalled that when they met, D3 had a brown paper envelope and that he took out some documents, company documents, chops and more than HKD1000 in cash. PW40 went in to the bank alone to open the accounts. It took a short time and, after he opened the accounts, he returned the documents to D3 with some receipts and they parted. D3 did not go into the bank with him. He did not say why and he did not ask him. He thought he was assisting D2. 459.He opened two accounts, one current and one saving account, for Pioneer Lane. He opened those accounts on the instructions of D2. Money had to be paid for the bank to conduct a company search. He did not keep a cheque book or pass book. 460.PW40 produced Ex 156, p.3282, the bank 0pening documents for the Pioneer Lane Development Limited Belgian Bank account at the Wanchai Branch dated 10th January 2005 for a savings and a current account. Cheques required only his signature and the company chop. He signed as director. Page 3283 is the specimen signature card for the accounts. 461.PW40 said he wrote his name and he put in his specimen signature on the 10th January 2005. It states that he was introduced by Man Chung Company, which is his company, which had business with the Belgian Bank. PW40 said that when he worked as an insurance agent payment was made through this company. 462.The specimen signature document is stamped “signature amended”. Page 3284 of the banking documents is a letter dated the 16th August 2006 to the manager of the Industrial and Commercial Bank of China which had taken over the Belgian Bank. It states that the chop will change as detailed below. There was a new company chop with a slightly different font. It is signed for and on behalf of Pioneer Lane by him. 463.PW40 recalled that he received a document from the small claims tribunal through the Ching Yee company. It was alleged that he did not pay the rent for the Wanchai office. It was sent by registered mail so he contacted D2 and asked what was happening. He related the incident to her and asked her what to do. PW40 said D2 appeared anxious and did not mention anything in particular to him. He chased D3 and spoke with D3 who approached him and in July he recalled from the news that there was a problem with OGH and he thought that had something to do with D2’s mood. He approached D3 and D3 initially said that the company did not have problems but he told him he was sued and all the company chops and cheque books were kept. PW40 said D3 repeated that the company had no problems and not to worry about the rental payment. He was told that the company chops and cheque books were on the mainland and he was asked if he could apply for new ones. He went to the bank to arrange for a new cheque book. He had a new chop made in Wanchai. PW40 said 3285 is an ICBC (Asia) form in relation to the new chop which was signed by him after he heard of the OGH problems. There is writing on the letter in English which states that someone called Patrick was to check with the Wanchai Branch to confirm with the customer the loss of the chop. It is dated 24th August 2006. 464.PW40 said he was concerned as Deloittes, the OGH provisional liquidator, was trying to trace him and the friends he had recommended to D2 to assist with holding company registrations. 465.PW40 was shown page 3286, the minutes of a meeting of Pioneer Lane dated the 14th December 2004 passing a resolution in relation to the use of bank account with the Belgian Bank signed by PW40. PW40 said he did not attend such a meeting. He did not recall signing or preparing this document. 466.PW40 said he produced his identity card at the bank and they took a copy, p.3287. 3288 is the Certificate of Incorporation of Pioneer Lane Development Limited. He produced it at the bank and they copied it. He got the certificate from D3. After opening the account he gave the company documents to D3. Page 3289 is the Business Registration Certificate of Pioneer which he produced at the bank. 467.PW40 said when he first opened the Pioneer account in January 2005, upon leaving the bank, he gave all the documents and the company chop to D3 who was waiting outside the bank. He kept no documents. 468.PW40 said he was very keen to get on with the business as he thought it was a chance to make money. D2 was someone at senior level at OG and he considered her a successful person. 469.After the visit to the bank he made contact with D2 about one month later near Chinese New Year (CNY). He called her and asked her about the business and what should be done next and he recalled that she said he should not be so anxious As it was CNY she would return to the mainland and go to America and he was told to wait for her return so they could sit down and have a discussion. 470.PW40 said he heard from Belgian Bank around CNY as they needed one month to do the search. He was told that the account had been opened and he could collect the cheque books and passbook. He told D2 about this and she asked him to go to the bank to get these. He arranged to meet her. She later said she was not available and she asked him to contact D3. He collected the things from the bank and went to meet D3 at Admiralty. PW40 said that he recalled that D2 told him that when he got the cheques he should sign them for the purpose of paying rent and things like that. He recalled that when he got to Café de Coral on the 1/F of the Admiralty Centre D3 came to meet him. 471.He went to Café De Coral straight after he collected the items from the bank. D3 was not there when he arrived and he called D3 and he came to the café. 472.PW40 said they chose a table which was near the edge of the café and not easily seen and, after they sat down, he handed over the cheque book and pass book to D3. D2 had asked him to sign cheques in advance and D3 reminded him to sign cheques so he took up the cheque book and started signing. He signed about 10 to 20 cheques and handed the book to D3 and he said that since signed some he could sign all. He thought for a while and thought no problem so he signed all and handed them all to D3 and, after that, they did nothing further and they left. D3 had the cheque book and passbook. The cheques were blank. 473.PW40 was shown page 3289, dated the 7th December 2004, the Business Registration Certificate for Pioneer Lane which shows the address as Room 501, The Centre Mark, Queens Road Central. The Company Registry Notification of Registered Address at p.4381 dated the 2nd February 2004 also shows that address but, at p.4380, the registered address is given as the Wanchai Central Building address in the notification dated the 11th December 2004. 474.PW40 was shown the bank statement, page 3304, and said he provided the bank with the Lockhart Road address for the opening of the account. 475.PW40 was shown Ex 156, p. 3298, a cheque dated 19th January 2006 for HKD2,235,000 payable to Hing Yip Holdings (Hong Kong) Limited signed by PW40 for Pioneer Lane. He said he signed the blank cheque at the Café de Coral. He said the following cheques also bore his signature:
476.After the meeting with D3 he heard again from D2 after CNY. He called her on the telephone and asked her when the business would commence and she said that she was rather busy these days and she repeated that the business could not be done right away. She said OGH was a listed company and his company would have to mail a quotation to OGH in order to get business. 477.He contacted her again, he could not recall if it was in 2005, and she told him that no business would be done for the time being. 478.PW40 said that D2 also contacted him on one occasion. He could not recall when it was, and he recalled on that occasion she mentioned that she wanted him to get some friends to hold companies. She knew of his job nature and that he knew a lot of sales people. She wanted him to refer persons to her to hold a company for her. It was to be for business registration, the main purpose was to mail quotations. The companies would be held for one year only and , they were to mail quotations to her company. PW40 said he did not enquire further; he thought maybe they were required for presentations. He promised her that he would look for some friends of his. At that time she mentioned there would not be any business, it was only a company for mailing quotations. He understood the role of these friends was to be the boss of the company and a licencee. By boss he meant that they would own the company. By licencee, there would be business registration and the registration would be done using his friends’ names. He said that he later recalled that the first time she contacted him about using his friends was before the cheque signing exercise with D3 in Café de Coral 479.He did ask some friends, most of them were his former subordinates in the insurance industry. They knew that he had contact with D2 and he told them that she had such a need. He told then she needed someone to help to hold a company for one year only, there would be no business and they would be required to mail quotations. He understood that companies like to make presentations and other companies had contact with the company in question. He did not ask her specifically but she clearly said it was to hold for one year only and that there would be no business. 480.Some of his friends agreed to the request. They were Doong Keng Sing (Doong) , Lee Tsz Fai, and Cheung Chi Keung. Doong was his former subordinate in the insurance field. Lee was a staff member of the company he set up. Cheung was a good friend of his whom he had known for many years. 481.Once they agreed he rang D2 and told her 3 of his friends of his were willing to hold companies. D2 said D3 would contact them and he gave her the names and telephone numbers of these three friends. 482.PW40 was shown Ex 251, p.5472–5500 Certificate of Incorporation of United Fine Holdings Ltd, number 880031 dated 19 January 2004. Page 5478 is the Consent to Act as Director or Alternate Director dated 18.2.04 in name of Cheung Chi Keung, his friend. PW40 said the signature on the document is not that of his friend. 483.PW40 was shown Ex 181, p. 4727, corporate documents for Trump Link Enterprises Limited. 4736 is the Certificate of Incorporation dated the 5th December 2003 number 873987. Page 4743 is the Consent to Act as Director dated the 4th March 2004 in the name of Doong Keng Sing James, his former subordinate. PW40 said the signature on the document is not that of Doong. 484.PW40 said he was later asked to look for other friends. This was about a few months later. Over the phone he was asked by D2 if there were other friends of his who could help. She said it was for the same purpose. She mentioned quotations. The companies would last one year. He agreed to help her and he approached some persons and they agreed. They were Siu Kin fung, Keith, D4 and Tsui Pui Sze, D6. Tsui was a friend of his. Siu was his former subordinate. They worked together in 1997 in Winterthur Life Insurance company. After D2 rang him he called Siu with whom he was on good terms they could discuss everything. D6 was the girlfriend of his good friend Cheung Chi Keung. 485.PW40 said he told his friends they would get nothing out of it. In his view doing business in cooperation is an advantage. He claimed he was offered no other advantage. 486.Ex 168 is the corporate documentation for Greatson. Page 4258 is the Certificate of Incorporation dated the 1st April 2004 with the number 893307. Page 4252, the Notification of First Secretary and Director refers to Greatson. On 29 August 2005 Keith Siu Kin Fung, D4, was appointed director. He lives in Shek-O. PW 40 said p.4256 is signed but not by D4. 487.Tsui Pui Sze (D6) is the girlfriend of PW40’s friend Cheung Chi-keung. He had known her for 2 years and told her to help out D2 to hold a company for a year with no business. She was not aware of his friendship with D2. PW40 said D6 is a pure and quiet girl and maybe considered him her senior and she responded OK as she trusted him and Cheung Chi keung had already agreed to help. PW40 said she had seen the other persons and knew something about them and she agreed. For most gatherings, Cheung and D6 were both there. PW40 said he made many phone calls to find persons and provided D2 with a lot of names including other persons he has not mentioned, about 10 names. PW40 said that D6 agreed to his request and did not take time to consider it at all. 488.He spoke with D2 and gave her the personal details of D6 over the phone and she said contact would be made. PW40 said he thought it would be D3. 489.PW40 said that when he provided the names of three persons to D2 including Doong Cheung and Lee, he was working at his office in Soy St Mong Kok and D3 rang to make an appointment with him to see how to deal with the three persons and obtain business addresses He said the times suggested clashed and it was agreed that D3 would send documents via a courier service. His friends provided their names and signed on the documents required and they were sent back to D3. PW40 kept no copies as records. 490.Ex 204, p. 5145 Certificate of Incorporation of Long Asset, 939625, on the 13th December 2004. Page 5151 is the Consent to Act as Director dated 15th December 2004 for D6. He does not know her signature. The address given as Soundwill Plaza Causeway Bay is not D6’s address as she lives in Shatin. Page 5160 ARI dated 13th December 2005. 491.In early 2006 he was invited to the wedding of D2 but he could not attend as he was sick. 492.He learnt through the newspapers of the financial difficulties of OGH around July 2006. He called D2 the following day but could not reach her. He rang her mobile phone. 493.He received a call from someone at a company secretarial firm about one week later. They wanted to speak to Doong and asked that he contact Deloittes as soon as possible. PW40 said he did not do this. PW4O said that when Doong gave his details to the secretarial company he had given them PW40’s telephone number and he sometimes received calls asking him to collect mail in relation to Trump Link. PW 40 said he was worried about this call and he rang Cheung Chi Keung and Leung and asking if they had received calls. Lee had not but Cheung Chi Keung had received calls. He did not contact D6. 494.He learnt that OGH was facing insovency and the situation was getting worse day by day. He called D2, initially she could not be reached. He wanted to ask her what was happening and why his friends had received such calls. In the end he reached D2 and he recalled D2 said it was some sort of business conflict, that there would be no problem and asked him to ignore telephone calls and that is how it ended. 495.He later met D2 at a solicitors’ office in Jardine House. The situation at OGH was getting worse and his friends were receiving phone calls and asked him to contact OGH as soon as possible. He rang D2 and wanted to meet her in person to know what was going on. Before going to the solicitors’ office he met D3 and he said there was no problem, that it was some sort of conflict in business and his company was framed up by others and not to worry. He was not reassured and approached D2 who made an arrangement to meet him on 27th July or August on 41/F where the solicitors’ office was in Jardine House at 3.00pm. PW40 said he got there at 4.00pm and told the receptionist that he wanted to find D2. She took him into a conference room where he saw D2, D3 and a solicitor. They were discussing how to save OGH and he did not understand the details. The conference lasted 10 odd minutes. They left together and he took the opportunity to ask D2 whether there were problems for his friends or company. D2 repeated that the companies of his friends had no problems and she was in a hurry to go back to the mainland to see her elder brother and had no time to speak and he should be at ease. 496.PW40 said he walked with D3 to the World Trade Centre and asked him what it was about. D3 said there was definitely no problem and he recalled he was fierce in his attitude and he gave him the same reply saying ‘no problem, no problem’ and he left. 497.PW40 said that night his friends were rather anxious and kept chasing him saying things were not so simple. He promised them that he would make an appointment to meet D3. They met in Yau Ma Tei in a café at the junction of Nathan Road and Waterloo Road. When he arrived he asked D3 to come into the café. PW40 said he was with 8-9 persons and D3 said he would not go inside to talk with him and asked him to talk with him at the rear lane behind the café. PW40 followed D3 and asked him what was going on. PW40 said D3 took out a photo from his pocket the size of a postcard. It was a photograph of a Chinese man and D3 asked him if he could take the photograph into the café and show it to his friends. PW40 said he was shocked. He let D3 finish. D3 told him that the man in the photograph was called Zhu and tht it was Zhu who was responsible for setting up the companies and not D3. He thought that there must be some problem with D3. PW40 said he did nto agree to show his friends the photograph. D3 did not go into the café. PW40 said D3 told him there would be no problem so he said there was no need to show the photograph to his friends. PW40 said D3 told him he was in a hurry and that he had to go to the mainland and would contact him again that night. 498.PW40 said he recognized Zhu from the newspaper coverage of the OG problems and he was aware that he had run away. 499.PW40 said that he later received a call from D3 at about 10.00pm and D3 told him he had just returned from the mainland and they arranged to meet that night. They met in a café in Kwai Fung and he asked D3 if there was a problem with companies held by his friends. D3 said there was none, someone would come out to save OGH. D3 said that someone was being oppressive towards OGH. PW40 mentioned Pioneer Lane to D3, PW40 was worried about that company. D3 said the problems only related to OGH. 500.PW40 said in August 2006 he received at his home, a letter from Ching Yee, the estate agency, concerning arrears of rent on the Wanchai office rented by Pioneer Lane. The letter mentioned the matter being referred to the Small Claims Tribunal. PW40 said that when he received it, he rang D2 about the letter. She told him she was very busy and she would get D3 to contact him. D3 rang him and told PW40 that all the chops and documents for Pioneer Lane had been delivered back to the mainland. PW40 said that D3 asked him to arrange for a new cheque book and chop to make the rental payments and he did that. 501.PW40 was shown Ex 357, p. 7225-7232, the Bank Affirmation for the Belgian Bank. Page 7230 is the account summary and shows the balance of the account at just over HKD1.4 million at 01.09.06 then a withdrawal of HKD100,000 by cheque on the Pioneer account dated 11.09.06. PW40 said he signed the front and the back of the cheque. PW40 said that he withdrew this money because of the rental arrears problem. He had a new chop made and obtained a new cheque book. He withdrew the money in Kwai Fung and gave it to D3 with the cheque book and the chop when he met him in Tsuen Wan by arrangement. He gave D3 the money to give to D2. He signed no other cheques in that cheque book. 502.Later in September, he learnt 3 of his friends had been arrested; Doong, Lee and Cheung. He rang up D2 at once and asked her what was really going on and she said he should be at ease. He was told there was no problem. She told him she was not free and then she hung up the phone. Cross Examination 503.When cross-examined by counsel for DC2, PW40 denied that he had permitted Doong to give the secretarial company his own mobile number. He admitted receiving calls from that company looking for Doong and telling him that letters for Trump Link had arrived. PW40 also said he was not aware that the address of PW40’s company at 7C, Manley Commercial Building, Soy Street, Mong Kok had been given to the secretarial company as the address of Trump Link. He denied going with Doong to SBC to set up the secretarial service. 504.He denied that he was much more involved in the setting up of companies than he was prepared to admit. Bank Accounts 505.PW40 was shown bank statements relating to an account he set up with Hang Seng Bank in October 2004, Ex D2-1, 1-3. He agreed that the account was opened in October 2004 which was around the time that he had became a director of Pioneer Lane. There were numerous transfers of money into the account and such monies were almost immediately withdrawn in cash or transferred to other accounts. Some transfers were to the account of Doong. PW40 could not recall where any of the transfers into the account came from nor what he did with the monies withdrawn. He said the transfers involving Doong related to mahjong debts. There were no transactions in August 2004, one month after OGH went into provisional liquidation. He denied that transactions were in cash so as to conceal their source. Legal Proceedings 506.He agreed that on three occasions in 1999, 2003 and 2005 he was successfully sued by the IRD for unpaid tax. He said on each occasion he considered that the claims were not justified. 507.He agreed that he was sued by Pacific Century Insurance in 2002 for monies paid to him under an agreement and he needed to repay the money as the agreement had terminated. He said he left Top Glory in 1996 and he was not sure what this claim related to. He said when he eventually understood what they were claiming he settled the matter by repaying the monies in three instalments. 508.PW40 agreed that in 2003 he was in financial difficulties and was living with his mother-in–law on a public housing estate. At that time he was about 40 and had been in the insurance industry for about 17-18 years. Police Statements 509.PW40 said he was arrested by the police on the 30th September 2006 and on that day gave his first Video Recorded Interview (VRI) under caution in the presence of his solicitor, Madame Lee Suk Ping, who had previously worked as his subordinate at different times in the insurance industry. He was aware that his friends Doong and Cheung had been arrested on the 28th September. He was aware that Deloittes were looking for them and he was concerned that they were in trouble. 510.On the 10th January 2007 PW40 gave his second VRI. On the 21st March 2007 he gave his third VRI. On the 12 July 2007 PW40 gave his first non-prejudicial statement (NPS). On the 19th November he gave his second NPS. On the 8th January 2008 PW40 gave his fourth and final VRI. On the 1st April 2009 PW40 gave his third and final NPS. On the 6th July 2009 PW40 was served with an immunity. 511.PW40 said he was aware that under the immunity he had to tell the truth. He said he was not aware of what would happen if he departed from what he said in his NPS’s. PW40 said he did not recall who brought up the issue of his immunity, it did not occur to him to enquire about an immunity. 512.He agreed that when he was arrested he did consider that he had done something wrong and was concerned to help his friends whom he had brought into these matters. He said he was happy to make statements to help his friends. He said he felt he had been betrayed and taken advantage of. Pioneer Bank Accounts 513.He said he was asked to sign the blank cheques initially by D2 whom he trusted. He agreed that he signed all the cheques. He could not recall how many books there were and he could have signed as many as 100. He said he was aware that bank accounts were valuable assets but he trusted D2 whom he regarded as a good friend of some standing. 514.He said he did receive enquiries from the bank in relation to large cheques drawn on the account and seeking his consent to honour the cheques. He said he received the first of such calls a few months after the account was opened and he was told that the amount was about more or less one million dollars. He said he was taken aback and tried unsuccessfully to reach D2. He eventually reached D3 who told him that there was no problem. PW40 said he consented to large cheques being honoured on 2-3 occasions. He said at the times he received the call,s he was unaware as to whether the company was doing business or not. He said he wanted to help D2 and trusted her. 515.PW40 said that at the time these matters occurred it did not occur to him that he was concerned in money–laundering but that he was concerned about that when he was arrested. He disagreed that D2 never said she trusted him or treated him as her elder brother or that she told him she trusted few others. 516.PW40 produced Ex 371, an e-mail he received from D3 dated the 8th September 2005 supplying PW40 with the MS Word file for Pioneer Lane for him to deal with bank queries. It contained the address, registration number, name of director and bank details. Amending records of company seal 517.PW40 said he reported the loss of the company seal to the bank by filling in a form. He had to have a new seal made. He went to the bank and got a paper copy of the chop and went to get a seal made. He then applied to have the records amended and got a new cheque book from the bank and reported the loss of the old cheque book. PW40 said that in early August he received a message from the estate agency that rent had not been paid. He received a letter from Small Claims Court concerning arrears of rent. He said he told D2 about the problem and she asked him to approach D3. D3 told PW40 that all the cheque books and seals had been delivered back to the mainland, he did not say who took them back. PW40 said D3 also told him that someone drove a vehicle from the mainland to get the things away. 518.PW40 agreed that this occurred before the Ya Ma Tei café meeting with D3, when D3 showed him the picture of Zhu. PW40 agreed that the cheque for HKD100,000 was cashed on the 11.09.06. 519.He said he did not stop the Pioneer Lane account as he trusted D2. He did not know that the cheques signed in Café de Coral were all crossed. He did not ask why D3 needed the HKD100,000 in cash. He said it was to deal with the rental payment. He said that when he received the demand he could not recall if he looked at the amount. 520.He said that he was not aware that the amount was only HK12,000. He agreed tha t he withdrew HKD100,000. He said tha t he was asked to do that. He disagreed that he was dishonest about the circumstances in which money was withdrawn from the bank. 521.PW40 agreed the in his first NPS he said it was D3 who asked him to go to the bank to get the HKD100,000. He disagreed that it was not D3 who asked him to get the money out of the bank. The Rental premises at 89 Lockhart Road 522.PW40 was taken in detail through the various documents relating to the lease of these premises which were variously dated the 6th, 13th and 14th December 2005. PW40 was adamant that he had only visited the offices of Ching Yee on one occasion and, on the same day, he went to the premises to inspect them with D3. He was unable to offer any explanation as to why the various documents bore different days. Previous testimony and statements of PW40 523.PW40 said D2 told him that the companies were to be opened to mail out quotations and told this to his friends. PW40 was shown a transcript of his evidence in the High Court Trial concerning these matters, Ex D2 – 10, second volume, D3 to D5, Tab 5, page 155. PW40 said in High Court that he set up companies for getting the business registration. At 157, he said that in July 2005 he received a call from D2 to introduce more friends to her for the same purpose, to set up companies. He did not mention that they were for mailing out quotations PW40 said maybe he was too excited to say the words. First VRI – 30.9.06 524.PW40 said at counter 76 tha t there would be some remuneration D2 would give some red packets to them. PW40 said this is what he said. In his evidence he said that no reward would be given. He said that when he was questioned he was not sure he could not remember. On the 30th September 2006 he was very frightened and nervous, his mind was blank and he tried his best to organize his thoughts. He said that all along he said he could not recall and tried his best to tell the investigating officer. PW40 agreed that he was with his lawyer. 525.PW40 denied that he was dishonest about the circumstances in which he became a director of Pioneer Lane. At counter 82 PW40 said he did not know the company names of the companies set up by his friends. 526.At counters 181-5, PW40 told the police that when his friends Lee and Cheung received messages from the secretarial company that there was mail, they would tell him and he would inform D2 or D3 to collect the mail. He also told the police that for Doong, the secretarial company would call him direct and then he would contact D2 or D3 to collect the mails. 527.In his evidence he said he would not handle the mail for Lee’s and Cheung’s companies. He said he did not recall this part. PW40 said he did receive calls from Lee and Cheung that there was mail for collection and he did tell D2 and D3. 528.PW40 was questioned about discrepancies concerning the business addresses for the companies held by Lee and Cheung and mail received. PW40 said maybe he did not understand the question put to him. 529.He disagreed that he lied when he said he did not know the names of the companies involved. Second VRI, Tape 2, 10th January 2007 530.In this interview, PW40 said that after receiving the cheque book from Belgian Bank, he met D3 and D3 took out a chop and chopped on the cheque books and told him to sign. At the time he said he was very surprised and asked what it meant and continued to say that he asked D2 afterwards and she said that there was no problem, they needed to pay the rent. 531.In his evidence in chief PW40 said D2 told him to sign the cheques before he went to the restaurant. Therefore in the restaurant he should not have been surprised. He said he was not lying. He denied that he did not tell the truth about the signing of the cheques. 532.564-573 He was asked about the friends he had introduced to D3 to set up companies and mentioned four names but not D6 and said as far as he could recall there was nobody else. In court he said provided ten names to D2. He said that he was telling the truth when he said he supplied ten names. 533.PW40 disagreed that he was not telling the truth. 534.Counters 577-581 concern cheques issued by the Belgian Bank. When Belgian Bank received a cheque for a large amount they would call him and he would contact D2. 535.Counter 581 concerns the period after he learnt of the provisional liquidator’s appointment and, after he spoke to D2, he contacted D3, who brought a person called Daniel Tam (PW29) to meet PW40. PW40 said they met at the Steak Out restarurant in Portland Street and Tam told him the companies were alright. This was the person he referred to in his evidence in chief. He met Tam once. Volume 2 Tab 3 Interview on 21.03.07 536.At counters 99-101 PW40 said he signed two cheque books each with 50 cheques. He said that that is right as far as he could recall. 537.At counters 170-172 inclusive, PW40 stated that D3 told him that a public security vehicle from the mainland came to HK and took away the documents. PW40 said he did not know what his understanding at the time was and he wondered how this could have happened. He did not know what was happening and he did not ask. 538.He denied that he was not telling the truth about his involvement in Pioneer Lane. 539.At 172 PW40 said he got the name card of Daniel Tam and that Tam appeared to be a religious person refined in his manner. He had no alternative but to believe him when he said there was no problem. He disagreed that he was not truthful about his relationship with Tam. 540.Counters 127-145 relate to the withdrawing of HKD100,000 from the Pioneer Lane account. PW40 was asked what the money was to be used for and he said D3 did not mention what it would be used for and that they were in a great hurry. He did not mention payment of rent. PW40 disagreed that he was not truthful about the circumstances in which he obtained the HKD100,000. 541.PW40 said that in the new cheque book he signed one cheque and then gave the book to D3 as he knew that he would no longer be involved in the business of Pioneer Lane. Next tape -8th January 2008 Tab 4 B 542.At 103-4 PW40 told the police that he supplied D3 with ten odd names, he thought it was 12-13. In court he said it was ten. 543.At 234 PW40 said many friends said it was not safe and did not agree to help and some asked if it would be illegal. PW40 told them OGH was a listed company doing big business and that there was nothing wrong in holding a business registration. PW40 was reminded that he told the court that they raised no queries. PW40 said that if some friends had doubts he no longer talked to them about the matter. 544.At counters 45-46 PW40 said he knew D6 in a gathering of friends. Counter 86, he said knew D6 in a gathering of friends 4-5 years ago he could not remember the date. In his NPS 8th April 2009 at end of paragraph 4, PW40 said he knew D6 about 2 years and could not say how they got aquainted. In his January 2008 statement he said that he had known known her 4-5years. In these proceedings he said he had known her for 2 years and she was the girlfriend of Cheung Chi Keung. He denied he had not told truth about his relationship with D6. 545.8th January 2008 was the first time PW40 mentioned D6. He had already given 2 VRI’s and 1 NPS by then. He denied he was not frank about D6. 546.At counter 473, PW40 said he received a call about rent not being paid for the Wanchai office. He said he received a summons in November and had to attend the Small Claims Tribunal on December 2nd. He disagreed that his evidence about the HKD100,000 being used for rent was untrue. He agreed it was cashed on 11.09.06. 547.PW40 disagreed that he and D2 were ordinary friends and not good friends as he asserted. He disagreed that most of the time he initiated contact. He agreed that he was keen to develop business opportunities with the OGH group. 548.PW40 did not recall that in late 2003 to early 2004 D2 told him that her colleagues at OGH would like to discuss something with him. He said he also did not recall asking her for further details and D2 saying that she was not able to give him further details and that she would ask her colleagues to contact him. 549.PW40 disagreed that on many occasions he indicated that he would like to develop business with OGH and was on that occasion very excited and interested and said he would call her back after she had spoken with her colleagues. 550.PW40 disagreed that shortly afterwards she said someone from OG, possibly Zhu Weibing, Brian Or or D3 contacted him. 551.He disagreed that D2 told him that OGH needed someone unrelated to the OG Group and he was asked to assist in the acquisition of a factory called Xu Zhou Sifang Aluminium, on the mainland. 552.PW40 disagreed that he then contacted D2 and told her that her OGH colleagues would like him to sign some documents and asked whether he would be assuming personal liability, that he asked D2 whether or not he should do so and that D2 said she considered her colleagues trustworthy but it was ultimately a decision for him. 553.He disagreed that D2 knew nothing about Pioneer Lane or supplied names or was involved in anyway in those companies and that his alleged conversations with D2 about these companies did not occur. 554.PW40 disagreed that one of the reasons for making false allegations against D2 and maintaining that he trusted D2 so much was that he wanted to shift the blame to D2 to protect the real culprits. CX by DC3 555.PW40 agreed that he was a good salesman. He disagreed that he was very persuasive in persuading his friends to set up companies for D2. He said that there was no need to persuade them. He agreed that he told them that the companies were not active and not doing business but he did not mention that holding a company registration for one year had no downside. He said he did not also say that if the companies did business it might be to their advantage. Records of Interview 556.In his first interview at counter 173 PW40 said that his friends would like to set up companies to prepare for doing business in the future but that there would be no business at the moment. 557.In his fourth interview at counter 226 he said that for the first year there would be no business. PW40 said that he could not recall what D2 said would happen after the first year and she did not tell him what was to be done. He did not think business would be done simply by sending out quotations. He said he did not consider it in a detailed way. He wanted to help other people he would not approach her on a daily basis. He was just helping a friend. 558.He said he did tell friends that, at most, quotations would be sent out. 559.His friends trusted him and he did not think that within a year business would be coming, they were helping a friend. He did not intend his friends to do business. 560.PW40 told the court in his evidence in chief that there would be no remuneration but in VRI said there would be remuneration by way of red packets. PW40 said that when arrested by police his mind was blank so when questioned by police they wanted every sentence and in statement said possible there were red packets. 561.PW40 said he cared about his companies when OGH collapsed. 562.He told his friends he would be in a business venture with D2. His friends knew who D2 was. Many of those friends he had cooperated withfor more than 5 years and sometimes he would share with them the communicatons he had with D2 so they were aware of her. 563.PW40 agreed that he did mention the packaging business to his friends but he did not mention the turnover for Pioneer would be in the millions. 564.PW40 agreed he had no experience in paper packaging business or contacts. He said that D2 did not know a lot of people in Hong Kong and he would hold the company. That would be his contribution she would be the boss behind. He disagreed that this was a reward for what he did for her in the past. 565.At counter 82 PW40 said she gave him a lot of business and chatted often and that he -trusted her to do a lot of things. At counter 194 PW40 said D2 often asked him to help her. At counter 517 he said that he had known her for 10 years and had done quite a lot of things for her. 566.At counter 573 PW40 said he helped to do many things for her. He introduced his nephew to work in her business. On one occasion their office was going to dispose of furniture and he assisted in donating the furniture to some charitable organization. He was approached to see if he could buy a new model of mobile phone for her. After tea an employee had quit and she asked him to find a replacement. He said that, on one occasion, D2 wanted to change her secretary and he arranged for the wife of a friend to be interviewed. He assisted her to retrieve a handbag in Causeway Bay and used his own connections. This was before Pioneer Lane. 567.PW40 said he did not know by whom the quotations for the company would be sent out. 568.In his interview on the 13th September 2006, PW40 was asked about the submission of quotations and said there was no follow up as, after setting up the BR, the job was finished. He agreed that his friends just held the BR. He did not understand this would lead to be a business opportunity, he wanted to help D2, he did not consider the opportunity for his friends. 569.PW40 told police that, once company was set up, the first task was completed. He said at counters 226 that D2 hoped that these businesses could work and if they could not she would not carry them on so it would be very safe. He said that if you help other people then there is a chance to develop. 570.PW40 agreed that sending quotations was a must before business could arise. He agreed that his friends would not send out quotations they only held the licence. 571.PW40 said it was not mentioned whether the company was limited or not. He understood that there was a BR and that was all. He trusted her. All along he did not think that there would be problems. 572.PW40 agreed that the business centre for only one of his friends called him. Doong used PW40’s phone number with the business centre. He did not mention that he did not receive other calls, he received calls directly in respect of the business centre. He could not recall if in July 2006 the provisional liquidator called asking for Doong. They did not contact him about Pioneer. They were looking for Doong’s company. Both Lee and Cheung contacted him to say that they were contacted by Deloittes and that Deloittes had contacted the business centre asking for them. He disagreed that he knew the company would be limited. PW40 agreed that he told the police all the persons introduced by him were good persons. 573.PW40 said that he knew all three companies were asked to contact the liquidator, he did not know it was provisional liquidator. As told there was a call from Deloittes which left a phone number and initially he thought it was a legal firm and he did not contact them. 574.At counter 267, PW40 said it did not occur to him to contact the liquidator. At counter 525 of the second interview he said he was not very familiar with D3. As regards the cheques he asked D2 first. This was the third time he saw him. He believed what D3 told him because he was an assistant of D2. PW40 said he did consider D3 was acting on behalf of D2. 575.PW40 said that the meeting in Yau MaTei with D3 and Daniel Tam was the first time he met Daniel. He was brought along by D3 and introduced as the person who set up the companies on behalf of OGH. He could not quite recall the introduction. He thought he had a company assisting other persons to set up companies. 576.PW40 agreed that he contacted D2 regularly and they had gatherings once or twice a year and that this continued whilst he knew her. Friendship with Cheung Chi Keung 577.PW40 said Cheung was a good friend of his and worked with an insurance company called Kam Fung, which PW40 owns and D6 was his girlfriend but he did not know whether they were still boyfriend and girlfriend. He did not know when Cheung and D6 started to go out. He did not know if they were in a relationship when he introduced her to D3. 578.At counter 292 of interview 1 PW40 said he knew Cheung well, had watched him grow up and was well acquainted with girlfriend, father. mother, and elder sister. At the last interview at counter 292 he stated they were not boyfriend and girlfriend now. Wanchai Central Building 579.Many of the matters covered by counsel for D2 were revisited by counsel for D3. PW40 remained adamant that he visited the estate agency on one occasion only. He disagreed he met D3 only at the MTR station and handed over the documentation there and that D3 did not accompany him to the building of the estate agency. August 2006 Non-Payment of Rent for the Wanchai Office 580.PW40 said that he received the demand for rent in about August 2006. 581.PW40 said that in August he knew that no rent was paid for the Wanchai premises and he called D2 or D3 about the rental arrears. He asked them to fix the matter. When he was asked to get another chop he asked them to pay the rent as well. He expected some of the HKD100,000 to be used for payment of rent. 582.PW40 did not know the duration of the tenancy but in most cases the lease is two years. He did not know the commencement date of the tenancy. 583.At counter 474 of his second VRI PW40 said in November he was told that the rent was not paid and had to attend the Small Claims Court on 2 December. 584.At 563 PW40 said that in October he received a phone call about demand for rent. PW40 said he did not recall the time he received the phone call. 585.PW40 denied that his assertion that he received the rent demand in August was a blatant lie. 586.PW40 said he had taken legal advice before he was arrested on the 30.09.06. He said he had legal advice when in police custody before the first interview. His lawyer did talk to him in private. PW40 said he asked to see a lawyer. Mme Lee Suk Ping was his lawyer. He recalled among his mobile phone numbers were 3-4 friends who work as lawyers and on that day the lawyer he contacted was Lee Suk Ping. 587.After Mme Lee arrived he had the opportunity to talk to her in private. As far as he was concerned, he wanted a lawyer to bail him out. She was present at the interview. He could not recall if he had spoken to her in private before that. He did not recall that she was told she could not interrupt. 588.PW40 agreed that D4 trusted him very much. He said he was aware that D4 now works as cabin crew for Cathay Pacific.He denied that he got Mme Lee to act for D4 so as to ensure tha he was forewarned as to what D4 told the police. PW40 said he did not know that when D4 went to see the police he took with him his flight duty roster to establish where he was at certain times. 589.PW40 denied that he taught D4 how to withdraw HKD330,000 from the Greatson account by obtaining a new chop and cheque book two months after PW40 had withdrawn HKD100,000 from the Pioneer Lane account. PW40 denied that he did not give the HKD100,000 to D3. The meeting between D2 and her Jardine House Lawyers 590.PW40 denied that he was not invited to attend that appointment. It was put to him that he kept pestering D2 and D3 and that he was told that D2 could not be reached. It was suggested that PW40 was told by D3 that D2 had a meeting with her lawyers in Jardine House and on a Sunday he went there uninvited and checked out all the lawyers offices. Most of them were closed. It was further suggested that he was not allowed into the offices and that D3 told him he would talk to him outside and anything he said would be relayed to D2. PW40 denied that the events occurred in that way. Cross- examination by DC4 Background of friendship with D4 591.PW40 said that he and D4 worked together at Winterthur Insurance company for 5 years. He was employed as an agent and PW40 was his supervisor. In 1998 he joined Winterthur at Luk Kwok Centre in Gloucester Road Wanchai. After 6 months the agency moved to Central Plaza next to the court. PW40 held the head agency with Winterthur. His was the largest agency in the two floors they occupied. D4 and PW40 became good friends. He knew James Doong and Cheung Chi-keung. They were all friends in 2004. After D4 left they kept in touch at social gatherings and shared an interest in football. They shared information. He had visited the home of D4 in Shek O. He knew something about his career record and knew that he joined Cathay Pacific as cabin crew. In July 2005 PW40 knew that D4 went for training and then started to fly in October 2005. After that D4 was regularly out of Hong Kong on flights aboard with Cathay. D4 learnt about the background of PW40. D4 knew PW40’s father was a police officer. PW40 and his family visited D4 at his home. PW40’s son was then about 10. 592.PW40 agreed that D4 knew about PW40’s career in insurance and learnt of his long friendship with D2. It was through PW40 that D4 came to have a relationship with OGH. 593.PW40 said he was aware that D4 had a clear record and since his arrest he has cooperated fully with CCB. 594.PW40 agreed that the offer of immunity came right at the end of his assistance to CCB. He agreed that there were three lengthy VTR’s before the first NPS on 12th July 2007. PW40 agreed that he never admitted committing any crime in connection with OGH matters. 595.In 2004/5 PW40 had had an overall good impression of OGH and the persons who ran it. 596.PW40 agreed that he felt privileged to know D1 and D2. He agreed that when he spoke to friends at Winterthur he gave the impression that he was happy to know the Yips. PW40 agreed that he had read favourable comments in the press about them. He knew something about the charitable operations they were involved with and was impressed by that. He knew D1 had status on the mainland with the local government. 597.He visited the OGH offices on a number of occasions on the 28/F of Admiralty. He was aware thatD2 ran a securities firm called Global Credit which was on the 27/F at one stage. He was unaware that she was a director of a number of OGH companies. He was aware of Kenlap which was part of the OGH group, Hing Yip, OGD. 598.PW40 knew that D1 and D2 had strong mainland connections. PW40 said he had no connections and did not go there frequently. He was aware that they had aluminum factory. In 2004-5 he was not aware they were planning a new factory. He never took D4 to OGH. He never introduced D4 to D1 or D2. 599.PW40 said he never met Lisa Li at OGH or heard of her. He had never heard of Zhu. Pioneer Lane 600.He said the setting up of this company was not on his initiative. When asked to participate in a joint venture in November 2004, he supplied his ID card. He was told that this was to apply for business registration. PW40 was given an application form to sign. He did not take it to IRD. He was aware of no reason why he was not asked to do that. PW40 was given some documents to prepare, a copy of his ID card and maybe residential proof nothing else and his signature. He did not attend the Companies Registry to submit the company documents. 601.He did not sign the company registration documents. There were several of them and they were not signed by him. All the information supplied to the Companies Registry was about Pioneer Lane. He never consented to anyone supplying documents on his behalf. He said that the first time he saw them was when he was shown them by the police. He said the signatures on the company documents were forged. 602.PW40 said he kept no cheque books, no bank statements and saw none until 30.9.06 when he was arrested. He used no offices rented by Pioneer Lane. He was aware of no business being conducted by Pioneer Lane. 603.PW40 said he now knows that between January and April 2006 HKD24 million dollars passed through Pioneer Lane accounts. Only on arrest did he feel that his friendship had been betrayed. 604.PW40 said that from December 2004 up to the date of his arrest he was shown no documents showing that Pioneer Lane was trading. By supplying the names of friends to D2 he did not intend to get his friends into trouble. PW40 said that by cooperating with D2 to assist her he did not consider he was a party to money laundering. He said he did not conspire with anyone to defraud any company within the OGH group. DC4 - Circumstances in which D2 asked him to help 605.PW40 said D2 asked him to find friends. She said she wanted to own some companies that she could control and he would help out. This is what PW40 told D4 when he asked him to help out. In July 2005 he approached D4 who was just a good social friend. He told him what D2 had told him. The company he was inviting himto set up with her was to issue quotations,he would hold a business registration for one year only and there would be no trade. He could not recall if he said that if D4 was minded to cooperate he might receive a lai see packet with a few hundred dollars. He agreed that there was to be no substantial sums of money involved. PW40 mentioned to D4 that other friends of his had done the same and that he had established a company without adverse effects. 606.PW40 agreed that over the phone he provided the contact number and the name of D4 to D2 and left it to OGH to contact D4. PW40 agreed that he contacted D4 on a frequent basis for advice to run the company that he had established. 607.PW40 could not recall that in January 2006 D4 said to PW40 that D3 had asked him to sign blank cheques for D3 and asked if that was OK. PW40 said that he was not sure he told him that he had done the same. 608.PW40 said he first heard about Greatson in November 2005, some four months later. 609.PW40 did not recall that in November 2005 PW40 told D4 someone called D3 would be contacting him about opening an account. PW40 recalled that he was unable to provide details. 610.PW40 did not recall that in November 2005 D4 contacted PW40 as the bank was making enquiries about a large cheque that was to be processed. 611.PW40 agreed that Belgian Bank contacted PW40 to approve payments of large amounts on cheques. PW40 said that he was concerned about this until he spoke with D2. D2 said that it was OK to approve as bills had to be paid for the premises of Pioneer Lane. 612.PW40 said he could not recall that D4 had ahd requests from banks and he asked PW40 about it and PW40 had said it was proper to approve. 613.PW40 did not recall that in late December 2005 D4 told PW40 that he had been asked by D3 to sign blank cheques and PW40 told him it was OK and he had done something similar. 614.PW40 said in late September 2006, D4 asked PW40 if he should freeze the account because of the provisional liquidation. PW40 agreed that D4 went to him for advice on this matter. 615.PW40 said he was not aware until later that the company set up by D4 was Greatson. He came to know the name of the company on 30.9.06 when he was interviewed by the police. 616.PW40 disagreed that in Ocotober 2006, D4 asked PW40 whether he could put to use the money left in the account. PW40 did not recall that D4 said he had to come to PW40 as he could not reach D3. PW40 agreed that after July 2006 it was harder to contact D2 and D3 by telephone and PW40 was resilient and kept phoning. PW40 said he was becoming increasingly agitated and annoyed at being pushed away by D2 and D3. 617.PW40 did not recall that at a football game in October 2006 which he attended with D4, PW40 said that he was sorry about what happened and that he and his friends had been framed. PW40 was able to recognize D4’s signature. PW40 was shown Ex. 10, CB2, The OGD contract with Greatson. PW40 said the signature was not D4’s. 618.He was also shown CB9, Ex7, the Cometal Contract with Greatson dated 30.9.05. PW40 said that the signature on page 14 of the contract was not that of D4. 619.PW40 was shown Ex 75, p. 1224 IRD Business Registration Application for Registration of Greatson dated 29 August 2005. PW40 said the signature was not that of D4. 620.PW40 was shown Ex 168, pp.4238–58, Company Registration Documents for Greatson. He said that none of the purported 6 signatures on the company documents were the signature of D4. The documents were variously dated from August 2005 to May 2006. He agreed that the signatures were forgeries. 621.PW40 said D4 put his whole trust in PW40. PW40 knew D4 believed that PW40 would never lead him into criminality. DC 6 622.By mid 2005 PW40 had known D6 for about 2 years. She was the girlfriend of Cheung Chi-keung and he knew her through Cheung. She was aged 24 in mid 2005. 623.PW4 said he knew that she worked for a chain store as a sales girl, the American casual wear chain Tommy Hilfiger. Around 2006 she still worked for that company. 624.PW40 said they met quite frequently. PW40 is in a football team called DIY and Cheung is a core member of the team. They practised a few times per month and D6 would come and watch when free. They would then go to dinner at a restaurant. There were other social gatherings. Over two years he was able to form an impression of her. 625.In evidence in chief PW40 described her as pure and quiet. In R/I with police he also described her. He said that to his mind D6 was like a little girl, very obedient, gentle, worked hard. She trusted PW40 very much. He told her that the opening of a company was to help others. 626.PW40 said he asked Cheung Chi keung about approaching D6 and he agreed. PW40 said he had the phone number of D6 and she agreed to him giving OGH her telephone number. This is the truth. 627.PW40 said that when he decided to go into the business with D2, at that time OGH was a reputable listed company. PW40 did not know that one of the Executive chairman was Herbert Hui. He paid attention to media reports on OGH. 628.PW40 said he had no hesitation in introducing friends to hold companies for OGH. PW40 agreed that D4 and D6 were the second group of friends to be introduced around July /August 2005. 629.PW40 was shown Ex 204, p.5145, the corporate documents for Long Asset. P.5151 is the Consent to Act as Director dated 15 December 2004, the signture purporting to be that of D6. PW40 said he could not say if the signature is hers. He said that the date cannot be right and therefore he considered the signature to be a forgery. 