HKSAR v. Chiang See Wai

DCCC127/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 127 OF 2012

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Reasons for Verdict

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1.The defendant faces one count of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455, commonly known as money laundering.

2.The prosecution’s case was that on 28 December last year, the defendant went to the Mong Kok branch of the Standard Chartered Bank and attempted to cash a cheque in the sum of HK$988,750 drawn on an account held by B&N Enterprises (‘BNE’), and numbered 003-574-0-07093-4 (‘the account’).  There was no dispute that the police had received complaints that the sums in the account were proceeds of indictable offences and that there were pending civil claims for the recovery of those sums.

3.The prosecution alleged that there was no reason for the defendant to receive the cheque and that the defendant had reason to believe that the sums he attempted to cash were proceeds of an indictable offence.

4.The defence admitted that the defendant was unemployed at the time of arrest and subsisted by Comprehensive Social Security Assistance.  However, they claimed that the defendant used to be a businessman, he had invested in a second-hand car business with some friends and had also lent some money to a friend to repay debts.  The defence claimed that the defendant genuinely believed that the cheque was given to him as repayment of the invested capital and of the loan.  The defendant had no knowledge and had no ground to believe that the sums in the account were proceeds of an indictable offence.

The prosecution’s evidence

5.Most of the prosecution’s case was not in dispute.  The prosecution’s case was basically set out in the facts admitted by the parties under section 65C of the Criminal Procedure Ordinance, Cap. 221, and produced as P4.

6.Apart from the abovementioned Admitted Facts, the prosecution called two witnesses.

7.In  December 2011, the police received complaints from three overseas companies (‘the companies’) who claimed that they had received bogus emails from someone who falsely claimed to be their suppliers.  The companies were deceived into depositing money into the account.  See paragraphs 4 to 5 of P4.

8.The three defrauded companies have also instituted civil proceedings against BNE to recover the sums paid by them into the account.  See paragraph 10 of P4.

9.The police launched an investigation and the Standard Chartered Bank was informed of the investigation.  The police discovered that a Gambian national called Babuccar Njie (‘BN’) entered Hong Kong as a visitor in January 2011.  On 24 May 2011 BN registered a business in the name of BNE purporting to be engaged in the exportation of mobile telephones. See paragraphs 1 to 2 of P4.

10.On 9 September 2011 BN opened the account in the name of BNE.  See paragraph 3 of P4.

11.The relevant banker’s affirmation was produced as P1. 

12.According to immigration records, BN has not left Hong Kong.  He is the subject of a stop order.  See paragraph 9 of P4.

13.On 28 December 2011, the defendant went to the Mong Kok branch of the Standard Chartered Bank and attempted to cash a cheque dated 24 December last year in the sum of HK$988,750 drawn on the account and made payable to the defendant.  The cheque was produced as P2. 

14.Miss Wong Wing-lam, PW1, was the bank teller who dealt with the defendant on 28 December.  The defendant approached her counter at about 2.30 pm on that day to cash a cheque in the sum of $988,750, P2.  In accordance with bank procedure, PW1 asked the defendant for his identity card. She made a record of the defendant’s name and identity card number on the back of the cheque and asked the defendant to sign it.  Because the sum was substantial, PW1 notified her manager.  The manager told PW1 that there were special instructions regarding the account and that a report may have to be made to the police.

15.Pursuant to the manager’s instructions, PW1 asked the defendant for his identity card again and handed it to her manager. The defendant was then asked to wait.  The bank notified the police and the defendant was arrested by PC10320, PW2.

16.Under caution, the defendant claimed that he did not know that the money in the account was laundered money.  He explained that the cheque was given to him by a friend for second-hand car business and repaying gambling debt to him.  See paragraphs 7 to 8 of P4.

17.A post record of the defendant’s response under caution was produced as P3.  See paragraph 8 of P4.

18.The defendant suffered from respiratory problems.  After arrest, he was taken to the Queen Mary Hospital on three occasions on 28 December.

Special issue

19.PW3 took a record of interview, PP5, from the defendant at the Queen Mary Hospital between 1902 hours and 2035 hours on 29 December 2011.  The voluntariness of that statement was challenged. 

20.The defence alleged that the statement was a result of inducement, unfair and oppressive behaviour on the part of PW3. 

21.PW3 denied that he ever induced the defendant to make a statement or that the process of taking that statement was unfair or oppressive.  He admitted that he went to the detention cell to see the defendant before he was admitted to QMH.  There was no record of this visit at all.  There was also no record of where the defendant was detained prior to his admission to QMH. 

22.On 29 December, PW3 knew that the defendant had been admitted to the custodial ward, Ward J9, of QMH, before he took the record of interview.  He claimed that he had called the defendant’s doctor to ascertain whether the defendant was fit to give a statement at about 3 pm on that day.  He arrived at Ward J9 soon after 6.30 pm.  He did not speak to any medical staff or check whether the defendant had taken any medication.

23.The defence suggested that according to the occurrence book of Ward J9, the defendant had in fact taken sleeping medication and was very drowsy.  PW3 denied that the defendant was unfit to make a statement.  He alleged that the defendant confirmed that he was fit to make a statement.  However, he admitted that the defendant was in bed when he arrived.  The defendant appeared he was coughing incessantly, had breathing difficulties and was very weak and his hands were shaking.  The defendant told PW3 that his hands were shaking so much that he was unable to write. 

24.PW3 also admitted that prior to the record of interview, he spent about 20 minutes asking the defendant about his family and occupation.  He was gathering information to prepare an antecedent statement from the defendant because he thought this case should be heard in the District Court.  He understood that he was investigating a money laundering case and that the defendant’s family and financial background may be pertinent to the offence. 

25.In addition, PW3 admitted that some declarations were missing from the record of interview.  He explained that he had forgotten his case file and he did not have copies of the declarations with him.  He was used to taking video recorded interviews in which such declarations were unnecessary.  Although he had been a police officer for 14 years and was aware of the gist of the declarations, no such declarations were made in the record of interview.

26.Further, PW3 admitted that the medical staff brought the defendant’s meal and medication into the ward during the record of interview, the medication was not given to the defendant until the completion of the interview.  PW3 admitted that he had delayed the administration of medication.  Apart from his wish to report progress to his supervisor, PW3 could not give any other explanation as to why he had