630.PW40 was shown Ex 267, p.5985, the bankers’ affirmation for Long Asset. The account opening documents contain signatures for D6. PW40 said that he thought the bank opening signatures were hers. 631.PW40 said he never took D6 to the offices of OGH. He agreed that she knew no-one from OGH. He never introduced anyone from OGH to D6. PW40’s understanding of a quotation. 632.PW40 said if he set up a company to do business then he would send out quotations concerning types of products, prices and services to be supplied. His company would keep sending out quotations. It was the very early stage of business. PW40 said that, even if the quotation were accepted, a contract needed to be signed. He said that even if the amount involved millions of dollars, there would be no legal obligation before contract. He said he thought that there was nothing illegal about that. 633.PW40 said he was aware that D6 signed blank cheques. Re-Examination of PW40 634.He was asked questions about signing tenancy documents for the Wanchai office on behalf of Pioneer Lane. Some of the documents had the date 6 Dec 2004, others 13 December 2004 and others 14 December 2004. PW40 said that he thought the date on which he went to the Ching Yee office was the 14th but he was not sure. He went to Ching Yee once according to his memory. He went to the address in Wanchai once. This was on the same day he went to Ching Yee. 635.PW40 said that from time to time he was informed that letters for various companies were ready for collection. PW40 said he never collected any letters. 636.The second police interview 2B counter 517 relates to the signing of blank cheques. PW40’s attention was drawn to the fact that D3 asked him to sign the cheques. PW40 said at counter 299-312 that D2 asked him to sign the blank cheques. 637.PW40 had told the court that on his visit to the premises of Ching Yee he met D3 at the Sheung Wan MTR and after they met, D3 stayed downstairs in the building where the agency was. PW40 said that this was their first meeting. Pioneer Lane Tenancy 638.PW40 was reminded that he was asked by counsel for D3 that to his understanding, he was still a tenant of Wanchai after Pioneer Lane became the tenant. PW 40 said that initially he went to sign and was told that the name of Pioneer Lane would be put in the lease within 14 days once Pioneer Lane had been set up. 639.PW40 agreed that in his 2nd Interview at counter 166 he stated that he collected the key in Sheung Wan for the Wanchai office and he then went to that office with D3. 640.PW40 agreed that counters 439-443 state that in connection with the office, D2 said D3 would contact him. Before going to see the lady at Ching Yee he had not met D3 except at the MTR station. 641.PW40 was reminded that counsel for D3 suggested that he told a lie when he claimed that received a communication in August about non-payment of rent. 642.PW40 agreed that the NPS made to the police dated the 12th July 2007, para 20, states that he told the police he received the letter about rent arrears in August. It states that some time in August he received a registered letter from Ching Yee about a law suit at the Small Claims Court and he was accused of owing office rent for Pioneer Lane. PW40 said that he did not keep that letter. The letter was among some things that he lost. PW40 said that he contacted D2 and told her what happened. 643.PW40 was reminded that he was asked to look at certain contracts by counsel for D4. PW40 said on CB 2, the OGD Contract, at p.355, the signature was not that of D4. PW40 said he did not know who wrote the signature. PW56 Silvio Mancini, Sales Manager of Cometal Engineering 714. PW56 said that he is now retired and acts as a consultant in relation to aluminium goods produced on the mainland. He lives on the mainland. He worked for Cometal Engineering from 1989 to 2007 when he quit. Cometal is an Italian company and part of a larger group of companies carrying the names of Trevisan, Cometal and Autel. Cometal concentrates on extrusion process and recycling of scraps produced by the process. Cometal is very well-known internationally, it is one of the world leaders in its field. There are 3 such companies in Italy, a couple in Germany, one in UK, and one in USA. Cometal manufactures machinery used in the extrusion process. They manufacture and install the machinery and train the personnel how to operate the machinery. 715.PW56 said that he joined Cometal in 1989 in Italy as a salesman of machinery manufactured by Cometal supplied to all parts of the world, except Japan. In 1995 Cometal commenced to do business in China mainly in the north. They wanted to modernize and that is when he started his association with China, which had just moved into this field of operation. PW56 said that he traveled round China three times per year. In the 6-7 years he visited China he realized that the market was huge but Italian equipment was too expensive. He said that the market had potential. They never sold full lines on the mainland, only part. In 2003 he got a very important order for 20 extrusion lines and presses with the rest of the equipment to be supplied by Cometal. He said that his company decided to found a company in China with equipment made in Italy. 716.PW56 said that Cometal had its own manufacturing facility on the mainland in 2004 as a joint venture and, after one year, he realized that it was not working properly for many reasons. Cometal decided to separate and establish its own fully-owned company in Foshan and conducted sales through Foshan. PW56 said he was in charge of the commercial department from 2004 to 2007. Aluminium Extrusion Process 717.PW56 said that CB 39, Ex 284, p. 6288, is an extract from The Bond Issue documentation of OGH dated November 2005. PW56 said that he had seen this page before. It relates to the aluminium business of OGH. There is a description of some of the principal steps in an aluminium extrusion production process. Smelting is first; then extrusion; there may be anodizing depending on customer requirements; the cooling and cutting; and then coating. An extrusion line has 3 groups of machinery; extrusion press, machinery to fit the press and then machinery for handling the extruded aluminium. Once extruded there is a surface finishing process. There are 2 branches, anodizing and coating processes and then finally a set of machines to prepare kits for sale to companies that manufacture the final product. 718.The extrusion presses contain pumps. The machine is hydraulic and force is generated by pumps which are the heart of the extrusion press. Cometal manufactures presses and handling systems. Cometal does not manufacture the pumps, there are few companies focused on this. Some are manufactured on the mainland but quality is lower than those manufacture by traditional suppliers Rexroth of Germany, Vickers of UK, and Oil Gerar in the USA.The anodizing machinery is manufactured for Cometal by an affiliate called Autel which is a top company in its field. The powder coating machinery is manufactured by an affiliate of Cometal, Trevisan, and that company is one of the leaders in the world. It can be done horizontally or vertically. The vertical is much more efficient for production of larger aluminium products. 719.PW56 said that wet coating machiner was also manufactured by Cometal but it ceased production as the process is now obsolete. It is still used in some places as most producers have the equipment and it is easy to buy the paint but the future is for powder coating which is much more efficient. PW56 said that the chart on the following page is a standard chart to describe the process, Ex 284 A. 720.PW56 said that he attended exhibitions on the mainland as an exhibitor. In March 2004, he attended an exhibition in Guanzhou where he met Liu Guoan ( Liu GA) who said he was the manager of OGH. PW56 said that he had not heard of OGH before. He said that Liu said his company had a big project and that Cometal machinery might be right for the factory. He asked for a further meeting and they had a presentation in Hong Kong at the offices of OGH in May or June of 2004. At the first presentation, he met Miss Cheung and the delegation from Cometal included the general manager, Mr Montaldi, himself, and a Chinese manager. On behalf of OGH Liu attended and a Miss June Yip. PW56 said that she was a kind of liaison between the groups. She introduced persons and did not follow the technical matters. His company made a presentation and showed a CD and videos which they use during exhibitions. He said they described the machinery his company was able to manufacture for an aluminium extrusion process. 721.PW56 said there were a lot of meetings on the mainland and he understood the nature of the project was huge. There were about 10 meetings, 2 meetings for each specific subject. He attended most of the meetings. Liu usually attended. Miss June Yip only appeared at the beginning. He was told that OGH intended to produce 150,000 tonnes of profile per year. They discussed the various presses manufactured by Cometal. 722.In November 2004 there was a visit the Cometal factory in Italy by a technical team from OGH. PW56 said that every 2 weeks he sent reports to Italy explaining the situation so they were well informed in Italy. This was one of many projects PW56 was handling. 723.Meng Yaping joined the sales staff of Cometal. He was familiar with Europe. He worked in Brussels and spoke excellent English and French and provided logistic assistance. At the end of 2004 there was an opening ceremony for the Sanshui plant attended by the GM of Cometal. PW56 said it was an impressive opening ceremony with many dignitaries. 724.After the visit several companies within Cometal submitted quotations to OGH. Ex 2, p.15 to 48 is a Trevisan quotation to Nanhai Xhingye, the OGH aluminium facility in Nanhai, for the attention of Liu Guoan dated 13th December 2004. It enclosed a project for a flexible and high productivity vertical powder coating plant. Page 37 is the tender which contains the price quoted at about HKD13.7 million. 725.Ex 3, p. 44, is a letter dated 7th December 2004 addressed to OG Zhingye for the attention of Liu and the Board of Directors on behalf of Autel which specializes in anodizing equipment. The letter offered a fully automatised annodising plant. Pp.46-134 are the technical specifications relevant to this offer. Page 117 refers to CIF price of about HKD13 million. 726.Ex 4, p. 135 is headed Cometal Engineering and is an offer no. 429/04 relating to a number 1 press 2.500 UST and is for Zing Ye, dated December 13th 2004. Page136 to 210 sets out the full quotation with specifications and page 158 sets out the price as Euro 3,674,500 which is equivalent to about HKD36 million. PW56 said that this was for a complete extrusion line, press and handling system. One press has one handling system. The handling system would be manufactured in China with components from Italy and the press would be manufactured in Italy. 727.PW56 said that Ex 5, p. 211 is an offer number 440/04 for a smaller press of 4,000 UST (i.e 0.9 ratio so 3,600 metric tonnage ) to Xing Ye and is dated 13th December 2004. Page 231 sets out the price as Euro 4,832,500 ie about HKD 48.3 million. It would be shipped in 42 containers. This is a quote for a complete extrusion line and handling system. The handling is about the same price as the press. 728.PW56 said that Ex 19, p. 864, is an e-mail dated the 3rd February 2005 at 1.15am from Meng Yaping to D3 in relation to a meeting in Shenzhen on the 31st January 2005 to better understand their machinery and copied to PW56. He said that it was sent on behalf of PW56 and enclosed a number of documents. PW56 had attended the meeting with D3 and Mr Liu. The meeting concerned a profile brushing machine which gives brightness like a mirror. PW56 said that his company competed with a Spanish company in this field. As far as PW56 could recall there was a Tony Chan at the meeting who was connected with marketing in China. He thought that this was the first time he met D3. When he went to meet OGH personnel in Hong Kong he could not recall if D3 was present. After that meeting there was a long period of silence, but they did get in contact with D3 later. They were surprised not to hear from OGH and on two occasions he sent e-mails as he was concerned that they would lose the contract. He said they were competing with an American company called Granco Clark. 729.PW56 was shown e-mails 865/866. Page 866 is an e-mail from PW56 to D3 on May 23 2005 asking if the company was still interested in the December quotations supplied to them. He said he did not want to waste each other’s time. He had been told in January 2005 that there had been a change of leadership and that is why he wrote to D3. He later learnt in about June 2005 that Liu Guoan was replaced by Liu Mengjun (Liu MJ). 730.At the bottom of page 865 is an e-mail from D3 to PW56 dated 24 May 2005 asking PW56 to provide information and prices on extrusion presses of different loading, 2.500, 1.500 and 1.250 tonnes. PW56 said this was evidence that something had changed. PW56 replied the same day at 6.30pm asking for clarification and the name of the new technical engineer. D3 replied that Tony Chan would be in Guanghzhou the following day and to contact him. 731.PW56 said that when he met Liu Mengjun there were staff from his side and from OGH there was Tony Chan and others whom he could not recall. PW56 said there were many persons from OGH and Tony Chan acted like an interpreter. PW56 could not recall if D3 was there. The meeting was to meet Liu Mengjun and to understand his new project. Someone said that due to heavy rain there were delays in Sanshui factory and someone said it seemed that OGH were thinking that the previous manager was losing time and that a new manager was required with new ideas. 732.PW56 said that he got a rough idea of the new project and it was to be a much smaller than the original project. The size of the presses were reduced, and the costs were much less. PW56 said there was disillusionment on Cometal’s side as so much work had been done by Cometal. He said that they were however still interested in making further quotations. After that meeting Cometal prepared quotations and then started discussions. 733.Ex p.867 is an e-mail dated 20 June 2005 from David Wang cc to PW56 and Tony Chan. David Wang was one of young Chinese working with him. He had five engineers working with him who could speak English. It relates to extrusion lines and the reference is offer 218. 734.Page 868 is another e-mail sent out at the same time with offer 219 and 869 is another offer sent on the same day and is offer 220. All were sent to D3. They were sent separately due to the size of the attachments. 735.PW56 said that Ex 14, p. 405, is offer 218 dated 15th June 2005 to Zing Ye from Cometal re a press of 2750 UST and the offer is from pp.405 to 519. The price quoted includes a press and handling system. Page 441 shows the price of press is Euros1,730,000, about HKD17.3 million, and the handling system Euros1,857,000, making a total of about HKD 35 million. 736.Ex 15, p. 520-627 relates to offer 219 for a press with 1500 UST prices are at p. 555 Euro1.3 million for the press and p.558 Euro1,428,000, a total about HKD27 million . 737.Ex 16 at 628-770 is offer 220 dated the 14th June 2005 for a press of 1250 UST with prices at pp. 662 and 665 making a total of HKD25 million approximately. 738.PW56 said that Ex 19, p. 870 are e-mails dated the 11th July 2005. The first is from PW56 to Tony Chan where he states that he is confused as to the intentions of OGH and Tony Chan sent it on to D3. PW56 said that he had made the quotation in June and OGH had said they wanted to see one press working of about the same size. PW56 said that it was easier for them to get the visa to go to USA as Cometal had finished an extrusion line in America and they could go and see it. He said that OGH postponed the visit. PW56 said that he received a call from Banca di Roma about this matter and told him that he was confused. He did not understand what was going on. So PW56 wrote to Tony Chan. PW56 said that OGH seemed to be playing games and he was losing face with his BOD in Italy. PW56 said he did not know when OGH intended to start production. He thought it was to be at the end of August 2005 or September. 739.PW56 said that pp. 871/2 were emails dated 12 September 2005 from PW56 to D3 regarding a draft contract for supply of equipment in relation to offers 218-220 and asked what was the next step. The following day there was an e-mail from D3 suggesting modification of payment terms and he refers to a meeting on 7th September although in the body of the e-mail, it refers to an 8th September meeting. The payment terms refer to a total contract price of RMB26,500,000. 740.PW56 said that there was a meeting on the 7th or 8th September attended by Liu Mengjun, D3 and Tony Chan with a conference call to Italy. This was because OGH asked for a discount. At that meeting an agreement was struck on the number of presses, the total price and delivery. PW56 said it had become very urgent and delivery time was a priority. At the meeting it was agreed that they would take only the handling systems due to the delay in building the factory and the fact that the delivery time for the press was around 10 months so they could not buy the presses from Cometal. PW56 said that OGH had decided to buy from a local factory which would give them a very fast delivery time. They said the price of the Cometal presses was high but that was normal. He said that customers never say the price is good. 741.PW56 said that Cometal was prepared to do business on that basis and that e-mails at pp. 871/2 relate to the agreement reached. D3 suggested payment terms. PW56 requested a patronage letter as they did not know who would be the contracting party and D3 said he would consult the committee and answer as soon as possible. 742.PW56 said that pp. 873-5 are e-mails between the 16th and 30th September wherein D3 states that the contract is to be made with Greatson Corporation Limited, ground floor, 5, St Francis Yard, Wanchai, Hong Kong with a telephone number and fax number. PW56 said he had not heard of that company before. He responded and copied it to David Wang. D3 suggested modified terms of contract. He suggested four payments with the last 10% on the first extrusion date, which is the date that the machinery actually operates. The guarantee would be provided by the supplier to the bank. PW56 also requested a guarantee from OGH in relation to the contract with Greatson. In the e-mails at pages 876/7 PW56 supplied D3 with technical specifications on the 30th September 2005. 743.PW56 said that p.878 is an e-mail from D3 on 3 October 2005 concerning the delivery date-linked payment when the equipment is not in fact working. D3 states that OGH prefer the machines to be up and running before they pay 90%. It also states that OG Sanshui could issue a comforting document in relation to the contract. It refers also to a Wednesday visit to Hong Kong. 744.PW56 said that p.879 is an e-mail dated 5th October and concerned PW56’s Wednesday visit to Hong Kong. Page 880 is an e-mail dated 10th October to D3 concerning PW56’s visit to D3’s office. PW56 said that he thought Mr Tony Chan was with D3. At the meeting they discussed terms of payment and delivery of the draft contract. The meeting lasted about 30 minutes. 745.PW56 said that pp. 881/2 are 3 e-mails dated 13th October. The first was from D3 and refers to Greatson and its address, phone and fax number and the e-mail at the top of the page is from Wang about the contract. 746.PW56 said that pp. 883/4 were e-mails between David Wang and D3 concerning the insurance arrangements for the shipping of the goods and requests how much the insurance will cost. CIF excludes insurance cover and D3 suggested CIF which would include insurance. Page 885 consists of e-mails on 17th and 18th October concerning insurance which required contract modifications. 747.PW56 said that pp. 886/7/8 are e-mails of the 21st October concerning the draft guarantee which D3 said could not be signed on OGH stationery or signed by D1. D3 stated D1 could not be involved in any guarantee. He stated “ it simply cannot be done”. D3 prepared a draft guarantee to be signed for and on behalf of OG Sanshui. D3 stated that to for the title of the commodity to go to the holding company would rock the deal to its foundation. PW56 said the proposal to use the Sanshui company was acceptable to the Cometal Board. PW56 said that he had to refer the matter to his board and later he notified D3 that his request was accepted. The contract was signed but no guarantee letter was ever signed. Once the order was signed PW56 did not involve himself any longer. It was followed up by others. The financial director of Cometal sent requests to D3 but PW56 did not follow up the matter in detail. 748.PW56 produced pp 889/90 which are e-mails of 22nd and 24th October from D3 and from PW56. D3 commented on the inexperience of the person who prepared the sales contract. PW56 said that their sales department and lawyer were involved in the contract. D3 also commented on e-mail table tennis. He also commented on the insurance charge being excessive and said that OGH would handle that matter. He also commented on the currency. D3 suggested a change to a Euro amount. He needed future dialogue to be in writing to show to his boss. PW56 was referred to page 900 where Yaping told PW56 in December 2005 that D3 was not happy when PW56 contacted him by telephone. PW56 said he was offended by this remark as he was trying to clarify certain points. 749.Pages 891-3 contain e-mails in late October between PW56 and D3 concerning the contract signing and insurance matters. PW56 pointed out that he ordered the production without the contract. The agreement was struck on 7/8 September and things had not moved as fast as he wished, especially as OGH were in a hurry on delivery dates. PW56 said that the delay was on the OGH side not the Cometal side. The verbal gentleman agreement referred to was the agreement reached between the meeting on the 7/8 September and the 26 October. There had been an agreement and production had already started. 750.An e-mail from D3 to PW56 referred to Cometal metal plates with serial numbers. PW56 said it is normal when supplying equipment to place on the equipment the serial number which identifies the manufacturer. He said that strict rules had to be followed to guarantee equipment made by Cometal and the equipment had to be identified with plate and number. He said that Cometal put their own plate on the equipment. 751.PW56 said that p. 892 is an e-mail from PW56 which refers to a Cometal manager called David Hsieh who looked after legal formalities and logistics including shipping which is why he was included. 752.At page 894 , an e-mail dated 2nd November 2005 from PW56 to D3, PW56 asked for news about the contract which was sent from Italy to the Greatson office in Hong Kong. PW56 said that as far as Cometal was concerned Greatson‘s address was the one supplied in Wanchai and the couriers, DHL, had problems with delivery. They had knocked at the door and no-one answered and PW56 informed Comtal. PW56 said finally DHL found someone and delivered the contract but it was not signed by 2 November. 753.Pages 895/6 deal with the delivery of the contract. On 7 November sent PW56 an e-mail to D3 regarding problems in delivering the contract and communication from Lo Pik Hung regarding the failure to find anyone to sign the documents. PW56 said that they also could not find a C Chan. It also states that they had tried the telephone number several times without success. 754.Page 897 is an e-mail dated 7th December 2005 from PW56 to D3 asking for a meeting with a C Chan so matters can run smoothly. 755.PW56 was shown Ex 7, CB9, OGD Contract dated the 30th September 2005. He said that the Cometal signature is Bruno Mancini responsible for the Extrusion Division of the company. PW56 did not see the Greatson signature being put on the agreement. The date is the 30th September which was the date inserted when the contract was first drafted. The contract was for 4 handling systems of different metric tonnage and total price of about HKD26 million CIF Hong Kong port. It includes a clause that erection will be under supervision of the sellers’ expert. Products were to be shipped to Hong Kong on CIF terms and supervision of the setting up by specialists employed by the buyer under supervision of the seller. PW56 said that Cometal was not responsible for moving the goods to the OGH factory. The reason for moving to the goods to Hong Kong from China then back to China was to avoid VAT in China. PW56 said that this was at the request of the buyer and this was his understanding of why this was done. 756.PW56 said that p. 338 sets out delivery terms and 1st and 2nd delivery, as the equipment was supplied at different times in a certain sequence. There were also financial implications. The first delivery was to be on the 10th November 2005 and the second on 20th February, refers to delivery to Hong Kong. 757.PW56 said that Ex 19, e-mail bundle page 897 stated that Cometal was ready to ship the goods and wanted a meeting with Mr C Chan to clarify the details. D3 said that they should in future deal with C Chan, as he was the responsible person at Greatson. 758.Pages 898/9 are correspondence purportedly with C Chan on behalf of Greatson with the e-mail address [email protected] and copied to D3. C. Chan said that there was no need for a meeting and requested details of the shipment. C Chan replied to PW56. The person referred to as Lumini worked in the Administration Department of Cometal and dealt with shipping. PW56 said that he could not recall if D3 gave him the e-mail address. PW56 said that he never met C Chan. 759.Pages 901–904 are e-mail exchanges in March 2006 concerning the matter of the shipment of the goods and D3 is the sender or recipient. PW56 said that he was not involved in the shipping arrangements but he would be copied into correspondence as he knew the various parties. These matters were handled by Mr Hsieh and there was correspondence between D2 and Hsieh.The handling systems were shipped to Hong Kong. PW56 produced the shipping documents in relation to the various shipments concerned. PW56 said there was a delay in shipping because of documentation problems and Cometal incurred extra costs because of having to pay extra charges in respect of rental costs. PW56 said that p. 901 is an e-mail in March 2006 between Yaping Meng and D3 about this matter. 760.PW56 produced a series of invoices in respect of payments made by Greatson for the four handling systems. The address of Greatson on the invoices varied. For the first payment dated the 26th November 2005, the Greatson address was D4’s residential address. The next Cometal invoice, issued in December was sent to the Wanchai address of Greatson and the remittance advice of the Dah Sing Bank was issued on behalf of Greatson and shows the residential address of D4 in Shek O. The next remittance advice dated in March 2006 also shows the Shek O address. Again the Cometal invoice had been sent to the Wanchai address of Greatson. 761.PW56 was shown a series of photographs taken at the Sanshui plant on the mainland after the appointment of the provisional liquidators, R9. PW56 pointed out the four handling systems supplied to OGH by Cometal. He also pointed out 3 of four Yong Chang extrusion presses bearing a Cometal plate. He said that the presses were not Cometal presses. He said that presses manufactured by Cometal in Italy do not bear such plates. He said that in any event he could tell simply by looking at the presses that they were not manufactured by his company. He said that compared to Cometal presses these presses looked like toys and were obviously manufactured on the mainland. He said that the output these presses were capable of would not justify the use of Cometal handling systems, which could handle a much greater output than these presses were able to extrude. He said the Cometal presses were twice the size of these presses and were six times more expensive than presses manufactured on the mainland. PW90 Long Xi- min, Senior Sales Engineer with Rexroth Bosch Group Guangzhou Office, Science City Development Zone 762.PW90 said that his company sells industrial hydraulic products including pumps. On the 26th April 2007 he accompanied police officers to OG Sanshui. There were some uninstalled pumps found beside the extrusion presses and PW90 identified them as having been manufactured by Rexroth Bosch. He said that on the day of inspection, he saw about three or four A7 pumps which were all manufactured by Rexroth Bosch. He identified the pumps in various photographs,Exhibits R9. He said he also saw some category A4 pumps in the photographs which he had not seen on the day of inspection. He said that his company is German and that the products were made in Germany. PW19 Kwok Au Tai, Sales Administration manager of Bosch Rexroth 763.PW19 said he worked in the head office of Bosch in Yeung Yiu Chung Industrial Building in Cheung Sha Wan, Hong Kong. His company had dealings with the Yong Chang factory in China, the Nanhai Dali Yaoyao Yongchang Metalware Machinery Metal Factory. 764.PW19 said that in July 2005 he was informed by his Guangzhou office that Yong Chang wished to purchase some hydraulic pumps. After negotiations he was aware that a contract had been made and a price agreed. 765.The Guangzhou office sent a draft contract to Hong Kong and he confirmed the draft contract and signed it. It was then returned to his Guangzhou office and he was later informed that it was signed by a representative of Yong Chang called Lai Wing Lung. He said that there were three separate contracts signed dated 4th, 18th, and 25th July between the same parties. 766.PW19 said that Ex 11, p. 356-8, is the first contract dated the 4th July 2009. The parts numbers are referred to in the contract, two different types of pumps at a total price of USD60,900 for 10 pumps. FOB Hong Kong meant that the goods would be delivered at a definite place as required by the shipping company. The country of origin was Germany and they were manufactured there by Bosch. The terms were 30% prepayment and 70% before delivery. Delivery was to be 19 and 31 weeks after the contract became effective. It was signed by PW19 on the 4th July as well as by Mr Lai. 767.PW19 said that p. 358 is the next contract, 359 A1 the translation, dated 18th July for 3 pumps, A4 type and more expensive than A7 pumps. He said that 3 MP5 cards were supplied for the pump electricity supply. The total cost was USD64,605.00. The contract was signed by the same parties. 768.The third contract is at p. 362, dated the 25th July 2005 between the same parties and they are all accessories for the pumps costing USD21,030. The shipment was to be made 18 weeks after first prepayment. PW19 said that all were manufactured in Germany. Arrangements were made for shipment to Hong Kong and then delivery to their address in Cheung Sha Wan. It was arranged that the goods were to be transported to China on 28th March 2006. 3 lots of invoices were issued. Ex 66, p.1198-1 is the invoice dated 14.11.05 for the prepayment of USD15,435.00 for the 7 pumps for the first contract, second item. P.1198 1A1, is an Invoice dated the 13th December 2005 for the other items of the first contract, the cheaper pump in sum of of USD2,835.00. P.1198 –7 is another invoice dated the 13th December 2005 for prepayment of items in the second contract in the sum of USD18,884.49. Pages 1198-11 show another invoice dated the 13th December 2005 for the accessories referred to in the third contract. Prepayment made in the sum of USD6,147.18 was received on 29th July 2005. 769.PW19 said that his compny was paid in full for all the items and, after payment, Yong Chang took delivery. The total amount for 13 pumps and accessories was USD146,535. This was paid by 3 different payments by different companies on behalf of Yong Chang. Cheques in relation to Yong Chang 770.PW19 produced Ex 314, p.6750, a cheque dated 6 July 2005 drawn on International Bank of Asia for HKD205,388 signed on behalf of Paterson Limited with a related pay-in slip at 6751 dated the following day. 771.PW19 produced a cheque dated the 27th July 2005, p.6753, drawn on Liu Chong Hing Bank Ltd signed by Guan Jinghua for HKD195,247. PW19 said that it is a personal cheque and PW19 did not know that person. He said that this relates to pumps supplied to Yong Chang with the pay-in slip at p.6754. 772.PW19 produced Ex 66, pp.1198-22, a cheque drawn on BEA Stong Sense Investment account dated 23rd December 2005 for HKD805,219.97 paid into their Deutsche Bank account. PW19 said that the cheques were paid into their bank account as written in the invoices. PW39 F/ Lee Siaw Phing, Clerk of Ching Yee Holdings Limited- Estate Agency 773.PW39 joined Ching Yee as a clerk in 1980. Her statement was read to the court under the provisions of s. 65 B CPO and admitted as Ex 368-20. 774.She acted in respect of the lease of Room 603,6/F Central Tower, 89 Lockhart Road, Hong Kong to Pioneer Lane. A week before the contract she had telephone discussions with a Mr Chan on number 6194 8610 about the lease. A deposit was to be paid on the 6th December 2004. There was a lease advertisement board at the premises in Wanchai. The invoice for the deposit is at Ex 30/ 983 A1, and is written by PW39 on 6th December 2004. 775.PW39 stated that p. 984 A1-A3 is the initial agreement dated that day. PW39 said that after she and Chan reached agreement PW40 came to pay the deposit and sign the initial agreement . PW40 requested to lease the flat personally first and then it would be changed to Pioneer Lane in 15 days, provided that all documentation was ready and that PW40 was by then a director of that company. Page 985 A2 is the official receipt dated the 13th December, page 986 is the document submitted for change of name and page 991 is the official lease agreement dated 6th December 2004. 776.PW 39 said PW40 paid a deposit on 6th December 2004 but did not sign the agreement. That was signed on the 13th December 2004 when the remaining balance was received from PW40 for the 2 year lease. PW 39 said page 1000 sets out the instructions to the building management office to deliver possession and use dated 13th December 2004. Mr Au Yeung of the management office handed over possession the following day. 777.PW 39 said page 1001 is the photographs of the flat, p.1004 is a receipt for the keys and p.1005 is a letter from Ching Yee to the tenant regarding the ground floor display board for the company name and telephone number. PW39 said she put the name on that day. She had to fax information for the sign for Pioneer Lane to be displayed downstairs when faxed to the sign writer. The tenant filled in the information when the agreement was signed and provided the name. Page 1006 are the tenant’s particulars, 983 A9 translation. 778.PW39 said p.1007, 983 A10, is a list of payments by Pioneer Lane. They normally paid on time. Cash was paid initially and on 12th July 2006, other payments were made by Belgian Bank cheques. Cheques were delivered in person. 779.PW39 said that, when rental payments fell into arrears, the accounts department staff urged payment of outstanding amounts by phone but, if to no avail, a distress warrant for repossession would be issued. She said page 1008-12 is the relevant petition in relation to these premises which were repossessed. 780.PW39 recalled PW40 being a bit tall fat and strong. She saw him. He handed over his ID card. She said, as far as she could recall, she had seen PW40 only once. 781.Under cross-examination by counsel for D2 she agreed that she had not mentioned in her witness statement, that at the outset of negotiations, she had faxed the documents to Mr Chan. In her statement she said PW40 had been to her office both on the 6th and 13th December. She said the documents dated the 6th December were signed on the 13th December and as far as she could recall, PW40 only came to her office once according to the documents presented to her in court. PW39 said that when PW40 signed the lease there was no company chop on the document. The chop was brought to her company by Mr Chan after PW40 had signed the lease. She said company documents relating to Pioneer Lane were provided after the 13th December and then the front page of the lease was changed from the name of the defendant to Pioneer Lane. 782.PW39 said that page 1006 sets out the tenant’s particulars and is dated the 18th December 2004. It refers to Pioneer Lane. She said this should be the date when the company documents were supplied. 783.PW39 said the deposit of HKD6000 was supplied by Mr Chan. 784.PW39 said that rental payments were payable on the 10th of each month. There is a grace period of 14 days after which the accounts department would start to chase the tenant for the rent. I noted that Pioneer Lane last paid in July 2006. The next payment was due on the 10th August so the accounts department would start to pursue the matter on about the 24th August. She said pages 1008-11 relate to a distress warrant filed on the 29th September 2006 in the District Court. PW28 Young Kwok Kwong, Leo, Certified Public Accountant, s.65 B Statement, Ex 368-21 785.PW28 said that in 2005 he started to work with two other accountants out of Room 1101, Hollywood Plaza, 610, Nathan Road, Kowloon. 786.PW28 said that in March 2006 the registered office of Greatson was changed to Room 1101 Hollywood Plaza , 610, Nathan Road, Kowloon, Ex 168. PW28 said this was arranged by Daniel Tam King Kuen, PW29, whom PW28 knew and trusted. PW28 said he only provided the address for registration purposes and for collection of mail. 787.He said he received more than 10 letters for Greatson which he passed to PW29. He said that, in June or July, staff of PW29 sent PW28 a Greatson company chop because in the collection of documents for Greatson, DHL required that a company chop be used to acknowledge receipt. PW100 Lo Ka Wai, Kerry, Marketing Controller of SBC International, 27/F Hopewell Centre, 183 Queens Road East Hong Kong, s.65 B statement Ex 368-22 788.PW100 said that Trump Link Enterprises Limited’s documents were provided to the police by PW100. The person applying for the services was James Doong. He paid cash in one go for one year’s services giving the telephone number and office address of PW40. The agreement ran for two year from 8th December 2004. The second payment was made in cash on 9th December 2005. They keep mails and parcels but they do not handle big mail items. After 3 days they can dispose of mail or parcels and no records of any mail received were kept. PW 66, Mo Kim Wing, Kelvin, Office Assistant of OGH 789.PW66 said he is called Kelvin. He commenced work in 1996 for Toowomba Holdings Ltd. This company was later renamed OGH. He worked there as an office assistant until July 2006 when the company went into provisional liquidation. His duties included the dispatch and collection of documents. 790.He recalled collecting mail from various companies, mainly on the instructions of D3, and occasionally as instructed by Zhu. He would go to the company secretarial companies to collect documents on behalf of the following 8 companies: Grand Lucky, Trump Link, United Fine, Union Sheen, Strong Sense, Eagle Glory, Crown Regent and Long Asset from vaious addresses on Hong Kong Island, Kowloon and Tsuen Wan. After collecting the mail he would give it to D3 or Zhu, if Zhu had given him instructions to collect the mail. 791.He recalled collecting documents for Grand Lucky Enterprises Limited from the address of a secretarial services company at 1919 Nanfung Centre, Tsuen Wan. He collected documents from that address. He was told to go there to collect mail from that company by D3. He went there not regularly, sometimes twice a month and sometimes none. 792.PW66 said that for Trump Link Enterprises he collected mail from 1006, 10/F, Carnarvon Plaza in TST. He could not recall when the first time was. The last time he could not recall either. He was told to go there to collect mail by D3. He did not go there regularly, twice a month, sometimes less. 793.He collected mail for United Fine Holdings Ltd at an address room 2401 A , 24 /F, Park In Commercial Center, 56 Dundas Street, Mong Kok on the instructions of D3. He went there with the same frequency as for the other companies. 794.He collected mail for Union Sheen HK Ltd from Room 1109, 11/F Grand Centre, 625, Nathan Road, Mong Kok, again with the same frequency as for the others on the instructions of D3. 795.He collected mail for Strong Sense Investment Limited from 22/F 3, Lockhart Road, Wanchai. He went there as frequently as before on the instructions of D3. 796.He collected mail for Eagle Glory Enterprises, 1201/3, 12/F, 178-186 Johnson Road, Wanchai. He went there on the instructions of D3 and with the same frequency as for the other companies. 797.He collected mail for Crown Regent from Lockhart Road Wanchai on the instructions of D3. 798.He collected mail for Long Asset at 28F, Soundwell Plaza, 38 Russel St, Causeway Bay on the instructions of D3. 799.He said that all the collections concerned documents, not parcels. They were mainly envelopes of varying sizes. When he returned he took them to OGH in Admiralty and gave them to D3. He said Zhu seldom asked him to go to the addresses to collect mail. If he did, he would return them to Zhu. 800.PW66 said that he was asked to sign on collection. One of those companies required the production of a card. He said the card was given to him by D3. He was not sure what was on the card but it indicated that he was authorized to collect mail on behalf of the company. For the other companies he merely said who he was collecting on behalf of and signed and there was no need to show his ID card. 801.PW66 was shown Ex 218, p. 5370, a member’s collection entitlement document for Long Asset. It stated that the owner is Mr S Chan, telephone number 94139233 for the Cosmopolitan Business and Conventions Centre at 28/F Soundwill Plaza in Causeway Bay. It refers to 13 December 2005 as the day of collection for 5 documents and 5 July 2006 for 5 documents. PW66 said they were collected on instructions of D3 or Zhu. 802.PW66 said he did not know the representatives of any of these companies and did not know why he was collecting mail on behalf of these companies. PW66 said that Tsui Pui Sze is a name he had heard. 803.PW66 said his duties included going to the bank and cashing cheques and when he cashed them he was required to sign on the back of the cheque. 804.PW 66 was shown 27 cash cheques drawn on the Greatson Dah Sing Bank account. The reverse side of the cheques were signed by him and had his ID card details. He said he cashed all these cheques at the Dah Sing Bank in Admiralty, Ex 289, p. 6408 –6424. The cheques were dated between the 30th March 2006 and the 7th July 2006 and totalled HKD1,346,950.80. He said that all, except the last two cheques, were given to him by D3. The last two were given to him by Zhu Weibing. He said he would return the cash to whoever gave him the cheque. 805.PW66 said the cash cheques were always handed to him personally, they were never just left in a drawer.In cross-examination he said it was either Zhu or D3 who gave him instructions to collect mail from the various companies he referred to in chief. He said none of the 27 cheques were handed to him by Miss Lam Pui Pui. 806.I noted that the amount on the cheques varied from a few hundred dollars to HKD100,000. The last five cheques drawn were for between HK80,000 odd and HKD100,000. PW68 Ma Tan Ni Centre Manager of The Cosmopolitan Business and Convention Centre, Soundwill Plaza, Causeway Bay 807.PW68 said she still works for CBCC, which she joined in 2002, and is still the Centre Manager. The company provides business secretarial services including office rental, personal mail box, telephone services and accounting services. 808.PW68 said that Long Asset was a customer. PW68 said that she commenced providing services for that company on 20.10.05. When a customer comes in there is a licence agreement with the customer. Ex 213, p.5365 is the licence agreement which states that Long Asset is a trading company and the authorized representative is Mr S Chan. Ex 214 5366 is the basic service plan and indicates the services available. 809.PW68 said the agreement was signed on 20 August 2005 at the offices of CBCC. She had received a telephone call the week before from a Mr Chan asking for details of the service to be provided. She faxed a blank application form. Some parts were filled in and she completed the rest of it. PW 68 said the top of the agreement indicates that it was sent by fax on the 13th October 2005 at 11.37am to her company’s fax number and is page 3 of four pages sent by fax. The fax was sent by her company to the client at the request of the client. She would only do this at the request of the client. 810.PW68 said that the agreement is dated the 20th October 2005 and has her signature and her company chop and the chop of Long Asset and authorized signatory in the name of Tsui Pui Sze (Director), ID Z 337940(9). PW68 said that this was chopped in her office by her and she could not recall if the signature on the form for Long Asset was made in her presence. Usually the ID card is not produced and in most cases clients do not wish to produce their ID card. PW68 said that “Remark 1” requires its production; PW68 said that where the company has not been set up, clients would usually produce their documents later. The document is usually signed in her presence. 811.PW68 said that two persons came to her office, Mr S Chan and a young lady called Tsui Pui Sze. She said that she recalls the girl was in her 20’s but could not recall any special characteristics. She said some of the form was filled in before they came to her office but the parts in blue would have been recorded in her office. They include the account number, commencement date, service plan number and PW68’s signature. 812.PW68 said that Ex 215, p.5367 invoice dated 20th October 2005 for Long Asset attention Mr Chan indicated paid up for 10 months with two months free from 21October 2005 to 20 October 2006 and total amount, HKD6250, which was paid in cash. This was paid at the time of signing the agreement 5368 is the receipt. Page 5369 is the Customer Petty Cash record and records that HKD200 was paid and the customer as Mr S Chan. PW68 said that no petty cash was used. 813.PW 68 said Ex 218, p. 5370 is the document collection record for Long Asset account 1861 telephone number 94139233. “Dates” show the dates on which letters were received. PW68 said the entries indicate letters were collected by Kelvin Mo. PW68 said that items of mail from 21 Feb to 12 June were not collected until 5 July 2006. PW86 said this is not usual but it did happen. PW68 said the document shows that from 5 July, there were eleven entries to the 26 March 2007 which were recorded as returned to sender and one for 4 April 2007 is similarly endorsed.. 814.PW68 said the fact that they were returned to sender means that they could not contact Mr S Chan and if she failed to contact him, she would send an e-mail message. The documentation shows that they would have been trying to contact Mr Chan fromthe 5th July 2006 to 26th March 2007 without success. 815.PW68 said the agreement was terminated because of their inability to contact Long Asset. The amount paid was only sufficient to go up to 1st December 2006. In order to terminate an agreement they complete an alteration of service form Ex 219, p.5371 A1, which is an alteration of the service contract and states the reason for termination as having lost contact with the client. The HKD750 paid in cash at the time that the contract was entered into was forfeit. Ex.534 5374 is the receipt. 816.PW68 was shown Ex 200, 5057-9, Long Asset correspondence. Page 5057 is a letter from PC Woo and Co dated 26th September to Long Asset at her office address regarding an outstanding payment to Soma AG Switzerland a contract number dated the 18th April 2006. PW68 said that she received it by registered mail and fax. They would e-mail the fax to the client by scanning and using their e-mail address. They would contact the client to collect by fax and if not it was not collected they would send an e-mail. Ex 218 5370 shows receipt of this e-mail. 817.Page 5058 is a letter from PC Woo on the same subject dated the 15th November 2006 by fax and registered post and it is a notice of termination of the contract. Page 5370 has an entry dated 17th November 2006 as the receipt of a letter. 818.In cross–examination PW68 was shown Ex 267, p. 5085, BEA affirmation in connection with Long Asset, 5999 is the specimen signature of the authorized signatory. PW86 agreed that it is very different from the signature on Ex 213, p 5365. 819.PW68 said that, at the meeting with Chan and the young woman, Chan did most of the talking. The meeting would take about 15-20 minutes. PW102 M / LAU Chueng, Manager of Forensic Dispute Services, Deloittes 820.PW102 said he joined Deloittes in September 2005 as a senior associate. He is based presently in Hong Kong as a manager of forensic and dispute services. In 2006 Price Waterhouse Coopers, Accountants, made a report to management of OGH and Deloittes was tasked to make an enquiry. OGH had gone into provisional liquidation and 2 partners of Deloittes were appointed provisional liquidators, Joseph Lo and Derek Lai. 821.PW102 was part of a team conducting an enquiry into various matters in relation to OGH group. The team was called the Deloitte Touche Forensic Services Engaging Team. He was responsible for the day to day work of the engaging team. Miss Amy Kwok was in charge of the team. He reviewed e-mails, faxes and correspondence of D3. A duplicate was made of his computer hardware for their investigation, from which he obtained electronic files and e-mails. As a result of his enquiries he looked into the dealings of Kenlap PGC with Shanghai WACmach. He was enquiring about a contract in which Kenlap PGC had contracted for the purchase of 3 sets of winding machines and 5 sets of drawing machines. The e-mails indicated that Kenlap PGC was purchasing through middle agents called Fong Long and Long Asset. He came to know this when his company was engaged at the request of PWC, he learnt it from them. 822.The WACmach General Manager, Don Yan Yong Jun, was based in Shanghai. To further their enquiries they sent him an e-mail on the 8th August 2006 Ex 199, p 5055/6. PW102 informed him of the appointment of the provisional liquidators and they were to collect in and protect OGH assets. He listed the information he required, including all the machines purchased and which transactions involved the use of Fong Long and Long Asset. He requested copies of all sales contracts; schedules of payments received from the middle agents and details of any remaining balance; delivery schedules, and a shipping advice forwarded to D3 on the 19th July 2006. 823.Don Yan replied on the 9th August and provided the information requested. It was stated that payment was due to the suppliers direct as they were just the agents. He said that they were awaiting the next payment of 70% under the contract before shipping the machinery. 824.There were attachments to the e-mail which included two contracts and the shipping advice supplied to D3 dated 17 July 2006 at 5046- 4049, 5050-3, 5054 is the shipping advice from WACmach to D3. D3 was informed that the equipment was to be shipped on 22 September but this had been brought forward to August 20 2006. 825.In cross-examination, PW102 agreed that he never met Don Yan. All the information came from his e-mail. He had no way of knowing the truth or accuracy of what he said. PW102 said he did not reply to Don Yan about whether the contract would be carried out but others may have done. 826.PW102 said the contracts were made with suppliers directly and not with WACmach and all payments were made to Europe as well. He had no idea if final payment was made. He gave this e-mail to the manager in charge, Amy Kwok and to the partner responsible, Christopher Fordham. PW29 Daniel TAM Ping Kuen of Bonseal Accounting and Secretarial Ltd 827.PW29 is an accountant and a director of Bonseal. In 1996 he was employed as an assistant to the chairman and marketing director of Cheerful Holdings Ltd. In 1997 he met D1 of OGH. He came to discuss the possible injection of capital into Cheerful. An agreement was not reached but they kept in contact. In late 1998 D1 contacted him and asked if PW29 wished to join a subsidiary called Kenlap Securities Ltd and assist in its development. He started in January 1999 and the office was on the 57/F of Central Plaza. In March 1999 it moved to the 27/F Admiralty Centre and in 2002 he resigned. Kenlap later moved to 28/F of the Admiralty Centre next to OGH. At Kenlap Securities he supervised the preparation of the financial statements of the company and the recruitment of personnel for securities services; brokers to buy and sell securities. Kenlap was run by D2. At Kenlap he reported to D2. 828.In 2002 he was employed by Toowoomba Ltd, a subsidiary of OGH. There he worked as the financial controller. He stayed there for about 2 years. He reported to D1 in his daily work. This company compiled the annual report and half yearly report of OGH. Toowomba was on 28/F of Admiralty in OGH offices. 829.He later became financial controller for OGH but his contract was with Toowomba. This was to do with the personnel arrangements. He held this position from June 2002 . In August 2003 he resigned but he remained in post until June 2004. He reported to D1.There were no other financial controllers at that time. 830.He set up Bonseal in 2001 when still with Kenlap. He was not sure if D2 was aware that he had set up Bonseal which he set up with his wife. It provided accounting and secretarial services and his wife ran it whilst he was financial controller of OGH. D1 knew he had set up Bonseal. 831.When he left OGH in June 2004 he became more involved in Bonseal. It operated in Wanchai, Room 901, Wanchai Central Building, 89, Lockhart Road, Hong Kong and it moved to Room C, 22/F Nathan Commercial Building in Kowloon in August 2008. 832.Whilst he was working at OGH, he got to know D3. D3’s work was related to project development. D3 already worked at OGH before PW29 arrived and was still there when he left. Zhu Weibing was on the staff when PW29 joined and when he left. Zhu was engaged in financial matters mainly connected with mainland matters. He reported to D1. D3 also reported to D1. 833.PW29 said he sold shelf companies, inter alia. In October 2004 he was contacted by Zhu who indicated he still worked for OGH and said he wished to buy some shelf companies. PW29 would contact outside suppliers for a shelf company. They would keep a number of companies on their books and he would pass their names to his clients to choose a company. He faxed a list to Zhu. Zhu said he wished to purchase two companies. PW29 produced a print out of various companies he sold to various staff of OGH – Ex 69, p1202/3. 834.PW29 said Ex 69 sets out the name of the companies, places of incorporation, his invoice date, the fee of acquiring the company and whether secretarial services were provided or not. A registered office fee applies if the company wished to use his company,s address. The notes indicate which addresses were used. 835.PW29 said he found the address for Greatson in 2006, at the request of Zhu, and he found an accountant friend of his namedYoung Kwok Kwong, Leo, PW28, to provide the address. 836.De-registration services refer to the cost of de-registration for IRD and Companies Registry purposes. The reference to attending magistrates courts relates to attending court for summonses such as failing to pay business registration fees or failing to submit tax returns. 837.Paterson Limited was de-registered as Zhu said there was no longer any business. PW29’s company was asked to fill out forms and he would arrange signing and they would submit them to the IRD and Companies Registry. The invoice date refers to the date his companay was approached for de-registration and it would take 6 months to complete the formalities. PW29 said the same situation applied in the case of Crown Regent, they were approached in June 2006 by Zhu to arrange de-registration. 838.The contact person was D2 for the first three companies, D1 and Zhu for the next 6 and Zhu for the rest, except for two of the companies. He would have been approached some time before the invoice date. He would send the invoice after the company was set up and it would be sent to D2 or whoever gave instructions. 839.PW29 said that for Fortune Eternal, he was approached by D1 and Zhu as far as he could recall. D1 would contact him to set up companies and Zhu would do the follow-up work for invoices and going through the formalities. He would ask for company names for him to choose and he would choose the company names. D1 did not always choose, it was sometimes Zhu who would choose the company name. 840.D1 said he wanted to purchase some companies and, on one occasion, he said that it was for his friends who would come from the mainland to do business. Apart from that, Zhu never said why he was acquiring companies. 841.The companies would have been acquired about one week before the invoice dates. It takes a week to set up the company. The invoices where D1 and Zhu set up companies would have been sent to Zhu. PW29 was working for OGH when the first of the companies were set up. D1, D2 and Zhu knew PW29 operated Bonseal. The main job of Bonseal was to fill in the Annual Return every year and submit it to the Companies Registry and to provide a correspondence address. The fees were usually paid in cash by Zhu. PW29 said he would have been happy with a cheque. D2 also paid in cash. The annual fees were paid in cash. On one or two occasions Zhu gave him a cheque which he cashed. They were company cheques on Eagle Glory Enterprises a cash cheque on the Eagle Glory bank account. 842.PW29 said that Mantex was set up in January 2003 and the fee paid in cash. Forton was set up in March 2003 and the fees paid in cash. Union Sheen was set up on instructions of Zhu in July 2004. Zhu said he wanted to set up a company and so PW29 provided him with a list of companies and he made arrangements for him to arrange for the documents to be signed. Zhu would provide the address and names of directors. Corporate documents would have to be signed such as the transfer of shares to new shareholders, the appointment of directors and company secretaries. These documents would be prepared by PW29’s company in advance and then handed to Zhu to arrange relevant directors and shareholders to sign. They were never signed in his presence. 843.Crown Regent was set up in October 2004 and cash paid for the fees with his office address in Wanchai. It was de-registered later on the instructions of Zhu. Pioneer Lane was set up in November 2004 and Trump Link in December 2004. Grand Lucky was also set up in December. He attended magistrates court for Trump Link possibly for failure to file a proper tax return or AR or for paying the registration fee. Usually the AR was not late as he reminded clients to submit ARs on time. Normally there would be a plea of guilty. The summonses were sent to the registered office of the company and brought to PW29 by Zhu. His company made payment first and he was reimbursed in cash. The fee for attending would be paid in cash. PW29 would be authorized to represent the company by authorization letter signed by a director. The letter would be given to Zhu for him to arrange signature and PW29 would make arrangements to attend court with the letter. 844.PW29 said United Fine was also set up in early December 2004. Forex and New China were set up in January 2005 at about the same time. 845.Long Asset was set up in September 2005 by Zhu and fees paid in cash. Robaka Li was a staff member of Kenlap Securities Limited. PW29 said Li said she said she wanted a new company to sign the tenancy agreement with Kenlap. The payment was made by a company cheque of Kenlap. Elite Castle BVI was set up in August 2006 at the request of D2. PW29 said that D2 did not say why this company was being set up and he was not aware at that time that OGH were in provisional liquidation. The fee of HKD9000 was paid and he could not recall if it was paid by way of cash or cheque. 846.PW29 said that CSO HK International limited was set up at the request of Zhu in early August 2006 with fees paid in cash. Zhu had a friend surnamed Or and Zhu told PW29 his friend would approach him. Or later contacted PW29 by phone. Or was a mainlander who wanted to set up a company and he provided him with the name of the company, it was not an existing company and he prepared the documentation. OR came to HK to collect the documentation for signing and OR was not the only director, there were two others. Or needed to take the documents away for them to sign and afterwards he returned them to PW29’s company and paid the fees in cash. Company Registry Documents 847.PW29 said that Ex 173, p. 4390, relates to Pioneer Lane, the director is PW40. The Consent to Act as Director is dated 25.02.2004. PW29 said that this was lodged with the Companies Registry and would have been given to Zhu to arrange the signatures. According to records of PW 29, the invoice shows that the company was acquired in 2004 at request of Zhu. PW29 said the appointment date would have been chosen by Zhu. He asked Zhu about this once and Zhu said it would be better to appoint the director at an earlier date and he did not ask him why. He never met PW40 nor heard of him before being given his name by Zhu. 848.PW29 said that Ex 181, p.4743 relates to Trump Link Enterprises Limited and refers to Doong Keng Sing, James, acting as director from the 4th March 2004. The Companies Registry receipt is dated 14th December 2004. PW29 said that the appointment was backdated at the request of Zhu. He sent the form off to Zhu to arrange signature and returned it to him already signed. He never met Doong nor heard the name. 849.Ex 251, p.5178, relates to United Fine. The Consent to Act as Director is backdated to the 18th February 2004 and registered on the 17th December 2004. PW29 said it was completed in similar circumstances to the other two companies. He had never heard of Cheung. 850.Ex 204, p. 5151 relates to Long Asset and director Tsui Pui Sze. The Consent to Act is back dated to 15 December 2004 and the company acquired in February 2005. PW29 said that the stamp indicates that it was received by the Companies Registry on 20.10.2005. He had never heard of D6 before or met her. 851.PW29 agreed that, when giving evidence previously in the Court of First Instance, he gave evidence about Bonseal. In Ex 69, p.120. the fourth company referred to is Fortune Eternal Trading followed by five other companies. The six companies were bought when he worked at OGH. Union Sheen was bought in July 2004 after he left OGH as were the other companies listed. The last column on the right indicated the contact person. With regard to the six companies which have D1 and Zhu as the contact persons he said in the Court of First Instance that he could not recall who gave him instructions to set up these companies. He said it may have been either D1 or Zhu. He said he was not sure which. This is the truth. PW29 disagreed that D1 never gave him instructions to set up companies. He recalled D1 telling him that some were set up for mainland friends. 852.PW29 said that he was aware of the firm Au Yeung and Au Yeung CPA is the firm of PW29’s wife and elder sister. It was involved in the auditing of NGAS and NAS. PW29 took part in auditing these companies. 853.Ex D1 –23 is the first page of banking facilities background information on the Nanfang Group. PW29 said he was familiar with companies mentioned in the document. He had not seen the document before. He could not say for sure that the diagram was accurate. He did not know whether the proportions of ownership were correct. 854.Ex D1-24 is a summary on Nanfang Galvanised Group. PW29 said that the organization chart is correct as far as he could recall. He could not recall Nanfang Holdings Limited. 855.Ex D1-25 is a letter from the Bangkok Bank to NAS in relation to a bank facilities confirmation dated the 9th December 2005 up to a limit of USD3 million. PW29 said he was not sure whether he was the auditor for that period. He had not come across this letter before. He recalled Nanfang borrowed no money from the bank nor had any facilities. He had no knowledge of any facilities. 856.D1-26-1 is a letter dated 26th February 2007 from Integrated Industrial System to NAS. D1-26 -2 is an email and 26-3 is a letter from NAS to IIS dated 28th March 2007. PW29 said he was unable to comment as his company did not do the auditing in 2007/8. 857.PW29 said that when he was financial controller of OGH he was aware of various accountancy procedures. The BOD were concerned about receivables being paid promptly. Once that happened pressure would be put on the person responsible for collecting that debt to ensure that it was done as soon as possible. He said it was not Zhu on whom pressure was put. The person responsible for accounts receivable would report to D1 first according to his knowledge, and various departments such as sales would be chased up to follow up on payment. He would not approach Zhu for accounts receivable. He was not aware the BOD would put pressure on Zhu. PW29 said that at the BOD meetings they checked and approved the audit report. He said this was done twice a year and he would attend those meetings. PW29 said they did not mention that pressure would be put on Zhu at those meetings. 858.PW29 said that for account receivables he would approach the person in the Nanhai factory, he would not approach sales personally to chase up the matter. At Nanhai he would approach the person in charge, who was also a director of OGH. 859.PW29 said Zhu became the treasurer at a later stage. He was originally in a subsidiary company in Guangzhou. The company was called Lun Pak Li Wei. Zhu was announced by D1 to be assistant financial controller in 2003. He was then in charge of movement of funds between the OGH companies. PW29 agreed that Zhu would be very concerned about accounts receivable. 860.PW29 said he joined Kenlap Securities in 1999. The English name was Global Credit and the Chinese name was Kenlap and the former English name was Kenlap Securities and only the English name changed. He joined Global Credit Investment Holdings Limited as a director of that company. It was owned by D1 and his father Yip Lap Chi and there was a transfer of shareholdings. D1 and D2 were shareholders of this company. D1 was the majority shareholder. Global Credit was not part of OGH. The business had nothing to do with OGH. 861.PW29 was referred to Ex 69, p. 1202/3. He was questioned about the various companies involving D2. He said Sun Huge Limited was used for the purpose of entering into a tenancy agreement to rent premises for Global Credit. He was a shareholder and director of that company and the fees were paid in cash. The contact person was D2. Pearl Legend Holdings Limited, was used as tenant of Global Credit and fees were paid by cheque to Bonseal. The contact person was Robaka Li of Global Credit. Li was a director of this company and Chu Ka Man, Doris, another employee of Global Credit, was the other director. 862.With regard to Easy Bright Limited and Welkin, he said Welkin was to be used to start a new brokerage firm. Easy Bright was to be the holding company. The idea did not materialize. The payments to Bonseal were probably by cheque. 863.PW29 did not know Elite Castle Limited was used to obtain a mortgage loan on the security of D2’s parents’ property. He did not know its purpose. PW29 was not sure if payment was made by cash or cheque. 864.PW29 said that Ex 173, p.4390, the Consent to Act form for Pioneer Lane referred to PW40. PW29 said he never met PW40 and did not know why the company was set up and he did not need to know why. It was not necessary to meet the directors. 865.Ex 54, p. 1202 refers to Union Sheen, Trump Link, Grand Lucky, United Fine Holdings Limited and Greatson. PW29 said it was not necessary for him to find out if the companies had any problems after they were set up. He said in mid-2006 he never went to YMT to attend a meeting arranged by D3. He said that there was never an arrangement for such a meeting. Nanfang Companies 866.PW29 did auditing work through Bonseal for both Nanfang Companies in 2006. He was not the auditor in 2007. He audited for 2 years from 2004/05 or 2002/3. 867.NGAS is a HK company with a subsidiary in Sanshui called Hongli Nanfang which has a factory which manufactures aluminium sheet. The HK company 100% or 90% owned the subsidiary. LI Lee Cheung and Lin Jianping were the directors of the subsidiary. He knew D2 had shares but did not know if she held them on trust for D1. PW29 said that on 15 November 2005 D2 transferred the shares to D1. NAS 868.PW29 said this was a Hong Kong company and had a subsidiary in Sanshui called Jieli Nanfang. The Hong Kong company owned 100% of the subsidiary. It was intended to build a factory next to the Hongli factory in Sanshui. The idea was for the new factory to manufacture alloy sheet to supplement the business of Hongli. Prior to 15 November 2005 D2 held shares but PW29 did not know whether she held them on trust for D1. In November 2005 all shares were transferred to D1. 869.For auditing work for the two Nanfang companies it was not necessary for him to communicate with D2, she was not concerned about the accounts. He never discussed the accounts with her. D2 had little involvement in it. They were largely run at the factory level. It was run by Li Lee Cheung on the HK side and Lin Jianping on the mainland. On the mainland he contacted a person called Leung Ming. 870.PW29 said OGH staff assisted in the operation of these two companies. Li Lee Cheung and Lin Jianping were directors of OGH. He never saw Zhu at these two companies. Peter Li Kar-fai assisted in the financing of the factory but he never saw him there. D2 would sign cheques issued by the two Nanfang companies. 871.In May to July 2007, D2 approached him to ask for his help in production of accounting documents relating to two Nanfang companies in relation to a High Court production order. This was because she was a director. PW29 assisted and gave her some auditing documents and accounts which she supplied to the police via her solicitors. 872.PW29 said that the standard of English of D2 is not good. He has never heard her communicate in English. Their company has no expatriate employees. He never heard her speak in English. They rarely met foreigners so there was seldom the opportunity for her to use English. On one occasion when they went to the SFC for a meeting, there were foreigners and she did not respond in English. He tried to act as her interpreter. 873.PW29 said the predating of appointment dates in corporate documents is common. PW29 agreed what was stated in the documents was not in fact true. PW29 said his company was only responsible for documentation. PW87 Brian OR Kwong Yiu, Solicitor 874.PW87 told the court that he qualified as a solicitor in 1993. He has worked in partnership in a firm called Or and Lau in Causeway Bay since December 2008. 875.He was employed by a subsidiary of OGH called Toowomba which was used for staff recruitment. His position was assistant chairman, D1 was the chairman. He joined Toowomba in around 2001. He was in private practice before that. His role was to consider legal documents, administration work and staff recruitment. Later he dealt mostly with administration work. He did work in relation to OGH generally, all Toowomba staff assisted OGH. 876.He knew Lau Hok Man, D5. D5 would come to the office to visit D1. He was not a member of staff. He saw him on average once a month or just less than that. He came to have a chat and sometimes to smoke, they both smoked cigars in D1’s room. PW 87 attended meetings with D1, D5 was not present for meetings concerning business. D5 would be there when just chatting. 877.In cross-examination he said he was a director of NGAS at one time from April 2003 to January 2006. He knew Li Lee Cheung who was also a director of NGAS, he thought. NAS and NGAS were on the same floor of Admiralty Centre. 878.He was shown D1-23 a Nanfang Group diagram. PW87 said he was not sure whether D1 made personal loans to these companies of over HKD100 million, but much money was spent on this project. PW87 said June Yip was responsible for sales in the company and she assisted in sales for both Nanfang companies. Li Lee Cheung ran the businesss of one of the Nanfang companies. 879.PW87 said he was not a member of the Credit Committee of the OG group but he would attend meetings concerning documents. He was involved in account receivables for chasing payments by issuing demand letters. 880.He knew Zhu. He said Zhu was not the assistant financial controller when he was in the company. Most of the time Zhu did the marketing work. He was not the treasurer as far as he recalled. 881.PW87 said he worked for the OGH group from 2001 to 2004 or early 2005. For NGAS he was a director but he could not recall being company secretary from April 2003 to the end of March 2006. When he left the company the post was not removed. He held 1 share in NGAS until April 2003. He could not recall that in NGAS, prior to Septmeber 2005, D2 held some shares. PW87 could not recall if NGAS and NAS were private companies of D1 but he recalled that D1 personally spent a lot of money on these companies. There was a company secretary responsible for that. PW 87 could not say for sure that D2 held shares on trust for D1. He said that he did not think D2 would such a large financial investment in either of the Nanfang companies. 882.PW87 did not recall that NAS had a wholly owned company on the mainland called Jieli NAS. He had not much recollection of this company. D2 had little involvement with the business operation of these two companies. D2 had little involvement in business operations. D2 was not involved in manufacturing or sales of products for the Nanfang group. PW87 did not recall that D2 was the authorized signatory for the bank accounts of the two companies and would have to sign cheques for the two companies. The decision to issue cheques would not be made by D2 but by others. If she signed she was simply implementing decisions of others and money going into Nanfang would not involve her, he thought. Most of the business was done on the mainland and they did not mention the companies very often. He thought it was not necessary for D2 to know about money going into the company.The accounts preparation did not involve D2, he thought. She rarely came to the OGH office. 883.PW87 was referred to the minutes of the IMMMs held between December 2003 and May 2004, Ex 18. One of the items discussed at these meetings which he attended was the setting up of an aluminium plant in Xuzou on the mainland. In May 2004 it was reported that the proposal was not to be carried out. 884.PW87 said he did not recall that, at that time, it was discussed that OGH would obtain the support of a third party unrelated to OGH in this venture. He agreed that if the acquisition involved a lot of money it would require disclosure under the Stock Exchange Listing Rules. He agreed that if a third party were to sign a letter of intent this might avoid that requirement. PW87 said at that time there was a large demand from overseas customers who demanded high quality and in order to meet the demand OGH had to expand. He said the company was not financially sound so a number of alternatives were considered and this might have been one of them. 885.PW87 could not recall approaching D2 to see if she could get someone unrelated to the group to sign a letter of intent. He could not say that that did not happen for sure. He said he could recall the name of Chung Ngai Man but was not sure if this was a person D2 had said might provide such a letter. Again he said he could not rule that out. 886.PW87 said the English of D2 was not good. He said he never heard her speak in English. 887.PW87 said after he left OGH in mid 2005 he had no more contact with the group. PW104 Chan Siu Fung , Banker with BEA, compiler of Banker’s Affirmation in relation to Long Asset Bank account, Ex 267, p. 5985 888.PW104 stated that p. 6029 is a telegraphic transfer to Soma Ag for approximately HKD1.9 million signed by D6 for and on behalf of Long Asset. The words in person appear opposite the chop of the company. That means that the bank staff requested the signing person to come to the bank personally so the bank staff could witness the signing of the transfer and presentation of their ID card. The ID number would have been checked. 889.Page 5989 Para 13 dealt with the account opening document. D6 was the sole director of the company. Para 15 dealt with the specimen signature of D6, she is the sole signatory and her signature was required to operate the account. 890.Page 6013 is the specimen signature card. The authorized signatory is D6 and it records her ID card number. This would have been completed at the bank by D6 in person. The signatures on 6013 and 6029 appear to be the same. 891.It was pointed out to PW104 in respect of page 6029 that much of the information had been typed. She said the typing could have been done by the bank staff or the customer. She cannot tell if by the bank or the customer. Below the signature it states it was handled by “M” but she does not know who that is. She did not know if there is a customer services officer called Chow. 892.PW104 said that if the document was typed by the client the blank form would be given to the client to type in the information and taken to the bank typed already. It has to be signed inside the bank and witnessed by bank staff. 893.She said it is always necessary for the signatory to come in person to sign, it is a must. The words in person are put in only when the signatory came to the bank to verify the signature together with their ID card. She said that if the words in person did not appear it would mean that the person who submitted the form was not the signatory. It could be handed in without the signatory being there. The application would still be processed. PW104 said that if it was for a large amount they would phone the signing person to confirm. 894.PW104 said she started at the United Centre in January 2007, after this application was processed. She had not much idea about OGH. PW17 WU Jian Hua, aka Ng Kin Wah , Customer Service Manager of Kimbo Finishing Equipment Limited, the sole agent in Hong Kong for ITW Gema Switzerland , s.65 Statements Exhibits 368-23 and 23 a 895.He produced a contract dated 9 January 2006 between OG Sanshui and Kimbo on 9 January 2006 for the sale of two Swiss ITW Gema Electrostatic Spray Powder Coating Equipment plants for RMB1,130,000, Ex 8,p348 A1 to A5, CB 18. The contract refers to Kimbo as the sellers and OG Sanshui as the buyers. 60% was to be paid on signing the contract, 30% on shipment and the balance within 30 days of installation. The contract number is L20060109 896.Attached to his statement were 2 packing lists, Ex 315, p. 6758 and Ex 95m1275/6. The first is a packing list in relation to goods shipped by ITW Gema Switzerland dated 15 March 2006 and refers to 5 crates number 01160 no. 1-5 which contained the 2 sets of spray powder equipment destined for Ocean Grand Sanshui. The second exhibit is a packing list dated 19April 2006 and refers to contract number L20051108 prepared by Kimbo which refers to the 5 crates referred to in the ITW Gema packing list but states the consignee to be Ping Guo Asia Aluminium Co Ltd, Guangdong, Foshan, Sanshui, Dongping Nanbian Industrial Area. The second page of the exhibit is a Kimbo Packing List dated 19 April 2006 and refers to the contract with OG Sanshui, L20060109 and lists 5 crates marked 01160 Numbers 6 to 10 with the consignee as OG Sanshui and the same address as Ping Guo. 897.On 14 March 2007, PW17 visited the OG plant in Sanshui. Whilst there he found 5 crates bearing the numbers 6-10 and the marks “ITW Gema AG” and “KIMBO 01160. He carefully inspected the equipment inside the crates and was satisfied that it had been manufactured by ITW Gema and that it was the two sets of ITW electrostatic powder coating equipment which Kimbo had delivered to Sanshui in April 2006 under the agreement L20060109. PW15 Li Yong Lun, Manager of Yong Chang Metal Machinery Ltd – s.65 B Statement Ex 368-24 898.By a contract dated 1 July 2005 OG Sanshui agreed to purchase four sets of aluminum extrusion presses from Yong Chang Metal Machinery Plant for RMB 8.24 million Ex 12, 365 –7, CB11. On the 29th March 2007 PW15 attended OG Sanshui and identified the four presses referred to in the contract. 899.PW15 said that in March 2005 Liu MJ of Sanshui discussed with Yong Chang the purchase of extruding machines. An agreement was reached on 1 July 2005 and Exhibit 12 was signed. 900.On 23December 2005 OG made a deposit of HKD800,000 which was used to settle a payment arising from Yong Chang’s purchase of pumps from Bosch Rexroth. Ex 21, CB13, is and e-mail between D3 and PW15 dated 22 December 2005 in relation to the Rexroth payment. It states that the Rexroth goods can be delivered to an address in Hung Hom and the contact person would be notified afterwards. It also attached a file which was to be signed and chopped by Yong Chang. The attachment referred to the contract Ex 12 and states that at the request of Yong Chang, OG Sanshui paid to their supplier, Rexroth China Ltd, the Hong Kong dollar equivalent of USD103,233.33. It goes on to confirm that the amount would be deducted from the total amount stipulated in the contract. 901.PW15 stated that the terms for payment under clause 12 of the agreement were not complied with by OG Sanshui. He said that nevertheless his company went on to manufacture the four presses as they were commonly used throughout the mainland and could easily be sold. 902.PW15 stated that in February or March 2006 a Miss Leung of Skybright in Foshan went to Yong Chang to view the four presses. She said she wished to purchase them and an agreement was reached for Skybright to purchase the four presses from Yong Chang. PW15 said he did not know why the four presses sold to Skybright were kept in the plant of OG Sanshui. He said Skybright paid about HKD9 million for the four presses. Skybright collected the presses from Yong Chang around May- July of 2006. 903.PW15 said that Skybright was an import export firm and he was told that the presses would be exported. 904.PW15 said that Ex 11, CB 12, are the three contracts whereby Yong Chang purchased hydraulic pumps and accessories from Bosch Rexroth. The deposit of HKD800,000 paid by OG Sanshui to Yong Chang was used to settle payment for the machines. 905.PW15 said he did not know why the four extrusion presses his firm sold to Skybright and which he saw at the premises of OG Sanshui bore the metal plates of Cometal. He said the plates were not delivered by his company. PW22 Shen Yaoleong Dirctor and president of Guangdong Skybright Import and Export Trading Co Ltd - S. 65 B statement exhibit 368 –25 906.He produced four purchase agreements for the purchase of four presses, Ex 124 ,p. 2690-2689. Yong Chang was the seller and Skybright was the purchaser for the sum of RMB8,897,170.50. 907.He said the agreements were prepared by Miss Leung of Guangdong Skybright. He said Skybright acted as a go-between and the batch of machinery was purchased by Mr Yu from Hong Kong. Skybright would charge handling costs. Mr Yu paid for the machines. He said he did not know Crownica Development Limited mentioned in the Guangdong Development Bank notification, Ex 125, p. 2695, in the sum of USD326,863, about RMB 2.5 million. PW22 said the remaining balance of about RMB 800,000 was paid by YU directly. Skybright did not get involved in the transaction. 908.I noted that Crownica Development Limited was aquired by PW29 on the instructions of OGH and the contact person was Zhu, Ex P54, p. 1202. The Bonseal invoice was dated 01 September 2005. PW23 F/ Ma Weiwen, Deputy General Manager of Skybright, s.65 Statement Ex 368- 26 909.She refers to the contract Ex 124 between Chong Yang and Skybright. She said it was used for import and export formalities and had no substantive meaning. It related to an aluminium extrusion machine valued at RMB3,620,254. The contract was prepared by Miss Liang of Skybright. PW103 Gloria Kwok Lai Han, Chief Inspector of Fraud Section 3 of CCB , s.65 B statement Ex 368-27 - Opening 24.1 refers. 910.On 4 April 2006 Deloittes made a report to the police about OGH. 911.According to her enquiries D1 left Hong Kong on 14 July 2006. Seven duty visits were made to the mainland between August and May 2007 to make enquiries about the case and to try to locate D1 through the assistance of PSB on the mainland. D1 was not located. 912.On 16 May 2007, D1 was put on the stop list and an arrest warrant was obtained on 17 May 2007. She met with the PSB about this matter. On 17September 2007, D1 was located in Hunan on the mainland and escorted to Huanggang check point in Shenzhen. On 18 September 2007 Hong Kong police officers arrived at the check point and D1 was brought back to Hong Kong. Under caution D1 remained silent. PW105 CHAN Man Ming, Assistant Manager of Dah Sing Bank, Ex 381,p. 7750 – re Greatson Corporation Account 913.PW105 made an affirmation on behalf of the Dah Sing Bank on 29 September 2009 relating to the two Greatson bank accounts. Ex 157, p. 3327 is the relevant bankers affirmation.The box numbered four has the signature of the authorized signatory, Siu Kin Fung, D4. At the bottom under section “bank use only” various items are ticked. The bank checked against the mandate for account of company, the memorandum and articles of association, photocopy of ID card and passports and specimen signature card, photocopy business registration and the certificate of incorporation. Those documents would have been checked and verified. 914.Page 3328 is the company resolution for opening the accounts. There are a number of further resolutions and certification by Siu Kin Fung Keith, his official title is director, and the specimen signature is shown there. The account is operated by signature of Fung and the company chop. This document would have been presented to the bank when the account was opened and amongst other documents was a photocopy of the ID card of the director. This would have been checked by bank staff when the account was opened. Fung would have had to come to the bank personally. 915.Page 3330 is the specimen signature and chop.The bottom of page shows a copy of the same document and indicated that the company chop was changed on the 15th November 2006. 916.Page 7755 is a remittance application of the bank dated 15 March 2006 in the sum of Euro 605,250. The applicant is Greatson and the remittance is to Cometal. It is chopped and signed by the authorized signatory. The box on the right hand bottom corner shows “phone confirmed with A/C holder Mr Siu at 10.30am on the 15.03.06” and is signed by an officer. PW105 said he did not handle this transaction. It would indicate that the remittance application was forwarded to the bank. It is stamped by the bank on the right hand side which would indicate the time of receipt possibly. 7756 is a remittance application dated the 6th June 2006 from Greatson to Cometal for Euro 470,750. The stamp of Dah Sing is on the O6.06.06 at 1414. There are no remarks in the bank column. 917.7757 is a further remittance application to Cometal dated the 21 November 2005 in the sum of Euro 807,000, signed on behalf of Greatson. There is also a further signature of the authorized signatory and there are initials of bank officers from the record and the right hand bottom of the page states “come in person” signed by a bank officer. “Come in person” means that the signatory would have come in person to sign. It is stamped by the bank on the 21st November at 9.05. 918.7758 is a remittance application dated 15 December 2005 for Euro 269,000 from Greatson Corporation to Cometal and refers to a contract and invoice number. “In person and ID verified” endorsed on the document means the authorized signatory came personally to make this application and produced identity. 919.In cross-examination PW105 said that in 2005/6 he was not an employee of the bank and was never involved in this kind of application with this bank. As regards Dah Sing Bank policy in 2005/6 he was unable to say if these forms were readily available to take out and fill in outside the bank. All the information could have been filled in outside the bank as far as he knew. 920.For page 7755 the applicant would not have been in the bank as a telephone call had been made. This would not have been done in person. It demonstrates that the chop and signature were already on the document when the form was presented at the bank. This could be the same for the other forms. PW 105 could not say how the ID was verified, normally on personal experience the person should come personally. There is no reference as to how the identity was verified. 921.Pages 7757 and 7758 have alterations which are signed. On page 7757 someone wrote in certain words which were crossed out. Page 7758 has a hand written alteration. PW105 said this amendment should not be done outside the bank. This should have been done in the presence of a bank officer according to his experience. 922.PW105 said the letters s.v. which appear below the signature normally means signature verified and is the signature of a bank officer. Page 7758 has the letters s.v. chopped on the document. PW106 Adrian Zwick, Sales Manager of Soma AG Switzerland – Statement admitted under s.65B CPO – Ex 368 29 and 29A 923.PW106 stated that Shanghai Wacmach Corporation ( WACmach) has been the agent of Soma AG in China since 2004. In April 2006 Long Asset purchased 5 fine wire drawing machines for CHF987,459.00. 30% was due to be paid as a down payment, 60% three weeks before delivery and 10% two weeks after purchase. He produced the contract P197. He said the contract was signed on their behalf by Don Yan of WACmach, who was entitled to sign such contracts for them after consultation. 924.PW106 said the machines were built and they received the 30% down payment. He said the machines were never delivered as, despite demands, Long Asset never paid the 60% due three weeks before delivery. He said they employed a lawyer in Hong Kong to take up the breach of contract and produced a letter from PC Woo Solicitors, Ex 200. PW101 Cynthia Lau, Assessor IRD – statement admitted under s.65 B CPO as 368-30 925.PW101 stated that in compliance with a production order she consulted IRD records in relation to certain companies for the period January 2004 to December 2006. The companies concerned were NAS, NGAS, Strong Sense and Good Light. She stated that the latter two companies could not be identified from the departmental records. 926.With regard to the first two companies, records showed that they submitted Profits Tax Returns for 2006/7. They did not file Profits Rax Returns for the years 2004/5 and 2005/6. She certified that none of the companies have made any tax payment for the relevant period. 927.She stated that the companies had entered into correspondence in relation to employees. With regard to NAS, under business registration number 33957599, Profits Tax Return for 2006/7 and Employers Return 2004/5. For NGAS, Profits Tax Return for 2006/07 and Employers Tax Return for 2004/5 and 2005/6. PW75 Lai Ka Siu, Victor, Commercial Crime Bureau Senior Inspector, s. 65 B Statement – Ex 368-31 928.PW75 stated that in early 2008 he made contact with Don Yan of WACmach in Shanghai by both e-mail and phone. Don Yan signed a witness statement in November 2008. He conducted a duty visit to Shangai between 24th June 2009 and 25th June 2009 with a view to locating Don Yan. He attended Wachmach premises and was informed that Don Yan had resigned from the company and the staff declined to assist in locating him. One week later PW75 received a communication from officers of Shanghai PSB which stated Don Yan could not be located at his residential address and his mobile had been disconnected. Video Records of Interview with D3 and D4 929.The video records of the cautioned interviews with D3 and D4 were produced. It was admitted that the answers were given voluntarily and I was not invited to use my residuary discretion to exclude them. Video Records of Interview with D3 First VRI – 5th October 2006 – Ex 355, 7097 A1 to A96 Corporate documents for Harvest Fortune, Sky Leader, Hing Yip Holdings, Hing Yip China, Chinacin and Asia Pacific 930.In his first interview D3 was shown corporate documents relating to a number of companies. In relation to companies called Harvest Fortune, Sky Leader Industries Limited, Hing Yip Holding Ltd, Hing Yip Holdings (China) Limited, Chinacin.com, Asia Pacific Industrial ( Hong Kong) Ltd, D3 stated that he was assigned as a director of these companies by D1 through PW7, the company secretary. He said D1 was the only person to arrange directorship of subsidiary companies. D3 signed the CR records. 931.D3 said he had no idea what the companies did. He resigned his directorships of all the companies at various dates in August and September 2006 on the advice of Daniel Tam, PW29, CPA, and ex-staff of OGH. He said Tam advised him to submit the submissions 10 days apart and then there would be no problems. 932.He said he resigned from the last compnay after being reminded by the SFC. He said he did not know the function of the company or what it was doing and he did not wish to bear the risk of being the director for nothing ( counter123). 933.D3 said Zhu was recruited from the mainland and D1 asked D3 to follow up Zhu’s application to work in Hong Kong with the Immigation Department. 934.D3 said he was a graduate in business administration and psychology. Trump Link 935.D3 said he was assigned by Zhu to set up subsidiary companies one or two years previously. D3 was told by D1 to set up the company but received instructions directly from Zhu. D3 and Zhu passed information to Daniel Tam for setting up a company. D3 said D1 asked D2 to follow up the establishment of subsidiary companies. D2 introduced PW40 by giving his telephone number to D3 for assigning directorship. From 2004 onwards D3 directly contacted PW40 for details of directorship including ID copy and correspondence address and D3 passed the information to Daniel Tam to deal with the Companies Registry and Business Registry. United Fine, Counter 190 936.D3 said it was probably set up through PW40 as one or two companies were bought at the same time. He had no idea what they were bought for. It was set up in similar circumstances to Trump Link. He said he just followed instructions to set something up. Zhu got the company names and he followed it up. 937.At 178 D3 said that if a bank account was required to be opened afterwards for reason unknown, he had no idea. He said if the bank accounts were required he would contact the persons after the companies were set up and go through the banking procedures with them. Grand Lucky 938.D3 admitted that he arranged for the setting up this company through a secretarial firm. 939.Union Sheen – ( Counters 403 onwards) 940.D3 admitted taking part in setting up this company. He said this was not through D2’s friend, PW40. D2 gave him the name of the director Tang Oi chun, Angela, either personally or by fax. He was supplied with her ID and proof of residential address which he gave to Tam. He said he helped her open a bank account and gave all the documents to Zhu. Tang signed the blank cheques. 941.Strong Sense Investment Limited 942.D3 said Tsui Sze-lam was not a staff member of OGH, he was the bodyguard of D1. Nanfang Galvanised Aluminium Sheet (Hong Kong) Company Limited (NGAS) 943.D3 said that he assisted D2 in her private company called Nanfang. D3 said he met D2 the day before the interview as he still assisted her with one of their private companies and they discussed matters in relation to Nanfang ( counter 573). The Second and third VRI’s 07.12.2006 - 1537-1729, Ex 162, p.3474 A1 to A112 and Ex 163, 3571a1 –a66 Negotiations with Cometal 944.In his second interview D3 was shown e-mail correspondence between himself and PW56, the sales manager for the Italian company Cometal Engineering. D3 said he was acting under instruction from D1 to liaise with PW56 for the purchase of machinery for the new factory in Sanshui. D3 would forward quotations received from suppliers to D1 for his reference and perusal. He said Zhu was also instructed to follow up on this project. He said the technical aspect of purchasing machinery was handled by the mainland–based preparatory office. D3 was responsible for communicating with the suppliers regarding contract terms, price etc. Greatson 945.D3 was shown e-mail correspondence relating to the setting up of Greatson. D3 said this company was set up on the instructions of Zhu. It was incorporated by a law firm, Stevenson Wong and Co which had a long business relationship with OGH. The director of Greatson, D4, was introduced by PW40. D3 arranged with D4 to open a bank account at the Dah Sing Bank. D3 provided D4 with the necessary documents and company chop for opening the account. Greatson eventually became a machinery agency as stated in the OGH announcement. It was Zhu’s idea to arrange for an unrelated person to set up Greatson. The registered address was arranged by Zhu. After the bank account was opened, D3 retrieved the company documents and chop from D4 and requested D4 to sign on the blank cheque book. D3 gave all the documents including the signed cheques to Zhu. D3 denied having any knowledge of the purpose of establishing Greatson. 946.D3 was shown the contract between Greatson and Cometal, Ex 7, with technical specifications exhibit Ex 6. D3 said Zhu gave him a compact disc containing Ex 7 and asked him to check the contents, especially the spelling. Cometal machinery should be purchased at the price of RMB 26,500,000 for use in the new Sanshui factory. D3 stated that Cometal was first approached by OGH in early 2005 for quotations for the machinery. D3 did not know why the contract was signed between Greatson and Cometal. D3 said he was aware that Greatson purchased presses from Cometal at RMB26,500,000 and all the machinery was sold to OGH at over HKD100 million. D3 said he understood that the handling system cost more than the presses. He said that by adding the painting system the price might be reasonable. 947.D3 said he was not sure who represented OG to have talks with Greatson. He said he was completely in the dark as to how Greatson operated. He said he was not sure how Greatson made payments to Cometal. Machinery for the Sanshui Plant 948.D3 was shown e-mail correspondence with Liu Menjung, an engineer and member of the Preparatory Office overseeing the Sanshui project. 949.D3 said chaos happened when the preparatory office purchased machinery, some for OGH and some not. When the machinery was shipped to Hong Kong and payment was demanded, D3 needed to clarify with Zhu first. Zhu instructed that some of the purchases should be executed by Greaston instead of OGH. D3 said he wrote these e-mails on the instructions of Zhu. The e-mails were copied to D1. The third VRI –1809-1850 7th December 2006 Ex 163 Purchase of Plant and Equipment for Sanshui 950.D3 stated that the building project started in 2004 and the idea came from D1.There was a committee for this project and he was not a member of the committee. D3 said there was a bank loan tied in with this project. E-mail correspondence between D3 and PW56 951.D3 was referred to an e-mail dated the 24th October 2005 about the purchase of machinery from Cometal for HKD26,500,000 and D3 said discussions for the purchase of the machinery started before then. He said that on the instructions of D1, D3 represented OGH to deal with the purchase of machinery. D3 said that the contents of the e-mails were told to D1 and the mainland committee. D3 said he would cc the e-mails to D1. D3 participated in the last phase of the execution. D3 said he had no knowledge of the participation of Greatson. 952.D3 visited Italy, Belgium and France with mainland director LAU Kwok On to see various machinery suppliers. Lau is the Chief Engineer connected with the Sanshui project and a member of the preparatory office for that project. He cannot read and speak English so he went to help with translation. Greatson corporate records - Ex 168, p. 4238 –4259 953.D3 said D4 prepared all documents in relation to Greatson and sent them to D3 who sent them to the solicitors for registration of the company. After registration all company documents were sent to Zhu. 954.D3 was asked about the amendment to the company records dated the 29th August 2005 where the registered office was changed to Ground Floor, 5, St Francis Yard, Wanchai, p.4251. He agreed that the purported signature of D4 on this document is different from the signature of D4 on the bank opening documents. D3 said he did not quite recall who was responsible for following up on this matter. He said he did not follow up this issue anymore afterwards (counters 292-5). Greatson Bank Records – Ex 157, 3306-3404D3 955.D3 said D4 signed the bank opening records. D3 said he had no records of the address on the Business Registry of Greatson, G/F, 5, St Francis Yard. 956.D3 was asked about D4 signing the blank Greatson cheques. He was asked if he thought this was unusual. He said everybody’s practice was different. He, for instance, would sign 10 cheques in one go, and leave them at home. He said why not sign as nobody would take them. He was asked if it appeared unusual for D4 to sign the whole cheque book and give it to someone. At 404, D3 said perhaps D4 and Zhu had a consensus. He was asked if they had ever met and he said he did not think so. The fourth VRI - 26th April 2007- 1809-1850 hours, Ex 166, 3850 a1 –180 957.D3 said he joined OGH in 2000 and was a project director before the liquidation. At the time of the police interview D3 said he worked for a company called Nanfang Galvanised Aluminium Sheet Company Limited handling projects. He said D1 had shares in that company. He said after something happened at OGH, D1 through D2 enquired about his intention and whether he was willing to work in another private company under him. This happened about the end of July. 958.He said in early 2005 he approached Cometal about aluminium machinery on behalf of OGH for the new factory in China. D3, PW3 and another colleague were assigned by D1 to follow up on this machinery sourcing exercise. When quotations were received he would sort them out and hand them to the preparatory office. The final decision was made by the Board of Directors of OGH. D3 would report directly to D1. In 2005, when the preparatory office decided to purchase from Cometal, he was responsible for translation and paper work. E-mail correspondence relating to Cometal – Ex 19 959.D3 said he and PW3 attended a meeting in Shenzhen with PW56 on the 31st January 2005. He said that the quotation from Cometal , Ex 19, was passed to D1 for his perusal and the details were also reported to colleagues. 960.D3 said he knew that it had been agreed to buy extrusion presses from Cometal for HK26,500,000. He had no knowledge of the technical aspect and Zhu was responsible for the payment terms. D3 said it was Zhu’s idea to change the purchaser of the machinery from OGH to Greatson and he sent an e-mail concerning this to Cometal and they requested a guarantee letter. He said he acted as a middleman to relay information between the preparatory office and PW56. 961.D3 said he reported these matters to D1 and it was D1 who suggested that the purchase be guaranteed by OG Sanshui. PW56 arranged a meeting with D3 in the OGH office in October 2005. 962.D3 said he and Liu Mengjun were involved in liaison of the contract terms in respect of delivery and payment. D3 said he was involved in correspondence concerning the contract terms and the signing of the contract. He saw the original contract which was handed to Zhu. 963.D3 was shown Ex19, 895-6, an e-mail dated the 7th November 2005, in which PW56 complained that the original contracts were sent to Greatson at G/F, 5 St Francis Yard, Wanchai and there was no-one willing to receive them. D3 said he had given the contracts to Zhu and had no knowledge about his matter. PW56 had been trying to contact a Mr C Chan of Greatson and PW56 sent a copy of an unsuccessful communication with Mr C Chan. D3 said he did not know about a Mr C Chan and did not know where PW56 got this person as a contact for Greatson, D3 only supplied PW56 with an address. D3 said there was something wrong with the contact and he thought that he was cc’d in the e-mail correspondence from C Chan as D3 was the contact for OGH. D3 was not clear from where this C Chan would have got his contact details. 964.D3 was shown further correspondence which showed that he was involved in the shipping arrangements. D3 said he just passed on Zhu’s instructions. Greatson 965.D3 said PW40 was D2’s friend who introduced D4 to set up Greatson. The company kit was handed to Zhu. He said the address, telephone number and fax numbers were supplied by Zhu. 966.D3 was shown the e-mail correspondence relating to Greatson produced as Exhibit 20. 967.D3 said he communicated with Stevenson and Wong concerning the setting up of Greatson under Zhu’s instructions. He contacted D4 for his passport number which he passed to Stevenson and Wong for registration in Singapore. D3 said that it was arranged for D4 to sign on the board minutes of Daintree as one of its directors to effect the transfer of shares. He liaised with Stevenson Wong for certified copies of Daintree’s company registration documents for opening a bank account. D3 said the change of address for Greatson in March 2006 to 1101, Hollywood Plaza, 610, Nathan Road, Mong Kok was arranged by Daniel Tam, who would have been contacted by Zhu. The new address was confirmed to D3 in an email Ex 20,923, from Tam to D3. Fifth VRI 26th April 2007, 2201-0056, Ex 167, Translation 4018 E-mail correspondence in relation to Greatson, Ex 20 968.D3 said he arranged for Stevenson and Wong to deliver the documents for Greatson to OGH’s Admiralty office on the instructions of Zhu. He arranged for D4 to sign the Companies Registry Annual Return, which he passed on to Zhu. The e-mail at page 927 dated the 9th May 2005 refers. Stevenson and Wong wrote to D3 about the renewal of the business registration. D3 said he passed this on to Zhu. The bill in relation to the services of Stevenson and Wong for setting up Greatson was sent to D3 and he said that he passed it on to Zhu. D3 corresponded with Stevenson Wong about the change of address for Greatson to Hollywood Plaza in May 2006. He was also asked by the solicitors to contact or arrange with D4 to renew the annual registration. D3 said he and PW3 and Liu Guoan were involved in the Sanshui project. They reported everthing to D1. Zhu participated in the later stage but not with meetings with the machinery suppliers. D3 just followed the instructions of Zhu to change the buyer to Greatson but did not know the reason behind this. He said that the November 2005 public announcement regarding the purchase of machinery was verified by the Board. E-mail correspondence in relation to the purchase of aluminium extrusion press machines – Ex 21 969.D3 said that the Tony Chan referred to was PW3 whilst the Mr Lau was Liu Mengjun of the preparatory office. D3 said four sets of extrusion press handling systems were purchased from Cometal at a price of RMB26.5 million. He said he failed to recall what four local extrusion presses meant. He said this was dealt with by Liu. 970.With regard to the e-mails at pp.938-40, D3 said the recipient, Mr Li Yong Lun, PW15, a manager of Yong Chang Metal Machinery Plant, was a friend of Liu Mengjun. Yong Chang was a local aluminium extrusion press supplier. D3 said he believed that PW15 had contracted with Liu Mengjun to provide four new extrusion presses to the new factory of OG in Sanshui. He said that in the contract they should have agreed that some of the parts were not included in the contract price and so OGH were responsible for settling payment of these parts. Attached to the e-mail is a document which refers to a contract for the purchase of four sets of aluminium extrusion machines signed on the 1st July 2005, the purchaser being OG Sanshui and the supplier Bosch Rexroth (China) Limited in the sum of USD103,233.33 paid in Hong Kong on the 23rd December 2005. It confirms that the whole of the amount would be deducted from the total amount stipulated in the contract and is signed and chopped by Yong Chan Metalware. D3 said he would have handled one such attachment and given it to Zhu. 971.In relation to the e-mail dated the 20th February 2006 from D3 to Lisa Li at page 941, D3 said that the e-mail address of the recipient was provided by Zhu. D3 typed the contents on Zhu’s instructions. It refers to the transportation of 30 Davidson’s vessels to Hong Kong. The contact was a representative of Yong Chang. He said he did not know why he provided such information to Lisa Li. 972.With reference to 942, an e-mail dated 1 March 2006 from D3 to PW15, D3 said he sent the Cometal press specifications to PW15 for reference at the request of PW15 or Liu Mengjun. 973.D3 was referred to an e-mail dated 23 March 2006 to Jack Kam who was a business partner of Liu Mengjun, according to D3. It stated inter alia that “all presses were still claimed to come from Trevisan”, D3 stated that he was under instructions to write this to Jack Kam and that D1 agreed the contents. 974.With regard to an e-mail dated 2 May 2006 from D3 to Jack Kam, D3 stated that he was under Zhu’s instruction to pursue Jack Kam for “Trevisan” name plates. D3 denied that he understood the meaning (counter 505). E-mail Correspondence relating to the purchase of ITW Powder Coating Machine involving D3 – Exhibit 22 975.D3 said Liu Mengjun arranged the meeting with the powder coating machine suppliers in which D3 was introduced as the representative of OGH. D3 said that under the instructions of Jack Kam, he liaised with a representative of ITW Ransburg, Mr Ye Junming, for quotations. Mr Lau Holland, a subordinate of Liu Mengjun, sent the contract for the powder coating machinery for D3’s filing. E-mail correspondence in relation to the OGD- Greatson Contract- Ex 23 976.This correspondence took place about the time of the Public Announcement concerning the purchase of machinery by OGH which exceeded HKD 35 million and therefore needed to be disclosed in accordance with the listing rules. PW7, referred to as ONJ in the correspondence, an INED, raised some queries concerning the background of Greatson. D3 replied that it “is an agent which specialized in trading machinery used in a variety of metal processing industries”. D3 said he wrote this after consulting LIU Mengjun. PW7 raised 5 queries, three of which were dealt with by D3. 977.Query 1 asked about the tender process in relation to the contract. D3 replied “there was no tender and the puchase was conducted by the preparatory office”. D3 said the information was provided by Zhu. 978.For Query 2 D3 stated that Greatson “was in independent third party, not related to any directors or major shareholders”. Again, D3 said this information was provided by Zhu. 979.For Query 3, D3 stated that Greatson was “a Hong Kong based Singaporean company specialized in trading machinery for the metal processing industry”. D3 said the information came from Zhu. 980.In his reply to PW7 D3 listed out the members of the preparatory office, p. 955. D3 said the names were supplied by D1. The second part of the reply was a brief introduction to Greatson. D3 said the information came from Zhu. It states that the seller, Greatson, “ was introduced by parties engaging in the same business in Nanhai Industrial Zone. From previous experience of co-operation with the company it can be seen and most of the views are that the company, showing a steady style in its trade practice, is trustworthy. We can benefit from its speciality in importing foreign equipment, which fits in with the requirement in the said plant construction..” 981.D3 said Zhu had his own OGH e-mail account. D3 said Zhu was not his superior but D1 instructed D3 to assist Zhu on some occasions. E-mail correspondence with You Shuiquing – Ex 25, 961 982.This correspondence between D3 and You concerns mainlanders coming to Hong Kong to hold companies that can open bank accounts on behalf of OGH. The e-mail from D3 dated the 19th July 2004 in response to an e-mail from You, states that the the document has been prepared and should be collected. It states that “ our party needs one or two new companies that can open bank accounts in Hong Kong, any way for that? It is too ridiculous to let your brothers simply go back to the village to take out permits. Although it is a bit difficult it still can be done.” 983.You replied that he will do his best and asks “ One company one person?” 984.In his next e-mail to You D3 asks You to discuss with Miss Wu when she has time to come again to Hong Kong to authenticate the specimen signature with the bank. You replied that the document should be got ready first and that he planned to come the following day and take it to Miss Wu to sign. He said Miss Wu’s permit would not be ready until the end of August when she could come to Hong Kong to deal with the formalities. 985.D3 said he failed to recall what the contents meant. He said the e-mails would have been written on the instructions of D1. E-mail correspondence relating to the Nanfang Companies dated 14th June 2006 – Ex 24, p. 957-60 986.This correspondence between D3 and Zhu includes charts relating to shareholding status as at 1.11.05 for Nanfang Galvanised Aluminium Sheet (HK) Company Limited for D2 and Miss Wu Siu yu, Patty and for Nanfang Alloy Sheet (Hong Kong) Company Limited for D2 and Lin Jianping, the husband of Lisa Li. Also included are organization sheets for Honglii Galvanised Sheet, a subisidiary of NGAS, and Jieli Nanfang Alloy Sheet which is owned by NAS. D3 said he prepared these under Zhu’s instructions and acquired the relevant information from the company kits. Purchase of Machinery under the OGD/ Greatson Contract 987.It was pointed out to D3 that according to the November Public Announcement, four Cometal presses, four Cometal handling systems and one set of powder coating system were to be purchased from Greatson at a price of HKD153 million. According to the e-mail correspondence with Cometal, it was agreed that four sets of handling equipment would be purchased for RMB26.5 million. D3 said that the amounts should refer to two unrelated machinery purchases. He said he reported to D1 generally about these matters. He had told D1 about Zhu’s instruction to use Greatson as the contracting party. 988.D3 said he never queried Zhu about the information Zhu gave him concerning the background of Greatson. He agreed that he had said previously in relation to the founding of Greatson that D2 introduced D3 to PW40 and PW40 introduced D4 to become a director of Greatson on 29 August 2005. D3 agreed that he went with D4 to the Dah Sing Bank in Wanchai to open a company bank account. After the cheques were obtained, D4 signed them and gave the cheque book to D3. D3 said he gave the book to Zhu. 989.D3 said that, when he replied in his e-mails about the background of Greatson, he relied on the information given by Zhu and said (1191) he had no motive to query what Zhu said. He said that the announcement by the board couldn’t be judged by a comparatively junior employee like him and he would not be responsible for conducting a background investigation of the company; this should be done by Zhu. Sixth Video Record of Interview, 21.12.2007, 1547-1713, Ex 263, p.5552-90 Contracts between Kenlap PGC and Long Asset, Ex 189, p.5012, and Fong Long Ex 190, p. 5019 990.D3 denied any involvement in the project related to the trading in machinery. D3 said Zhu asked him to help read these contracts. He just proof read them. He said he could not recognize the signatures on the contracts. Long Asset Corporate Records – Ex 204, p.5154 991.D3 said he was aware of Long Asset but his knowledge of the company was vague. He said the company was probably bought through PW29’s accounting firm. D3 obtained the personal data of D6 through PW40 and handed it to Zhu to buy Long Asset. He said Zhu gave him the necessary documentation to open the Long Asset bank account. He went to the bank with D6. D3 arranged for D6 to sign the blank cheques and he took the cheques to Zhu. Long Asset Corporate Records – Ex 203, p. 5072-5111 992.D3 said he had no knowledge of Fong Long but was aware that You Shuiqing was a friend of D1. He said D1 had his own personal office in Shenzhen for property investments and You rented that office. Contract between Long Asset and Soma dated 18th April 2006 Ex 197, p. 5050 993.D3 said he had no knowledge of this contract. Contract between Fong Long and IWT Industrielle Wickeltechnik GmbH Dated the 18th April 2006, Ex 196, p. 5056. 994.D3 said he had no knowledge of this contract. D3 said he had no knowledge of the difference in prices on the different contracts for the same products. Fax record of correspondence between D3 and WACmach dated 28th March 2006 and 19th May 2002, Ex 193, p. 5040 995.This correspondence, dated March / April 2006 is between D3 and Don Yan, the General Manager of WACmach and Ms Yvonne of WACmach. It relates to the Fong Long and Long Asset contracts. It goes into some of the contract terms and supplies the details of Long Asset and Fong Long for incorporation in the contracts. The fax dated the 21st April 2006 relates to a conversation D3 had had with Ms Yvonne. 996.D3 said he just liaised with the supplier on the instructions of Zhu. He said he also got information from Kwan Yan. E-mail correspondence between D3 and WACmach dated 7th to the 25th March 2006 Ex 191, p. 5033 to 5035 997.This correspondence concerns price negotiations in respect of machines for producing gold bonding wire. D3 said he sent the e-mails on Zhu’s instructions. E-mail correspondence between D3 and Don Yan of WACmach in May and 19th July 2006, Ex 191, 5036-5038 998.These relate to the payment of deposits for the Fong Long and Long Asset contracts. D3 said he sent the e-mails. E-mail correspondence between You Shuiqing and D3 dated 7th June 2006, Ex 192, p.5039 999.D3 said that SQY in the correspondence refers to You Shuiqing. D3 said You rented a place at Room 2307-10, Block A, Tianan Cyber Time Square, Futian District, Shenzen, China for D1. 1000.D3 was shown a letter dated the 17th July 2006 from Shanghai WACmach to D3 concerning the five sets of Soma AG drawing machines which OG had ordered to be shipped on 22nd September 2006. I noted that Shanghai WACmach is the sole agent for several machinery suppliers in Europe, including Soma and IWT Industrielle Wickeltechnik GmbH. The e-mail refers to the request by OGH to shorten the delivery time, WACmach had given the order first priority and shipment would be ready in August and as such the first payment under the contract should have been made on the 30th July, three weeks before shipment. 1001.D3 said he told Zhu about the contents of this letter. He said he reported generally about the progress of the machinery purchase. Seventh VRI with D3 dated 13.03.2009, 1058 – 1111 – Ex 287, p. 6316a1-a19 1002.D3 was asked about facsimile correspondence with Don Yan of Shanghai WACmach, Ex 193, 5041/2 in April 2006. This related to the purchase of machinery for the Kenlap PGC Zhuhai factory under the Long Asset and Fong Long contracts. In his sixth record of interview D3 had said with regard to this matter that he had been asked by D1 to assist Zhu. D3 said he received no further instructions from D1 in relation to this matter and he reported back to Zhu and not D1. Eighth and final VRI with D3 dated the 15th May 2008 – 1127-1153, Ex 264, 5828-5862 1003.D3 was asked about a set of Microsoft Excel files retrieved from his computer at OGH, Ex 205. The documents set out comparative prices from a variety of suppliers of machinery of the kind referred to in the Long Asset and Fong Long contracts. D3 said he had a blurred memory of this matter. He said the original document had been supplied to him by Zhu in simplified Chinese characters and he was asked to change it into traditional Chinese characters. D3 said he never tried to understand the details contained in the document. The OG monthly internal management meetings 1004.D3 said that although he attended these meetings regularly he seldom made any comments. He said D3 never asked him to handle the machinery purchase for Kenlap PGC Zhuhai factory. He said Zhu passed on D1’s instructions to him to assist in the machinery purchase. D3 reported what he did to Zhu and not D1. RECORDS OF INTERVIEW WITH D4, Ex 164 and 165 First VRI dated 26th February 2007 from 1145-1250, Ex 164, 3647A1 – A86 Corporate Records of Greatson, Ex 168, 4238-4259 1005.D4 said PW40 asked him to provide his name and personal particulars to set up this company in return for a cash reward in the form of a red packet. He could not recall the amount. He said PW40 was his former boss. He denied signing on the company records. He had no idea about the setting up of Daintree. Bank Records of Greatson- Ex 157, p. 3306-3404 1006.D4 signed a number of blank cheques and gave them to D3. He said on the request of D2, PW40 asked D4 to provide his name for a company to be set up. He was contacted by D3 who arranged the incorporation of Greatson. 1007.D4 said he was the subordinate of PW40 for many years and D2 was one of his former customers. D2 wanted to establish and register some companies. Apart from D4, several friends of D4 also assisted D2 to set up companies. 1008.PW40 gave D4’s mobile number to D3. D3 called D4 to make an appointment. When D4 arrived, D3 had prepared everything including the company chops and documents required for the setting up of the company. D4 provided his identity card and proof of residential address. D4 opened two Dah Sing bank accounts. 1009.D4 said he signed and filled in the personal particulars on the bank account opening documents. After the bank accounts were opened, D3 contacted D4 two to three times, mainly to give signed cheque books to D3. 1010.D4 was shown cheques/ transfer slips of Greatson purporting to bear his signature, Ex 157, page 3306-3404. D4 said he signed some of the documents but did not recall others. The OGD/ Greatson Contract dated 1st November 2005, Ex 10, page 351-355 1011.D4 said he had no idea about this document and did not sign it. 1012.D3 gave D4 the St Francis Yard address and told him to go to the bank to change the address in the bank records. D4 said he did not sign the Greatson Cometal contract, Ex 7, p.334-7. 1013.D4 said he had no idea about the 2005 IRD tax return of Greatson, Ex 74, p.1222-1223. 1014.D4 said he found out about Greatson from a land search. He had no idea about its office address. He said that he just signed on documents provided to him by D3. D4 said he gave all the bank statements relating to Greatson to D3. Company Records of Daintree Pte Ltd, Ex 253, p.5509-10 1015.D4 said he had no idea why his name was on this document and was not aware of the existence of this company. He said he received a letter from a female about a request to withdraw from Daintree. He said he threw the letter away. Withdrawal of balance left in the Greatson Bank Account 1016.D4 said he withdrew all the remaining balance in the Greatson bank accounts in 2006 because his father needed money at that time. D4 froze the account first and withdrew the money later. D4 could not contact D3. He did not tell PW40 about the removal of money from the accounts. Second VRI dated 19th April 2007 1531-1637 hours – pages 3740 a1 –a113 1017.D4 said D3 opened the Greatson accounts for him at the Dah Sing Bank. On the day it was opened, before D4 got the cheque book, D4 signed a number of blank documents including blank transfer slips at the request of D3. He said he signed them either at the Delifrance situated by the side of the Dah Sing Bank in Gloucester Road or outside Admiralty Centre in Queensway. He said he pre-signed six transfer slips of Dah Sing Bank with the chop of Greatson dated the 22nd November 2005 for HKD5,665,000; 29th November 2005 for HKD12,470,000; 1 December 2005 for HKD10,830,000 and HKD9,230,000; 15 December 2005 for HKD17,500,000 and 16 March 2006 for HKD10 million. 1018.D4 said he thought Greatson was a legitimate company and he knew it was doing some sort of trading activities. He knew from his former boss, PW40, that D3 was doing some business in trading. 1019.D4 said that when the matter of OGH had come to light he had the account frozen. He said there was a problem with his father’s health and his father owed money so he opened a bank account under his name under account number 7470170430 at the Dah Sing Bank on 15 November 2006 for the purpose of transferring the money which was originally in the account under the name of Greatson. D4 used money in this personal account to transfer the money to the account of his mother. He transferred HKD340,272.34 to the new Dah Sing account and closed the Greatson account. He said his father had credit card and bank debts amounting to roughly HKD400,000. As regards his father’s health, D4 said his father had had a stroke and probably did not undergo an operation. 1020.D4 said that in order to use the Greatson account in November 2006 he had to make a new chop as the original chop had been given to D3. 1021.D4 admitted that he had deposited HKD150,000 and HKD145,000 to his mother’s account on 28 November and the 6 December respectively. He said he had learnt from the newspaper that there was something wrong with OGH on that day or the day after. He said that within two weeks he had frozen the Greatson account at the Dah Sing Bank. 1022.When D4 was asked if he knew whether he had a right to use the money, D4 said he was not aware. He said he didn’t think it was serious matter or he wouldn’t have done it (counter 540). D4 said that D3 did not know that D4 had had a chop made. He said there was no way to contact him. Admitted Facts 1023.Four sets of Admitted Facts were admitted pursuant to s.65B of the Criminal Procedure Ordinance Cap 221, Exhibits P365 A-D ( AF 1-IV). Case for the Defence D1 1024.D1 elected not to give evidence and no witnesses were called. Facts were admitted pursuant to s. 65C of the Criminal Procedure Ordinance as Exhibit D1-27 (AF V). These facts dealt with a number of financial transactions involving various companies related to this trial. D2, D3 and D5 1025.These three defendants elected not to give evidence and called no witnesses. D4 1026.D4 elected to give evidence. He told the court that he and his family live in Shek O. He is single and lives with his parents and younger brother. 1027.He studied in Canada to second year university level, taking a degree in food and beverage. He left Canada in 1998 and returned to Hong Kong. He undertook various jobs but later that year started to work as a salesman for the insurance company run by PW40, WintertThur. He remained with that company until 2004. He then worked for Centreline Property Agency for a short time. In early September 2005 he joined Cathay Pacific as a member of their cabin crew and underwent 6 weeks training. 1028.D4 said he got on with PW40 very well. He said at its height, Winteryhur employed 200 staff and PW40 was the respected head of the agency. There were regular social gatherings, annual award presentations and balls. There were regular sporting activities and he and PW40 played football for a soccer team called DIY. He said he and his family would visit PW40 every Chinese New Year and PW40 would bring his son to Shek O for social gatherings. He was aware that PW40’s father was a retired police officer. 1029.D4 said he also knew PW40’s friends James Doong, Edward Li and Cheung Chi Keung through social gatherings and playing football. He said PW40 had known Cheung since childhood and Cheung’s father was also a police officer. 1030.D4 said he was aware from PW40 that PW40 knew D1 and D2. D4 said that PW40 told him he had known D2 for many years and she had been a client of PW40 when PW40 worked for National Mutual. He said PW40 told him that D2 and he had tea together from time to time. 1031.D4 told the court that in around July or August of 2005 he came to know from chatting with PW40 that PW40 had been having discussions with D2 about setting up a company dealing with paper wrapping. He said PW40 was excited about the idea and PW40 said that D2 would provide the finance whilst PW40 had to provide the effort. D4 said that PW40 told him he needed assistance and PW40 asked D4 to help out by setting up a company for quotation and it also possibly had something to do with taxation. D4 said he was not too clear as to what it was about but he was keen to help out his friend PW40. 1032.D4 said he was aware that PW40 had set up a company as well as their friends Doong, Cheung and Li. D4 said that PW40 told him that there would be no problem and he did not believe PW40 would do anything illegal. D4 said PW40 asked him for a copy of his ID card and proof of address. D4 said he had lost his ID card so gave PW40 his passport number and proof of address 2 days later. 1033.D4 said in early November, PW40 rang about the setting up of the company and told him that he would be contacted by a Mr Yip with regard to this matter and that Yip was a colleague of D2. He understood that Yip was from OGH. 1034.D4 said that on the 11th November 2005 D3 rang him and spoke to him about setting up the company. D3 arranged to meet D4 at Delifrance in Wanchai. He met D3 whom he described as very gentle, softly spoken, wearing a suit and glasses. D3 provided D4 with a number of company documents which D3 asked him to sign. D4 said D3 also gave him the company chop. After he had done so D3 asked D4 to go to the bank alone to deal with matters. D4 said at Delifrance he also signed between 10 and 20 transfer slips and telegraphic transfer forms in relation to the Dah Sing Bank. D4 said he thought it was normal to have a bank account when setting up a company. 1035.D4 was referred to Exhibit 157, pages 3306-3404, which is the affirmation from the staff of the Dah Sing Bank relating to the Greatson Account. D4 said that the details supplied for the opening of the account (3326-9) were either already completed at Delifrance, written by him or supplied by him and recorded by the bank staff. The nature of the business is recorded as relating to electronic chemical products. D4 said at the bank he rang D3 and this was what he was told by D3. D4 said the fax number supplied was provided to him by D3 and the mobile number is his own. D4 said he could not recall if he recorded his signature inside the chop at the bank or Delifrance. D4 said that after opening the account he returned the company chop and company documents to D3 inside Delifrance. 1036.As regards the transfers variously dated between the 22nd November 2005 and the 16th March 2006, D4 said he did not attend the bank to make any of these transfers, pages 3347-52. D4 said these documents were signed in blank at Delifrance on the 11th November 2005. 1037.D4 was asked about exhibit 158, page 7757, which is a Dah Sing Bank remittance slip dated the 21st November 2005. It was pointed out by his counsel that there were two time chops on the document, one at 11.39 on the 19th November 2005 and the other at 0905 on the 21st November 2005. D4 produced his Cathay Pacific flight roster record, D4-1, which shows that D4 flew to Johannesburg on the 19th November 2005 and returned on the 21st, his duty ending at 0805 hours. He said that the duty ending time is shown as being 30 minutes after landing but he said he always spent longer than that in ensuring passenger disembarkation, flight debriefing, having a cigarette, collecting his luggage and clearing customs. He said it would not have been possible for him to get to the bank in Wanchai by 0905 hours. D4 said he did not go to the bank on that day. 1038.The remittance application, page 7757, shows that it is signed by D4 in three different places, including a signature opposite a correction made to the document regarding the address of the payee. D4 said he signed this form at Delifrance on the 11th November when it was handed to him by D3. He said it was already filled in. D4 could not explain why it was signed by him in three different places. 1039.D4 said he spoke with PW40 on the 14th December 2005. They discussed D4’s opening of a bank account. D4 said PW 40 did not have much reaction and told D4 that he also had opened a bank account and there would be no problem. D4 said that he thought if anything was wrong the bank would call him. D4 said that PW40 told him that he had written some blank cheques which were for daily expenses such as rent and regular expenses. 1040.D4 said he met D3 for a second time on the 15th December 2005. D4 said he was at home when he received a call from D3 saying he wished to meet D4 as a matter of urgency at the Dah Sing Bank in the Admiralty Centre. D4 said he was not feeling well but he agreed to take a taxi to the bank to meet up with D3. D4 said he met D3 at the bank and D3 asked him to sign the application for telegraphic transfer on page 7758. D4 said that after he was given the transfer, D3 left the bank and he presented it to the teller. He said when at the counter the teller asked him the country of the payee. D4 said he rang D3 on his mobile phone and was told the country was Italy and D4 related this to the teller. The remittance application related to a payment to Cometal in Italy of Euros 269,000 and is dated the 15th December 2005. 1041.D4 said he was admitted to hospital between the 19th and 25th December for treatment of a broken orbital bone. 1042.D4 said that on the 27th December he received three or four cheque books from the Dah Sing Bank. He said he arranged to meet D3 at the Café de Coral in Admiralty to hand them over. He said that he was invited by D3 to sign all the cheques. D3 said he signed the cheques in one book but was too tired to sign the others. He took those cheque books home and signed them there. Two or three days later he rang D3 to arrange the handing over of the signed cheque books. He said he drove his car to a parking space in Admiralty and met D3. He handed over the cheque books to D3 from his vehicle. 1043.With regard to the remittance application dated the 15th March 2006 in favour of Cometal in the sum of Euros 605,250, page 7755, D4 said he signed this application on the 11th November 2005 at Delifrance when it was given to him by D3 and the typed particulars were filled in. He said that on the 15th March 2006 he received a phone call from a staff of the Dah Sing Bank who told him briefly about the remittance application and verified that he was the person concerned. D4 said he was told the money was to be transferred from Greatson to Cometal and he was asked if the was “OK”. D4 said that he told the bank “naturally” that it was in order. D4 said he rang PW40 about the transaction and PW40 assured there would be no problem as the same thing happened to him. 1044.D4 said that in April 2006 he was still receiving mail from the bank in relation to Greatson. He said he found this troublesome and he never opened the mail. He said he spoke on the telephone with D3 about this matter and D3 told him to go to the bank to change the mailing address of the company to the St Francis Yard, Wanchai address which D4 did. D4 said he had no further contact with D3. 1045.D4 said that on the 7th August 2006 he was flying back from Johannesburg and read in a Chinese newspaper that OGH were having problems with business. D4 said when he got back to Hong Kong he spoke to PW40 about the matter and PW40 reassured him. D4 said he went to the Dah Sing Bank to freeze the account. The Theft Charges 1046.D4 said that in November 2006 his father became ill and was admitted to hospital between the 22nd and 27th November having suffered a heart attack. He learnt that his father was in financial difficulties. He had credit card and personal debts amounting to some HK 400,000. D4 said the family finances were controlled by his mother. He was aware his father, who had been in long term employment as a personal driver was due to retire the following year and expected to receive a pension of about HKD 1 million. 1047.D4 said it “popped up in his mind” to use the money in the account of Greatson to settle his father’s debts. He said he tried to speak to D3 many times but could not contact him. On the 11th November a bank account was opened by D4’s mother at the Dah Sing bank in Hang Fa Chuen. On the 15th November D4 said he went to the Dah Sing Bank in Wanchai to borrow money from the account but he did not know how much money was in the account. He discovered there was HKD300,000 odd in the account. D4 said he was told by bank staff the if he wished to use the account he would need to have a chop made and change the chop to be used to operate the account. D4 said he had a chop made in Wanchai nearby. He went back to the bank, unfroze the account and transferred the balance of HKD318,190.20 into a new personal account he opened with the bank the same day. He then closed the Greatson account. 1048.The same day he withdrew HKD20,000 from the account and gave it to his mother. 1049.On the 27th November 2006 he transferred HKD300,000 from his new account to his mother’s Dah Sing account. D4’s mother withdrew HDK150,000 from her account and on the 4th December 2005 she withdrew a further HKD145,000 from the account. D4 said he told his mother the money he paid into her account was a loan he had received from friends which he would repay when his father received his pension. He said after his father received his pension HKD330,000 was paid into his mother’s account on the 6th September 2007 to cover the money he paid into her account. He said the money still remains in the account. He said it was kept there to repay monies he transferred out of the Greatson account and he was waiting to be contacted by D1 or someone from OGH. He said he never intended to steal the two amounts of money from the Greatson account. He produced his mother’s bank book to confirm his evidence as to the payments into and out of that account and monies retained as D4-3. 1050.D4 said he had never met either D1 or D2. He had never heard of Zhu Weibing, Mr C Chan or Lisa Li. He said that before his arrest he was never aware that Greatson had a Singapore connection, he had never heard of Stevenson and Wong or any of their staff. D4 said that the Company’s Registry documents in relation to Greatson were not signed by him. He said he had never seen or been involved in the creation of any e-mails purporting to come from Greatson. D4 said he had never seen nor signed any of the contracts produced to which Greatson was a party. He said he knew nothing about the supply of any machinery for metal processing. 1051.With regard to the 13 Dah Sing Bank cheques, Exhibit 157, pages 3372/4/5/6/80/2/4/6/8/90/2/4/6, they all bore his signature but he was not present when they were drawn and knew nothing about them. 1052.Under cross-examination by counsel for D2, D4 agreed that when interviewed by the police he told them that he thought that one of the reasons for the opening of the account was for tax avoidance. D4 said he had a mixed feeling when interviewed. D4 said his general impression from D3 was that the company was involved in trading. 1053.D4 said he was given a red packet for helping out PW40. It was not a reward for setting up Greatson. He said it was for a few hundred to a thousand and it was on one occasion only. He said he did not know if red packets were given to others. 1054.D4 was shown Exhibit 370, page 7489, an e-mail dated the 22nd March 2006 to Stevenson and Wong concerning the change of the company address to Room 1101, Hollywood Plaza, Nathan Road. D4 said he did not know that PW40 had an office in that building. He said he knew PW40 had an office in Mong Kok. 1055.Under cross-examination by counsel for D3, D4 said he knew PW40 had been arrested by the police in September 2006. He said he knew Jennifer Li, the lawyer for PW40 and he used her later when he attended for his second police interiview in April 2007. He agreed that when he attended that interview he took with him certificates, bank documents and his duty roster record. D4 said he did not speak with PW40 after his first police interview in February 2007. 1056.D4 said it was his recollection that he did meet D3 at the Dah Sing Bank in Admiralty on the 15th December 2005 to process exhibit page 7758, a telegraphic transfer. He was shown immigration records, D3-4, that showed D3 left Hong Kong early that morning and did not return until the following day. D4 denied that 7758 was not given to him by D3. D4 disgreed he only met D3 twice. D4 said he was sure at Delifrance on the 11th November D3 did give him a pile of blank telegraphic transfers to sign. Cross examination of D4 by the Prosecution 1057.D4 said he knew that D2 was a friend of PW40 and that she was one of the bosses of OGH. D4 said he had been told that D3 was a colleague of D2 although D3 never confirmed this and as far as he was aware D3 was acting on behalf of D2. D4 understood from PW40 that the company he was to set up was to be under the control of D2. He said he understood the company was to be set up for one year and deal with quotations and he understood from what PW40 told him that it had something to do with taxation. He said PW40 told him the company would do no business. He said that when he signed the various documents at Delifrance on the 11th November it was his understanding the company would not do any business. He said he was not clear about the documents he signed and did not ask about them as he thought this might embarrass PW40. He said he did speak to PW40 later about the signing of the documents and PW40 told him a story which he could not recall. He said PW40 told him there would be no problem and he had done the same thing. D4 said he did not know what was meant by quotations. 1058.When asked why he signed the documents if there was to be no business, D4 said he was never involved in business and did not know what should be included. D4 said he did not ask why there were two bank accounts, he said he never thought about this. He said he was not aware there were two bank accounts. D4 said D3 did not come into the bank, D3 told him he had to eat something. D4 said he deposited a few hundred to a thousand dollars given to him by D3 when opening the bank account. 1059.D4 said he did not know there were large amounts of money being processed through the account. He agreed that certainly by the 15th March 2006 when he was telephoned by the bank about the transfer of Euros 605,250 from Greatson to Cometal, Ex page 7755, he was aware large sums were being transferred. D4 said that he had an idea from PW40 that if there were problems at the bank, the bank would contact him. He said that he approved the fund movement on the 15th March 2006 as he recalled at one stage PW40 told that such thing would happen. D4 said after the bank called him he rang PW40 who reassured him that there was no problem and the same thing happened to him. 1060.D4 said that he was not shocked by the size of the transfer. He said PW40 was engaging in the paper business and he did not know what machinery he would need. He said D2 was providing the finance and the amount would not be a lot to OGH. D4 said he did not know how much was in the account. 1061.D4 said that 7755-8 were all signed by him on the 11th November at Delifrance. The information contained in the forms was already typed in then. 1062.With regard to page 7757, D4 said the date was not on it when he signed it, he could not recall if the amount was there, he only knew something was printed on the form. He said he did not know why he had to sign twice in the bottom left hand corner. He said he did not go to the bank in person in respect of this document. He agreed that according to his duty roster he finished duty at 0805 on the 21st November. He disagreed that he could have been at the bank by 0905 as he had other matters to attend to after the plane landed. 1063.D4 agreed that he did go to the Admiralty Branch of the Dah Sing Bank on the 15th December 2006 and he did sign next to the amendment. He noticed the amount was for nearly HKD2 million. He said he knew a large amount was being processed through his account. He did not ask D3 why he was signing for such a large amount. D4 agreed he had seen a similar form in November when he signed forms at Delifrance. 1064.D4 said that after he was aware large amounts were going through the account he had a meal with PW40 and they discussed this matter. He said that PW40 told him a story which he could not now recall. He said he thought the reasons for the fund movements were for quotation and taxation matters. 1065.D4 said he did not know how much money was going through the companies operated by PW40 was that he was helping out his friend D2 and she provided the money. 1066.D4 said he was not clear why money was going through his company if his company was only required for quotation and taxation purposes. 1067.D4 agreed that as far as he was aware, Greatson had no staff, no offices and he was never asked to sign any lease or insurance contracts. As regards the business of Greatson he imagined “something for taxation needs” but he did not consider the matter in depth. 1068.D4 agreed that when interviewed by the police he told them he could not recall who gave him lai see. He said he now recalled it was given to him by PW40 on the 11th November 2005. 1069.D4 said that after he read in the newspaper that OGH was in financial difficulties he thought the matter over and had the account frozen. He said he only decided to unfreeze the account when he learnt of his father’s financial problems. 1070.D4 agreed that when he was interviewed by the police about the monies transferred out of the Greatson account after he unfroze the account that he never mentioned to the police that he intended to repay the money from his father’s pension. He agreed that when he came for interview in April 2007 he came prepared to answer questions about this issue and brought with him his mother’s passbook but did not mention his intention to repay. D4 agreed that he had closed the Greatson account after transferring the balance to the personal account he opened in his own name and that he could not transfer the monies back to the Greatson account. D4 said he was unable to contact D3 at that time. 1071.D4 said he did not transfer the monies from the Greatson account directly into his mother’s account as he did not want his mother to be in trouble in the future. 1072.D4 produced his Cathay Pacific Flight Roster Records as D4- 4 D5 1073.D5 elected not to give evidence. A travel record relating to D5 was produced as Exhibit D5-1. D6 1074.D6 elected to give evidence. She told the court she is now aged 28 and lives in Shatin with her parents, sister and brother. She was educated to Form 5 standard and works as a garment sales girl. Up to 2002 she worked for Tommy Hilfiger in Shatin and her income including commission was around HKD10,000 per month. She has a clear record. 1075.D6 said she came to know PW40 through her boyfriend, Cheung Chi Keung, who is a long term friend of PW40. D6 said they had known each other since childhood. D6 said that by 2005 she had known PW40 for two and a half years. She knew he was an insurance agent and regarded him as a “proper person”. D6 said that PW40 and her boyfriend played for the same soccer team and they would meet socially 2-3 times per month. 1076.D6 said that in September 2005, PW40 asked her to do him a favour by holding a company which he was getting involved in with D2 in relation to paper making. She said she was aware her boyfriend and some other friends of PW40 had agreed to hold companies. She said she agreed to do so immediately and did not suspect anything. D6 said PW40 told her it was about a paper business and a metal business and mentioned about holding the company for a year. D6 said she was told the company would do no business and that it was only for quotations and the collection of mail. 1077.D6 said that PW40 asked her for her name, telephone number and copy identity card which she supplied and he told her someone would contact her later. She said that in December 2005 she received a call from D3 and agreed to meet him at the Delifrance in Wanchai. D6 said they met as arranged and she went along with her boyfriend. 1078.D6 said when they met D3 took some documents from an envelope and asked her to sign them. She said she thought they related to the opening of companies. She said she signed some but she did not know what they were. D6 said that D3 supplied her with the company details to open the account but as it was too late to open the account that day D3 said he would contact her to arrange to open the account on another day. A few days later, D3 contacted her and arranged to meet in the United Centre in order to open an account at the Admiralty branch of the Bank of East Asia. D6 said that D3 met her around the corner from the bank and gave her some documents including the business registration document, the company chop and HKD1000 in cash. I noted that according to the bank records the initial payment into the account was HKD5000. D6 went to the bank to open the account and D3 said he had other things to do and she should call him after the account was opened. After opening the account, D6 called D3. They met and she returned the documents and chop to D3. 1079.D6 said that after one month, D3 asked her to go to the bank to collect the cheque book. They met at the bank centre. D6 collected the cheque books. D6 said that D3 asked her to take home the cheque book and sign all the cheques. D6 said there were 20-30 cheques in the book. After she had signed them she arranged to meet D3 at Admiralty and hand over the signed cheques. 1080.D6 said that a few months later, D3 contacted her and told her some banking documents needed to be signed and they arranged to meet at Admiralty. When she arrived she called D3 and he said he was too busy and would send a Mr Zhu to meet her. She said she met Zhu outside the bank. He had the company chop and asked her to sign a document. 1081.D6 said that when she was saw the document the particulars were typed in. She was taken throught the particulars by her counsel and confirmed they were typed in. She was asked if for instance at the top CHF296,237.70 was typed in and she said that they were. She was taken through the rest of the entries and confirmed that they were typed in. I noted that the proforma words on the form were in both English and Chinese. She said the chop was on the form when she signed it in front of the bank staff. 1082.When asked if she knew what the document was she said she was not clear what the document was because Zhu spoke with the bank staff and she did not know what they talked about and after that she signed the document. She said she had no suspicions about the document as she thought there would be no problem as she was signing at a bank. 1083.D6 was shown the Long Asset company incorporation documents, ex 204. D6 said she did not sign the documents which purport to bear her signature. 1084.D6 said that the account opening documents dated the 13th January 2006 were signed by her and the information was supplied by her to the bank staff. She said that the certificate of incorporation and business registrations were given to her by D3. She said that the China Resources Monthly Invoice in her name was supplied by her as proof of address. She said she had been asked to bring this along by D3. D6 said she never saw the bank statements. 1085.D6 said she never saw the completed cheques. 1086.With regard to Exhibit 267, page 6029, an application for outward remittance dated the 19th May 2006 in the sum of CHF296,237.70, D6 said this was the document given to her by Zhu at the bank in Admiralty. D6 said she had received a call from D3 asking her to go to the bank as some banking documents were not yet signed. D3 later said he was busy and a Mr Zhu would deal with her. When she arrived outside the bank she met Zhu how was in possession of 6029. D6 was asked to tell the court about this document and the circumstances in which she signed it.D6 said that when she first saw the document is was filled in as can be seen including the amount, Long Asset name, account number and Soma AG details. She said she signed this document in front of the bank staff accompanied by Zhu who spoke with the bank staff. She said she did not know what they said. She said that after the bank staff and Zhu finished their conversation she was asked to sign at a particular place. She said she was not suspicious as this document was signed at the bank in front of the bank staff. 1087.D6 said she had neither seen nor signed any of the Long Asset contracts. She said she had not seen nor signed the Long Asset Service Licence agreement, Ex 213, page 5365. She said the mobile number recorded is not hers. She said she had never been to Soundwill Plaza in Causeway Bay. 1088.D6 said she was not aware the account was being used to channel money from an indictable offence and never suspected anything unlawful. She said she never received any benefit from the arrangement. 1089.She said she had heard of OGH from the news and from the gossip magazines as the wife of D1 was a media celebrity. 1090.D6 said she was aware OGH was a listed company. She said that PW40 told her that D2 was the younger sister of D1 and that she had taken out insurance with PW40’s company and they had known each other for many years. She said she did not find it surprising that they did business together. 1091.In cross-examination D6 said PW40 told her the business was only to be set up for quotations and she agreed straight away. She knew that Cheung had been asked to set up a company some time before. She said she did not ask Cheung about signing blank cheques. She said he had told her that he was not required to sign any cheques but some of his friends had with no problems. D6 said she did not know what was meant by quotations and was unclear as to what was involved in setting up a company. She said she was told payment had to be made for offices and other miscellaneous matters. She said she did not find it strange that offices were to be rented notwithstanding the company was not intending to do any business. She said that her boyfriend and other friends had helped out PW40 so she thought there would be no problem. She said she did not ask her boyfriend as to the details of what he did. D6 said she did not ask Cheung what he got out of it. She said she did not consider why so many companies were being set up. 1092.D6 said that before she went to open the account, D3 told her that the business of the company was trading and when she asked him what kind of trading he told it related to the metal business so she told this to the bank staff who dealt with the bank opening documents. She said she it was normal to tell the bank what sort of trade the company did. When asked how she knew to tell the bank that the major market was Hong Kong she said that D3 must have told her that. 1093.D6 said that with regard to the date on which the company started business, she said the bank staff told her to copy the date on the business registration certificate. When asked that she must have realized that that was not true she said she did not know what it was all about. She said she did not understand what was required in opening accounts. 1094.D6 said it did not occur to her to ask D3 who he was representing. In her mind it was arranged by D2 who wanted PW40 to get some friends to open accounts. D6 said she never submitted any quotations on behalf of Long Asset. 1095.When asked why she did not tell the bank that there would be no business she said it was normal to write down the nature of the business. It did not occur to her to tell the bank that the company was being set up merely for quotations. She said that she felt it was better for her to say fewer words. 1096.In the customer information form at p.5997 D6 supplied an office number and a mobile number. When asked about that number which was also recorded on her proof of residential document, p6003, she confirmed that that was her mobile telephone number and she had written it on p.6003. Also on the form at p.5997 she stated that her occupation was that of a director. 1097.D6 was cross-examined about the remittance application dated the 19th May 2006 in the sum of CHF 296,237.70 which was signed at the bank, page 6029. D6 ateed that she signed the document at the bank on behalf of Long Asset. She said that at the time she signed the document she did not know what it was. She said at that time she did not know it related to a remittance application form. D6 was reminded that she had told the court the amount was recorded on the document when she signed it. She then said that she did not in fact see that part at the time as when it was handed to her to sign Zhu had his hand over that part of the document and she did not push his hand away. She said there were English words on the form that she did not understand. She said she did not see the figures. She was reminded that she had told the court in her evidence in chief that when she saw the document on the 19th May the amount was set out in the document. D5 said that maybe she had misunderstood the question, she thought she was being asked what was recorded in the document. She agreed that the document was in Engish and Chinese characters. I noted that in her examination in chief about this document she had not mentioned that Zhu had covered any of it with his hand nor did she mention she had not seen the amount. 1098.D6 was asked if she said anything to Zhu about the large amount involved. She said she did not do so as D3 had asked her to go the bank to sign the document. She said that it did not occur to her to ask Zhu about the document and she did not know what the document was. She said it did not occur to her to ask Zhu to move his hand as she did not know what the document was even if he had moved his hand. She was asked why she did not ask Zhu what the document was because if Zhu intended her not to know what the document was about he would not tell her even if she asked him. 1099.D6 said that she has had a bank account since she was 17. Directions 1100.I reminded myself that the prosecution bring this case and are required to prove the guilt of each defendant beyond reasonable doubt. I am required to consider the evidence for and against each defendant separately and on each charge separately. I reminded myself that the prosecution had to establish each element of each offence to the required standard. 1101.All the defendants have clear records. This is relevant to the issues of credibility and propensity. A person with a clear record is more likely to be telling the truth and less likely to commit a criminal offence. In the case of D1 and D2 there was positive evidence of good character which I took into account. 1102.I reminded myself that PW40 was giving evidence under immunity and I took this into account when considering his evidence and treated his testimony with caution. 1103.I reminded myself that before a court may draw an inference from facts, the facts must be proved beyond reasonable doubt and the inference must be the only reasonable inference to be drawn from those facts. 1104.In relation to D3 and D4, records of interviews with the police were admitted into evidence. There was no issue as to their voluntariness and I was not invited to use my residuary discretion to exclude them. I reminded myself that the statements were mixed and that exculpatory statements made by them in relation to themselves or other defendants were admissible as evidence of their truth. I reminded myself that inculpatory statements made by the defendants in relation to other defendants were not admissible and I disregarded such statements. 1105.I reminded myself that if I rejected matters asserted by the defendants in evidence or in their records of interview, that did not mean they were guilty of any of the offences with which they were charged. I had to consider the evidence which I did accept and decide whether or not that evidence established the guilt of the defendants to the required standard. I bore in mind their clear records when considering the assertions made by them in evidence and in their records of interview. 1106.Four of the defendants elected to remain silent and I reminded myself that they had a right to do so. No adverse inferences could be drawn against them for exercising that right. The Law Conspiracy 1107.The essence of a conspiracy is the agreement. When two or more agree to carry their criminal scheme into effect, the very plot is the criminal act itself: R v. Chan Hon Muk ( 1989) HKLY 182. Nothing need be done in pursuit of the agreement: O’ Connell v. R (1844) 5 St Tr (ns). A conspiracy does not end with the making of the agreement; it will continue as long as there are two or more parties to it intending to carry out the design: DPP v. Doot [1973] AC 807,HL. 1108.The prosecution must establish beyond reasonable doubt that the defendant had the intention to be a party to an agreement to do an unlawful act. In R v. Anderson [1986] AC 27 HL Ld Bridge said :
1109.Knowledge of the facts is a necessary ingredient of the offence. The prosecution must establish to the required standard that the accused knew that the agreed course of conduct if carried out, would involve the doing of acts which constitute the relevant actus reus with the relevant mens rea, ie, would in fact involve the commission of an offence. 1110.By their very nature, conspiracies are often difficult to prove. The court is usually left to infer from circumstances and the individual acts of parties that a conspiracy has taken place. Once there is prima facie evidence that a particular person was a party to a conspiracy, the acts and declarations of the parties to the conspiracy are admissible both against that person and against other members of the conspiracy, if the acts and declarations are made in furtherance of the conspiracy and provided they are related to it: R. v. Au Shui Yuen [1992] HKC 219 1111.In HKSAR v. Lai Wai Cheong [1998] HKLRD 665 Leong J stated at 668:
1112.It is not necessary that all the parties to a conspiracy reach agreement at one and the same time: it is possible for persons to join a conspiracy at various stages and times provided that that conspiracy is a single, on-going one. (R v SHEIK Abdul Rahman Bux and Others [1989] 1 HKLR 1 @ p 7). 1113.Overt acts, which are proved against some accused, may be looked at as against all of them, to show the nature and objects of the conspiracy (R. v. Stapylton, Esdaile and Brown [1857] 8 Cox 69).
1114.In HKSAR v Chan Chun Hong & Another [2006]1 HKLRD 346, the Court of Appeal explained R v Wai Yu Tsang [1992] 1 HKCLR 26 (PC). An intent to defraud is not narrowly confined. To “defraud” or to “act fraudulently” simply means by dishonest means to act to the prejudice or detriment of another’s rights or to take the risk of prejudicing another’s rights; it is sufficient if the conspirators dishonestly agree to bring about a state of affairs which they realize might deceive the victim into acting a way that caused risk to itself. I also considered HKSAR v Lau Kwok Way Benjamin [2004] 3 HKC 523 (victim-bank at risk just because it made payment on letters of credit where there was no genuine commercial transction), and HKSAR v Law Kam Fai & Another (unrep, CACC No 189 of 2005, [2006] HKEC 937). 1115.While an intention to defraud is necessary, actual detriment need not be shown. See obiter of Ma CJHC at para 24 (3) of HKSAR v Law Kam Fai & Another, above. 1116.The test of dishonesty is set out in the leading authority of R. v. Ghosh [1982] QB 1053 CA ( the Ghosh test). Lord Lane concluded that there were two aspects to dishonesty, the objective and the subjective, and that the tribunal of fact, in determining the issue, would have to go through a two-stage process before it could convict a defendant.
1117.This test has been applied in Hong Kong as correctly stating the law: HKSAR v. Goh Swee Yan [2000] 3 HKLRD 342, CA. Dealing with the proceeds of an indictable offence 1118.Section 25(1) of the Organized and Serious Crimes Ordinance, Cap. 455, provides:
1119.In HKSAR v. Wong Ping- shui and Another (2001) 4 HKCFAR 29, the Appeal Committee held that, in a prosecution under this section, the prosecution does not have to prove that the property represents the proceeds of an indictable offence. The Appeal Committee held that the actus reus of the offence is dealing with property. The status of the property is only an element of the mens rea of the offence. 1120.The mens rea of s.25(1) has two parts, “knowing” and “having reasonable grounds to believe”. “Know” included evidence of the person’s involvement with the commission of the indictable offence, or by admission that he knew that the property was the proceeds of an indictable offence: Seng Yuet-fong v. HKSAR [1999] 2 HKC 833 836D. “ Reasonable grounds to believe” contains objective and subjective elements: (a) objective element – requires proof that there were grounds that a common sense, right thinking member of the community would consider sufficient to lead a person to believe that the property in whole or in part represented any person’s proceeds of an indictable offence; (b) subjective element – requires proof that those grounds were known to the defendant: HKSAR v. Shing Siu-ming and Others [1999] 2 HKC 818 at 825H. 1121.The Court of Appeal in HKSAR v. Yam Ho-keung CACC 555 of 2001 affirmed the reasoning of the trial judge that where there are reasonable grounds for believing in a number of scenarios which might give rise to the property being dealt with, the defendant holds reasonable grounds for believing in them all. If one of those scenarios is related to an indictable offence, that is sufficient basis to convict. The essential point is whether the defendant was aware of those reasonable grounds, not the nature of the actual belief he had formed on the basis of those grounds. 1122.“Dealing” is broadly defined in section 2(1) of the Ordinance and includes receiving, concealing, disposing or converting property. The limited defence provided by s. 25(2), that the defendant intended to disclose his suspicions about money laundering to an authorized officer, does not arise in this case. False statements by Company Directors, Etc. 1123.S. 21 of the Theft Ordinance Cap 210. Theft provides:
1124.The terms of section 21 of the Theft Ordinance are widely framed. The fact that the statement 'is or may be misleading, false or deceptive' does not diminish the burden and standard of proof, it merely states that the prosecution must prove, at a minimum, that it may have fallen into one of those three categories. 1125.The written statement itself has to be false. The falsity etc must relate to a material particular. In R v Mallet [1978] 1 WLR 820, (a false accounting case) a material particular, in the context of a document containing a false statement in a material particular, was held to be one that was material for the purpose for which the document was brought into existence and used. It is a matter of fact for the court to determine. 1126.The Ordinance requires proof of a specific intent to deceive. It is not an offence that can be committed by inadvertence, carelessness or inattention. There must be a dishonest intent for an offence to be committed. 1127.But there need be no successful deception. The prosecution must prove beyond reasonable doubt that the written statement was published or concurred to publish by the defendant. The mens rea element is twofold. On one hand, the prosecution has to prove beyond reasonable doubt that to the defendant’s knowledge, the written statement was or might have been either misleading, false or deceptive. 1128.The prosecution must also establish beyond reasonable doubt that the defendant had the intention to deceive members or creditors of the body corporate or association about its affairs. However, the prosecution does not have to prove dishonesty, and there is no need for the statement to be made or required for any accounting purpose [see Blackstones Criminal Practice 2009 Edition at 19(1): B6.15]. Accessing a computer with dishonest intent 1129.Section 161 (1)(c) of the Crimes Ordinance, Cap 200, provides:
Section 161 (2)(a) of the Crimes Ordinance, Cap 200, provides:
1130.The actus reus of section 161(1)(c) is the act of access to a computer. 1131.The mens rea of section 161(1)(c) has two parts:
In The Queen v. Tong Ka Kin (Unrep, HCMA 1031 of 1995), Duffy J held that the test for dishonesty for this section should be the Ghosh test.
1132.HKSAR v. Tsun Shui Lun [1999] 3 HKLRD 215: Chan CJHC considered the legislative intent underlying the Computer Crimes Ordinance and opined that each of the four situations contained in subsections (a) to (d) constitutes the mens rea of the respective crime, which share the same actus reus of obtaining access to a computer and “it is the intent or purpose of the offender at the time of access which must be looked at, not his intent or purpose at some later stage”. The section is, by virtue of subsections (c) and (d), not restricted to acts preparatory to the commission of a crime or fraud. As to the meaning of “gain”, the Chief Judge held that the definition in section 161 is wide enough to cover intangible benefits and can be transient in nature, thus would include information the defendant did not have prior to the access, be it transient as one would read on the screen or permanent if printed or copied to a storage medium. “Gain” need not be something, which can be utilized or used. 1133.In HKSAR v. Yu Mei-king (unrep, HCMA 898 of 2002), Deputy High Court Judge Barnes ( as she then was ) considered the issue and held: “the prosecution was not required to prove that the [defendant] ‘actually’ obtain any ‘gain’. It suffices for the prosecution to prove that the [defendant], when ‘obtaining access to a computer’, did so ‘with a view to dishonest gain’ for herself”. 1134.In HKSAR v. Alistair Charles Currie (unrep, HCMA 795 of 2004) Lunn J considered the issue of mens rea under section 161(1), ie “with a view to dishonest gain for himself.” The Judge adopted and applied the principle in Tsun Shui Lun and held that obtaining information one did not have prior to the access to the computer with Ghosh dishonesty suffices. In rejecting the argument put forth by the defendant on appeal, Lunn J stated that what purpose the defendant had for the information so gained or what use he would make of it is really a question of motive and motive is not an ingredient of the offence. The Court of Final Appeal agreed (unrep, FAMC 57 of 2004) [2005] HKEC 69. “Intent to cause loss to another” 1135.In R v. Tong Ka Kin (HCMA 1031 of 1995), the defendant had been convicted of accessing a computer he used at his employment for obtaining client account details and passing certain information to persons other than the original clients. On appeal, it was argued that there was no evidence that the defendant caused any loss to another. The appellate judge disagreed and held that the prosecution only had to establish potential loss to another and there was clear evidence in that regard. Theft 1136.Theft is the dishonest appropriation of property belonging to another with the intention of permanently depriving the other of it. The test for dishonesty is as set out in R. v Ghosh ( supra). EVALUATION OF THE EVIDENCE Introduction 1137.Ocean Grand Holdings Limited (OGH) was a publicly listed holding company. Its subsidiaries were primarily engaged in the manufacture and wholesale of aluminium extrusion products and chemicals for use in electroplating process. During the period covered by the charges the products were produced on sites located in Nanhai and Zhuhai, Guangdong Province, PRC and in Hong Kong. 1138.The aluminium side of the business engaged in the design, manufacture, sale and distribution of anodized, paint coated, powder coated and fabricated aluminium extrusion products. Their products included extrusions for eletronic components, shipbuilding, aerospace, industrial applications, furniture, window frames and curtain walls. The group also manufactured and sold aluminium alloy ingots used as raw materials in die-casting for the manufacture of aluminium products such as motor engine parts and outdoor furniture. 1139.In 2003, the management of OGH proposed the building of a new aluminium production plant on the mainland, at Sanshui in Foshan. The stated ambition of the company was to be one of the top aluminum factories in the world. The company was to target huge international customers which would inevitably mean that there would be very demanding and strict quality requirements. State-of-the-art equipment was to be purchased from manufacturers in Europe or America. 1140.The equipment required for the project included extrusion presses with pumps, handling systems and electrostatic painting/powder systems. 1141.The other major company initiative concerned the chemical side of its business. In August 2005, at a internal monthly management meeting (IMMM), D1, the executive chairman of OGH, briefed its directors about a proposal to buy gold bond wiring machines for their factory in Zhuhai on the mainland. The company was controlled by a subsidiary company, Kenlap PGC. Negotiations were entered into with local agents for a Swiss company called Soma AG for the purchase of fine wire drawing machines, and with a German company called IWT Industrielle Wickeltechnic GmbH (IWT) for the purchase of winding machines. 1142.The company also produced electroplating chemicals such as potassium gold cyanide (gold salt) which is used for gold plating. Electroplating is a process which produces an attractive outer finish on objects. Plated items included clocks, watches, jewelry, fashion accessories and other products of a decorative nature. Electroplating is also used in the manufacture of electronic components and parts for industrial equipment in order to alter and improve certain physical characteristics of the plated object. 1143.At the material time, OGH was held out to be the only fully licensed commercial electroplating chemicals manufacturer in China. 1144.The organization chart of the company, Ex 284, Core Bundle Item 1, shows that underneath OGH there were two further holding companies, one for the aluminium products business, Hing Yip Holdings (Hong Kong) Limited, (Hing Yip), and the other for the manufacture of electroplating chemicals, Ocean Grand Chemicals Holdings Limited, (OGC). Hing Yip Holdings ( Hong Kong ) Limited ( Hing Yip) 1145.Hing Yip was the holding company for the aluminum business. Hing Yip itself traded in aluminium ingots and it operated from the main offices of OGH on the 28th Floor of the Admiralty Centre. Hing Yip was the holding company for three wholly owned subsidiaries, OG Development Company Limited (OGD), OG Aluminium (Foshan) Company Limited (OG Foshan) and OG Aluminium Company Limited (Foshan) (OGCL Foshan). 1146.The two OG Foshan companies operated out of the same premises in Nanhai on the mainland. One dealt in aluminum extrusion and the other in the aluminium spraying business. The companies were originally called Nanhai HingYip Company Limited but the names were changed in 2005. 1147.The offices of OGD were also in the Admiralty Centre. It had no factory. OGD was the 90% owner of OG Aluminium (Sanshui) Company Limited (OG Sanshui). The construction of the new plant in Sanshui commenced in 2004 in order to meet the growing demand for aluminium extrusion products both domestically and overseas. According to OGH, the factory would have an annual production capacity between 100,000 and 150,000 tonnes and was to be equipped with top-of–the–line equipment. Aluminium billet and alloy production was expected to commence operation by the end of 2005 or early 2006, with aluminium extrusion lines and valued added service facilities gradually introduced in 2006 and 2007. It was expected that the Sanshui plant would be fully operational by the end of 2007. 1148.On 1 November 2005, OGD purported to enter into a contract with a firm called Greatson Corporation Limited, (Greatson) for the purchase of machinery for the Sanshui plant at a cost of approximately HKD153 million. The price was such that the transaction required to be publicly disclosed under the Stock Exchange Listing Rules. A Public Announcement dated the 1st November 2005, Ex 28, Core Bundle 3, stated that the plant would produce high value-added aluminium products of superb quality. Ocean Grand Chemicals Holdings Limited (OGC) 1149.OGC was a publicly listed holding company for the group companies that dealt with electro plating chemicals manufacture. OGC wholly owned Kenlap PGC (Potassium Gold Cyanide) Manufacturer Company Limited (Kenlap PGC) and that company wholly owned Kenlap Chemicals Limited (KCL) and Kenlap Fine Chemical (Zhuhai) Technology Company Limited (Kenlap Zhuhai). 1150.Kenlap PGC had factory premises in Hung Hom which closed in 2003. It dealt in the production of gold and silver salt. KCL bought and sold metals and chemical products. Kenlap Zhuhai dealt in the production of gold and silver salts, palladium salts, electroplating chemicals. It was proposed that the company should also deal in the production of gold bond wiring at the new workshop being constructed at Zhuhai. 1151.D1 was the chairman of OGH and OGC. He holds a master’s degree in construction economics and management. In 2004 he had over 20 years’s experience in business administration and in the aluminium industry. In 2004, he and his family held 33% of OGH and 24.07% of OGC. 1152.D2 is D1’s sister and a director of OGH, Kenlap PGC, KCL, OGD and Hing Yip. D1 and D2 were signatories of the bank accounts of these companies. 1153.D3 was employed as a project director within the OG group. He reported to D1. He was a director of Hing Yip. 1154.Zhu Weibing (Zhu), who is referred to in a number of charges, was employed within the OGH group as an assistant financial controller. Notwithstanding his job title, Zhu did not report to any of the three financial controllers of OGH but reported directly to D1. He dealt with fund movements of OGH and its subsidiaries. The Nanfang Galvanised Aluminium Sheet (Hong Kong) Group 1155.In 2003, D1 had a private investment in a group of companies which focused on the manufacturing and distribution of galvanized sheet in Sanshui on the mainland. The companies were 90% owned by D1 and his family. 1156.Two Hong Kong companies were set up as shareholding companies for two wholly owned subsidiaries. The holding companies were Nanfang Galvanised Aluminium Sheet (Hong Kong) Company Limited, (NGAS), and Nanfang Alloy Sheet (Hong Kong) Company Limited, (NAS). The former company wholly owned Hongli Nanfang Galvanised Sheet ( Sanshui) Company Limited, (Hongli), whilst the latter wholly owned Jieli Nanfang Alloy Sheet (Sanshui) Company Limited, (Jieli). 1157.The Nanfang holding companies operated from the OGH offices in the Admiralty Centre. There were common employees such as Li Lee Cheung and June Yip. Yip assisted in the sales division of both companies. Introduction to charges 1-13 1158.According to the prosecution, these charges arise from a scheme whereby OGD purportedly entered into a contract with Greaton to purchase machinery for approximately HKD153 million for the Sanshui plant. The prosecution alleged that machinery was purchased for the Sanshui plant but not pursuant to this contract. The prosecution alleged that, purporting to be pursuant to this contract, HKD136.7 million was paid to Greatson by OGD and Hing Yip and disbursed contrary to the economic interests of OGD and Hing Yip. The OGD Contract – Ex 10 Core Bundle (CB) 2 1159.By a contract dated the 1st November 2005, OGD purportedly agreed to purchase the following machinery from Greatson:
1160.It was a term of the contract that the extrusion presses and handling systems were to be manufactured by Cometal Engineering S.p.A (Cometal), an Italian company. The other machinery was to be manufactured by ITW Gema in Switzerland and ITW Ransberg in the USA. 1161.Under the contract, the port of shipment was Hong Kong and the port of destination was the Sanshui Port on the mainland. 1162.Because of the price of the machinery it was necessary for OGH to publish an announcement under the Stock Exchange Listing Rules. 1163.On the 4th November 2005, OGH published an announcement (the Announcement) referring to the purchase pursuant to the OGD contract, Ex 28, Core Bundle 3. The Announcement was dated the 3rd November 2005 and was stated to be “By Order of the Board of Ocean Grand Holdings Limited, Yip Kim Po (D1), Chairman”. 1164.The Announcement stated, inter alia, that:
1165.On the 21st November 2005, in a circular from OGH to its shareholders (the Circular), the representations set out above were repeated, Ex 29, Core Bundle 4. The Circular was signed “ Yours faithfully, For and on behalf of Ocean Grand Holdings Limited, Yip Kim Po Chairman”. D2 was at that time an executive director of the board. 1166.The Board Resolutions to approve and release the announcements were passed at a board meeting held on 11 November 2005 chaired by D1 and attended, inter alia, by D2, Ex 336, p. 6915. A further announcement (“Final Announcement”) was also approved for release and publication at that meeting. This related to an international offering by OGH of USD125 million fixed rate guaranteed notes to international investors in Asia and Europe. ABN Amro Bank NV was to be the lead manager in respect of the offer and sale of the notes. It was noted at the meeting that the issue was an appropriate arrangement for the company. The company had long term capital requirements for the Sanshui plant infrastructure project which was expected to commence operation around January / February 2007. 1167.At that meeting it was asserted that the company intended to use the net proceeds of the notes (approximately HKD900 million) to repay certain existing indebtedness ( approximately HKD500 million), as an intercompany loan to PGC (approximately HKD120 million) and the balance of approximately HKD280 million for general corporate purposes, working capital and capital expenditure. It was resolved that the Final Announcement was to be published on 22 November 2005. 1168.The representations about Greatson were lies. Greatson was a shell company, it had no offices and no staff. D4 was a nominee director of Greatson. He became involved in this enterprise through his friendship with Chung Ngai Man, PW40. PW40 was a friend of D2. According to PW40, D2 asked him to hold a company for OGH and to find friends to hold other companies. PW40 became a director of Pioneer Lane, his friend and former colleague, D4, became the director of Greatson. Another friend of PW40, D6, became the director of a company called Long Asset Limited (Long Asset). PW40, D4 and D6 all opened corporate bank accounts through which money from OGH was channeled. D4 opened the two bank accounts for Greatson. The prosecution alleged the Long Asset was a shell company and used to channel funds from Kenlap PGC by use of the sham contracts referred to in charge 14. 1169.Over HKD136 million was paid into the Greatson accounts, the majority of which was immediately paid out to the bank accounts of a company held by PW40 and two companies held by Tsui Sze Lam, D1’s bodyguard. The companies were Pioneer Lane, Strong Sense and Crown Regent respectively. This movement of funds are shown in the fund flow chart produced by the prosecution, CB 10. 1170.Between November 2005 and March 2006, Greatson did pay HKD15.5 millon to Cometal for four press handling systems, but these payments were made pursuant to a different contract purportedly entered into by Greatson and Cometal and backdated to 30 September 2005. OGH negotatiated with Cometal for the purchase of the four handling systems for HKD26.6 million. Although Greatson was never a party to these negotiations, OGH requested that the name Greatson be inserted into the contract instead of one of the OGH companies. 1171.A false address was used for Greatson, namely Ground Floor, 5 St Francis Yard, Wanchai from 29 August 2005. At that time these premises were occupied by a firm called Belmont Interiors operated by PW37. PW37 said that he had never heard of Greatson. PW37 told the court that in 2004 he was approached by OGH to carry out some renovation work and provide furniture for their offices in Admiralty. He said that he dealt with D2, whom he knew as Christie Yip. He said he met D1 on a social occasion together with D2. He said he spoke with D2 in English. He said that he had never heard of Zhu, Brian Or, D3, D4 or PW40. PW37 said that on the first occasion he met D2 they spoke for about half an hour or less. He said he was given 6-7 jobs to do at the offices in Admiralty and would see her from time to time when he went to the offices to check on the progress of the work. PW37 disagreed when it was put to him in cross-examination that it was not D2 that he dealt with. PW37 said he only spoke with D2 in his dealings with OGH. 1172.PW29 and PW87 who had worked with D2 said they had never heard D2 use English and had been present on occasion when English interpreters were used. 1173.I accepted PW37 as a reliable and credible witness and I was sure that it was D2 that he had dealt with at the OGH offices. 1174.OGH did proceed to buy equipment for the Sanshui factory but not in pursuance of the OGD/ Greatson contract. OGH entered into protracted negotiations with a number of suppliers in respect of this equipment. The four presses referred to in the OGD contract were not purchased from Cometal. Presses with identical specifications, and bearing false Cometal plates, were purchased from a mainland company called Yong Chang Metal Machinery Plant ( Yong Chang) at a fraction of the price referred to in the OGD contract. The price of the four presses purchased from Yong Chang was RMB 8.8million. 1175.OGH did contract to purchase electrostatic coating equipment via agents of ITW Gema and ITW Ransburg, namely Kimbo Funishing Equipment Limited (Kimbo) and Langtech Limited (Langtech) respectively. OGH entered into a contract with Kimbo on 9 January 2006, Ex8, CB 18, for the purchase of 2 sets of equipment for RMB1.13 million. After the goods had been shipped to Hong Kong in April 2006, D3 made arrangements for the contracts to be put into the name of Greatson, a company with whom Kimbo had had no dealings. 1176.OGH entered into a contract with Langtech for the purchase of 6 sets of ITW Ransburg equipment for the equivalent of RMB4.2 million. The contract, Ex 9, CB21, was dated 10 January 2006. OGH made an initial payment but defaulted on further payments and the machinery was never delivered. The Langtech representative had never heard of Greatson. 1177.The actual cost of machinery supplied to OG Sanshui according to contracts entered into by various suppliers was approximately HKD38 million 1178.The dealings with the various suppliers were convoluted and complex. A paper trail was created to obfuscate the genuine situation. D3 was at the heart of such dealings. Negotiations in respect of machinery supplied to OG Sanshui Ex 12, CB11, Contract dated 1 July 2005 between OG Sanshui and Yong Chang Metal for four extrusion presses 1179.Throughout the relevant period, OGH held regular management meetings ( IMMMs) which were always chaired by D1. The two major topics discussed at these meetings were the building and equipping of the new aluminium production plant at Sanshui in Foshan, and, at later meetings, the aquisition of the gold bond wiring machines for the Zhuhai plant. 1180.As mentioned above, for the Sanshui plant, state-of-the-art equipment was to be acquired from leading European and American manufacturers. There was no mention at any of the management meetings of purchasing any equipment manufactured by mainland manufacturers. 1181.However, a contract was entered into between OG Aluminium (Sanshui) Company Limited (OG Sanshui ) and Yong Chang Metals Machines Factory (Yong Chang) dated 1 July 2005 for the supply of four extrusion presses the specifications for which were identical to the specifications for the presses referred to in the OGD contract. The price ((RMB8.24 million) was far lower than the price stated in the OGD/ Greatson contract. 1182.The payment terms set out in the OG/ Yong Chang contract were not honoured and the contract lapsed. Yong Chang nevertheless went on to manufacture the four presses as they were commonly used on the mainland. 1183.In February or March 2006, a company called Skybright Import and Export Trading Company Limited (Skybright) agreed to buy the presses for HKD9 million and collected them from Yong Chang in May/July 2006. Skybright acted as a go between in this arrangement on behalf of someone who called himself Mr Yu and who claimed to be from Hong Kong. 1184.These presses were subsequently delivered to the OG Sanshui plant and inspected there after OGH went into provisional liquidation on the 24th July 2006. At that time they bore Cometal plates. Silvio Mancini an employee of Foshan Trevisan Cometal Industrial Machinery Company (Cometal), PW56, who had been involved in negotiations with OGH concerning their proposed purchase of Cometal presses and handling equipment, said that the presses he saw at Sanshui were not manufactured by his company and were toys when compared with Cometal presses. He said Cometal presses are twice the size of the Yong Chang presses and 6 times more expensive. He also said that the four sets of handling machinery eventually supplied to the OG group under the contract between Cometal and Greatson, Ex 7, CB9, dated the 30th September 2005, were capable of handling a much greater output of aluminium than the Yong Chang presses were capable of extruding. Supply of Pumps for the Presses 1185.PW 19, the manager of the Rexroth Bosch Group in Hong Kong (Rexroth Bosch) told the court that by contracts dated the 4th, 18th and 25th July, Yong Chang agreed to purchase thirteen mechanical pumps from Rexroth Bosch for HKD1.14 million, Ex 11, CB12. The pumps were necessary to power the extrusion presses. 1186.On the 22nd December 2005, D3 sent an e-mail to a Mr Li of Yong Chang attaching a draft confirmation letter which stated that pursuant to a contract dated 1 July 2005 OG Sanshui paid HKD805,219.97 to Rexroth Bosch on 23 December 2005 as requested by Yong Chang, Ex 21, CB13. 1187.On 23 December 2005, Strong Sense issued a cheque for HKD805,219.97 to Rexroth Bosch in part payment for the pumps, Ex 314. The balance was paid on behalf of Yong Chang by two other persons, Ex 314 pp 6750/3. The sole director of and shareholder of Strong Sense and sole signatory of its bank account, was Tsui Sze Lam, the bodyguard of D1. His nickname was “Tai Shan”, which is the Cantonese expression for Tarzan. 1188.Three lots of invoices, Ex 66, were produced in relation to the pumps and accessories which were delivered to the Hong Kong address of Bosch. Arrangements were made for the goods to be shipped to the mainland on 28 March 2006. 1189.On 26 April 2007, PW90, a representative of Rexroth Bosch, visited the OG Sanshui plant. He identified a number of pumps found beside the Yong Chang extrusion presses as having being manufactured by Rexroth Bosch. EX 8 CB 18 Contract dated 9th January 2006 between OG Sanshui and Kimbo for 2 sets of ITW Gema Electrostatic Powder Coating Equipment – the Gema Contract 1190.The OGD/ Greatson contract refers to an agreement to purchase one set of ITW Gema/Ransburg for Electrostatic Powder Coating Equipment (EPCE) for just over HKD43.34 million. 1191.Throughout 2005, negotiations were carried on with Kimbo Finishing Equipment Limited, the agent for the Swiss company, ITW Gema, in Hong Kong and on the mainland. This led to the signing of a contract between OGH Sanshui and Kimbo, Ex P18, CB 11, dated the 9th January 2006 for the purchase from Kimbo of two sets of ITW Gema EPCE by OG Sanshui for RMB1.13 million. When delivery of the equipment was to be made in April 2006, PW16, the general manager of Kimbo, was informed by D3 that the contract should be in the name of Greatson and the contract should be sent to the address of Greatson for signature, Ex 309,p6739-6740, CB 19. Some of the correspondence relating to this matter was cc’d to D1. Kimbo had never had any contact with Greatson. PW17, from Kimbo, identified the 2 sets of EPCE delivered to OG Sanshui in pursuance of these arrangements at the OG Sanshui plant in March 2007. Ex 9, CB21, Contract dated 10January 2006 between OG Sanshui and Langtech for a set of ITW Ransberg Electrostatic Vertical Painting Equipment – the Ransburg Contract 1192.In September 2005, PW18, the Managing Director of Langtech Ltd, which deals with machinery including the sale of ITW Ransberg coating systems, told the court that his mainland staff were approached in September 2005 to prepare a quotation for the sale of a vertical coating equipment system to OG Sanshui. He said ITW Ransburg is an Amercan company and Langtech are their agents. On the 10th January 2006, a contract was signed between Langtech and OG Sanshui for the purchase of ITW equipment at the price of RMB4.2 million, Ex 9, CB21. OG Sansui later paid RMB 1.5 million as a prepayment but later defaulted. The machinery was never delivered. Langtech had no contact with Greatson. Payments made pursuant to the OGD Contract 1193.Between 21st November 2005 and the 21st March 2006, payments totaling some HKD136.7 million were made by the OGH group to Greatson, purportedly pursuant to the OGD contract. The cheques were prepared by PW9, the accounts clerk for Zhu. 1194.Greatson dealt with the payments in the following manner:
1195.A flow chart, CB10, shows that these funds eventually found their way to Hing Yip, HKD74.9 million, KCL, HKD11.2 million, the Nanfang Group, HKD25.2 million and to a You Shuiqing, a friend of D1, HKD 8.8 million. 1196.PW9, Zhu’s accounts clerk, gave evidence that she prepared cheques and bank transfers in respect of the bank accounts of OGD, Hing Yip, Greatson, Strong Sense, Pioneer Lane, Crown Regent, Good Light and Nanfang Galvanised Sheet. D1 and D2 were the signatories for the bank accounts of OGH and Hing Yip. The signatories of the bank accounts of the other companies were friends of either D1 or D2’s friend, PW40. Background of some of the companies involved Greatson Corporation Limited 1197.Greatson was incorporated in Hong Kong by a company secretarial firm (PW35: S. 65B – Ex 368-5) in March 2004. 1198.It was purchased from the secretarial firm by a solicitor, PW26,in August 2005 on the instructions of D3 who also requested the purchase of a Singapore company to hold the shares in Greatson. 1199.According to Company Registry (“C.R”) Documents, D4 became the sole director of Greatson on 29th August 2005 [Ex 168, p.4238 - 4259]. D4 also became a director of a Singapore company, Daintree Pte. Ltd. On 28 September 2005, according to the C.R. documents, Daintree Pte. Ltd became the sole shareholder of Greatson (AFI, parag. 3(e)). 1200.According to PW40,some months after opening the Pioneer Lane bank accounts, he was approached by D2 in about mid 2005. She asked him to find other persons who would be willing to hold a company for one year. PW40 said that D2 told him there would be no business done by such companies. According to PW40, he said that he was told that the main purpose was to mail quotations. 1201.PW40 responded positively to this request and arranged for a number of his friends and former subordinates to hold companies. One of the friends was D4. 1202.Upon its purchase by the solicitor, PW26, the registered office and business registration address of Greatson became G/f, No. 5 St. Francis Yard, Wanchai (AFI parag’s 3(c) and (d)); [Ex 168]. PW26 said that this address was given to him by D3. 1203.This was in fact the office address of a renovation company. Greatson was unknown to the proprietor (PW37). The proprietor had previously dealt with D2 (whom he identified) in respect of OGH office renovations at its Admiralty Centre address. 1204.According to the records of the Dah Sing Bank [Ex 157, p.3306-3404], D4 opened and became the sole signatory of two bank accounts of Greatson on 11 November 2005. 1205.In April/May 2006, the R.O. and B.R. address of Greatsonwere changed to that of a secretarial firm (PW28; S.65B: Ex 368-2 and AFI parag. 3(c))at Room 1101, Hollywood Plaza, 610 Nathan Road, Kowloon [Ex 168]. This was arranged by Tam Ping-kuen, Daniel, PW29, who had previously worked at OGH and knew D1, D2, D3 and Zhu. According to PW29, Zhu approached him and asked for the services of a secretarial firm to provide a correspondence address for Greatson. Thereafter, letters received by the secretarial firm for Greatson were passed to Zhu. Zhu was employed within the OGH group as assistant financial controller. He dealt with fund movements of OGH and all its subsidiaries, reporting directly to D1. 1206.A Profits Tax Return filed with the IRD on behalf of Greatson for the year of assessment ending 31st March 2006 stated the company to be “dormant”. [Ex 74, p.1222 - 1223] No profits tax return was filed for the year ended 31st March 2007. Payments to Greatson 1207.Between 21st November 2005 and 21st March 2006 twelve payments totalling some $136.7 million were made to Greatson’s bank accounts by way of bank transfer, purportedly in pursuance of the OGD Contract. Five payments were made from the bank account of OGD and seven from the account of Hing Yip. 1208.It was clear from the evidence that Zhu instigated the timing and amount of the twelve payments. Twelve Payment Approval Request/Accounting Vouchers (“Payment Vouchers”) were prepared. On eight of the twelve occasions, D1 and Zhu signed in the “approved by” columns of the relevant Payment Vouchers. [Ex 32 - 43, p.1089 - 1133] 1209.D1 signed 9 of the 12 relevant bank transfer (CHATS) applications;D2 signed 3. 1210.During the period of these payments D4 remained the sole signatory of Greatson’s bank accounts. Crown Regent 1211.Crown Regent was incorporated in Hong Kong on 11 July 2003. 1212.At all material times, one Tsui Sze-lam (“Tsui”) was the sole director and shareholder of this company. (AFI, para. 4) I was satisfied on the evidence that Tsui was the “bodyguard” of D1. 1213.Tsui was also the signatory of Crown Regent’s bank accounts held with the Dah Sing and Chong Hing Banks. (AFI parag’s 31-1 and 31-2) Strong Sense 1214.Strong Sense was incorporated in the British Virgin Islands by East Asia Corporate Services (BVI) Limited on 19 June 2002. (AFI parag. 6(a)) 1215.It was purchased by Tsui on 5 November 2002. (AFI parag. 6(b)) 1216.Tsui was the sole director and shareholder of Strong Sense between 5/11/02 and 30/12/04. He was the sole signatory of its bank accounts at the Bank of East Asia at all material times (AFI parag. 32(b)).The evidence of PW59 (S. 65B: Ex 368-18B) was that on 7th November 2002 a cheque for USD$750 was received in respect of “formation charges” relating to Strong Sense. This cheque [Ex 232 p.5385] was signed by D5 (AFI parag. 6). 1217.The registered address of Strong Sense was that of a secretarial firm, CEO Business Centre. (PW30: S. 65B: Ex 368-17) The firm received correspondence for that company; such correspondence was collected by PW66, the office assistant employed by the OGH Group, who would give it to either D3 or Zhu. 1218.Strong Sense was unknown to the IRD. (PW101: S. 65B: Ex 368-30) Pioneer Lane 1219.Chung Ngai-man, PW40, was the sole shareholder and director and bank account signatory of Pioneer Lane. (AFI parag’s 7 and 29) According to PW40 he had known D1 and D2 since 1991. In November 2004, D2 approached him about holding a company on behalf of OGH. In December 2004, D3 contacted PW40 and helped him to set up Pioneer Lane and to rent a company office. Again assisted by D3, PW40 opened a company bank account for Pioneer Lane and signed a number of blank cheques which he gave to D3. Disbursement of Funds by Crown Regent, Strong Sense and Pioneer Lane 1220.The disbursement of the majority of the funds received by Crown Regent, Strong Sense and Pioneer Lane is depicted in Chart 1 (CB10). I noted the following matters:
1221.PW9, Agnes Lam Pui Pui, Zhu’s accounts clerk, gave evidence that it was part of her duties to process payments received by customers, and that she would obtain the information and documentation to process these payments from Zhu. The documentation would normally include a notification letter, informing Hing Yip that a certain amount had been deposited into Hing Yip’s account by the customer by way of payment for goods purchased, usually metal salts. 1222.PW19 produced 17 letters of notification purporting to relate to payments made to Hing Yip from various customers. A number of the letters of notification, purporting to be from different customers, are similar in format and wording. Many of the cheques accompanying such letters were prepared by PW9 on Zhu’s instructions. 1223.It can be seen, for example, the letter of notification from Good Light, Ex 48,p.1147, dated 2 December 2005 is similar in format and wording to the letters of notification from Forex. The same goes for the two letters of notification dated 17 March 2006 from Good Light and Forex (Exhibits 50,p.1153 and 136,p.3084). 1224.The Pioneer Lane letter of notification, Ex 55,p.1168, dated 17 March 2006, appears similar in format and wording to the Forton letters. The New China Trading letters of notification, Ex 57,p.1175, 58,p.1180, dated 20 March 2006, appear similar to the Forex letters of notification. The Mantex Trading letter of notification, Ex 60, p.1183, dated 30 November 2005 appears similar to the Forton and Pioneer Lane letters. 1225.Forton, New China Trading, Mantex and Forex were all set up by PW29 on the instructions of either D1 or Zhu. 1226.Many of the cheques accompanying such payments were drawn on the bank accounts of different companies. By way of example Good Light cheques and Pioneer Lane cheques accompanied Forex Letters of payment (Ex 134, pp 2959 and 2969 and Ex 156, pp3298 and 3300). The two Good Light cheques were prepared by PW9. 1227.PW29 was instructed by OGH personnel to set up Forex, Forton, Mantex and New China Trading. 1228.PW9 first started to work for D2 at Global Credit in 1999 as a receptionist. In 2003 she worked for D1 as a secretary. In August 2003 she became an accounting assistant initially under Daniel Tam, PW29, and then under Zhu in late 2003 or early 2004. Her work involved issuing cheques, preparing payment vouchers, monitoring funds and inputting information into the computer. 1229.Having considered the supporting documents, the timing of the fund movements and all the surrounding circumstances, the irresistible inference was that these sales never took place. The Office Planning Committee 1230.An office planning committed was set up to supervise the Sanshui project. The members of this committee were as follows:
Other persons connected with OGH 1231.Kwan Yan was an executive director of OGH and a director of OGC, Hing Yip and Kenlap PGC. 1232.June Yip was the assistant director of the marketing department of OGH. 1233.Qi Liping was a director of Kenlap PGC and worked in the accounts department. She did not report to any of the OGH financial controllers. According to PW2 she could sign bank documents for companies on the chemical side of the group. 1234.Lisa Li worked in the accounts department of OGH. According to PW2 she was employed to liaise with colleagues from the mainland on behalf of the group’s finance department. I noted that in the OGH directory dated 29 December 2005, Ex 334, her position is not specified and the evidence showed that she did not report directly to any of the financial controllers. She is the wife of Lin Jianping, a good friend of D1 according to the unchallenged evidence of PW1. 1235.Lin Jianping was also an Executive Director of OGH, Director of OGD, Director of NGAS. On 2 February 2000 NAS was incorporated in Hong Kong as Brightman Enterprise Limited (Brightman). On 13 October it changed its name to NAS. D2 and Lin Jianping were the directors and shareholders of Brightman and Lin remained a director and shareholder of NAS on 24 July 2006. D2 remained a director of NAS on 24 July 2006 and had transferred her 90% shareholding to D1 on 15 November 2005. Lin also had a shareholding in Jieli Nanfang Alloy Sheet, the subsidiary of NAS. 1236.I accepted the evidence of PW21, the General Manager of Allied Shipping Limited, that in connection with the shipping of the Cometal handling systems, he met Lisa Li who was introduced to him as Madam Chan. She claimed to represent the cargo owner. He identified her as the person shown in Exhibit 354. PW2 gave unchallenged evidence that the person in the photograph was Lisa Li, the wife of Lin Jianping. Chronology of Events in relation to Sanshui Project 1237.When examining the chronology of events in relation to this project, I noted that the acquisition of some of the machinery was not mentioned at IMMMs. For instance, the acquisition of the four presses from Yong Chang pursuant to the contracts dated in July 2005 was not mentioned at the monthly management meetings. At that time OGD were dealing with Cometal for the acquisition of presses manufactured by them and those reporting at the monthly meetings referred to the acquisition of state-of-the-art equipment to be produced by leading international manufacturers. Cometal presses are referred to in the OGD contract signed in November 2005. The OGD Contract –1st November 2005 Ex 10, CB,2 1238.This contract purported to relate to the purchase by OGD from Greatson of 4 sets of cometal extrusion presses with handling systems for HKD109,695,683 and 1 set of ITW Gema/ Ransburg Vertical Powder and Electrostatic Coating System for HKD 43,398,099. 1239.In March 2004 Mancini of Cometal, PW56, was approached at an exhibition in Guanghzhou by Liu GA who said that he was manager of OGH. Liu said that OGH company was involved in a large project and Cometal machinery might be suitable for the factory. 1240.In May or June 2004, PW56 made a presentation in the Hong Kong OGH offices attended by, inter alia, Liu GA and June Yip who acted as a liaison between the groups. 1241.This was followed by a number of meetings on the mainland and PW56 came to know that the OGH project was huge. 1242.In November 2004 there was a visit by OGH personnel, including D3, to the Cometal factory in Italy. PW56 said at the end of 2004 there was an impressive opening ceremony in Sanshui for the new factory which was attended by inter alia the General Manager of Cometal and various local dignitaries. 1243.After the OGH visit to the Cometal factory in Italy, companies in the Cometal group submitted quotations with detailed specifications to personnel in the OGH group on the mainland, Exhibits 2-5, in respect of a vertical powder coating plant, a fully automised anodyne plant and two complete aluminium extrusion lines including the presses and handling systems of different capacities costing in the region of Euros 3-4 million. The presses were to be manufactured in Italy and the handling system was to be manufactured by Cometal’s factory on the mainland. 1244.On 31 January 2005, Liu GA with D3 and Tony Chan, who was involved in the marketing side for OGH, met PW56 and some other Cometal staff in relation to a profile brushing machine. 1245.PW56 said that there was a long period of silence but he did later get in contact with D3. In May 2005, PW56 sent an e-mail to D3 asking if his company was still interested in the December quotations as he did not want to waste their time. 1246.PW56 said that at about this time he became aware that Liu GA had been replaced by Liu Mengjun (Liu MJ) as leader of the Sanshui project. 1247.On 24 May 2005, an e-mail was sent from D3 to PW56 requesting him to provide information and prices on 3 presses of different capacities. PW56 said the size of the order was much smaller than he had expected. PW56 asked for clarification and the name of the new technical engineer. D3 told PW56 that Tony Chan would be in Guangzhou the following day and would contact him. PW56 said he met up with Liu MJ and Tony Chan who acted as an interpreter. PW56 was told there had been delays in the project because of heavy rain. 1248.On 20 June 2005, an employee of Cometal sent out quotations and specifications via 3 separate e-mails (867-9). He said they had to be separate e-mails because of the size of the attachments. Exhibits 14–16, pages 405–770 are the offers from Cometal in respect of the three extrusion lines referred to as offers 218 to 220 with a total value of the equivalent of about HKD87 million. PW56 said OGH indicated that they wanted to see a press of the same size and he indicated to them that because of the visa requirements it would be easier for them to visit a factory in the USA to see an extrusion line in operation. 1249.On 11 July PW56 sent an e-mail to Tony Chan which he forwarded to D3. PW56 said he was confused as to the intentions of OGH. He noted that OGH had delayed their visit to the USA. PW56 told the court that he was under pressure from the Cometal board of directors with whom he was losing face. 1250.On 8 September 2005 D3, Tony Chan and Liu MJ met PW56. There was a conference call made to Cometal in Italy. OGH had requested a discount in the price. PW56 said that OGH had made it clear that delivery time was a priority. He said that Cometal were not able to deliver presses from Italy in time. He was told that OGH had decided to buy from a local manufacturer who could give them a very fast delivery time. OGH also said that the price of the Cometal presses was very high. PW56 said that they agreed a price of HKD26.5 million in respect of the Cometal handling systems. 1251.On 8 September 2005, D3 sent an e-mail (p.936) to Tony Chan (Marketing Sales manager of OGH) headed “Breaking News from Cometal” in which he informed Tony Chan that a Mr Lau had accepted in principle to buy four complete sets of handling systems from Cometal for RMB26.5 million to accompany “four local extrusion presses”. There was also correspondence concerning OGH ‘s dealings with another company concerning the purchase of presses manufactured by Granco Clark in the USA (p.936). 1252.The purchase of the Cometal handling systems was confirmed by e-mail correspondence between PW56 and D3 (pp. 871-2) and payment terms were negotiated. PW56 said the contract was to be with Greatson. PW56 said that as they did not know Greatson they would need a letter of guarantee from OGH. 1253.Pp.873-5 are the e-mails sent in September 2005. D3 informed PW56 that the contract they had negotiated was to be with Greatson Corporation rather than with OGH and provided him with the Wanchai address and contact details of Greatson. In September and October there were further meetings and correspondence concerning payment, shipping and insurance arrangements. 1254.With regard to PW56’s request for a letter of guarantee from OGH, D3 informed PW56 that D1 and OGH would not sign a letter of guarantee in respect of the contract but OG Sanshui would do so. This was acceptable to Cometal. PW56 made it known that he was not happy about the progress in relation to the signing of the contract as production of the machinery had already commenced. 1255.In October 2005, PW56 met D3 at the offices of OGH to discuss terms of payment and delivery of the draft contract. PW56 said the contract between Cometal and Greatson was signed but Cometal never received a letter of guarantee. The price eventually agreed was RMB26.5 million. The contract number was number 220/05 and related to four handling extrusion lines. 1256.The contract was sent to Greatson on 3 November 2005 for the attention of Mr C Chan via a courier, China Express. The courier was unable to locate anyone related to Greatson at the Wanchai address. Cometal also rang the telephone number supplied many times without success. PW56 sent an e-mail to D3 concerning these problems on 7 November 2006, p. 895. On 6November 2006, PW56 sent an e-mail to D3 suggesting a meeting with Mr C Chan to coordinate the delivery arrangements as the first shipment had already been sent. Mr C Chan of Greatson replied by e-mail on the 8th December copied to D3 that there was no need to meet up (p.898). 1257.PW56 said that Ex 7, CB9 is the Cometal / Greatson contract dated the 30th September 2005 signed by Bruno Mancini who is responsible for the extrusion division of Cometal. It relates to the purchase of four Cometal handling systems for presses of different metric tonnage for HKD26 million. He said that the date is the date that was first inserted in the contract when it was drafted. 1258.There was further e-mail correspondence between D3 and Cometal concerning shipping delays which incurred extra costs for Cometal because of additional storage charges. 1259.PW56 produced a series of invoices in respect of payments made by Greatson for the four handling systems. The address of Greatson on the invoices varied. For the first payment, dated 26 November 2005, the Greatson address was D4’s residential address. The next Cometal invoice issued in December was sent to the Wanchai address and the remittance advice of the Dah Sing Bank was issued on behalf of Greatson shows the residential address of D4 in Shek O. The next remittance advice, dated in March 2006, also shows the Shek O address. Again the Cometal invoice had been sent to the Wanchai address of Greatson. 1260.PW56 was shown a series of photographs taken at the Sanshui plant on the mainland after the appointment of the provisional liquidators, R9. PW56 pointed out the four handling systems supplied to OG by Cometal. He also pointed out extrusion presses bearing a Cometal plate. He said these presses were not Cometal presses. He said that presses manufactured by Cometal in Italy do not bear such plates. He said that, in any event, he could tell simply by looking at the presses that they were not manufactured by his company. He said that, compared to Cometal presses, these presses looked like toys and were obviously manufactured on the mainland. He said that the Cometal handling systems could handle a much greater output than these presses were able to extrude. He said the Cometal presses were twice the size of these presses and were six times more expensive. 1261.The shipping arrangements for delivering the handling systems were dealt with by Allied Link Shipping Limited. PW21, its General Manager, told the court that in early 2006, the business was referred to him by Mr Lee Kwok Keung, PW20, the manager of a company called Tim Logistics. He met representatives of Cometal with PW20 on the mainland. PW20 acted as a go-between. At that meeting there was a woman who called herself Mme Chan who represented that she was the owner of the cargo. He identified Mme Chan as being the person whose image was shown in Ex 354, 7096, Lisa Li of OGH. He said he asked her for a name card and she said she did not have one. 1262.The Cometal handling systems arrived in Hong Kong from the mainland addressed to Greatson on the 23 March, 13 May, 16 June and 28 June 2006. PW21 said the name of the company had been given to him by Madame Chan over the telephone. The systems were shipped to OG Sanshui either the day following their arrival or the day after. 1263.On 22 November, 16 December 2005, 15 March 2006 and 7 June 2006 four payments totaling HKD20.2 million were sent to Cometal from Greatson. OG Sanshui – Yong Chang Metal Machinery Plant - Contract for 4 presses – Ex 12, CB 11 1264.The statement of PW15, the manager of Yong Chang, was admitted under s.65 B – Ex 368-24. He said that in March 2005, Liu MJ discussed with him the purchase of extrusion presses for OG Sanshui. 1265.This led to a contract dated 1 July 2005 by which OG Sanshui agreed to purchase four presses from Yong Chang for RMB8.24 million, Ex 12 CB 11. Yong Chang is a local Chinese manufacturer 1266.On 8 September 2005, about the time that OGH and Cometal reached verbal agreement for the supply of the 4 handling systems, D3 sent an e-mail to his colleague Tony Chan informing him of the agreement to buy the handling systems to accompany the “ 4 local extrusion presses” [Ex 21, p.936 – 937: CB 7]. 1267.PW15 said that on 23 December 2005, OG made a deposit of HKD800,000 which was used to settle a payment arising out of Yong Chang’s purchase of machinery (pumps) from Bosch Rexroth. CB13 is an e-mail between D3 and PW15 in relation to the Rexroth payment and stated the goods could be delivered to the OG Hung Hom premises. An attachment referred to the contract, Ex 12, CB11, whereby OG would pay Rexroth USD103,233.33 on behalf of Yong Chang and this would be deducted from the amount in the Yong Chang/OG contract. PW15 said that OG defaulted on the payment terms and the presses were not supplied to OG Sanshui pursuant to this contract. Yong Chang did however proceed to manufacture the presses as they were in demand on the mainland. 1268.PW15 said that in February or March of 2006, a Miss Leung, of Skybright Inport and Export Trading Company Limited (Skybright) in Foshan, went to Yong Chang to view the presses which were later sold to Skybright for about HKD9 million. PW15 said that they were delivered in the May-July period. He said he did not know why the four presses sold to Skybright were kept in the premises of OG Sanshui. He said he did not know why the presses bore the metal plate of Cometal. The Cometal plates were not supplied by his company. 1269.On 20th February 2006, in an e-mail to “Lisa”, D3 provided information about the shipping companies responsible for Cometal’s shipment to Hong Kong. The e-mail also provided the contact information for Mr. Li of Yong Chang, which was described as “the local plant” [Ex 21, p. 941 : CB 14]. 1270.On 1 March 2006, D3 sent an e-mail to Mr. Li of Yong Chang, setting out, in an attachment, the specifications for the extrusion presses. [Ex 21, p. 942] The format of the attachment [Ex 21, p.942-1 to 942-107] is similar to that containing the quotations prepared by PW56 for D3, ie, Ex 14-16, p.405-730. The specifications for the extrusion presses were identical to those stated in the OGD/ Greatson Contract (i.e. 1350 MT (p.942-1); 1850 MT (p.942-43) and 2650 MT (p.942-74). 1271.Some time later, (according to PW22 and PW23: S. 65B Statements, Ex 368-25 and 368-26), a Mr. Yu from Hong Kong, approached a trading company in Foshan, Guangdong Skybright Import & Export Trading Co. Ltd. (Skybright), and asked it to purchase four extrusion presses on his behalf from Yong Chang for export. 1272.By contracts dated 2 April, 12 April and 12 May 2006, Skybright agreed to purchase four aluminium extrusion presses from Yong Chang for RMB 8.89 million. [Ex 124, p.2682–2693; CB 15] According to PW22, [S. 65B: Ex 368-25] Mr. Yu paid for the presses with Skybright acting as a go between. 1273.PW22 said the agreements were prepared by Miss Leung of Guangdong Skybright. He said Skybright acted as a go-between and the batch of machinery was purchased by Mr Yu from Hong Kong. Skybright would charge handling costs. Mr Yu paid for the machines. He said he did not know Crownica Development Limited mentioned in the Guangdong Development Bank notification, Ex 125, p. 2695, dated 15 June 2006 in the sum of USD326,863, (about RMB 2.5 million). PW22 said the remaining balance of about RMB800.000 was paid by YU directly. He said that Skybright did not get involved in the transaction. 1274.I noted that Crownica was acquired by PW29 in September 2005 on the instructions of OGH. The contact person was Zhu. 1275.The statement of PW23, F/ Ma Weiwen, Deputy General Manager of Skybright, was admitted under s.65B CPO, Ex 368- 26. The statement referred to the four contracts, Ex 124, CB15 between Chong Yang and Skybright. The first two contracts are dated 2 April 2006, the third 12 May 2006 and the fourth, 12 May 2006. She said the contracts were was used for import and export formalities and had no substantive meaning. They related to four aluminium extrusion machines valued at RMB8.89 million. The contracts were prepared by Miss Liang of Skybright. 1276.In May 2006 Skybright arranged for a shipping company called Allied Link Shipping Company to handle the shipping arrangements. PW21, the general manager of Allied Link told the court that on 11 May 2006 a shipment of 2 extrusion presses (1350 MT – consignor’s name Skybright) arrived in Hong Kong. It was shipped back to the mainland two days later with the shipper being documented as Greatson and the consignee as OG Sanshui. [Ex 159, p.3422 – 3424; CB16]. PW21 told the court that he obtained details in relation to the shipping of the goods out of Hong Kong from a Madame Chan. 1277.PW21 said that similar arrangements were made with regard to the other two aluminium extrusion presses (1850 & 2650 MT respectively). These machines were shipped to Hong Kong on 20 and 30 May 2006 and were shipped back to the Mainland two days later with the shipper being documented as Greatson and the consignee as OG Sanshui [Ex 159, p. 3425-3432; CB 17]. 1278.During his visit to the Sanshui plant on 14 March 2007, PW56 also identified a number of extrusion presses [Real Exhibit 9, p.236 – 239]. He was able to say that although these bore a Cometal plate and logo they had not been manufactured by Cometal, the presses of Cometal being “much bigger, more solid and much better .”. According to PW56, the Cometal logo used on a press is significantly different from the logo attached to the press shown in photograph Real Exhibit 9, p.238. PW56 said that he had never seen this type of logo before. 1279.From his experience, PW56 was able to say that the presses he inspected would have cost about 1/6th of the price of a Cometal press. Contract for and supply of pumps – Yong Chang/ Rexroth Bosch 1280.PW19, Kwok Au Tai is the Sales Administration Manager for Bosch Rexroth, the head office was in Cheung Sha Wan. 1281.In July 2005 he was informed by his Guangzhou office that Yong Chang wished to purchase some hydraulic pumps. A price was agreed. 1282.His Guangzhou office sent draft contracts to his office in Hong Kong which he confirmed and signed. They were then returned to his Guangzhou office and he was later informed the contracts had been signed by Mr Lai, a representative of Yong Chang. 1283.PW19 produced the contracts dated 4 July, 18 July and 25 July 2005. Yong Chang had agreed to purchase 13 pumps and accessories used in aluminium presses from Rexroth for the equivalent of approximately HKD1.14 million, Ex 11 p. 356-62. The pumps and accessories were to be manufactured in Germany and shipped to Hong Kong. 1284.Three lots of invoices were produced in relation to the pumps and accessories, Ex 66. The goods were delivered to the Cheung Wan address of Bosch and arrangements were made for the goods to be shipped to China on 28 March 2006. 1285.PW19 said that payments were made on behalf of Yong Chang by three different companies. The three payments were made into the Deutshe Bank account of Bosch Rexroth in accordance with the invoices issued. PW19 said the three payments were as follows:-
1286.PW90, a senior sales engineer of Bosch Rexroth, accompanied the police to the factory of OG Sanshui on 26 April 2007, where he saw a number of Bosch Rexroth pumps. 19 January 2006 Contract OG Sanshui/ Kimbo for ITW Gema 2 sets of Vertical electrostatic powder coating equipment – RMB1.13m 1287.Kimbo was the local agent for the Swiss company ITW Gema. In January 2004, PW16, the general manager of Kimbo, learnt from his Guanzhou office, that OGH were interested in buying some spraying equipment. He was referred to D3. He met D3 at the OGH offices in Admiralty. Other persons were present, including Tony Chan the head of marketing for OGH. They gave PW16 their business cards, Ex 339, p.6993. 1288.PW16 understood they wished to purchase spray- painting equipment. No deal was reached on that occasion. He gave them an idea of the cost and was told they would contact him later. 1289.PW16 said that he was later told by Mr Lau of his Guangzhou office that Lau had been contacted by someone from OG Sanshui about the purchase of a different spray coating machine. 1290.PW16 said that an initial agreement was reached for the purchase of 2 sets of powder coating equipment for RMB 1,130,000. He said the contract was signed on the mainland and faxed to him. Ex 8, p.348, is the sales contract in respect of this matter. It is dated 9 January 2006 and is between OG Sanshui and Kimbo. 1291.PW16 said that he placed an order for the machinery with ITW Gema in Switzerland and within a month he was supplied by ITW Gema with a packing list, Ex 315, p.6758, dated 15 March 2006, addressed to Kimbo for 5 crates of powder coating equipment to be sent to Hong Kong. 1292.On 19 April 2006 the goods arrived in Hong Kong. PW16 contacted D3 and told him the goods had arrived. Arrangements were made to use Jet Shing Shipping Company to transport the goods to OG Sanshui. PW16 said that he was supplied by Jet Shing with a drayage receipt in respect of the transportation of the goods, Ex 95, p. 1278. 1293.On 19 April, D3 sent an e-mail, Ex 310 p.6739, to Holland Lau (the supervisor of OG Sanshui), copied to D1 and Jack Kam, a business partner of Liu MJ, confirming his conversation with PW16 and stating that the painting line components bought for OGH had arrived in Hong Kong. D3 stated that the Hong Kong side needed to make payment and assist in the transportation of the components. He stated that to “make a long story short, this is a questionable arrangement. What we have to correct urgently is to let Greatson Corporation take over all the contracts that you have signed for OG with the outside and the contract dates should be within November and December of 2005. If the four e-mails you sent to me on the 19th February 2006 are the final versions of the contracts for ordering vertical painting powder and vertical fluorescent painting please arrange for every supplier to make the above alteration before sending the contracts to the address of Greatson. in Hong Kong for signature and action. Then arrangement of payment can be made according to the procedures.” The e-mail goes on to provide the contact details for Greatson and the address in Hollywood Plaza, Mongkok. 1294.On 21 April 2006, D3 sent an e-mail to Holland Lau, copied to D1, Li Lee Cheung and Jack Kam in connection with the storage of the ITW Gema machinery. It stated that Kimbo had to arrange for a delivery list to be sent immediately to Greatson for checking and provides the e-mail address of Greatson. 1295.Shortly afterwards, Liu MJ contacted PW16 and the machinery was delivered to the Sanshui plant by a delivery company, Jet Shing, on 24 April 2006 according to the evidence of PW24, a clerk of Jet Shing, s.65B Ex 368-2. 1296.PW16 said that on 17May 2006, PW16 received a cheque from OG Sanshui for RMB1,017,000 which was 90% of the purchase price. Ex 61,p.1185 is the cheque which was made payable to Hong Huo Trading in Guangzhou which is one of PW16’s companies on the mainland. The cheque was paid into the mainland bank account of that company. There were three chops on the cheque, one of which was that of D2. 1297.PW16 said that the outstanding 10% balance was never paid. 1298.PW16 said that they received a communication from OG Sanshui , Ex 64, p. 1188, which stated that OG were undergoing a reconstruction of their assets. PW16 said he had never heard of Greatson. 1299.On 14 March 2007, a representative of ITW Gema, PW17, visited the OG plant and identified the 2 sets of electrostatic powder coating equipment delivered to the plant in April 2006 (Ex 368-23 s. 65 B statement of PW17). USA ITW Ransburg – Agent Langtech 1300.PW18, Cheung Siu Tai, is the managing director of Langtech Ltd. The company deals in the sale of machinery and they are agents for ITW Ransberg, an American manufacturer of electrostatic painting equipment. His company employed two staff in Guangzhou called Ye Jun Ming and Liao Zhi Xin. 1301.In September 2005 his staff asked him to provide a translation for a proposal in relation to the sale of a vertical painting system to OG Sanshui at a price of USD691,600 and a paint circulation system for USD99,420, Ex 17, p.731. The core components of the equipment were to be manufactured in USA. 1302.PW18 said that Ye and Lao continued negotiations and a contract was signed dated 10 January 2006, Ex 9, CB 21, which was signed by Ye on behalf of Langtech. The buyers are shown as OG Sanshui but PW18 was unable to recognize the signature of the person signing for OG. The contract relates to 6 sets of vertical painting equipment and one central painting system. The price is USD532,000. Under the terms of the contract, the equipment was to be delivered on or before the 30th April 2006, 50% was to be paid within 10 days of the contract, 40% when the equipment was dispatched and 10% within 90 days of installation. 1303.PW18 said the deposit was not paid in accordance with the contract. In early 2006, RMB1.5 million was paid by OG Sanshui but no further payment was made. 1304.PW18 produced Ex 65, p.1189, a letter of notification of performance of contract, dated 21st August 2006. A courier employed to deliver the letter on one occasion found the premises closed but was able to serve the letter on a later occasion. The machinery was never delivered. 1305.PW18 said that he had never heard of Greatson Corporation. Price Comparisons 1306.According to the four contracts concerning the Cometal handling systems, Yong Chang presses and ITW equipment, the total purchase price payable was HKD39,083,265.81. This excludes the price for the Bosch Rexroth pumps as Cometal did not manufacture pumps and there was no provision for this purchase in the OGD/Greatson contract. 1307.The total price provided for in the OGD contract with Greatson was HKD153,093,782.70. The Internal Monthly Management Meetings- IMMMS 1308.It was clear from the evidence, that D1 was at the helm of the Sanshui development which was a multi million dollar project. PW2 estimated the cost at about HKD600 to 700 million. It was the largest project ever undertaken by OGH. The listing rules required a public announcement of the OGD/Greatson contract and OGH intended to make a bonds issue following the public announcement. The development was the major item on the agenda of the IMMMs which were invariably chaired by D1. PW1 said that if D1 was not available, they would reschedule the meeting. 1309.The first IMMM minutes produced were those for 17 December 2003. The minutes record that the OGH management had visited the Sanshui site four days earlier. As was the invariable practice, D1 chaired this meeting. 1310.The Project was referred to again during a number of subsequent IMMMs in 2004-2006, all chaired by D1. The relevant minutes of meetings are those of 13/1/04; 3/2/04; 24/2/04; 18/3/04; 13/4/04; 11/5/04; 8/6/04; 6/7/04; 10/8/04; 16/11/04; 16/12/04; 2/2/05; 9/3/05; 17/05/05; 21/06/05; 29/08/05; 27/9/05; 22/12/05; 15/2/06; 21/3/06; 4/5/06; 16/6/06 [Exh. 18, p.768 - 863]. 1311.It is clear that, apart from chairing each of these meetings, D1 was personally involved with the execution of the project. For example, there are references to his contributions to the meetings held on 16/12/04, (p.811-814); 2/2/05, (p.815-819); 17/05/05, (p.824 – 826); 22/12/05, (p.841 – 846). 1312.D3 attended each of these 23 meetings save 2 - those on 27/9/05 and 4/5/06. The capacity in which he attended is generally described as “Project”. In the minutes of the meeting of 27/9/05, he is described as the “person responsible” in the context of the purchase contract (see p.837). He is referred to in a similar context in the minutes of the 22/12/05 meeting (p.841). 1313.D2 attended four of the meetings, those from 15/2/06 onwards. Her capacity was recorded as “administration”. 1314.Zhu also attended each of the 13 meetings held between 8/6/04 and 15/2/06 save for the meeting on 16 December 2004. The capacity in which he attended the meeting was referred to as “Accounts/Finance.” Payment Approval Request Forms (PARS) and the Voucher Approval System 1315.A number of witnesses from the OGH accounts department were called to give evidence about the procedure relating to payments made by the OGH companies. Payment request approval forms were in two parts. The upper part was headed “Payment Approval Request” which provided for initialing in the “Approved By” line. The lower part was headed “ Accounting Voucher” with lines for the initials of persons by whom it was prepared, checked and approved. There were PARs in respect of each of the payments made by Hing Yip, OGD and Kenlap PGC pursuant to the sham OGD/ Greatson, Kenlap PGC/Long Asset and Kenlap PGC/Fong Long contracts. 1316.There were significant discrepancies in the evidence of the accounting staff called to give evidence in relation to the procedures to be followed for dealing with PARS. The witnesses gave inconsistent accounts as to the procedure to be followed and there were many examples of their failures to follow what they understood to be the procedure. Many of the PARs had no, or inadequate, supporting documentation. There was conflicting evidence as to who should initial the “approved” by column on the lower part of the form and whether that signified approval of the payment, or, approval of the accounting information set out in the document. Evidence was given that, in some instances, cheques and transfers were prepared before the PAR’s, whereas some accounting staff testified that a PAR had to be prepared first. 1317.The procedure followed by those on the aluminium side of the business differed from that followed on the chemical side. According to PW70, an accounts clerk, the accounting procedure for Kenlap PGC differed from that followed by KCL. PW70 said that the PARS she dealt with were given to Qi Liping and she did not know what she did with them. Qi Liping is a mainlander and was a director of Kenlap PGC. PW64, the financial director on the chemical side of the business, said that if he had any queries relating to Kenlap PGC he would approach Qi. He said that Qi was the only person who had the password to the computer and that she fed the data into the computer. PW64 said that Qi did not report to him or PW5. 1318.It was clear that Zhu was free to move funds from the company bank accounts and the bank accounts of other companies used to channel funds back into the OGH bank accounts and elsewhere. He was able to move funds without explanation or supporting documentation. He reported only to D1. 1319.I noted the contents of the Review Report on the Effectiveness of the Internal Control System (D1-8) for the period 1January 2005 to 31 March 2006 prepared by PW5 and PW2 for the board of directors pursuant to the Stock Exchange Code on Corporate Governance. It reported that it was considered that in all areas control was effectively implemented throughout the period. 1320.The evidence of the accounting staff of OGH showed that this was clearly not the case. PW5 himself had in incomplete understanding of the voucher system. The payment voucher procedure was shambolic and, for the reasons I have set out above, the position of Zhu within the corporate structure was highly irregular. 1321.The only significance I attached to the presence of an initial of D1 on a PAR was that it established that it was a document he had seen. Evidence of PW40 1322.PW40 gave evidence under immunity, Ex 353, p.7902. He was an accomplice witness and, notwithstanding the abrogation of the requirement that evidence of an accomplice witness must be corroborated, I examined his evidence with the greatest care and caution. An immunized witness has an incentive to exaggerate, fabricate and embellish evidence against others and to remain consistent with his prior statements. 1323.I have set out above his evidence in detail. I was satisfied that notwithstanding his immunity, PW40 was most anxious to minimize his role in these offences and to protect himself and his friends including D4 and D6. PW40 played a very significant role in many of the offences before the court. He agreed to hold a company for OGH and to open a bank account through which millions of dollars was to be channeled from OGH. He arranged for friends to do likewise, including D4 and D6. 1324.There was no doubt that PW40 became involved in these offences through his association with D2, whom he had know since 1991. Whilst working for an insurance company, he initially came to know D2’s brother, D1 through a female subordinate who dated D1. PW40 was told that D2 did not have many friends in Hong Kong and PW40 was encouraged to invite her to social and work gatherings arranged by and for his work colleagues. D2 took out insurance with PW40 as did her father. By 2004, however, he no longer worked for an insurance company and was in financial difficulties. He was living with his family in a public housing unit rented by his mother-in –law. He was looking for business opportunities. 1325.It was not in dispute that PW40’s involvement with OGH came through D2. Counsel for D2 put to PW40, that on an occasion in 2004, D2 put PW40 in touch with her colleagues in OGH to develop a business opportunity and that what might have occurred thereafter between PW40 and her colleagues was purely a matter between them and had nothing to do with D2. PW40 disagreed that this was the situation. 1326.I did not believe the evidence of PW40 to the effect that it never occurred to him until he was arrested that what he was doing for OGH was dishonest. I did not believe that he and his friends were not rewarded for their participation in holding companies and opening bank accounts. 1327.I found the evidence of PW40 evasive as to the circumstances in which Pioneer Lane came to rent the office in Wanchai. 1328.PW40 was evasive about the circumstances in which he opened his personal bank account with Hang Seng Bank in October 2004, Ex D2 –2, 3 and 5. The account was opened about the time he agreed to act as a director of Pioneer Lane and the last transaction was in July 2006, when OGH went into provisional liquidation. PW40 was equally evasive about the payments made into this account. There were a series of unexplained deposits which were usually withdrawn within a short period. He was vague as to what he did with the cash withdrawn. 1329.I did not believe the testimony of PW40 as regards his withdrawal of HKD100,000 from the Pioneer Lane account on 11 September 2006. I did not believe that this was prompted by a claim for rental arrears for the office premises of Pioneer Lane in Wanchai and I did not believe he paid the money to D3. 1330.There were a number of inconsistencies between the oral evidence of PW40 and his previous statements to the police and in another court. I do not propose to go through them all. 1331.There were discrepancies between the evidence of PW40, D4 and D6 as to what representations were made by PW40 to D4 and D6 about his dealings with D2 and in respect of the companies D4 and D6 were to hold. 1332.There was, however, no doubt that it was D2 who introduced PW40 to OGH and that OGH were looking for persons to hold companies and open corporate bank accounts through which substantial sums of money were to be channeled. The conspirators were engaged in a substantial and elaborate fraud on a publicly listed company in which they held senior positions. They would appreciate that the discovery of their duplicity would have extremely grave consequences. The fraud covered a period of several months, involved complex transactions and dealings with a large number of companies. The execution of the fraud required very detailed and time-consuming planning. The conspiracy envisaged channelling millions of dollars through shell companies controlled by PW40 and his friends and companies held by D1’s friend, D5 and D1’s bodyguard. 1333.The conspirators must have made it clear to PW40 and his friends that millions of dollars would be channelled through the bank accounts for which they were responisible. The conspirators would know that such fund movements might raise queries at the banks concerned and they must have made it clear to the account holders that they should confirm with the banks that such fund movements were authorised and give reassuring answers to any other queries the banks might have. In the OGD/Greatson contract conspiracy, funds were channelled through the bank accounts of companies held by D1’s bodyguard and his friend, D5. HKD136.7 million was to be channelled throught the account held by D4 and HKD24.9 million through the account held by PW40. 1334.The corporate bank accounts used to channel funds diverted from OGH for the Kenlap/Fong Long/ Long Asset contracts conspiracy were operated by D1’s bodyguard, a friend of D1, You Shuiqing, and PW40’s friend, D6. 1335.It would be inconceivable that the conpirators would use PW40 and his friends without D2 being made aware that PW40 and his friends would be required to open bank accounts through which millions of dollars would be channelled. The conspirators would have to be confident that PW40 and his friends would be prepared to hold companies, open bank accounts, sign and hand over to them blank banking documents. The account holders would need to answer bank queries and attend the bank personally to sign documents if required. They would need to conceal from the banks the true circumstances of their involvement with the companies they held and the circumstances in which they were requested to open the corporate bank accounts. The only person at OGH who knew PW40 personally, as a friend, was D2. 1336.PW40 and his friends would need to have been reassured that there was minimal chance that they would get into trouble. PW40 had known D2 since 1991. He knew that D2 held a senior position in this substantial, publicly listed company and that her brother was its chairman. The movement of funds through these accounts occurred over a period of five months. I have no doubt whatsoever that there were discussions between D2 and PW40 about what PW40 and his friends were required to do. The other conspirators would have been aware that such discussions would take place and that they were necessary to the success of the conspiracy. PW40 and his friends D4 and D6 were not parties to the main conspiracy but they played a vital role in the channelling funds from OGH companies which purported to be pursuant to the sham OGD/ Greatson and Kenlap PGC/Long Asset contracts. The OGD/ Greatson Conpiracy Charge 1- D1, D2 and D3 1337.The evidence clearly established that the purported contract between OGD and Greatson dated 1 November 2005 was a sham. Greatson was a shell company. It had no legitimate commercial purpose, no offices and no staff. It was to be used solely as a cash transfer vehicle. Machinery purchased for the Sanshui plant was not purchased pursuant to this contract. The prices paid for equipment actually delivered to the Sanshui plant were considerably lower than those referred to in this contract. 1338.Between 21 November 2005 and 17 March 2006 there were 12 payements made by Hing Yip and OGD totaling HKD136,708,000 which purported to be pursuant to this contract. There were 7 payments from OGD totaling approximately HKD71million and 5 from Hing Yip totaling approximately HKD65.6million. 1339.The price of the machinery quoted in the contract was far in excess of the price actually paid. The purchase price of the machinery as provided in the contract was approximately HKD153 million. The actual cost of machinery purchased according to the contracts entered into with various suppliers was approximately HKD39 million. The price paid for the Bosch Rexroth pumps was not included in this caculation as these items were not included in the OGD contract. 1340.The machinery acquired was for use at the aluminium production site being constructed in Sanshui. The OGD Contract refers to the purchase of 4 sets of Cometal Aluminium Extrusion Presses with profile handling systems at a price of approximately HKD109,695,683. Four months prior to this contract, by a contract dated 1 July 2005, OG Sanshui agreed to purchase from Yong Chang four extrusion presses of identical specifications to the presses referred to in the OGD contract for RMB8.24 million. These presses were delivered to the Sanshui plant and after the provisional liquidation of OGH the presses were inspected and found to bear false Cometal plates. I accepted the evidence of PW56 that the presses he inspected at the Sanshui plant were not manufactured by Cometal and were far inferior in terms of quality and capacity to presses manufactured by Cometal. He said that the Cometal presses were twice the size and six times more expensive than the Yong Chang presses. 1341.By a contract dated 30 September 2005 between Cometal and Greatson, it was purported that Greatson would purchase four Cometal handling sytems for HKD26 million. Although this contract is dated 30 September, it was not signed until several months later. Greatson had no offices, staff or premises. The signature on the contract was not that of D4, the sole director and shareholder of Greatson. He knew nothing about the contract. Attempts by PW56 to try to meet up with someone from Greatson were unsuccessful. The person purportedly dealing with this matter at Greatson was a Mr C Chan. PW56 was informed by e-mail on the 8th December 2005 that there was no need to meet up with Mr Chan. All dealings with Greatson were handled through OGH. 1342.The shipping arrangements for the delivery of the Cometal handling systems were dealt with by Allied Link Shipping Limited. PW21, the General Manager of Allied Link, told the court that a meeting about this shipment was attended by, inter alia, a woman who called herself Mme Chan and claimed to represent the owner of the cargo. She said she did not have a name card. PW21 said Ex 354 was an image of this woman. That image was identified as being Lisa Li of OGH. Lisa Li worked in the accounts department of OGH employed to liase with mainland colleagues of behalf of the group’s finance department. She is the wife of Lin Jianping. a good friend of D1, and an executive director of OGH, a director of OGD and a director and shareholder of NAS. 1343.Correspondence between OGH and Cometal shows that steps were taken to conceal the true ownership and operation of Greatson. A false address, St Francis Yard Wanchai, was used for the registered office of Greatson. These premises were used by a contractor who had previously done some work for OGH. The telephone number and fax number were false. 1344.Correspondence sent to the subsequent correspondence address of Greatson was collected and passed to Zhu. 1345.For correspondence in relation to the Greatson/ Cometal contract, the name of Mr C Chan and the e-mail address [email protected] was used. 1346.Under the contract purporting to be between Greatson and Cometal, payments were made on 22 November, 16 December 2005, 15 March and 28 June 2006 totaling HKD20.2 million. Of the HKD136,708,000 paid into the Greatson account by OGD, HKD15,515,985 was paid to Cometal. These were the monies paid in November, December and March. 1347.Nearly all the money paid into the Greatson account was quickly disbursed to other companies. Only HKD15.5 million was paid to Cometal. Most of the balance was paid to Crown Regent (HKD80,099,000), Strong Sense (HKD15,261,000) and Pioneer Lane (HKD24,978,000). The sole director, shareholder and bank account signatory of Crown Regent and Strong Sense was Tsui Sze Lam, D1’s bodyguard. The sole director, shareholder and bank account signatory of Pioneer Lane was D2’s friend, PW40. 1348.Of the money paid into the account of Pioneer Lane HKD24,967,000 was paid back into the account of Hing Yip. After collecting the Greatson company cheques from the bank, PW40 had signed the cheques blank and gave them to D3. 1349.After the payments into the account of Crown Regent, payments were made from that account to Hing Yip (HKD23,099,000), Good Light (HKD26,944.000), NGAS (HKD10,809,500), NAS HKD6,686,000 and You Shuiqing (HKD1.3 million). The sole director, shareholder and bank signatory of Good Light was D5, a friend of D1. D2 was a director of NGAS and NAS which were substantially owned by D1. You was a friend of D1 and one of the directors of Fong Long. The Nanfang companies were run on the mainland by Li Lee Cheung who was head of the aluminum business and mainly responsible for the Sanshui project and Lin Jian Ping, a friend of D1, whom I have referred to above. 1350.After the payment by Crown Regent to Good Light, Good Light paid HKD26,940,000 into the account of Hing Yip. 1351.PW9, an accounts clerk working under Zhu, prepared 24 of the cheques used for most of the payments. She prepared cheques for the bank accounts of OGD, Hing Yip, Greatson, Strong Sense, Pioneer Lane, Crown Regent, Good Light and NGAS. In the case of cheques drawn on the accounts of Greatson, Strong Sense, Pioneer Lane, Crown Regent and Good Light the cheques were pre-signed. PW9 originally worked for D2 in 1999 at Global Credit. In 2003 she worked for D1 as a receptionist and then for Daniel Tam, PW29. 1352.I noted that Ex D-27, Admitted Facts V, show that there were payments between certain of the companies before, during and after the charge period and which were obviously unconnected with these proceedings. The vast majority of the transactions relate to payments into and out of the bank account of Strong Sense whose sole director, shareholder and bank signatory was D1’s bodyguard, Tsui Sze Lam. A number of the transactions purport to relate to alleged sales to shell companies, Trump Link, United Fine Holdings and Grand Lucky Enterprises. These companies were set up by PW29 on the instructions of OGH. The sole shareholders and directors of these companies were PW40’s friends Doong Keng-sing, James, Cheung Chi Keung (the boyfriend of D6), and Lee Tze Fai respectively. The signatures on the corporate documents, purporting to be those of the directors, were forged and they show that the friends of PW40 became directors long before PW40 had been approached by D2 to find persons to hold companies. I noted that D1-27 was only admitted in relation to D1. 1353.The fraud perpetrated on OGH was sophisticated, elaborate and involved a substantial amount of money. The development of the Sanshui plant was the most significant project being carried out by the OGH group. Negotiations were protracted and complex and involved many persons and companies. 1354.The first approach to PW56 of Cometal, was made in mid-2004 by Liu GA, the then leader of the OGH office planning team. Dealings continued until the provisional liquidation in July 2006. As these negotiations were going on, in March 2005 Liu MJ, Liu GA’s successor, approached the mainland extrusion plant manufacturer, Yong Chang, about the purchase of four extrusion presses of identical specifications to the Cometal presses referred to in the OGD/ Greatson contract for about HKD9 million, a price far below the Cometal price. This contract was not fulfilled. Yong Chang subsequently entered into a deal with Skybright to purchase the presses at a slightly higher price, Ex 124. PW22 of Skybright said that Skybright acted as a go between on the instructions of a Mr Yu of Hong Kong. The Yong Chang presses were delivered to OG Sanshui. The presses were shipped into and out of Hong Kong. When they were shipped out, the documents showed the consignor as Greatson and OG Sanshui as the consignee. PW21, for the shippers, said that this was done on the instructions of a Mme Chan. 1355.PW15, of Yong Chang, later inspected the presses at the Sanshui factory after the provisional liquidation and said that the cometal plates affixed to the presses were not attached by his company and he did not know why the presses would bear such plates. 1356.I have set out above the convoluted dealings between OG Sanshui and ITW Gema and ITW Ransburg in relation to the purchase spraying and coating equipment. The initial contract in respect of the Gema equipment was signed between OG Sanshui and Kimbo in January 2006. In April 2006, D3 sent an e-mail, Ex 310, p6739, to Holland Lau, a supervisor of OG Sanshui, copied to D1 and Jack Kam, a partner of Liu MJ, stating the goods had arrived in Hong Kong and that the arrangement was questionable. He stated that Greatson should take over the contract and it should be backdated by 5 months. 1357.The ITW Ransburg contract between Langtech and OG Sanshui, dated 10 Janaury 2006,Ex 9,CB21, was never fulfilled. The manager of Langtech, PW18 said that he had never heard of Greatson. 1358.D1 and D2 are the only persons authorized to sign cheques drawn on the bank accounts of Hing Yip and OGD. A substantial amount of money was paid into the Greatson account was thereafter disbursed through the bank accounts of a number of companies. The conspirators would have to have been confident that they could rely on the persons controlling those companies’ bank accounts. They would also have been aware that the substantial movements of funds into and out of the accounts might well raise concerns on the part of the bankers. The conspirators would have to be confident that those persons operating the bank accounts would be prepared to deal with such queries in a manner that would assuage any concerns on the part of the bankers. 1359.The companies used were all held by friends of D1, and D2’s friend, PW40. The companies held by PW40 and his friends were all shell companies. Corporate documents contained forged signatures and were back-dated. I bore in mind that the fraud alleged in charge one related to the payments to Greatson purportedly made pursuant to the sham OGD contract. The evidence of the movement of funds out of the Greatson account is relevant to establishing the falsity of the OGD contract; the monies were not paid out for the purposes stipulated in the contract. 1360.I noted that the majority of the monies paid to Greatson were rerouted through other companies back to Hing Yip, OGD and KCL purporting to be payments for goods supplied. The corporate documents were falsified to show that payments were made pursuant to the sham OGD contract for the purchase of state-of- the-art equipment for the Sanshui plant. Company documents were also falsified to show that huge sums of money were paid to Hing Yip and KCL purportedly for goods supplied. Evidence in relation to D1 1361.D1 was the chairman and most senior executive in OGH in which he had a substantial shareholding. 1362.The development of the Sanshui plant was the major project for OGH during the relevant period. The project was closely followed by D1. The directors and shareholders of the company were told that state-of-the-art equimpment was to be purchased from leading international suppliers. The price would be of the utmost concern to D1. 1363.D1 was personally involved in the project. He was involved in the procurement of the site through his connections with the authorities in Foshan. He chaired the IMMMs at which the project was always discussed. It was a standard item on the agenda. The meetings were scheduled to accommodate his diary. 1364.The mainland planning group for the project reported to Li Lee Cheung who reported to him. 1365.D1 frequently traveled to the mainland in connection with the project. 1366.D3 was pivotally involved in negotiations concerning the acquisition of the machinery. D3 reported directly to D1. 1367.Zhu, who was in charge of the fund flow of the group reported directly to him. Although Zhu was described as being an assistant financial controller, he did not report to PW5 or the other financial controllers, PW6 and PW64. Zhu reported directly to D1. Zhu was able to raise requisitions for money without any or without adequate supporting documentation. 1368.PW9, Zhu’s clerk, prepared the cheques /money transfers by which the money paid out by Hing Yip and OGD purportedly pursuant to the OGD contract. PW9 had pre-signed cheques on for the bank accounts of Greatson, Pioneer Lane, Strong Sense, Crown Regent and Good Light. The pre-signed cheques were supplied to her by Zhu. Zhu signed three of the payment vouchers relating to payments by Hing Yip to Greatson and all of the vouchers used for payments by OGD to Greatson. Zhu requested Daniel Tam, PW29, to find another business address for Greatson. 1369.D1 and his sister were the only signatories to the relevant OGH bank accounts. The Hing Yip account required both signatures whereas the OGD account required only one of the signatures. For queries in relation to the OGD account, D2 was the first contact person, Ex 137. D1 was a signatory to the OGD bank account notwithstanding that he was not a director of OGD. 1370.D1 signed many of the payment vouchers and cheques/ remittances to effect the relevant payments by OGD and Hing Yip to Greatson. I took into account that the evidence concerning the payment voucher system was confused and confusing. Different witnesses from the accounts department gave conflicting evidence as to who was to initiate such documents, who was required to initial them, the purpose of initialing the documents and the sequence in which the documents would be processed. I was also aware that D1 was required to sign a significant number of documents, many of which would be flagged to indicate where he was to attach his signature. 1371.D1’s bodyguard, Tsui Sze Lam, was the sole director, shareholder and bank signatory for Strong Sense and Crown Regent. Payments in excess of HKD95 million were made to those companies by the shell company Greatson. Bank records showed that payments were made by Strong Sense and Crown Regent to Good Light, NGAS, NAS and You Shuiqing. The pre-signed cheques/transfers in relation to those payments were prepared by PW9, who was supplied by Zhu with the signed cheques and other documents. 1372.Good Light was operated by D1’s friend, D5. D5 contributed to the incorporation expenses of Strong Sense. I noted that there were inter company payments between some of the companies outside the charge period – Ex D-27, AFV. 1373.NGAS and NAS were companies substantially owned by D1. D1 was not a director of these companies. The companies were run by OGH staff, principally Li Lee Cheung, who assisted D1’s friend Lin Jian Ping. 1374.You Shuiquing was a friend and business partner of D1 and he was also a co-director of Fong Long. 1375.PW21, from Allied Shipping, told the court that his company was responsible for the transshipment of the four Yong Chang extrusion presses from the mainland to Hong Kong and then back to the mainland. In connection with this shipment he met a man and a woman. The woman told him that her name was Mme Chan and that she represented the cargo owner. He identified Mme Chan as being the lady whose image was shown in the photo Ex 354. PW2 identified this lady as Lisa Li. She works in the accounts department at OGH and reported to D1. She is married to Lin Jian Ping. 1376.I accepted the evidence of PW1 that D1 and Lin Jian Ping were good friends. Lin was also an executive director of OGC and a director and shareholder of NAS. I accepted the evidence of PW2 that D1 engaged Lin as a director of OGH. 1377.D2 is the sister of D1. She is also and executive director of OGH. From all the evidence I was sure that she recruited PW40 to hold a company on behalf of OGH and asked him to get his friends to do likewise. D2 had known PW40 since 1991 and they were friends. Millions of dollars from OGD were to be moved through the bank accounts of companies held by PW40 and his friends and the conspirators had to be confident these persons could be trusted and would be able to deal with any queries raised by the bank without revealing the true circumstances as to their relationship with OGH. 1378.I bore in mind, in relation to Greatson, that D3 said that D1 was not involved in its setting up (VIR dated 7 December 2006 Counter 354-359). This is admissible in relation to D1 as it is exculpatory. For matters which I will go into later, I did not believe many of the assertions made by D3 to the police and I had no doubt that D3 was aware that Greatson was a shell company and that there was no genuine underlying commercial relationship between OGD and Greatson. 1379.On 9 January 2006 a contract was entered into between OG Sanshui and Kimbo, the agent for ITW Gema for the sale of 2 sets of vertical electrostatic powder coating equipment for RMB1.13 million. PW16, the Kimbo general manager, was referred to D3 as the person at OGH handling this matter. 1380.On 19 April 2006, PW16 informed D3 the goods had arrived in Hong Kong. On the same day D3 sent an e-mail, using Chinese characters, to Holland Lau, a supervisor of OG Sanshui, copied to D1 and Jack Kam, a partner of Liu MJ, in which D3 states that “to make a long story straight..this is a questionable arrangement. What we have to correct urgently is to let Greatson Corporation take over all the contracts that you have signed for OG with the outside and the contract dates should be within November and December 2005. If the four e-mails you sent to me on 19 February 2006 are the final versions of the contracts for ordering vertical painting powder and vertical fluorescent painting please arrange for very supplier to make the above alteration before sending the contracts to the Greatson address.in Hong Kong for signature and action.” The e-mail goes on to provide the Greatson address in Hollywood Plaza Monkok, Ex 310,p 6739. 1381.On 21 April 2006, D3 sent a further e-mail to Holland Lau copied to D1, Li Lee Cheung and Jack Kam in connection with the storage of the ITW Gema machinery. It stated that Kimbo had to arrange for a delivery list to be sent immediately to Greatson for checking and provided the e-mail address of Greatson. Many of the e-mails from D3 were in English but these two e-mails were in Chinese characters. 1382.The sham OGD/ Greatson contract dated 1 November 2005 provided for purchase of a set of ITW Gema/ Ransburg Vertical Powder and Electrostatic Coating System at a price equivalent of HKD43,398,099. 1383.I reminded myself the where a court relies on circumstantial evidence, it has to be satisfied that the facts on which the court relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn from such facts. 1384.Notwithstanding the clear record and positive good character of D1, the totality of the evidence left me in no doubt whatsoever, that D1 was a party to the conspiracy. I was satisfied that this was an irresistible inference and that no other reasonable inference could be drawn. 1385.I was sure that D1 conspired with D2, D3 and Zhu to defraud OGD and Hing Yip as alleged. Evidence in relation to D2 1386.D2 has a clear record. I noted also that, unlike a number of other persons connected with OGH, she remained in Hong Kong after it became public knowledge that OGH was under investigation. 1387.D1, her brother, was the Chairman and senior executive officer of OGH and had a substantial shareholding in the company. D2 has been in Hong Kong since the early 1990’s. 1388.In addition to her involvement in OGH, D2 ran a securities company called Global Credit Securities, which operated from a suite of offices on the same floor of the Admiralty Centre as OGH. The room number of Global Credit was 2803A, the room number of OGH was 2805. Both NGAS and NAS had office premises in the offices of Global Credit. D2 and Li Lee Cheung, the head of the Sanshui project, were both directors of NGAS at the material time. 1389.D1 was the owner of all but one of the 156,000 issued NGAS shares from 15 November 2005 to 26 March 2006. D2 transferred all her shareholdings in the company to D1 on 15 November 2005. NGAS had a subsidiary Hongli Nanfang Galvanised Sheet (Shanshui) Company Ltd (Hongli Nanfang). 1390.D2 and Lin Jian Ping, D1’s friend, were directors of NAS at all material times. D2 was a shareholder of that company until 15 November 2005 when her entire shareholding was transferred to D1 who thereafter held 90% of the shares, the balance being held by Lin Jian Ping. NAS had a subsidiary called Jieli Nanfang Alloy Sheet (Sanshui) Company Ltd (Jieli Nanfang). On 15 December 2005, after monies were transferred from Greatson to Crown Regent, Crown Regent made two payments to NGAS totaling HKD10,810,000 and one to NAS of HKD6,686,000. On 19 January 2005, NAS paid HKD6,636,413 to Jieli Nanfang. On 19 January 2006 NAS received HKD7.76 million from Strong Sense and on 23 January NAS paid HKD7.76million to Integrated Industrial Systems in USA. 1391.The NAS bank account with the Bank of China was opened on 28 April 2003. D2 was the sole signatory to the account. The correspondence address was the OGH office. 1392.The NGAS bank account with Bank Sinopac was opened on 12 August 2005. Again, D2 was the sole signatory to the account. The correspondence address was that of the OGH offices. I noted that D2 had a very limited role in the actual running of the companies which were mainly run by Li Lee Cheung. 1393.D2 was at the material time a director of both Hing Yip and OGD. Cheques and transfers drawn on the bank account of Hing Yip required to be signed by both her and her brother D1. Cheques and transfers drawn on the bank account of D2 could be signed by either D1 or D2. D2 was the first contact person for the bank in respect of the OGD account. She is described as an executive director of OGH in the OGH directory dated 29 December 2005, Ex 334, and signed minutes of the paper meetings in relation to the OGD contract. PW2 said D2’s responsibilities in addition to being the bank signatory involved administration and personnel and she did not have an office in the OGH until January 2006. I noted that D2 was not involved in any of the IMMMs until February 2006, and that she had no executive role in the Sanshui project. 1394.As I have stated earlier, I was sure that D2 approached PW40 and requested him to agree to hold a company and to open company bank accounts. I was sure that she asked him to arrange some of his friends to do likewise. Millions of dollars were to be transferred into and out of the bank accounts of the companies which PW40 and D4 were to hold. She had known PW40 since 1991, when he worked for an insurance company. Both D2 and her father had taken out policies with him. D2 attended social and work related gatherings arranged by PW40 and they had become friends. When she approached him about holding a company in 2004 he was down on his luck and in financial difficulties. PW40 and his family were living in a public housing unit rented by his mother-in-law. 1395.I was sure that D2 subsequently supplied the contact details of PW40 to D3 who approached PW40 with a view to his becoming the sole director and shareholder of Pioneer Lane. PW40 also opened two company bank accounts with the Bank of East Asia. PW40 was requested to sign blank cheques which he gave to D3. 1396.D4 was a friend of PW40. Arrangements were made for him to become the sole director and shareholder of Greatson, open a bank account and pass signed blank cheques to D3. Greatson was to be used prominently in the conspiracy. The contract the subject of charge 1 purported to have been made with Greatson. All monies transferred out of the OGD and Hing Yip accounts were to go to the Greatson accounts. The company was referred to in the Public Announcement and the Circular to the company shareholders. The name Greatson was to be used extensively in dealings between OGH and various suppliers of machinery and equipment for the Sanshui plant. The conspirators would have to have had confidence in the person chosen to act as the sole director, shareholder and bank signatory of this company. 1397.The false address used for Greatson (St Francis Yard) was that of PW37, a contractor who had carried out work for OGH in 2004/5 under the direction and instructions of D2. He said that D2 was the only person at OGH that he spoke to. I noted that D3 said in his records of interview that this address was supplied by Zhu. As I have stated elsewhere, the conspirators would need to be very confident that persons holding bank accounts were reliable. The nominees would have to be careful not to arouse any suspicions when they opened the accounts. Clearly they would not be able to tell the bank about the true circumstances of their involvement with the account opening companies. 1398.It was almost inevitable that movements of such large amounts of money would attract the attention of the banks. Both D4 and PW40 were contacted by the banks and D4 attended the bank personally in respect of some transactions. The conspirators would have to have had confidence that the company holders would be able to deal effectively with any bank concerns about such fund movements. 1399.I had no doubt that PW40, D2 and D4 were aware that the accounts of Greatson and Pioneer Lane were to be used to channel substantial sums of money for which their was no legitimate commercial purpose. Before agreeing to participate in such dealings, the account holders would need to be reassured that there was minimal risk of the banks learning of the true circumstances behind the transactions. The only person at OGH with whom PW40 had a personal relationship was D2. The movement of funds was to occur over a period of several months and would involve many transactions. 1400.The bank accounts of other companies through which funds were to be moved were all controlled by friends of D1. The funds eventually found their way back to Hing Yip, KCL, NGAS, NAS and You Shuiqing. Funds could only be moved out of OGD and Hing Yip on the authority of bank documents signed by D1 or D2. 1401.I noted that there was no evidence that D2 had ever met or spoken to any of PW40’s friends. D2’s initial approach to PW40 was in late 2004, outside the conspiracy period. D4 was first approached about holding a company in mid 2005. D4 claims he was asked by PW40 to help him and D2 to set up a company. By this time, the negotiations in relation to the purchase of machinery with Cometal and Yong Chang were well advanced. PW26, a solicitor, was first approached by D3 about the acquisition of Greatson in July 2005. The company form for D4 to act as director was dated 29 August 2005 as is the notification of the business registration address as St Francis Yard in Wanchai. The OGD contract with Greatson is dated 1 November 20005. The public announcement concerning the transaction was made to the Hong Kong Stock Exchange on 3 November 2005. D4 opened the two Greatson bank accounts on 11 November 2005. 1402.The conspirators obviously had to be extremely confident that D4 would agree to open bank accounts in the name of Greatson, hand over to them a series of blank cheques and be prepared to deal with any bank enquiries about the movement of huge sums of money. A refusal by D4 to go along with any of these matters would have caused major problems for the conspirators. The only link to D4 was via PW40, D2’ s long-term friend. 1403.A number of key documents were signed by D2. D2 signed 3 bank remittances by Hing Yip to Greatson. The remittance applications were dated 15,16 and 17 March 2006 and were for HKD10,000,000, HKD15,566,040 and HKD4,443,960 respectively. I noted that payments started to be made into and out of the Greatson accounts in November 2005 and through the Pioneer Lane account in January 2006. The bank accounts of these companies were operated by D4, introduced to OGH by PW40 at the request of D2 and PW40, D2’s friend. 1404.I noted that she was not involved in the payment approval system. She signed the OGD/ Greatson contract and the paper minutes relating to the contract. Her chop was on the cheque, Ex 61, p.1185, dated the 17 May 2006, for RMB 1,017,000, issued by OG Sanshui for the ITW Gema Spray Painting Equipment purchased from Kimbo. I noted this was after the conspiracy period but it related to equipment referred to in the OGD/Greatson contract. 1405.I reminded myself the where a court relies on circumstantial evidence it had to be satisfied that the facts on which it relied had been proved beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn. 1406.Taking into account the totality of the evidence in relation to the first charge, I was sure that D2 conspired with D1, D3 and Zhu Weibing to defraud OGD and Hing Yip as alleged in charge 1. Evidence in relation to D3 1407.D3 has a graduate degree in Business Administration and Psychology. At the material time he was the project director for OGH and a director of Hing Yip. He was also a director of a number of related companies. When interviewed by the police and shown corporate documents relating to these other companies he said he was asked to take on these directorships by D1 through PW7, the company secretary. He said he had no idea what the companies did. D3 told the interviewing officers that he joined OGH in 2000 and at the time of his interview in October 2006 he was working for NGAS. 1408.D3 reported directly to D1 when he worked at OGH. In respect of his involvement in the transactions the subject of the charges he said he was a relatively junior employee and simply followed the instructions of his superiors. 1409.D3 was the project director for the Sanshui project and referred to as such in IMMM minutes. 1410.D3 was the principal point of contact between OGH and Cometal. He was very much involved with PW56 of Cometal as regards the shipment of the four Cometal handling systems. 1411.D3 contacted the solicitor, PW26, about acquiring Greatson and gave him instructions about the use of a Singapore Company as it shareholder. He supplied the solicitor with the St Francis Yard address and the false telephone and facsimile numbers. 1412.D3 dealt with PW56 with regard to the execution of the OGD contract. The signature of D4 on the contract was forged. It was D3 who dealt with D4 concerning company documentation banking matters. 1413.D3 concurred in the publication of the false Public Announcement the subject of charges 2 and 3. 1414.D3 sent e-mails to PW7, the company secretary, containing false information about Greatson and the OGD/ Greatson contract in response to queries raised by an INED. These e-mails are the subject of charges 6-8. 1415.D3 was actively involved in the acquisition of the local manufactured presses from Yong Chang. The specifications of those presses were identical to those for the Cometal presses referred to in the OGD contract. 1416.D3 was aware of the purchase of the pumps from Rexroth Bosch. 1417.D3 met PW16 of Kimbo with regard to the acquisition of the ITW Gema powder coating equipment and responded to PW16’s request concerning the shipping arrangements. 1418.On 19 and 31 April 2006, he sent e-mails, copied, inter alia, to D1, with regard to Greatson taking over the contracts signed by OG and other parties and backdating such contracts to November or December 2005. On 19 April 2006 PW16 informed D3 the ITW Gema powder coating equipment had arrived in Hong Kong. On the same day D3 sent an e-mail to Holland Lau, a supervisor of OG Sanshui, copied to D1 and Jack Kam, a partner of Liu MJ, in which D3 stated that “to make a long story straight”..”this is a questionable arrangement. What we have to correct urgently is to let Greatson Corporation take over all the contracts that you have signed for OG with the outside and the contract dates should be within November and December 2005. If the four e-mails you sent to me on 19 February 2006 are the final versions of the contracts for ordering vertical painting powder and vertical fluorescent painting please arrange for every supplier to make the above alteration before sending the contracts to the Greatson address..in Hong Kong for signature and action.” The e-mail goes on to provide the Greatson address in Hollywood Plaza Monkok, Ex 310,p 6739. 1419.On 21 April 2006, D3 sent a further e-mail to Holland Lau copied to D1, Li Lee Cheung and Jack Kam in connection with the storage of the ITW Gema machinery. It stated that Kimbo had to arrange for a delivery list to be sent immediately to Greatson for checking and provided the e-mail address of Greatson. These two e-mails were in Chinese characters. 1420.D3 contacted PW40 in December 2004 and helped him to set up Pioneer Lane and rent the premises in Wanchai on behalf of Pioneer Lane. He met PW40 in Wanchai before the opening of the Pioneer Lane bank account and gave PW40 instructions, corporate documentation, the company chop and HKD1000. PW40 went to the bank alone. After the cheque books were issued, PW40 was instructed to sign all the cheques and he handed the signed blank cheques to D3. 1421.D3 made the arrangements for D4 to become the sole director, shareholder of Greatson and bank signatory of its two bank accounts. The bank accounts were opened on 11 November 2005. D4 said that on 11 November, D3 rang him about setting up the company. They arranged to meet at Delifrance in Wanchai. This was the first time they met. This was 10 days after the OGD contract and one week after the Public Announcement of the contract. It was also more than 6 weeks after the date on the Cometal/ Greatson contract relating to the purported purchase by Greatson of the four Cometal handling systems, Ex 7, CB9. 1422.D3 provided D4 with a number of company documents for D4 to sign and the company chop. After that D3 gave instructions for D4 to go the bank alone to open the two bank accounts. D4 said at D3’s request he also signed a number of Dah Sing Bank transfer forms and telegraphic transfer forms. D4 said whilst at the bank he was asked by the bank officer about the nature of the business and he said that whilst at the bank he rang D3 to obtain the necessary information. After opening the two accounts D4 returned to Delifrance and returned the company documents and chop to D3. 1423.On 15 December 2005 at the request of D3, D4 met D3 at the Dah Sing Bank. D4 said that D3 had told him the meeting was a matter of urgency. At the bank, D3 asked D4 to sign the telegraphic transfer, Ex 158, p.7758 relating to the payment of Euros269,000 in favour of Cometal. 1424.D3 attended almost every Internal Monthly Management Meeting during the relevant period. His responsibilities in respect of machinery acquisition and shipment are apparent from the minutes. A number of witnesses gave evidence that D3 was the project director as regards acquisition of machinery – PW’s 1,2 6,7,8 and 16. 1425.PW66, the OG office assistant, would from time to time go to the bank to withdraw cash from the Greatson account at the request of D3 and Zhu. Between 30 March and 7 July 2006 HKD1,346,950 was withdrawn in cash from the Greatson account. 1426.PW26 and PW56 said that it was D3 who supplied them with the name of C. Chan as the contact person for Greatson together with the e-mail address, namely, [email protected]. PW56 was informed that it was not necessary for PW56 to deal personally with the contact person at Greatson. I was sure that there was no such person as C Chan. Records of Interview 1427.Throughout his records of interview, D3 asserted that he was merely a junior employee of OGH carrying out the instructions of his seniors and it was not for him to question their instructions. He said he followed the instructions of Zhu in particular. 1428.I bore in mind that the statements were mixed and therefore the exculpatory parts were admissible as evidence of their truth. I also bore in mind that exculpatory statements made by him in favour his co-accused were admissible in relation to them. Inculpatory statements made by D3 against co-accused were not admissible against them. 1429.I also bore in mind that if I were to reject what D3 or any of the other defendants said in their caution statements or in giving evidence, that does not mean they are guilty of any of the charges. I had to consider the evidence I did accept and decide if that established to the required standard the guilt of any of the defendants on any of the charges. 1430.I have set out a summary of the D3’s interview records elsewhere. Greatson 1431.D3 said that Greatson was set up on the instructions of Zhu via a law firm which had a long business relationship with OGH. He said D4 was introduced by PW40 and D3 made the necessary arrangements for D4 to open the bank accounts. D3 said it was Zhu’s idea to arrange for an unrelated person to set up Greatson. He said the registered address was arranged by Zhu. D3 said he gave the blank signed cheques to Zhu. He said he had no knowledge of the purpose of establishing Greatson. This was clearly a lie. When asked about the Greatson /Cometal contract dated 30 September 2005 relating the 4 handling systems, CB9, he said he was completely in the dark as to how Greatson operated. He said he was not sure how Greatson made payment to Cometal. Again this was a lie. D3 was pivotally involved in the dealings between PW56 and OGH as regards the delivery of and payment for the Cometal handling systems. He was involved in detailed correspondence about payment, shipping and insurance arrangements. 1432.D3 was asked about the arrangements for D4 to sign blank cheques. He was asked if he thought this was unusual. D3 said that everbody’s practice is different. He said for instance he would sign 10 cheques in one go and keep them at home. D3 said why not sign as nobody would take them. D3 was asked if he thought it was unusual for D4 to sign a whole cheque book and give it to someone. At counter 404 of his third VRI, D3 said that perhaps D4 and Zhu had a consensus. When asked if they had ever met and he said he did not think so. 1433.Later in the same interview, D3 was questioned about Ex 19, 895-6, an e-mail dated 7 November 2005, where PW56 complained about documentation sent to the Greatson address in St Francis Yard not being received. D3 said he had given the contracts to Zhu and had no knowledge about the matter. D3 said he did not know about a C Chan and did not know from where PW56 received the information about him. Again I was sure that D3 was lying about these matters. It was contradicted by the evidence of PW’s 26 and 56. Moreover, D3 knew Greatson was a shell company with no legitimate commercial purpose, staff or offices. 1434.In his fifth record of interview, D3 was asked about e-mail correspondence between him and You Shuiquing ( Ex25, p.961). The correspondence concerned mainlanders coming to Hong Kong to hold companies and open bank accounts on behalf of OGH. The e-mail from D3, dated the 19th July 2004, in response to an e-mail from You, stated that a document had been prepared and should be collected. It stated that “ our party needs one or two new companies that can open bank accounts in Hong Kong, any way for that? It is too ridiculous to let your brothers simply go back to the village to take out permits. Although it is a bit difficult it still can be done.” 1435.You replied that he would do his best and asked “ One company one person?”. 1436.In his next e-mail to You, D3 asked You to discuss with Miss Wu about when she has time to come again to Hong Kong to authenticate the specimen signature with the bank. You replied that the document should be got ready first and that he planned to come the following day and take it to Miss Wu to sign. He said Miss Wu’s permit should not be ready until the end of August when she could come to Hong Kong to deal with the formalities. 1437.D3 said he failed to recall what the contents meant. He said the e-mails should be written on the instructions of D1. 1438.I noted that his was not admissible evidence against D1 and that it was outside the conspiracy period. It did however show that D3 was aware of mainlanders being used to hold companies and I did not believe his assertion that he could not recall what the content meant. 1439.In my view, the evidence clearly established that D3 had a pivotal role in the conspiracy the subject of the first charge. He was not merely a junior employee blindly following orders. He was actively involved in dealing with persons recruited to hold companies and open bank accounts. He collected signed blank cheques from them. He was the person who had personal contact with PW40 and D4 with regard to their holding companies and opening bank accounts. These arrangements were vital to the success of the conspiracy. 1440.I reminded myself the where a court relies on circumstantial evidence it had to be satisfied that the facts on which it relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn 1441.D3 was involved in the details of the commercial arrangements for the supply of machinery. He was aware that Greatson was a shell company with no legitimate commercial purpose. After considering the totality of the evidence, I was satisfied that the prosecution had established beyond reasonable doubt that D3 did conspire with D1, D2 and Zhu Weibing to defraud OGD and Hing Yip as alleged in the first charge. Charges 2 and 3- D1, D2 and D3 1442.These charges relate to the Public Announcement dated 4 November 2005, Ex 28 CB3, concerning the OGD/ Greatson contract. 1443.Charge 2 alleges that, as officers of OGH, D1, D2 and D3 published or concurred in the publication of a written statement which to their knowledge was or may have been misleading, false or deceptive in a material particular, with intent to deceive the members or creditors of OGH about its affairs. 1444.Charge 3 is an alternative to charge 2, and relates only to D3. It alleges that he conspired with D1, D2 and D3 and Zhu, officers of a body corporate, with intent to deceive members or creditors of the body corporate about its affairs, to publish a written statement which to their knowledge was or may have been misleading, false or deceptive in a material particular. The charge had been laid as an alternative charge to charge 2 to cover the situation where the court was satisified that D3 had conspired as alleged in charge 2, but it was not satisfied that D3 was an officer of OGH. 1445.As early as the IMMM of 16 December 2004, Ex 18, p.811, when D1 reported on the progress at the Sanshui Plant, Kwan Man Wai, PW2, Head of Communications and Corporate Development, reminded those at the meeting of the Stock Exchange requirements on disclosure were very strict and that a single purchase of machinery over a very low figure had to be disclosed. He said that reminders would be sent out about his matter. PW1 said this was a matter that was regularly mentioned in connection with the acquisition of machinery for Sanshui. 1446.It was therefore clear to the conspirators at an early stage, well before the OGD contract had been drafted, that it would have to be disclosed. 1447.The Announcement made, inter alia, the following representations
1448.Given my findings in relation to Charge 1, it is clear that I was satisfied beyond reasonable doubt that the Announcement was misleading, false and deceptive in material particulars. 1449.Greatson was a shell company and clearly did not act as an agent in trading machinery used in a variety of metal processing industries. 1450.Greatson could not be described as being an independent third party not connected with OGH or any of its subsidiaries or its connected persons as described by the Listing Rules. It had been set up on instructions from OGH communicated to the solicitors by D3. 1451.For the reasons set out in relation to Charge 1, I was sure the evidence established that D1, D2 and D3 knew the representations were false. I had no doubt that D1, D2 and D3 were aware of the true nature and use of Greatson. 1452.D1, D2 and D3 were all involved in the drafting and or approval of the Announcement. 1453.On 20 October 2005, D3 sent an e-mail to PW7, the OGH company secretary, in response to a query raised by her regarding the background of Greatson. D3 responded that Greatson “is an agent which specialized in trading machinery used in a variety of metal processing industries”, CB21. At this time, D3, who was the person from OGH responsible for making the arrangements for the setting up of Greatson, had not yet met PW40’s friend, D4, and no bank accounts had been opened. 1454.The Announcement needed to be approved by the OGH Board of Directors. PW7 drafted the Announcement and forwarded it to the directors. Vincent Lee, PW11, an independent non-executive director, raised a number of queries regarding the background of Greatson. On 1 November PW7 sent an e-mail to D1, D2 and D3 and other regarding the queries raised by PW11, CB 24. 1455.On 2 November, D3 replied to the effect that Greatson was an independent third party and that its directors and shareholders were not connected with OGH. He stated that Greatson was a Singapore trading company investing in Hong Kong and specializing in the trading of machines of metal processing companies, CB25. 1456.On the same day D3 sent another e-mail to PW7 stating that Greatson had been introduced to OGH by business partners engaging in the same business in the Nanhai Industrial Zone. He stated that Greatson was trustworthy, showing a steady and healthy style in trade practice. D3 stated that OGH could benefit from OGH’s specialty in importing foreign equipment, CB 26. 1457.Minutes of a paper Board Meeting of Directors approving the announcement were signed by D2, CB 27. The Announcement was said to be “By Order of the Board of Ocean Grand Holdings Limited, Yip Kim Po, Chairman.” 1458.D1 and D2 were directors of OGH and were therefore clearly officers of OGH. 1459.D3 was not a director of OGH. In respect of this matter he was the project director reporting directly to D1, the most senior executive. 1460.The Court was referred to in Re A Company (1980) Ch 138. In that case the court there had to determine the meaning of the words “officer of a company” in S. 441 of the 1948 English Companies Act (which by section 445 included director, manager or secretary). Denning J (as he then was) said that the word “officer” was not to be narrowly construed. It included anyone performing a superior administrative function in the company (at p. 143, F-G). Further it was said that the meaning given to officer will depend upon the context in which it is used and the object of the particular legislation. In considering the English Companies Act, the court said in this regard:
1461.It was pointed out that S. 21 of the Theft Ordinance, like the legislation concerned in Re A Company, is designed to punish those in the company who have committed a fraud on the shareholders and creditors of the company. 1462.The Court was also referred to S. 20 of the Theft Ordinance:
1463.I was satisfied that D3 was an officer of OGH for the purposes of this legislation. 1464.I reminded myself the where a court relies on circumstantial evidence it has to be satisfied that the facts on which it relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn 1465.On the totality of the evidence I was sure that charge 2 had been proved beyond reasonable doubt against D1, D2 and D3. Had I concluded that D3 was not an officer of OGH I would have convicted him of the alternative charge 3. Charge 4 – D1 1466.This charge relates to the Circular from OGH to its shareholders in relation to the OGD Contract, CB4. It contains the same misrepresentations as the Public Announcment. It is signed “ Yours Faithfully, For and on behalf of Ocean Grand Holdings Limited, Yim Kim Po, Chairman”. 1467.The Circular was tabled at a meeting held on 11 November 2005 at OGH. The meeting was attended by the OGH Board including its independent non-executive directors and the company’s solicitors, Charltons. The meeting was chaired by D1 who also signed the minutes. 1468.For reasons already stated, I was sure that D1 was aware that this Circular was misleading, false and deceptive as alleged. Charge 5 – D2 and D3 1469.This charge alleges that D2 and D3 conspired with PW40 to deal with HKD24,967,000, knowing, or having reasonable grounds to believe, the money, in whole or in part, directly or indirectly, represented any person’s proceeds of an indictable offence. 1470.This charge arises from the 6 payments by Pioneer Lane to Hing Yip made between 19 January 2006 and 20 March 2006. Between 18 January and 17 March 2006 there were 6 payments made by Greatson to Pioneer Lane totaling HKD24,978,000. 1471.The evidence established beyond reasonable doubt that monies paid by Greatson to Pioneer Lane were the proceeds of an indictable offence, Charge 1, and that Pioneer Lane dealt with them. 1472.From evidence and reasons already referred to, I was sure that D2 and D3 were part of the conspiracy to defraud OGD and Hing Yip and that it was part of that conspiracy that monies would be channeled through various company bank accounts including that of Pioneer Lane. D2’ s friend, PW40, was the sole director and shareholder of Pioneer Lane and sole signatory of its bank account. D3 assisted PW40 in signing corporate documents in relation to Pioneer Lane, renting premises and opening the company bank account. 1473.I was therefore sure that the prosecution had proved each and every ingredient of charge 5 beyond reasonable doubt against both D2 and D3. Charges 6-8 - D3 1474.These charges arise from D3’ s use of the OGH computer to send the false information in the e-mails Ex 23, pp.950, 945 and 955 referred to previously. The e-mails stated, inter alia, that Greatson was an agent specializing trading machinery, it was an independent third party not connected with OGH, it was a Singapore trading company and was introduced by business partners from the Nanhai Industrial Zone. 1475.From my findings in relation to charges 1 and 2, I was sure that these e-mails contained false information and D3 knew this. I have set out elsewhere the ingredients of the offence. Charges 6-8 allege that D3 accessed an OGH computer with a view to dishonest gain for himself or another. D3’s obvious intent in sending these false messages was to advance the dishonest enterprise upon which he and his conspirators were engaged. I was therefore sure that his actions were view a view to gain. Charge 9- Conspiracy to Deal in the Proceeds of an Indictable Offence – D3 and D4 1476.This charge alleges a conspiracy between D3 and D4 together with Zhu, to deal with HKD136,708,000, knowing, or having reasonable grounds to believe, that such money, in whole or in part, represented any person’s proceeds of an indictable offence. 1477.The charge arises from the 12 payments made by OGD and Hing Yip between 21 November 2005 and 17 March 2006 to Greatson and to the movement of those funds from the Greatson bank account to the bank accounts of Crown Regent, Strong Sense, Pioneer Lane and Cometal. I noted that the amount of money actually paid out of the Greatson account was HKD135,853,985. 1478.PW40 asked D4, a friend and former subordinate, to act as the sole director of Greatson and he agreed. D4 later met D3 who gave him corporate documents, the company chop and some money to enable D4 to open two company bank accounts. D4’s Shek O address was used for the accounts and statements were sent there. D4 later signed a number of blank cheques, bank transfers and TT forms and gave them to D3. 1479.The details of D4’s dealings are as follows:
1480.I was satisfied that two of the TT remittance forms had been signed by D4 in person at the bank. The first was on 11 November 2005 for the equivalent of HKD7.3 million. The second was on 15 December 2005 for HKD2.4 million (Ex 381, pp. 77578 and 7758). 1481.The bank telephoned D4 to enquire if the bank transfer for the 15 March 2006 was in order. This was for HKD5.661 million, Ex 381, p.7755. D4 admitted when interviewed , Ex 164, p.3642, counter 405, that he would be asked from time to time to confirm that certain payments to be made out of the Greatson account were in order. 1482.The amount of money going through the bank account was substantial, not only in aggregate, but also in individual transactions. I was sure D4 was aware that persons behind the arrangement wished to conceal what was going on. I was also sure that D4 knew that PW40 was acting on behalf of others. D4 had direct dealings with D3. Evidence in relation to individual defendants D3 1483.For reasons I have already set out, I was satisfied so that I was sure that D3 and Zhu were central figures in the conspiracy to defraud OGD and Hing Yip. They were also pivotal figures in arranging the channeling of funds obtained through a number of bank accounts. 1484.After liaising with PW40, D3 met D4 to arrange for him to set up the Greatson bank accounts. He arranged for D4 to sign blank cheques, bank transfers and TT forms which were used in the conspiracy to transfer monies out of the Greatson account. He arranged for D4 to attend the Dah Sing Bank on 15 December 2005 to sign the remittance for the transfer of Euros269,000 to Cometal. 1485.I was sure that D3 handed over the banking documentation signed by D4 to Zhu who arranged for the movement of the funds into and out of the Greatson account. When D4 attended the Dah Sing Bank on 15 December it was Zhu, in possession of the remittance form, who met D4 and accompanied D4 into the bank where D4 signed the remittance form in front of Zhu and the bank staff. 1486.I reminded myself the where a court relies on circumstantial evidence, it had to be satisfied that the facts on which it relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn 1487.I was sure that D3 had conspired with D4 and Zhu to deal with the proceeds obtained from the conspiracy. D4 1488.As with all the defendants, D4 has a clear record. He had studied in Canada to second year degree level on a food and beverage course. He returned from Canada in 1998 and worked in the insurance field with PW40 when PW40 ran Winterthur. He had various odd jobs after the collapse of Winterthur including a short time as an estate agent with Centaline. In September 2005 D4 joined Cathay Pacific as a flight attendant. He lives with his family in Shek O. He is single and lives with his parents and younger brother. 1489.D4 said he got on with PW40 very well. He said that at its height, Winterthur employed 200 staff, occupied two floors of offices in Central Plaza and PW40 was the respected head of the agency. He said there were regular social gatherings, annual award presentations and balls. D4 said there were regular sporting activities and he and PW40 played in the same football team. He said that he and his family would visit PW40 every Chinese New Year and PW40 would bring his son to Shek O for social gatherings. He was aware that PW40’s father was a police officer. 1490.D4 said he had known James Doong, Edward Li and Cheung Chi Keung through work, social gatherings and playing football. He said that PW40 had known Cheung from childhood and Cheung’s father was also a police officer. 1491.D4 told the court that he was aware from PW40 that he knew D1 and D2. D4 said PW40 told him he had known D2 for many years and they had tea together from time to time. 1492.D4 told the court that in July or August 2005 he came to know from PW40 that PW40 had had discussions with D2 about setting up a company. He said that PW40 asked him to assist by agreeing also to hold a company for the purpose of quotations or something to do with taxation. D4 claimed that he was not too clear what it was about, but he was keen to help PW40. He said that he was aware that their mutual friends Doong, Cheung and Li had also agreed to help out. He claimed that PW40 told him that there would be no problem and he said that he believed PW40 would not do anything illegal. 1493.D4 said that in early November 2005, PW40 rang him to say that D3 would contact him to set up the company. He said PW40 told him D3 was a colleague of D2. D4 said that he understood that D3 was from OGH. 1494.D4 was shown in court the corporate documents for Greatson, Ex 370. He said that none of the signatures on those documents were his, nor was the signature on a document from Greatson to the IRD (p.7497). D4 said he was not aware that Greatson had a Singapore connection. 1495.I have set out earlier a summary of what D4 said in his records of interview and in evidence before the court. D4 told the court about the circumstances in which he met D3 on 11 November 2005 to open the Dah Sing Bank accounts in the name of Greatson. D4 said that that day he signed a number of blank transfer slips and telegraphic transfer forms in relation to the account. He said that he thought that was normal when opening an account. The nature of the business on the bank opening documents is described as electronic chemical products. D4 said that when he was at the bank he rang D3 who gave him this information. 1496.D4 said that all the remittance slips he was shown were signed by him in blank in Delifrance on 11 November 2005, the day when the accounts were opened. It was pointed out to D4 that one of the remittance slips containing the dates 19 and 21 November is endorsed “ came in person”, Ex 158,p. 7757. The defendant said he did not go to the bank in respect of that remittance. He said that on the morning of 21 November he was working. He said that he returned from Johannesburg and could not have got to the bank by 0905 which is the time endorsed on the remittance for the 21 November. He said his duty ended at 0805 and he would not have been able to get to the bank by 0905. I noted from the flight roster of D4, Ex D4-4, that the flight landed at 0735. D4 said he would have to perform a number of tasks thereafter and it would not have been possible for him to have reached Admiralty by 0905 hours. D4 said he did not know why his signature is recorded twice in the bottom left hand corner of the form. I was sure from all the evidence that D4 did go to the bank on that day. The remittance was for Euros807,000. 1497.D4 said that he met D3 for a second time on 15 December 2005. He said that he was at home when he received a call from D3 asking to meet him at the bank as a matter of urgency. He said that he met D3 at the bank and D3 asked him to sign an application for a telegraphic transfer, p.7758. D4 said that after signing the document D3 left and that he presented the document to the teller. He said the teller asked him the country to which it was to be sent. D4 said that he rang D3 who told him that the remittance was to be sent to Italy. This was a remittance for Euros269,000 to Cometal in Italy dated 15 December. 1498.D4 told the court that on 15 March 2006 he was telephoned by the bank about the transfer of Euros605,250 from Greatson to Cometal, p.7755. He said he was told by PW40 that such things would happen, that there was no problem and that the same thing had happened to PW40. By this date of course, D4 was already aware of substantial sums of money being channeled through the Greatson accounts and he had been to the bank on two occasions in connection with such transfers. 1499.D4 said he was in hospital from 19 –25 December. Some of the Greatson remittances contained dates during that period. 1500.I noted that in the bank opening documents for Greatson, Ex 157, at p.3326, the business address was given as the G/F, 5 St Francis Yard, Wanchai. The nature of the business was trading, the words electronic and garment are crossed out, and the words “Chemical & product” with the word “Garment” underneath. The address to which the account statements were to be sent was the residential address of D4 in Shek O village. 1501.D4 told the court that in April 2006 he was still receiving mail from the bank in relation to Greatson. He said that he found this troublesome and that he never opened the mail. He said that he spoke about this matter with D3 and it was arranged that D4 would go to the bank to change the address to the business address in Wanchai. 1502.I found incredible D4’ s assertion that he did not open the bank mail. He admitted being aware of the transfer to Cometal of Euro 269,000 and I found as a fact that he did attend the bank on the 21st November to sign the transfer of Euro 807,000 to Cometal. He has also signed a number of blank transfers and remittances on the day the accounts were opened. This would have put D4 on notice that very large sums of money were moving in and out of the bank account for which he was the sole signatory. An honest, commonsense, right thinking member of the community would want to be kept fully informed of movements of monies through accounts for which he was responsible. Without being given very persuasive reassurance, such a person would in my view be alarmed that such large amounts of money were being transferred through his account. 1503.D4 told the court that after opening the bank accounts he spoke with PW40 who told him he had done the same and there would not be a problem. D4 said that he thought if there was anything wrong the bank would tell him. He said that PW40 had told him he had written some blank cheques which were for daily expenses such as rent and regular expenses. Clearly, the substantial sums moving through the Greatons accounts were not for this type of expenditure. 1504.In cross-examination, D4 told the court that when he signed the bank opening documents in November 2005 he understood the company would do no business. He said he was not clear about the documents he signed and did not ask about them as it might embarrass PW40. He said when he later asked PW40 about these matters, PW40 told him a story which he did not recall. D4 said he did not know why there were to be two bank accounts. 1505.D4 said he was not shocked about the amounts moving through the Greatson accounts as he knew PW40 was engaging in a paper business and he did not know what equipment he might need. He said he had been told D2 was providing the finance. 1506.D4 said he was not clear why money was going through his company if his company was only required for quotation and taxation purposes. He said he was aware Greatson had no staff or offices. 1507.D4 said he only received lai see of a few hundred dollars but could not recall if it was given to him by PW40 on the 11th November, the day he opened the bank accounts. 1508.D4 said that on 7 August 2006, when he was flying back from Johannesburg, he read in a Cantonese newspaper that OGH was having business difficulties. He said he was reassured by PW40 that there was no problem and went to the bank to freeze the accounts. 1509.As I have stated elsewhere, I did not believe the evidence of PW40 that he did not believe he was committing any offence. When giving evidence PW40 tried to downplay his role in these offences and that of his friends. I was sure that when he gave statements to the police and when he gave evidence he did his utmost to assist his friends. 1510.D4 stated that when he was first approached by PW40 about holding a company, that it was not contemplated that there would be any business. He agreed not only to act as a director of the company, but went to the bank on his own to open two accounts whilst D3 waited outside. At that time he had been told by PW40 that he had also agreed to act as a director of a company and open a bank account and that some of PW40’s friends had agreed to do the same. On the day he opened the accounts, D4 signed blank transfer forms, telegraphic transfers and later blank cheques. 1511.D4 said he was aware OGH was a publicly listed company. He said that PW40 told him that he had been approached by D2 to hold a company and to find friends to do the same. I reminded myself that his evidence was not admissible against D2. D4 said he was aware that D2 held a very senior position in OGH. 1512.D4 was aware that at least 3 substantial amounts of money were transferred out of the Greatson accounts. On 21 November 2005 he signed a remittance for Euro807,000 in favour of Cometal. On 15 December he signed a telegraphic transfer for Euros 269,000. On 15 March 2006 he was asked by the bank to approve a remittance of Euros 605,250, again to Cometal. A total of Euro 1,681,250. He said he was told by PW40 that he had been asked to agree to similar requests. 1513.Until April 2006, the statements for the Greatson account were sent to his home. He claimed not to have opened them. Had he done so he would have seen that over HKD136 million had been transferred through the Greatson accounts. Clearly, the fact that the statements were sent to his personal address meant that the conspirators were not concerned about D4 being made aware of the size of the fund movements. The address to which the statements were to be sent was changed at the request of D4 after the last of the transfers had been made. 1514.D4 made various assertions about what he thought the bank accounts were to be used for. He said initially he was told by PW40 that the company D4 was to set up was to be used for supplying quotations or possibly something to do with taxation. D4 said that in December 2005 when he opened the Greatson bank accounts and signed blank transfers and remittances that PW40 had told him he had also written some blank cheques which were to cover daily expenses such as rent and regular expenses. He said later that he thought the money sent to Cometal was to cover the cost of machinery for PW40 ‘s business. 1515.Contrary to the evidence of PW40, D4 said he did receive lai-see. When asked by the police about this matter he said he could not recall who gave him the lai-see. When giving evidence he said he recalled that it was given to him by PW40 on 11 November which was the day he opened the two bank accounts. 1516.D4’s involvement in this offence covered several months and he had plenty of time and opportunity to reflect on the situation. The evidence established that he had no hesitation in agreeing to hold a company, open bank accounts, sign blank transfers, TT/s and cheques. He personally dealt with two remittances at the bank on 21 November and 15 December 2005 and was telephoned about a remittance on 15 March 2006. These remittances were for a considerable amount of money, Euros1,681,250. The bank statements for the relevant period were sent to his home. 1517.The two conspiracy to defraud charges, Charges 1 and 14, concern the movement of funds out of the bank accounts of OGH companies and through the accounts of companies controlled by persons personally known to either D1 or D2’s friend, PW40. Substantial sums of money were to be moved through the accounts and the conspirators had to be confidence that they could rely on the account holders. They would also have to have been confident that the account holders would be able to deal with any queries raised by the bank with the account holders about these substantial movements of funds. The enquiries might be made over the telephone and, on occasions, the account holders might have to attend the banks personally. Both D4 and D6 personally attended the banks to deal with the movement of funds out of the bank accounts for which they were the signatories. PW40 received queries from the bank about large cheques being drawn on his Pioneer Lane Bank account. He said these started a few months after the account was opened. 1518.In the case of Greatson, the only contact for the bank accounts was D4. In a relatively short period or time over HKD135, million was to be moved in and out of the accounts. The conspirators must have appreciated that such a movement of funds would almost certainly cause enquiries to be made by the bank. The conspirators must have been aware that if D4 had told the bank the true circumstances as to his involvement in Greatson, it was inevitable that this would lead to enquiries into what was going on. A situation the conspirators would be most anxious to avoid. 1519.I was sure that neither PW40 nor D4 told the court the truth as to the circumstances of their involvement with OGH. The fact that I disbelieved the evidence of PW40 and D4 about these matters does not mean that D4 is guilty of the offence. I had to consider the evidence I did accept and decide if that was sufficient to establish the guilt of the defendant to the required standard. 1520.It was stated by the Court of Appeal in HKSAR v. Wong Chor Wo and Anr CACC 314 of 2006, para 108, that “ in the normal course of events, if a man allows another person to use his bank account to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account had reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.” The court stated at paragraph 110:
1521.In the present case D4 did not merely allow someone to use an existing bank account. He agreed to act as the sole director and shareholder of a company and open two bank accounts for which he would be the sole signatory. He signed blank transfers, TT’s and cheques. He personally dealt with two remittances and authorized a third all of which were for substantial sums of money. 1522.In my view, it must have been made clear to D4, that it was expected that he should give reassuring answers to any enquiries from the bank with regard to the large movements of funds through the account. It must also have been made clear to him that he must to conceal from the bank the true situation as to the circumstances of his involvement with Greatson. 1523.I reminded myself the where a court relies on circumstantial evidence, it had to be satisfied that the facts on which the court relied had been established beyond reasonable doubt and that inferences drawn from such facts were irresistible, that no other inferences could reasonably be drawn. 1524.Looking at the totality of the evidence, I had no doubt whatsoever that the facts and circumstances known to D4 would have led a commonsense, right thinking member of the community to conclude that there existed reasonable grounds to believe that the money (HKD136.7 million) paid into and moved out of the Greatson’s accounts represented the proceeds of an indictable offence. I was sure that he had conspired with D3 to deal with this money. 1525.An alternative charge, Charge 12, had been preferred against D4 alleging a substantive charge of dealing with the proceeds of an indictable offence the subject of charge 9. Obviously from my findings I was sure that this charge had been proved beyond reasonable doubt and had I had any doubts about his participation in the conspiracy with D3 as alleged in charge 9, I would have convicted D4 on Charge 12. Charges 10 and 11 1526.Charges 10 and 11 allege that D4 on 15 November 2006 stole two choses in action, namely HKD318,190.20 and HKD22,082.14 the property of Greatson. 1527.On 15 November 2006, D4 opened a personal Easisave multicurrency account with the Dah Sing Bank.It was not disputed that on the same day D4 transferred the balances left in the two Greatson bank accounts to his own account. The sum of HKD22,082.14 was transferred from the Greatson Easisave Multicurrency account and HKD318, 190.20 was transferred from the Greatson current account. After the transfers, D4 closed both Greatson accounts. D4 said he withdrew the money to pay off his father’s debts. 1528.By that time, D4 was aware that there were problems at OGH. He had read about them in a newspaper on 7 August 2006 and after speaking with PW40 he decided to freeze the Greatson accounts. Three of the friends and former colleagues of PW40, Cheung Chi Fai, Doong Ken Sing and Li Chi Fai were arrested on 28 and 29 September and PW40 was arrested the following day. 1529.On 11 November 2006, D4’s mother opened a bank account with the Dah Sing Bank in Hang Fa Chuen. D4 said that on 15 November he gave HKD20,000 to his mother in cash. D4 said on 27 November he transferred HKD300,000 from his new personal account with the Dah Sing Bank to his mother’s account. His mother withdrew HKD150,000 from her account and on 4 December she withdrew a further HKD145,000. D4 said that he told his mother the money was a loan from friends which he would repay when his father received the lump sum he was anticipating receiving on his retirement the following year. D4 told the court that he did not wish to transfer the money directly from the Greatson accounts to his mother’s account as he did not wish to get his mother into trouble. 1530.When interviewed, D4 admitted that he opened his personal account with the Dah Sing Bank for the purpose of effecting these transfers. D4 said that at the time, he did not have the Greatson chop, this was retained by D3 after the accounts were opened. D4 said that he had a new company chop made in Wanchai to use at the bank. I noted that his friend, PW40, had done the same thing on 1 September 2006 when he withdrew HKD100,000 from the Pioneer Lane account. PW40 claimed that that was to meet a demand by the property agency, Ching Yee, for arrears of rental on the Wanchai premises leased by Pioneer Lane. I did not believe PW40’s claim that he withdrew the money for that purpose. 1531.When interviewed, D4 said that he withdrew the money because of the indebtedness of his father. He said that in November 2006 his father became ill and was admitted to hospital between 22 and 27 November having suffered a heart attack. D4 said he learnt that his father had credit card debts and other debts amounting to about HKD400,000. D4 said the family finances were controlled by the mother. He said he was aware his father, who had worked as a chauffeur for many years, was due to retire and was expecting on retirement a lump sum payment of about HKD1 million. 1532.D4 said it “popped into his mind” to use the money in the Greatson account to settle his father’s debts. D4 said he tried unsuccessfully to contact D3 many times. He claimed that he intended to repay the money out of his father’s retirement payment. D4 said that after his father received his pension, HKD330,000 was paid into his mother’s account on the 6th March 2007 to cover the money paid into her account from the monies obtained from Greatson accounts. I noted that this money was paid into his mother’s account one week after his first police interview. He said the money remains in the account to cover the monies owed to Greatson. He said he was waiting to be contacted by D3 or someone else from Greatson. He said he never intended to steal the money. He produced his mother’s bank-book, Ex D4-3, to confirm what he had said. 1533.D4 agreed that when he was interviewed by the police about the monies transferred out of the Greatson account, he never mentioned that he intended to repay the money from monies his father was to receive on retirement. He agreed that when he attended for interview in April 2007 he came prepared to answer questions about this issue and brought with him his mother’s passbook but again he made no mention of his intention to repay the money. 1534.I did not believe D4’ s evidence that he honestly thought that those responsible for the Greatson account would have consented to his borrowing the money with a view to repaying it later. As soon as he cleaned out the balance of both accounts, he closed them. By the time he appropriated the funds, he was aware OGH had financial problems and the four of his friends had been arrested and interviewed by the police in connection with their dealings with OGH. 1535.I did not believe he was waiting for someone from OGH to contact him about the accounts. He never mentioned his intention to repay the money to the police in either of his interviews notwithstanding that when he attended the second interview he anticipated that he would be questioned about these money transfers. He did not transfer the money directly to his mother’s account. He said he did not wish to get her into trouble. I had no doubt that when he appropriated the money, he was acting dishonestly according to the Ghosh test and he intended to permanently deprive Greatson of the money. Even if I had accepted, which I did not, that he intended to repay the money later, he would still be guilty of the offence. Charge 13 – D5 – Dealing with property 1536.The prosecution alleged that between the 22November and 5 December 2005 D5 dealt with property (HKD26,944.000), knowing, or having reasonable grounds to believe, that, in whole or in part, the property, directly or indirectly, represented any person’s proceeds of an indictable offence. 1537.D5 was the sole director and shareholder of Good Light Limited (Good Light) and sole signatory of its bank account. 1538.The charge arises from the payment into the company bank account of HKD26,944,000 from Crown Regent, and the subsequent disbursement of HKD26,940,000 from that account to Hing Yip. 1539.Between 22 November and 1 December 2005 Good Light received 5 payments from Crown Regent totaling HKD26,944,000. 1540.Between 22 November 2005 and 2 December 2005 Good Light made 6 payments by cheque to Hing Yip. 1541.D5 also paid USD750 towards the formation of Strong Sense, a company held by D1’s bodyguard. 1542.D5 was the owner and sole director and shareholder of Good Light which was incorporated in the British Virgin Islands on 23 May 2002, AF1 paragraph 5. D5 was the sole signatory of the company’s bank account with the Bank of East Asia which was opened on 25 June 2002, AF1 paragraph 30. 1543.The information supplied to the bank in the document headed “Corporate Customer Information”, Ex 134, page 2909, describes the business as a newly set up general trading and investment company. The correspondence address is Room A, 13/F, Silvercorp International, Towers 707-714, Nathan Road, Kowloon. D5 is the contact person and an office telephone number and mobile phone number were supplied. 1544.The evidence of PW38 was admitted under S. 65 B of the Criminal Procedure Ordinance, Cap 221, Ex 368-1. In his statement, PW38 said he had known D5 for 40 years. PW38 established Galaxy International Travel Consultancy as a sole proprietorship in 2000 and leased the premises in Nathan Road which were later used as the correspondence address for Good Light. PW38 said that D5 contacted him and asked if he could use the Nathan Road address of his company for Good Light. PW38 said that it was arranged that D5 would collect the mail sent to Good Light at the Nathan Road address including the monthly bank statements. PW38 said he never opened any of the mail. 1545.Good Light did not register as a business in Hong Kong. PW101, Ex 368-30, an IRD assessor stated in her s. 65B statement that Good Light and Strong Sense could not be identified from departmental records. Good Light and Strong Sense 1546.The s.65B statements of PW59, a supervisor employed by Tricor EAC at the material time, Ex 366 18 A and B, were admitted into evidence. They relate to the setting up of Good Light and Strong Sense. PW59’s company acted as an agent in setting up the BVI companies. He stated that Good Light was incorporated on 23 May 2002 as a shelf company. He produced an application by D5 to purchase the company with a bank supporting letter dated 24 June 2002.D5 was appointed its first director on 24 June 2002. PW59 stated that D5 completed and signed the relevant forms on 24 June 2002 and supplied a copy of his identity card 1547.Strong Sense was incorporated in the British Virgin Islands by East Asia Corporate Services (BVI) Limited on 19 June 2002. Tsui Sze-lam, the bodyguard of D1, was its sole director and shareholder between 5 November 2002 and 30 December 2004. Tsui was the sole signatory of its two bank accounts at the material time. The address supplied was 18/F, Wilson House, 19-27 Wyndham Street, Hong Kong, telephone number 9283 3189. A cheque dated 5 November 2002 drawn on the personal account of D5, Ex 232, p.5385, was used to settle the bill of USD750 in respect of the formation charges relating to Strong Sense. The corporate documents and chop were collected personally by Tsui. 1548.Minutes of a board of directors meeting of Strong Sense, dated the 1st November 2004, resolved that D5 take over as director from Tsui, p. 5398. The Bank of East Asia were notified, p. 5405. EACS were required to confirm the identity of the customer and forms were sent to D5 at 22/F, No. 3 Lockhart Road, Wanchai on 4 January 2005 without reply. EACS phoned Tsui on 17 February 2005 and he confirmed the address was correct. That letter and reminders went unanswered and a letter sent to Tsui post marked 06.05.05 at the Wyndham Street address was marked “return to sender”. Tsui was again contacted by phone and said that there was no change of the correspondence address. Further correspondence went unanswered and EACS had the company struck off in November 2007. Crown Regent 1549.Crown Regent was incorporated in Hong Kong on 11 July 2003. At the material times, the aforementioned Tsui Sze Lam was its sole director and shareholder (AF1 paragraph 4). Payments into and out of the bank account of Good Light 1550.Between 23 November and 1 December 2005 five payments were made into the Good Light bank account by Crown Regent. The cheques, Ex 139 pp3198-3202 were for HKD5.664m, HKD5.938m, HKD6.530, HKD4.312m and HKD4.5 m. The first cheque was dated 22 November, the second and third cheques 27 November, and the last two cheques were dated 1 December. 1551.Between 23 November and 2 December 2005 6 cheques, signed by D5, and bearing the company chop were paid into the account of Hing Yip. The cheques, Ex ‘s 146-51 were for HKD5.663m, HKD3.847, HKD4.240.HKD4.370, HKD4.850 and HKD3,960,000. The first was dated 23 November, the next three 30 November and the last two were dated 2 December. 1552.I noted that OGD made four payments to Greatson from its HSBC account, Ex 137. The payments were by way of Chats documentation. They were in the sums of HKD13.094million, HKD12,471million dated 21 and 28 November respectively and two payments, each of HKD10 million were made on 30 November. 1553.I also noted that Greatson made three payments to Crown Regent between 22 November and 1 December, Ex 155, pp.3348-50. The payments were for HKD5.665m, HKD12,470m and HKD10.830m. They were made by way of bank transfers dated 22 and 29 November and 1 December respectively. I noted that these payments were booked in as payments to Hing Yip by Forton Development, Mantex Trading, New China Trading, Good Light and Forex Industries. These companies, except Good Light, were set up by PW29 on the instructions of OGH. 1554.I further noted that in March 2006, following payments into the account of Crown Regent by Greatson, payments totaling just over HKD23 million were made to Hing Yip by Crown Regent purportedly on behalf of New China Trading, Good Light and Pioneer Lane. D2’s friend, PW40, was the sole director and sole bank signatory for Pioneer Lane which was a shell company, used as a money transfer vehicle. Pioneer Lane itself received 6 payments from Greatson between January and March 2006 totaling HKD24,978,000 and made 6 payments to Hing Yip during the same period. The payments from Pioneer to Hing Yip purported to be made on behalf of Forton Development, Forex Industries and Pioneer Lane. 1555.PW9, Agnes Lam Pui Pui, was working for and reporting to Zhu Weibing at the time the above cheques or transfers were prepared. She said that she prepared the documents on the instructions of Zhu. She said in cross-examination that she said she would not disagree that they were all pre-signed. She said that she could not recall if they were chopped or not but she did not put the chops on the cheques. In respect of cheques drawn on Pioneer Lane and Greatson, they had been pre-signed and given to D3. Given the movement of funds and the dates of the various cheques or payments passing from Greatson, Crown Regent and Good Light I was sure the cheques were all presigned. PW9 had started to work for D2 in 1999 at Global Credit. In 2003 she worked for D1 as receptionist for few months and later worked for Daniel Tam. From late 2003 she worked for and reported to Zhu. 1556.The letters purporting to support payments on behalf of Forex to Hing Yip for ingots were not signed and had no address (Ex’s 44-47). The body of the supporting letter purporting to come from Good Light, Ex 48, p. 1147, for the payment of HKD3,960,000 on 2 December 2005 was in identical terms to the Forex letters and again had no address or signature. The supporting letters for purported payments to Hing Yip for ingots from New China Trading, Forton, Mantex and Pioneer Lane contained very similar wording, Ex 57, p1175/7, Ex 51, p1156, Ex 52, p11670, Ex 55, p1168 and Ex 60, 1183. 1557.Forton, Forex, Mantex, New China were set up by PW29 on the instructions of OGH personnel. D5 and D1 1558.PW80, the secretary to D1 at the material time, described D5 as a friend of D1 who used to visit PW1 at his offices from time to time. PW9 came across D5 at the offices of OGH but said he did not work for OGH. PW87, Brian Or, a solicitor who had worked with D1 since 2001 said D5 would come to the offices of OGH to visit OGH. He was not a member of staff. He saw him on average about once per month. D5 and D1 would chat and smoke cigars in D1’s room. Determination 1559.As I have stated above, I was satisfied beyond reasonable doubt that the OGD/Greatson contract was bogus and that Greatson was used as a vehicle to permit funds to be moved out of the OGD and Hing Yip accounts purportedly in pursuance of this sham contract. In relation to charge 13, I was sure that the monies paid into the Good Light account by Crown Regent represented the proceeds of an indictable offence and that those funds were almost immediately transferred out of the Good Light account and back to the Hing Yip account. 1560.I was sure that the 6 cheques in respect of the Good Light payments to Hing Yip were prepared by PW9 and that the cheques had been pre-signed. D1, the chairman of OGH, is a friend of D5. Other payments from the funds paid into the two Greatson accounts purportedly pursuant to the OGD contract were paid out from those accounts to Crown Regent and Strong Sense, companies for which Tsui Sze Lam, the bodyguard of D1, was the sole director and bank signatory. Other payments were made by Greatson to Cometal as payment for four handling systems and HKD24.9 to Pioneer Lane, a company which had no legitimate commercial purpose. PW40, a friend of D2, was the sole director and bank signatory of Pioneer Lane. All but HKD11,000 of that money was paid back to Hing Yip. D1 and D2 were the only bank signatories of the bank accounts of OGD and Hing Yip. The vast majority of the cheques and transfers for these various transactions were prepared by PW9. 1561.As I have stated previously, the conspirators would have to have been confident that they could trust the various account holders and that those holders would be agreeable to those accounts being used for the movement of these huge sums of money. They would also have to be sure that the account holders would be able to deal with any queries raised by the banks about such fund movements without arousing the suspicion of the bankers. The funds leaving OGD were initially transferred to Greatson, a company controlled by D4 who had been introduced to OGH by D2’s friend, PW40. The funds were then transferred to Pioneer Lane, Strong Sense and Crown Regent. Pioneer Lane was held by PW40 and the other two companies were held by Tsui Sze Lun, D1’s bodyguard. D1 was the most senior executive of OGH. D2, D1’s sister, was an executive director of OGH. They were both signatories of the OGD bank account. 1562.I was satisfied so that I was sure that D5 had allowed his bank account to be used by OGH for the purpose of these fund movements. I was sure he gave the company some pre-signed cheques. Details of the payments in to and out of his account would be recorded in the company’s monthly bank statements which were sent to the offices of PW38. D5 would collect those statements and any other correspondence from PW38, who did open any correspondence. 1563.I reminded myself that D5 is a person of good character. I also noted that he was not in Hong Kong on 30 November 2005 when three cheques were credited to his bank account (Defence Exhibit D5-1). Bank accounts are valuable properties. D5 allowed another person to use his company account and provided them with pre-signed cheques. The defendant elected not to give evidence and no adverse inference can be drawn against him for so doing. There is therefore no direct evidence as to what was in his mind at the relevant time. I am obliged to infer it. There was no evidence to suggest that he was not an adult of sound mind. 1564.It was stated by the Court of Appeal in HKSAR v. Wong Chor Wo and Anr CACC 314 of 2006, para 108, that “ in the normal course of events, if a man allows another person to use his bank account to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account had reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.” The court goes on to state at paragraph 110:
1565.I had no doubt that the funds moved through the account of Good Light were the proceeds of an indictable offence. The transactions were processed through the company bank account and monthly bank statements would be seen by D5. If arrangements had been made for the movement of these substantial sums of money through the bank account of Good Light without the knowledge of D5, those responsible for such actions were taking very serious risks of being discovered not only as regards that illicit movement of those funds, but also the illicit movements of funds through the accounts of banks from where the money had come. 1566.The funds were paid into the account of Good Light from the Crown Regent account, Ex 139, 3175. The bank statements for November and December 2005 show the payments into the account from the shell company Greatson, and the immediate payment from the Crown Regent account of the 5 payments to Good Light, the three payments to Strong Sense, the other company held by D1’s bodyguard, and the three payments to NAS and NGAS. These were the only movement of funds in and out of the Crown Regent account for the period from 22 November to 15 December. 1567.D2 and Li Lee Cheung, head of the Sanshui project, were both directors of NGAS at the material time. D1 was the owner of all but one of the 156,000 issued shares from 15 November 2005 to 26 March 2006. D2 transferred all her shareholding to D1 on 15 November 2005. NGAS had a subsidiary Hongli Nanfang Galvanised Sheet (Shanshui) Company Ltd ( Hongli Nanfang). 1568.D2 and Lin Jian Ping, D1’s friend, were directors of NAS at all material times. D2 was a shareholder until 15 November 2005 when her entire shareholding was transferred to D1 who thereafter held 90% of the shares, the rest being held by Lin Jian Ping. 1569.In my view, D5 must have been aware that substantial funds were being moved into and out of the account of Good Light and that Good Light was involved in no legitimate commercial activity in relation to such funds. It must also have been obvious to D5 that those responsible for moving the funds into and out of the Good Light account were trying to conceal what was going on. The bank documents contain no record of D5 having ever queried this movement of funds through the account of Good Light. Had he raised any queries this would inevitably have been very carefully investigated by the bank. 1570.I reminded myself the where a court relies on circumstantial evidence it has to be satisfied that the facts on which the court relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn 1571.Taking into account the totality of the evidence, I was sure beyond reasonable doubt that D5 was aware of reasonable grounds which would have led a common sense, right thinking member of the community to believe that monies paid into and out of the bank account of Good Light were the proceeds of an indictable offence and I convict D5 of charge 13 The Kenlap PGC contracts with Fong Long and Long Asset Charges 14-18 1572.In August 2005, at an IMMM, D1 briefed the OGH management about a proposal to buy gold bond wiring machines for their factory in Zhuhai on the mainland which was controlled by a subsidiary company, Kenlap PGC. 1573.OGH started negotiations with Don Yan, the General Manager of Shanghai Wacmach (“WACMach”) Corporation. This company was the regional agent for the Swiss manufacturers, SOMA AG, and the German manufacturers, IWT Industrielle Wickeltechnik (“IWT”). 1574.The prosecution produced two contracts in relation to the purported purchase by Kenlap PGC of machinery manufactured by these two companies. The first contract, between Long Asset and Kenlap PGC, CB29, is dated 23 March 2006 and relates to the purported purchase by Kenlap of five Soma drawing machines for the equivalent of HKD18.9 million. The second is between Fong Long and Kenlap PGC, CB29, dated 27 March 2006, and relates to the purported purchase by Kenlap of five IWT winding machines for the equivalent of HKD 9.3 million. 1575.At the dates recorded on these contracts, OGH were still in negotiation with Don Yan about the purchase of Soma and IWT machinery. These negotiations eventually led to OGH agreeing to purchase five drawing machines from Soma for approximately HKD5.94 million and three IWT winding machines for HKD470,000. As these negotiations were in their final stages, OGH requested Don Yan to have the contracts drawn up in the names of the two Hong Kong based companies, Long Asset and Fong Long, CB’s 34 and 35. 1576.It was clear from all the evidence that the Kenlap contracts, CB 29 and 30, were bogus. The prices were vastly inflated. Long Asset was a shell company with no offices or staff. The monies paid out purportedly pursuant to the contracts were channelled through other companies and then back to Kenlap PGC and its subsidiary KCL using bogus supporting documentation purporting to show the payments were for the purchase of salt metals by those companies from Kenlap and KCL. Long Asset Limited 1577.Long Asset was purchased by PW29, Daniel Tam, at the request of Zhu in September 2005. PW29 was a former financial controller of OGH until June 2004. He then joined a company run by his wife, Bonseal Accounting and Secretarial Ltd (Bonseal), which provided secretarial services. The registered office and business registration address of Long Asset was that of a secretarial firm, the Cosmopolitan and Business Convention Centre. Correspondence received at the firm was collected by PW66, an office assistant of OGH who would pass it on to D3 or Zhu. 1578.PW40 had been approached by D2, his friend, to hold a company for OGH and to find friends to do likewise. In September 2005, PW40 approached D6 with a view to her holding a company for OGH. D6 agreed. D6 was the girlfriend of Cheung Chi Keung, a friend and former colleague of PW40. D6 was appointed a sole director and shareholder of Long Asset and agreed to open a company bank account with the Bank of East Asia for which she would become the sole signatory. The account was opened on 13 January 2006, Ex 267, p. 5985-6029. Long Asset filed no profit tax returns with the IRD and did not make any payment to the IRD between 1 April 2005 and 31 March 2007, Ex 277, AF IV, para. 8.1. Fong Long (Overseas) Industrial Limited 1579.Fong Long was incorporated in Hong Kong on 22 June 2005 by Wai Fai and Company at the request of PW69 (PW69 s.65 B statements Ex 368-8/9). The company had three directors, two from the mainland, You Shuiqing and Xiao Jianfeng, and a Macau citizen. You was a business associate and friend of D1. 1580.On 5 December 2005, Fong Long opened two bank accounts at the Bank of China. All three directors were authorised signatories (AF1 para. 34). 1581.A Profits Tax Return with the IRD for the year ended 31 March 2006 stated the company was dormant, (AF1 Para 65.5) No return was made for the following year. Chronology of Events 1582.On 29 August 2005, at an IMMM, D1 briefed the OGH management about a proposal to buy gold bonding wire machines for the Kenlap PGC factory in Zhuhai. 1583.E-mail and fax correspondence, dated between March and May 2006, was produced, Ex 191, 5033 – 5054. The correspondence was between D3 and Don Yan of GM WACmach Shanghai concerning the purchase of equipment from Soma AG and IWT. 1584.An e-mail dated 7 March 2006, p.5033, from D3 to Don Yan referred to quotations numbered 05141/2/3 dated 12 January 2006. D3 sent the e-mail with a view to price negotiation. 1585.Don Yan responded on 13 March and referred to a discussion with a Walter Looser of OGH following a telephone conversation which Yan had had with Soma AG. He said Soma had agreed to a price reduction. 1586.At the IMMM on 21 March, the management were informed that the machinery was purchased and would be shipped in April –Ex 18/ 851-4. The contract between Kenlap and Long Asset to buy five Soma fine wire drawing machines for HKD 18.9 million is dated 23 March 2006, CB29. 1587.There is a contract dated 27 March 2006 between Kenlap and Fong Long to buy five IWT winding machines for HKD 9.3 million,CB30. 1588.On 22 March, D3 enquired of Don Yan, by e-mail, whether or not WACmach also sells the the IWT winding machinery as they had noticed his company as an enquirer on an IWT quotation number 4986 issued on the 23rd February. D3 said if that was the case, OG they were planning to buy three of those and asked for his best offer. 1589.The next e-mail from D3 is dated 25 March 2006 and is in response to a fax from Don Yan. D3 asked WACmach to consider their counter offer. 1590.On 28 March D3 send a fax to Yan referring to quotation 4986, dated 2 March. D3 stated they only needed three winding machines and would offer a unit price of USD28,000, therefore 3 sets would cost USD84,000. D3 stated that he wanted the deal closed as soon as possible. 1591.On 28 March 2006, accounting staff of OGH, PW81, instructed by Zhu, prepared the accounting voucher and other documentation, to pay Fong Long HKD7,580,520 which is described as being a 40% deposit on plant and equipment, Ex 201,2 p. 5060-71. 1592.An application for telegraphic transfer dated 28 March 2006 is signed by D1 and D2. HKD7,014,016 was transferred from the Kenlap PGC bank account to that of Long Asset on 29 March 2006, Ex 202, p.5065-71. 1593.A cheque dated 28 March 2006, in favour of Fong Long, was drawn on the Kenlap PGC account with the Bank of China and signed by D1 and D2 in the sum of HKD7,580,520. The Fong Long account was credited the following day, Ex 268, p. 6059. 1594.PW70, Cindy Wong, a former administrative assistant with OGH, told the court that exhibits 201 and 202 (pages 5060 and 5066) were the relevant payment vouchers relating to these payments. The vouchers were prepared by PW81 and herself. She said there were no contracts with the vouchers when she received them. She said that the normal procedure for dealing with vouchers was not followed in relation to these vouchers as she would not check the documents until after the payments had been made. PW70 said she did not know why Ex 201 refers to a payment of a deposit of 40% when the amount paid was in fact 80% of the contract price as stipulated in the contract, Ex 189. She also said that she did not know why other aspects of the two payments differed from what was stipulated in the contracts. 1595.PW64 said that he saw exhibits 201 and 202. They were brought to him to sign in the approved by line in about April 2006. He said there were no contracts with the vouchers and he asked Zhu about the contracts. PW64 said Zhu asked him to approach D3 for the contracts. PW64 said he asked D3 for the contracts and D3 told him he would have to look for them and give them to him. PW64 said one or two days later they arrived on his desk, Exhibits 189 and 190. PW64 said that as far as he was concerned, D3 was responsible for buying machinery and was the project director. He said D3 reported to D1. 1596.A fax, dated 4 April 2006, was sent by OGH to Yan referring to Yan’s fax of 29 March, and stated that a deal could be cut with a 5% discount on the Soma equipment and three sets of ITW at Euros 80,000. It also stated that they wished to explore the possibility of the 2 contracts being signed separately by two other Hong Kong-based companies. 1597.On 12 April 2006 a fax was sent by OGC to Yan, p. 5042, which provided the details of the companies for incorporation in each of the contracts. For the Soma equipment, Long Asset was to be used and for the IWT winding machines, Fong Long was to be used. The addresses and contact numbers of both companies were supplied. 1598.18 April 2006 is the date on both the Fong Long/ IWT contract number 2006WAC802006DE, Ex 196, CB35, and the Long Asset/ Soma AG contract number 2006WAC801005CH, Ex 197, CB34. In the first contract Fong Long agree to buy three sets of winding machines for a total price of EUR80,000, the equivalent of approximately HKD740,000 in accordance with the details supplied in quotation number 5986. 30% of the total contract price, EUR24,000 was payable by telegraphic transfer two weeks after the receipt by the buyer of certain invoices. 1599.Under the second contract, Long Asset agreed to buy five sets of fine wire drawing machines for CHF987,459.00, the equivalent of HKD5.94 million, in accordance with the details provided in quotations No.05141,05142 and 05143. Again, 30% of the contract price, in this case CHF296,237.70, the equivalent of just over HKD1.9 million, was payable two weeks after the receipt of certain invoices by the buyer. 1600.On 21 April 2006 a facsimile was sent by Long Asset to WACmach attaching executed copies of the Soma contract. It stated that the two original copies would be sent by courier. 1601.On 28 April a facsimile was sent by Fong Long to WACmach in relation to the IWT Winding Machine, Contract number 2006WAC802006DE complaining about the documentation. It stated that Fong Long would schedule a 30% deposit, amounting to Euros24,000 and expected by return the missing papers delivered to its Hong Kong office. 1602.On 15 May 2006 Don Yan sent an e-mail to D3, p.5037, stating that he was informed by Kenlap Zhuhai that the payment for IWT/Soma order was already processed and that on confirmation of payment, production would be arranged to catch an earlier delivery time. 1603.Ex 269, p.6086, is a remittance to IWT from Fong Long for the equivalent of HKD240,000, 30% down payment for the winding machines. The details on the remittance were identical to those set out in the payment arrangements under the IWT contract. 1604.On 17 May 2006 Strong Sense deposited HKD1,910,082 into the account of Long Asset, p. 6027. 1605.Ex 269, p. 6029, is a transfer dated 19 May 2006 in the sum of HKD1,907,082 signed in person by D6 remitting money from Long Asset to Soma AG as a 30% deposit on the cost of the machinery ordered. 1606.Page 5043 is a copy fax dated 19 May 2006 sent by OGH to WACmach attaching payment slips from both Long Asset Limited (for the Soma drawing equipment) and Fong Long (for the IWT winding machines) for their reference. 1607.On 29 May, D3 sent an e-mail to Don Yan to see if Yan had received his fax dated 19 May for payment confirmation in relation to the Soma and IWT equipment. Yan sent an e-mail the following day stating that IWT received the down payment one week previously and that Soma AG had received it the previous day. It also stated that both companies had started production. 1608.On 7 June 2006, You Shuiqing e-mailed D3 about Fong Long. D3 responded the same day. You was requested to print out an attachment and contact Mr Xiao of Fong Long Overseas Enterprise “for affix signature and chop”. D3 instructed him to bring the document to D3 in Hong Kong the following day. 1609.On 24 July 2006, OGH went into provisional liquidation. The machinery ordered from Soma AG and IWT was never delivered. 1610.The statement of Senior Inspector Victor Lai Ka-siu, PW75, was admitted into evidence under the provisions of s.65 B of the Criminal Procedure Ordinance Cap 221, Ex 368-31. He stated that Don Yan could not be located. 1611.The statement of Adrian Zwick, PW106, was admitted into evidence under the provisions of s. 65B CPO. He is the sales manager for Soma AG and had a collective power of attorney from that company. He said that the Shanghai WACmach Corporation had been the agents for Soma AG in the China area since June 2004. He produced the contract between Soma AG and Long Asset, Ex 197, dated 18 April 2006, whereby Long Asset agreed to buy 5 fine wire drawing machines from Soma for the equivalent of HKD5.94 million. He said the contract was signed by Don Yan who was their agent and entitled to sign contracts on behalf of Soma AG. PW106 said they received a 30% deposit and produced the relevant credit note from Long Asset to Credit Suisse in respect of that payment for the equivalent of HKD1,910,000, Ex 353, pages 6027-29. 1612.I noted that the sets purportedly ordered by Fong Long from IWT cost about Euros26,666 per set. The contract price set out in the Kenlap PGC /Fong Long contract was about Euros200,000 per set, nearly 8 times greater. 1613.Similarly, the price in the Kenlap PGC and Long Asset contract was grossly inflated. 1614.On 17 July 2006, Don Yan wrote to D3 concerning contract numbered 2006WAC801005CH/ Delivery advice for the Soma drawing machines. He advised that the five sets of Soma AG drawing machines should be shipped on the 22nd September 2006. He said that as he knew Kenlap (Zhuhai) needed them urgently and that they were going to be ready for shipment in August 2006. 1615.In August 2006 there was e-mail correspondence between Don Yan and the provisional liquidator for OGH, Deloittes. On 9 August 2006, Don Yan sent by e-mail, page 3055, copies of the Fong Long and Long Asset contracts, Exhibits 196/7, to PW102, a senior associate of DTT. The e-mail stated that in respect of each of the contracts the 30% down payment was already effected and that the balance of 70% had not been paid. He said the machines were ready for shipment. 1616.On 26 September and 15 November 2006, Messrs PC Woo and Co wrote to Long Asset on behalf of Soma AG regarding the breach of contract, Ex 197. Fund Flows Long Asset
Fong Long
1617.In the books of account of Kenlap and KCL the payments purport to be for sales of metal salts to Foshan Dongfan, Strong Sense and United Fine Holdings Limited – 208-9, 5355-5360. 1618.The sole director and bank signatory of Strong Sense was Tsui Sze Lam, the bodyguard of D1 1619.PW29 told the court that Union Sheen was purchased by PW29 on the instructions of Zhu in June or July 2004. The registered and business registration address of Union Sheen was that of a secretarial firm, Multi-Trade Development Company ( PW93) which received correspondence for Union Sheen. The correspondence was collected by the office clerk, PW66, who gave it to Zhu or D3. IRD did not issue a Profits Tax Return to Union Sheen for the tax years 2003/4 to 2004/5 and the company made no tax payment for those years. 1620.United Fine is a shell company which was held by a friend of PW40, Cheung Chi Keung, the boyfriend of D6. The registered and business registration address was that of a secretarial firm SBC International (PW94). The correspondence for the company was collected by PW66 and given to Zhu or D3. The IRD did not issue Profits Tax Returns to United Fine for the relevant tax years and no tax payment was made by the company for those tax years. 1621.With regard to Foshan Dongfan Chemicals, PW78, a police officer, told the court that he visited the address of the company as shown in the records of Kenlap PGC as the purchaser of metal salts. He was unable to find any evidence of that company at that address. Excel File recovered from Computer of D3, CB38 1622.An Excel file relating to the “Original”, “Adjusted” and “Account” price for the fine wire and drawing machinery was recovered from the computer of D3 – AF IV, Para2 and Ex 205, p. 5327 –5340, CB38. 1623.The prices relate, inter alia, to Soma machines and IWT machines. With regard to the Soma machines prices the sub-totals in the “Amount” column gives a total of CHF987,470 with is very close to the contract price of CHF987,459 as recorded in the contract between Long Asset and Soma AG, CB 34. 1624.The next column shows the HKD equivalent. 1625.The next column, “X”, represents a multiplying factor which gives the figures in the column “ Amount After Adjustment”. For items 1 and 2 the multiplying factor is 3 and for item 3 the factor is 4. 1626.These adjusted figures are carried forward to the lower part of the table, translation p. 5327 a3-a4. In this table the figure is converted back to Swiss Francs in the “ Amount Announced” column and is then rounded up in the “Rounded Up” column. The three rounded up figures come to CHF3,169,000 which is the contract price in the Kenlap PGC and Long Asset contract, CB29. 1627.The same exercise is carried out in relation to the IWT machines at Item 9, p.5327 a2. The original price corresponds with the price in the Fong Long IWT contract, CB35. The “Amount announced” corresponds with the price in the Kenlap PGC and Fong Long contract, CB39. Charge 14 D1 and D3 1628.PW2 and other witnesses gave evidence that D1 first proposed the purchase of gold bonding wire machines at the IMMM held in August 2005. D3 was assigned the task of dealing with the project. The matter was raised again on a number of occasions at subsequent management meetings. 1629.At the IMMM on 15 February 2006 it was recorded that the proposal was in its final stages. 1630.On 21 March 2006, the meeting was informed that the machinery had been purchased and would be shipped to the factory the following month. 1631.On the instructions of Zhu, PW81, an accounting staff of OGH, prepared two accounting vouchers on 28 March 2006 for deposit payments to Long Asset and Fong Long. Both were initialled by D1. 1632.On 29 March, D1 and D2 signed a CHATS application for the payment of HKD7,014,016 from Kenlap PGC to Long Asset, the latter’s bank account being credited on 29 March 2006, AF 11, para8.1. On the same day, D1 and D2 signed a cheque drawn on the Kenlap PGC account in the sum of HKD7.58 million payable to Fong Long, Ex 268, p.6059. 1633.On 16 May 2006, Euro 24,000 was remitted from Fong Long to IWT as a 30% down payment for the three winding machines. 1634.On 19 May 2006, a remittance for CHF 296,237.70 (HKD1,907,082), Ex267, p. 6029, was remitted from Long Asset’s bank account to Soma AG as a down payment for five fine wire drawing machines. D6 was the sole director and bank signatory of Long Asset. She was introduced to become a director by D2’ s friend, PW40. On 19 May 2006, D3 told her to go to a bank in Admiralty to sign some banking documents. When she arrived she was met by Zhu and signed the remittance in the presence of Zhu and bank staff. 1635.PW29, Daniel Tam said he purchased Long Asset on the instructions of Zhu. D6’s appointment as director was backdated to 15 December 2004 on Zhu’s instructions. Her signatures were forged on eight company documents and on the two contracts CB 29 and 30. 1636.PW67 of Wai Fai and Company, a secretarial firm, stated that Fong Long was incorporated in Hong Kong at PW69’s request (S.65B Statements 368 –8&9). The company was incorporated on 22 June 2005 and the directors were two PRC citizens, You Shuiqing and Xiao Jianfeng, and a Macau citizen, Hoi Cheng Soi. The company bank account at the Bank of China was opened on 5 December 2005 and the signature of any of the directors could operate the account. You was a friend of D1. In July 2004 D3 had entered into e-mail correspondence with You (Ex 25,p.961) about mainlanders coming to Hong Kong to hold companies and open bank accounts on behalf of OGH. You replied that he would do his best and asked “One person one company?”. When interviewed about this D3 said he could not recall what the contents meant. He said the e-mails should be written on the instructions of D1. I noted this was not admissible against D1. 1637.Profit Tax Returns filed by Fong Long for the year ending 31 March 2006 stated that the company was “dormant”. No profits tax return was filed for the year ended 31 March 2007. 1638.The fund flows relating to funds paid by Kenlap PGC to Long Asset and Fong Long, CB 36, show that almost all of the money was paid back to Kenlap PGC or its subsidiary KCL via Strong Sense and Union Sheen. In the accounts of Kenlap PGC the payments from Long Asset to Union Sheen and then to Kenlap PGC were represented as being payments for salt metals to Foshan Dongfan, Ex 206-7,p.5341-5354. 1639.With regard to Fong Long, the payments from that company to Strong Sense and then to KCL and Kenlap PGC were represented in the account books of Kenlap PGC and KCL as payments for metal salt sales to Foshan Dongfan, Strong Sense and United Fine. 1640.A total of HKD8,312,570 (HKD1,130,000 and HKD7,005,000) was paid into the bank account of Kenlap PGC with the Bangkok Bank by way of a loan repayment ( AF 11,para 8.4). 1641.I noted that on 17 May 2006, Strong Sense paid into the bank account of the shell company, Long Asset, HKD1,910,000 ( AF11, para 9.2). On 19 May 2006, Long Asset paid to Soma AG HKD1,907,081 in Swiss Francs) being 30% of the cost of the machinery ordered under the contract CB34. The remittance was signed by D6 personally at the bank. She had gone to the bank at the request of D3 and met Zhu who went into the bank with her and saw her sign the remittance. 1642.PW29 told the court that he purchased Union Sheen on the instructions of Zhu in June or July 2004. The registered address was that of a secretarial company, Multi-Trade Development Company which received correspondence for Union Sheen (PW93, s. 65 B statement Ex 368 –19). The correspondence was collected by PW66, the OGH office clerk, who gave it to Zhu or D3. The IRD did not issue Profits Tax Returns to Union Sheen for the years of assessment from 2003 to 2006. The company made no tax payment for those years – AF IV, para 6 c. 1643.Tsui Sze Lam, the bodyguard of D1, was the director and sole bank signatory of Strong Sense 1644.United Fine was purchased by PW29, on the instructions of Zhu, in November/ December 2004. Its sole director and shareholder was Cheung Chi Keung, introduced to OGH by PW40. Cheung was the boyfriend of D6. The registered address and business registration address of United Fine was that of a secretarial company SBC International – PW94, s.65 B Statement Ex 368 –15. The correspondence received by that company was collected by PW66 and given to either D3 or Zhu. 1645.IRD did not issue Profits Tax returns to United Fine for the years from 2003 to 2006. United Fined did not make any tax payment for those years of assessment and up to 2007 – AF IV, para.8 (b). 1646.PW78, a Hong Kong Police officer, told the court he visited the address of Foshan Dongfan Chemicals shown in Kenlap PGC records and could find no evidence of the company at the address supplied. 1647.On the totality of the evidence, I was sure that the contracts between Kenlap PGC and Long Asset and Fong Long (CB 29 and 30) were bogus contracts. Long Asset was a shell company with no legitimate commercial purpose, offices or staff. A director and bank signatory of Fong Long, You Shuiquing ,was a friend and business associate of D1. I was sure there was no genuine sale of the property referred to in the contracts to either Fong Long or Long Asset. The conrtracts were used as vehicles to channel funds from Kenlap PGC. Those funds were later channelled back to Kenlap PGC and its subsidiary KCL via Union Sheen and Strong Sense and booked in the accounts of those companies as sales of metal salts to Foshan Dongfan Chemicals, Strong Sense and United Fine. I was sure that there were no such sales. 1648.OGH had entered into negotiations with Soma AG and IWT and the terms agreed were as set out in the contracts CB34 and 35. Long Asset and Fong Long were not genuine commercial parties to those agreements. The prices referred to in the contracts CB29 and 30 were substantially greater than the prices negotiated by OGH with Soma AG and IWT as set out in the contracts CB34 and 35. 1649.The transfers of monies to Long Asset and Fong Long were effected by a telegraphic transfer and cheque both dated 28 March 2006. The purported contracts were dated 23 and 27 March 2006 in relation to Soma and IWT equipment. Don Yan, the SOMA and IWT agent, was asked in a facsimile dated 4 April 2006 if he would consider the possibility for the contracts being negotiated between OG and his companies being signed separately by two other Hong Kong companies. The details of Fong Long and Long Asset were sent to Don Yan by facsimile dated 12 April. In other words, the remittances were made before the completion of negotiations between OG and WacMach. Evidence Against Individual Accused – D1, D3 and Zhu D1 1650.D1 was the most senior executive in the OGH group and a significant shareholder. At the IMMM in August 2005 he proposed the purchase of the machinery. Obviously the price of the machinery would be a major consideration for D1. He assigned D3 the task of dealing with the matter. D3 reported only to D1. The proposal was referred to again in a number of IMMM’s all chaired by D1. As with the Sanshui project, this project was a regular item on the IMMM agenda. 1651.Although Zhu was described as being an assistant financial controller, the evidence established that he did not report to any of the three financial controllers. He reported directly to D1 on financial matters. D1 hired Zhu and often accompanied him to the mainland. 1652.At the IMMM held on 15 February 2006, the OG management were informed that the proposal was in its final stages, it was quite a sensitive issue and would be discussed later. 1653.At the IMMM held on 21 March 2006 the management were informed that the machinery had been purchased and would be shipped to the factory in April 2006. 1654.On 28 March 2006, D1 signed two payment vouchers for deposit payments to Long Asset and Fong Long which had been prepared by PW81, an accounting staff, on the instructions of Zhu. 1655.D1 and D2 signed the CHATS application to the Bank of China for payment of HKD7,014,016 from Kenlap PGC to Long Asset, credited on 29 March 2006. 1656.D1 and D2 signed a Kenlap PGC cheque in the sum of HKD7,580,520 payable to Fong Long, credited on 29 March 2006. 1657.Long Asset was purchased by PW29 at the request of Zhu who reported directly to D1. 1658.One of the directors of Fong Long was You Shuiqing, a business associate and friend of D1. 1659.The sole director and bank signatory of Long Asset was D6, introduced to OGH by PW40, a friend of D1’s sister, D2. PW40 had agreed to hold a shell company and open a company bank account for use by OGH and had introduced friends to do likewise. D3 1660.D3 reported directly to D1 and had been assigned the task of dealing with the purchase of machinery from IWT and Soma AG. 1661.D3 was centrally involved in negotiations and correspondence with Don Yan of WacMach, the agent for Soma and IWT. Contracts CB 29 and 30 are dated 23 and 27 March 2006 and the monies are transferred out of the Kenlap PGC account by cheque and TT dated 28 March 2006. On 28 March D3 was still in negotiation with Don Yan about what equipment was to be purchased and the price ( Facsimile dated 28 March 2006, Ex 191 5040). It is not until April that Yan learns the name of Fong Long and Long Asset when OGH request that they become signatories to the contracts with Soma and IWT, pp5041/2. 1662.The excel file recovered from D3’ s computer, CB38, demonstrates how the inflated prices set out contracts CB 29 and 30 were calculated. 1663.Correspondence sent to the secretarial firms of various companies involved were collected by PW66 and given to Zhu or D3. 1664.It was D3 who dealt with D2’s friend PW40 and PW40’s friends in relation to holding companies on behalf of OGH and opening company bank accounts for OGH to use. He received the signed blank cheques/ remittance documents in respect of these accounts. 1665.D3 arranged to meet D6, another friend of PW40, in January 2006 to open the Long Asset bank account. She later signed blank cheques and gave them to D3. On 19 May 2006 D3 asked D6 to go to the bank to sign some banking documents. There she was met by Zhu and signed a remittance for HKD1,907,082 in favour of Soma AG, Ex 267, p. 6029. 1666.The director and sole bank signatory of Strong Sense was the bodyguard of D1, Tsui Sze Lam. The company correspondence for Strong Sense and Union Sheen was collected by PW66, the OGH clerk, and given to Zhu or D3. 1667.Monies paid out to Long Asset and Fong Long were channelled back to Kenlap PGC and its subsidiary KCL via Union Sheen and Strong Sense as bogus sales of metal salts. Money channelled back to Kenlap PGC was remitted to the Bangkok Bank to settle a bank loan. Zhu Weibing 1668.Zhu Weibing, like D3, was pivotally involved in this conspiracy. He arranged the financial side of the conspiracy as he did with the OGD/ Greatson conspiracy. Although he is described by witnesses as a assistant financial controller, he reported to none of the three financial controllers. He reported only to D1. He was hired by D1 and accompanied him many times on his trips the mainland. 1669.Zhu was present at the IMMM on 29 August 2005 when the purchase of the machinery was first proposed. 1670.He arranged for the preparation of the payment vouchers for the deposit monies to be paid to Long Asset and Fong Long. The vouchers were both signed by D1. He held signed blank cheques for Long Asset, Fong Long and other companies. 1671.PW29 told the court that Long Asset was purchased at Zhu’s request and the backdating of D6 as its director and shareholder was done on Zhu’s instructions. The correspondence for Long Asset was collected by PW66 and given to D3 or Zhu. 1672.Union Sheen and Strong Sense were used as conduits for the payments of the monies back to Kenlap PGC and KCL as payments for metal salts purportedly purchased by Strong Sense and United Fine. 1673.Union Sheen was purchased by PW29 on the instructions of Zhu in June or July 2004. Its registered address was a secretarial company, Multi-Trade Development Company. The office assistant, PW66, collected its correspondence and gave it to D3 or Zhu. 1674.D1’s bodyguard, Tsui Sze- lam, was the sole director and bank signatory of Strong Sense. Its registered office was that of CEO Business Centre. PW66, an OGH clerk, collected its correspondence and gave it to Zhu or D3. 1675.United Fine was purchased by PW29 on the instructions of Zhu in November or December 2004. It’s director and shareholder was Cheung Chi Keung, the boyfriend of D6, who was recruited by PW40 at D2’s request. The registered business address of the company was a secretarial company, SBC International. PW66 collected its correspondence and gave it to D3 or Zhu. 1676.Accounts clerks, PW70 and 81, gave evidence as to the manner in which they prepared receipt vouchers in respect of the purported payments by, inter alia, Strong Sense, United Fine and Union Sheen. PW81 said that on occasions Zhu would give her pay-in slips with no supporting documentation and inform her orally as to what the transaction was about. 1677.Where there was supporting documentation it was often suspicious, for example the payments purportedly made by Strong Sense and United Fine on 31 March 2006 in the sums of HKD3,220,000 and HKD3,250,000 (Exhibits 208 and 209). Both payments were made into the account of KCL at the same time and at the same bank. Both supporting letters are on the letter heading of Strong Sense. Both use the lower case for the letter “s” in “Dear sir”. The letter in respect of the purported payment by United Fine has the name of that company in brackets. 1678.I compared the supporting documentation with payments made by Trump Link and Union Sheen in December 2006 to KCL in the sums of HKD4 million and HKD3 million respectively, Ex 292, p.6458 and 293, p.6463. Trump Link was another shell company using a friend of PW40 as a nominee director. The letter confirming the Trump Link payment is on Strong Sense letter heading, again the lower case is used for the “s” in “ Dear sir” and the words Trump Link Enterprise Limited are in brackets. 1679.The Union Sheen letter again uses the lower case for the letter “s” in “Dear sir”. At the time of this transaction there was only HKD643.80 in the Union Sheen bank account, Ex 265. The payment was covered by a cheque drawn on the Strong Sense account, Ex135, p.3033. 1680.I noted that the third payment made to KCL on 2 December purported to come from a company called Hao Bao Trading Company Limited in the sum of HKD4.2 million was also covered by a Strong Sense cheque, Ex 135, p. 3033. I noted that the time stamp on the paying in slips in relation to the payments from Trump Link and Hao Bao showed almost the same time. 1681.On the 30 March 2006, Foshan Dongfan Chemicals appear to have paid for goods totalling HKD11,288,000 (Ex 209, p. 5360 –2a). Two of the payments were made by Union Sheen and one by Strong Sense (Ex 206-8 p. 5341-5357). These are reflected also in the bank statement of the two companies (Ex 265 5909 and Ex. 135,p.3047). The payments for the Union Sheen cheques were those received from Long Asset. This was the only activity of any significance in the Union Sheen account. The account was opened with a deposit of HKD643.80 and the only other entries relate to monthly maintenance payments of HK50 for the months January to December 2007. 1682.Zhu met D6 at the Bank of East Asia on 19 May 2006 when she attended to sign the remittance from Long Asset to Soma AG for HKD1,907,082. D3 had rung D6 to come to the bank on that occasion. 1683.The accounting staff of OGH, PW64 and PW81, testified that Zhu was responsible for the recording of the metal salts sales in the account books. Having considered all the evidence, I was sure there was no genuine commercial activity as regards the accounting documentation purporting to relate to the sales of metal salts. 1684.Looking at the totality of the evidence, I had no doubt whatsoever that D1 and D3 consprired with Zhu to defraud Kenlap PGC and it shareholders as alleged. I found this to be an irresistible inference having considered the evidence for and against each of the defendants and taking into account their clear records. Charges 15 and 16 1685.These charges of theft were preferred against D1 only and are alternative charges to charge 14. Had I not been satisfied beyond reasonable doubt that D1 was engaged in the conspiracy the subject of charge 14, I took the view that the evidence was sufficient to establish beyond reasonable doubt the guilt of D1 on both of the alterative theft charges. For the reasons I have already outlined, I was sure he stole the choses in action being the purported deposit payments to Fong Long and Long Asset. Charge 17- D2 and D6 conspiracy to deal with proceeds of indictable offence 1686.D2 and D6 were charged with conspiring with PW40 to deal with the proceeds of an indictable offence, the monies paid by Kenlap PGC to Long Asset and then channelled back to Kenlap PGC via Union Sheen. 1687.I was satisfied that D2 had approached her friend PW40 to hold a company on behalf of OGH and to find friends to do likewise. D6 was the girl-friend of Cheung Chi-keung, a long standing friend and former associate of PW40 who had agreed to act as the nominee director of United Fine Holding Ltd, a shell company used by the conspirators. 1688.D6 signed documents opening a bank account with the Bank of East Asia in the name of Long Asset and she was the sole signatory, Ex 267. 1689.D6 signed blank cheques in the cheque book issued by the bank and gave them to D3. 1690.The signatures of D6 appeared on two cheques, both dated 29 March 2006, payable to Union Sheen in the sums of HKD3,142,000 and HKD3,865,000, Ex 267, pp. 6025/6. Union Sheen subsequently paid an amount of HKD7,005,000 by 2 cheques dated 30 March 2006 to Kenlap PGC. False documentation and accounting documents were created purporting to show that the monies paid back to Kenlap were in payment for sales of metal salts. Evidence in relation to each Defendant D2 1691.In late 2004, D2 approached her friend PW40 to hold a company on behalf of OGH. He agreed to do so and allowed his name to be put forward as the sole director of Pioneer Lane and open company bank account for which he would be the sole signatory. PW40 went with D3 to open the bank account and he later handed a number of blank signed cheques to D3. 1692.D2 later asked PW40 to provide friends to also hold companies. D6 was a friend of PW40 and also the girlfriend of Cheung Chi Keung who had also agreed to hold a company (United Fine). 1693.D6 agreed to act as the nominee director for Long Asset and D3 provided documentation for D6 to open a company bank account. D6 signed blank cheques which she gave to D3. 1694.D2 was a director of OGH and a signatory of of the Kenlap PGC and KCL bank accounts. She is the sister of D1, the chairman of OGH and a substantial shareholder in OGH. 1695.The Chats applications to the Bank of China for the payment of HKD7,014,016 from Kenlap PGC to Long Asset was signed by D1 and D2. 1696.I have dealt with the evidence of PW40 elsewhere. I was sure that PW40 kept in touch with D2 throughout the relevant period during which PW40 and his friends held companies. She was the only person at OGH with whom PW40 was on friendly terms. I did not believe the evidence of PW40 that he did not consider it illegal that millions of dollars were to be moved through the corporate bank accounts he and his friends had agreed to set up. 1697.As I have stated earlier, the conspirators were engaged in a substantial and elaborate fraud on a publicly listed company of which they were senior personnel. They would know that the discovery of their duplicity would have extremely grave consequences. The fraud covered a period of several months, involved complex transactions and dealings with a large number of companies. The execution of the fraud required very detailed and time-consuming planning. The conspirators must have made it clear to PW40 and his friends that millions of dollars would be channelled through the bank accounts for which they were responisible. The conspirators would know that such fund movements might be queried by the banks concerned and they must have made it clear to the account holders that they should confirm with the banks that such fund movements were authorised and give reassuring answers to any other queries the banks might have. In the OGD/Greatson contract conspiracy, funds were channelled through the bank accounts of companies held by D1.s bodyguard and his friend, D5. The other cororate bank accounts through which funds were channelled were held by D2’s long-term friend, PW40 and a friend of PW40, D4. HKD136.7 million was to be channelled through the account operated by D4 and HKD24.9 million through the account operated by PW40. 1698.The corporate bank accounts used to channel funds diverted from OGH for the Kenlap/Fong Long/ Long Asset contracts conspiracy were operated by D1’s bodyguard, a friend of D1, You Shuiqing and PW40’s friend, D6. Over HKD7 million was to be channelled through the bank account of Long Asset for which D6 was the sole signatory. 1699.I did not believe the assertions of PW40 and D6 that they acted without reward or promise of reward. D6 was obviously aware that the account that she has opened was to be used to move substantial sums of money. On 19 May 2006, she signed a remittance from the account in the sum of CHF296,237.70 in favour of Soma AG. She must have been aware that there were sufficient funds in the account to cover this remittance. I noted this transaction occurred outside the conspiracy period. 1700.It is inceiveable that the conpirators would have used PW40 and his friends without D2 being made aware they would be required to open bank accounts through which millions of dollars would be channelled. The account holders would need to be reassured that there was minimal chance of the true circumstances of their involvement being discovered. The only person at OGH with whom PW40 had a personal relationship was D2. He knew that D2 held a senior position in this substantial publicly listed company and that her brother was its chairman. The movement of funds through these accounts occurred over a period of five months. I have no doubt whatsoever that PW40 discussed with D2 what PW40 and his friends were being asked to do and that the other conspirators would be aware that that is what would happen. 1701.On the totality of the evidence, I had no doubt that D2 had requested PW40 to hold a company, open a bank account and to induce some of his friends to do likewise. I had no doubt that D2 was aware these bank accounts would be used to channel funds illegally obtained from OGH. D6 1702.It was not in dispute that D6 agreed to act as the sole director and shareholder of Long Asset and the sole signatory of its bank account. The company was incorporated on 13 December 2004 and a current account was opened with the Bank of East Asia was opened on 13 January 2006. D6 signed a number of blank cheques which she gave to D3. 1703.It was also not in dispute that on 29 March 2006 HKD7,014, 016 was transferred from the bank account of Kenlap PGC to the bank account of Long Asset. On the same day, cheques drawn on the bank account of Long Asset for HKD3.124 million and 3.865 million (a of total HKD7.007million) were paid into the bank account of Union Sheen. On the following day, two cheques drawn on the bank account of Union Sheen for HKD 3.393 million and 3.612 million (a total HKD7.005m) were paid into the account of Kenlap PGC. 1704.For reasons stated elsewhere, I was sure beyond reasonable doubt that the monies paid into and out of the Long Asset bank account represented the proceeds of an indictable offence. Background 1705.In late 2004, D2 had requested PW40 to hold a company on behalf of OGH. I was satisfied from all the evidnece D2 was aware that PW40 would be asked to open a bank account which OGH would use. D2 later asked him to solicit some friends to hold companies on behalf of OGH. In early 2005 PW40 arranged for three friends to hold companies including a long term friend Cheung Chi Keung. Later, towards the middle of 2005, PW40 was again asked to arrange for friends to hold companies and open corporate bank accounts for OGH to use and he arranged for D4 to hold Greatson and D6 to hold Long Asset. D6 was the girlfriend of Cheung Chi Keung and PW40 had known her then for about two years. 1706.It was proposed by the conspirators to use these accounts as money transfer vehicles for millions of dollars. The conspirators would need to be reassured that the persons holding the companies and being sole bank signatories of the accounts were reliable. 1707.PW40 later gave D2 the telephone number and identity particulars of D4 and D6 and she told him someone would contact them later. 1708.PW40 said in evidence that, at the time he approached D6 about holding a company for OGH, she trusted him and knew him to be the former boss and friend of her boyfriend. PW40 claims that he assured her there was nothing illegal as to what she was being invited to do and that he himself had done the same thing. 1709.According to the evidence of PW40, D6 was a pure, innocent and quiet girl who would consider him as a senior. He said that when he asked her to hold the company she agreed immediately and did not take time to consider. Corporate and banking documentation 1710.The company documents relating to Long Asset, Ex 204 p.5145-5164, show that Long Asset was incorporated on 13 December 2004. According to the documentation, D6 was appointed sole director and shareholder on 15 December 2004 and the residential address supplied was 28/F, Soundwill Plaza, 38 Russell Street, Causeway Bay, Hong Kong. I accepted the evidence of D6 that the signatures on the company documents purporting to be her signatures were forgeries. 1711.On 13 January 2006, Long Asset opened a current account with the Bank of East Asia, Ex 267, 5995- 6029. D6 attended the bank to open the account and supplied the information contained in the customer information form, p.5695, and supplied company documents including the business registration certificate. D6 was in possession of the company chop. D6 informed the bank that the principal business of the company was metal trading in Hong Kong. She said that the company had started business in 2004. The sole signature of D6 and the company chop were valid for operating the account. 1712.D6 supplied an office number and a mobile number which are recorded in the customer information form at p.5997. When asked about that number, which was also recorded on her proof of residence document, p6003, D6 confirmed that that was her telephone number and she had written it on p.6003. D6 told the bank her occupation was that of a director, as recorded at p.5997. 1713.The bank records show the transactions of 29 March referred to above (Exhibit p. 6015 of the bank statement). The related cheques are also exhibited. 1714.The records disclose that on 17 May 2006 a cheque, drawn on the Bank of East Asia account of Strong Sense in the sum of HKD1,910,000, was paid into the Long Asset account (pp. 6016 and 6027) and HKD1,907,082.07 was transferred out of the account two days later to Soma AG. The application for transfer (p.6028) indicates that D6 attended to this matter in person at the bank. I bore in mind that this transaction was not the subject of any charges and was outside the conspiracy period. I bore in mind that when cross-examined about this document she claimed not to have seen the figures. I did not believe that assertion. I was sure she was aware that his large sum of money was being moved out of the company account and must have been confident the account held sufficient funds for the transfer to be effected. Evidence of D6 1715.D6 told the court that she was 28 at the date of giving evidence and lived in Shatin with her parents, sister and brother. She was educated to Form 5 and worked as a garment sales girl. She has a clear record. 1716.She said that she came to know PW40 through her boyfriend, Cheung Chi Keung, a long term friend of PW40. She said that in 2005 she had known PW40 for about two and a half years. She said she knew PW40 was an insurance agent and regarded him as a “proper person”. 1717.D6 said that in September 2005, PW40 asked her to do him a favour by holding a company for him. She said that PW40 told her he was getting into a paper making business with D2. She said PW40 told her that D2 was the younger sister of D1 and that she had heard of D1 and OGH from the news and from gossip magazines as the wife of D1 was a media celebrity. D6 said that she knew D2 had taken out insurance with PW40 and they had known each other for many years, so she was not surprised they did business together. D6 said that she agreed to the suggestion of PW40 immediately and did not suspect anything. 1718.D6 said that PW40 told her that the company would do no business and that it was only for quotations and the collection of mail. She said she supplied PW40 with her name, telephone number and a copy of her identity card. She said that PW40 told her that someone would contact her later. D6 said that she was her aware that her boyfriend and other friends of PW40 had agreed to hold companies. 1719.D6 said that in December 2005 she was contacted by D3 and agreed to meet him at the Delifrance in Wanchai. She went along with her boyfriend, Cheung, who had already agreed to hold a company called United Fine. D6 said she thought D3 was a colleague of D2. 1720.D6 said that when they met, D3 took some documents out of an envelope and asked her to sign them. She said she thought the documents related to the opening of a company. She said she signed some but did not know what they were. D6 said that D3 supplied her with company documents to open a bank account for the company. As it was too late to open the bank account that day, they arranged to meet another day. D3 contacted her a few days later and they arranged to meet at the United Centre to open an account at the Admiralty branch of the Bank of East Asia. 1721.D6 said that D3 met her round the corner from the bank and gave her some documents including the business registration document, the company chop and HKD1000 in cash. I noted the initial payment into the account was HKD5,000 according to the bank records. D6 said that she supplied a China Resources monthly invoice as proof of address. She said she took that document along at the request of D3. She said she went to the bank alone as D3 said to her that he had other things to deal with and that she should contact him after the account was opened. After the account was opened she met D3 and returned to him the company documents and chop. D6 said she never saw any bank statements nor any completed cheques. 1722.D6 said that one month later, D3 asked her to go to the bank to collect the cheque book. They met at the bank and after she had collected the cheque book, D3 asked her to take the cheques home to sign and return the signed cheques to him which she did. 1723.D6 said that a few months later, D3 contacted her and told her that some banking documents needed to be signed and asked her to meet him in Admiralty. When she arrived she rang D3. D3 said that he was too busy and would ask Zhu to meet her. She met Zhu outside the bank. He asked her to sign the application for outward remittance from the Long Asset account in favour of Soma AG, p.6029. D6 said this was the document given to her by Zhu at the bank in Admiralty. 1724.D6 was asked to tell the court about this document and the circumstances in which she signed it. D6 said that when she first saw the document is was filled in including the amount, Long Asset name, account number and the Soma AG details. The company chop of Long Asset was affixed. She said she signed this document in front of the bank staff accompanied by Zhu who spoke with the bank staff. She said she did not know what they said. She said that after the bank staff and Zhu finished their conversation she was asked to sign at a particular place. She said she was not suspicious as this document was signed at the bank in front of the bank staff. 1725.D6 said she did not sign the company documents which purport to bear her signature, Ex 204. D6 said she did not sign any contracts relating to Long Asset or the Service Agreement, Ex 21, p5365. D6 said that the mobile number recorded on the latter document was not hers and she had never been to the address of that company. 1726.In cross-examination, when asked about signing blank cheques, D6 said that some friends of her boyfriend had been asked to sign cheques with no problems. She said she did not understand what was meant by quotations and did not know what was involved in the setting up of a company. She said that she understood the bank account was required so that rent and other miscellaneous expenses could be paid. She said she did not find it strange that an office was to be rented notwithstanding the company was to do no business. She said she did not ask her boyfriend about the details of what he did. She said she did not ask PW40 what he got out of it. She said she did not consider why so many companies were being set up. 1727.In relation to the information supplied to the bank about the business of the company, D6 said that D3 told her that the business of the company was trading in metal so that is what she told the bank staff. The records show that the major market for the company was Hong Kong. D6 said that D3 must have told her that the major market was Hong Kong. With regard to the information supplied to the bank as to the start of business of the company she said the bank staff told her to put on the form the date on the business registration certificate. She said she did not know what it was all about or understand what was required in opening a bank account. 1728.D6 said she never submitted any quotations on behalf of Long Asset. She said that she did not tell the bank that the company was being set up merely for quotations as she felt it was better for her to say fewer words. 1729.D6 was cross-examined about the remittance application, dated the 19th May 2006, in the sum of CHF 296,237.70, which was signed at the bank, page 6029. D6 agreed that she signed the document at the bank on behalf of Long Asset. She said that at the time she signed the document she did not know what it was. She said at that time she did not know it related to a remittance application form. D6 was reminded that she had told the court the amount was recorded on the document when she signed it. D6 then said that she did not in fact see that part at the time as when it was handed to her to sign, Zhu had his hand over that part of the document and she did not push his hand away. She said there were English words on the form which she did not understand. She said she did not see the figures. She was reminded that she had told the court in her evidence in chief 1that when she saw the document on the 19th May the amount was set out in the document. D6 said that maybe she had misunderstood the question, she said that she thought she was being asked what was recorded in the document. She agreed that the document was in English and Chinese characters. 1730.I noted that in her examination in chief when asked about the circumstances in which she signed this document and what was recorded on it when she first saw it she did not mention that Zhu had covered any of it with his hand nor did she mention that she had not seen the figures. 1731.D6 was asked if she said anything to Zhu about the large amount involved. She said she did not do so as D3 had asked her to go the bank to sign the document. She said that it did not occur to her to ask Zhu about the document and she did not know what the document was. She said it did not occur to her to ask Zhu to move his hand as she would not know what the document was, even if he had moved his hand. She was asked why she did not ask Zhu what the document was. D6 said that it was because if Zhu intended her not to know what the document was about, he would not tell her even if she asked him. 1732.D6 said that she has had a bank account since she was 17. Determination 1733.As I have stated elsewhere in this judgment, I had no doubt that the monies paid into the Long Asset account by Kenlap PGC were the proceeds of an indictable offence. Long Asset was established for no legitimate commercial purpose and was used as a vehicle to transfer monies. The contract between Kenlap and Long Asset was a bogus contract. I bore in mind that the fact that the property is the proceeds of a crime does not have to be proved to establish and offence under s.25 of the Organised and Serious Crimes Ordinance, the provenance of the property is not an ingredient to be proved (HKSAR v. Lung Ming Chu CACC 165 of 2008). 1734.The prosecution case on each of the charges against D6 (Charges 17 and the alternative Charge 18) is that she had reasonable grounds to believe that she was dealing with the proceeds of an indictable offence. The prosecution had to show objectively, that reasonable grounds existed for such a belief and subjectively, that the defendant was aware of the existence of those reasonable grounds. Charge 17 requires the prosecution to also establish that D6 conspired with D2 and PW40 to deal with such property. 1735.D6 told the court that in September 2005, D6 was asked by PW40 to hold a company for D2 and agreed to do so immediately. She was aware that PW40 had made similar requests of her boyfriend and other friends. She was told that the company was to submit quotations and would have no real business. She said she did not consider why so many companies were being set up. She said she thought the bank account was required so rent and other miscellaneous expenses could be paid. 1736.She said she gave PW40 her name, telephone number and a copy of her identity card. 1737.She said PW40 was a trusted and respected friend and she relied upon him. This evidence was supported by what PW40 told the court. He described D6 as a pure and innocent girl. There was no evidence that she had anything to gain from the arrangement. When the Long Asset bank account was closed on 11 October 2007 it had a balance of HKD11,933.93. She had made no withdrawals from the account. She has a clear record. 1738.I treated with the greatest circumspection the evidence of PW40 as to the positive good character of D6. PW40 was an immunized witness and in my view had committed a number of serious offences in connection with his dealings with OGH. I was sure that he used every opportunity to downplay his role in these offences and the roles of persons introduced by him to OGH. 1739.It was not until three months after D6 had agreed to hold a company for OGH that she was contacted by D3 and arranged to meet him at the Delifrance in Wanchai. She went to that meeting with her boyfriend, who also held a company for OGH. She was asked by D3 to sign company documents and as it was too late to open a bank account that day, they arranged to meet later to open the company bank account. D6 and D3 met round the corner from the bank in the United Centre. D6 brought along a document to prove her address and was given corporate documents, the company chop and HKD1000 to open the account. D3 did not go to the bank with her. At the bank she was required to provide detailed information about the company such as what it trade in and where it carried out its business. After opening the account she met up with D3 to return to him the company documents and the chop. 1740.One month later, D3 asked her to go to the bank to collect the cheque book. He asked her to take the book home and sign all the cheques, which she did. 1741.Her next contact with D3 was when he contacted her on 19 May 2010 for her to attend the bank to sign Ex 204 p. 6029, the application for outward remittance to Soma AG of CHF 296,237.70. I have set out above her evidence in relation to this matter. I did not believe her assertion that she was not aware of the nature of this transaction. I was sure she was aware that a substantial sum of money was being moved through the company account and that she signed the application knowing that that was the case. I found ludicrous her assertion that Zhu somehow attempted to conceal what was going on by covering up part of the document with his hand in front of the bank staff. 1742.I bore in mind that this transaction was outside the charge period and does not form any part of the charges. It was however relevant to show that she was aware the account was being used to move substantial sums of money and that the account was not opened merely to cover office and miscellaneous company expenses as she claimed. 1743.Her involvement in this matter covered several months and she had plenty of time and opportunity to reflect on the situation. The evidence established that she had no hesitation in agreeing to hold a company, open a bank account, sign blank cheques and sign a remittance for a considerable sum of money. 1744.The two conspiracies the subject of charges 1 and 14 involved the movement of funds out of the bank accounts of OGH companies to the accounts of companies controlled by persons known personally to either D1 or D2’s friend, PW40. Substantial sums of money were to be moved through the accounts and the conspirators had to be confident that they could trust the persons controlling the accounts. The conspirators would also have to be confident that the account holders would be able to deal with any queries raised by the banks without arousing the banks’ suspicions. The enquiries might be made over the telephone and, on occasions, the account holders might have to attend the bank personally. Both D4 and D6 personally attended the banks to deal with the movement of funds out of the bank accounts. PW40 received queries from the bank about large cheques being drawn on his Pioneer Lane Bank account. He said these started a few months after the account was opened. 1745.In the case of the Long Asset bank account, the only contact mobile number was that of D6. After the account was opened, the only the transactions were those on 29 March and 17-19 May. The transactions of the 29th March involved over HKD7 million moving into and out of the account. A movement of funds that the conspirators must have contemplated might have caused enquiries to be made by the bank. The only person the bank would contact would be D6. The conspirators must have been aware that if D6 had told the bank the true circumstances as to her involvement in Long Asset it was inevitable that this would lead to further enquiries as to what was going on. A situation the conspirators would be most anxious to avoid. The conspirators must have been confident that the account holders would not say anything which might compromise them. 1746.In the circumstances, I was sure that neither PW40 nor D6 told the court the truth as to the circumstances of their involvement with OGH. The fact that I disbelieved the evidence of PW40 and D6 about these matters does not mean D6 is guilty of the offence. I have to consider the evidence I do accept and decide it that satisfies me of the guilt of the defendant to the required standard. 1747.It was stated by the Court of Appeal in HKSAR v. Wong Chor Wo and Anr CACC 314 of 2006, para. 108, that “ in the normal course of events, if a man allows another person to use his bank account to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account had reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.” The court goes on to state at paragraph 110: “ That the account is used to conceal the transactions is an inference which inevitably arises from the fact that a person uses another’s bank account to undertake transactions without any explanation to the holder of the account” 1748.In the present case D6 did not merely allow someone to use an existing bank account controlled by her, she agreed to act as the director and shareholder of a company with which she had no genuine connection and open a bank account for which she would be the sole signatory. She signed a whole book of blank cheques to give to someone else. She signed a remittance for a substantial sum of money to be moved out of the account. 1749.In my view she must have been instructed to give reassuring answers to the bank were she to have been asked about the large movements of funds through the account and also to conceal from the bank the true situation as to the circumstances of her involvement with Long Asset. These are grounds known to the defendant which would prompt in any reasonable man the belief that funds moving through the account were tainted. 1750.I have dealt elsewhere with this charge insofar as it relates to D2. I was sure that she was instrumental in inviting PW40 and his friends to hold companies and open bank accounts and she was aware that money from OGH would be illicitly channeled through these accounts. 1751.There was no evidence that D6 had ever met D2. She was invited to hold a company on behalf of OGH by PW40. She understood from what PW40 said that PW40 was dealing with D2 at OGH. This is not admissible against D2. D6 said she knew D2 was a sister of D1 who was involved in OGH. On the evidence I was sure that D2 had approached PW40 and asked him to get friends to agree to hold companies. I was sure D2 knew that bank accounts would be opened through which monies would be diverted from OGH for fraudulent reasons. Clearly D2 would know that the persons being used to hold these companies would have to sign documents to facilitate the movement of such funds and deal with any queries raised by the banks. I was sure that D2 must have reassured PW40 that his involvement and that of his friends in these illegal activities would not come to light. I was sure also that PW40 must have passed on this reassurance to his friends. 1752.I have already set out what has to be proved by the prosecution in order to establish a conspiracy. I reminded myself the where I rely on circumstantial evidence I have to be satisfied that the facts on which the court relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn. In all the circumstances I was sure beyond reasonable doubt that D2, D6 and PW40 had conspired as alleged to deal in the proceeds of an indictable offence and accordingly I convict both D2 and D6 of that charge. 1753.Had I not been satisfied as to the guilt of D2 and the involvement of PW40 in the conspiracy I would have convicted D6 of the alternative charge 18.
Mr. Peter Duncan, S.C. leading Mr. Bernard Ryan, Counsel on Fiat, for Prosecution. Mr. Ching Y Wong, S.C. leading Mr. Jon Wong and Ms Sylvia Tung, instructed by M/s KM Cheung & Co. for D1. Mr. MK Wong, S.C. leading Mr. Michael Delaney, instructed by M/s Richards Butler for D2. Mr. Kenneth Chik, instructed by M/s Chong & Yen for D3. Mr. Duncan Percy, instructed by M/s Jennifer Lee & Co (DLA) for D4. Mr. Osmond Lam, instructed by M/s Tang & So (DLA) for D5. Mr. Suen Kam Hay, instructed by M/s Li Wong Lam & WI Cheng (DLA) for D6. Please refer to CACC353/2010 for the relevant appeal(s) to the Court of Appeal. Please refer to CACC353/2010 for the relevant appeal(s) to the Court of Appeal. Please refer to CACC353/2010 for the relevant appeal(s) to the Court of Appeal. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under DCCC 960/2007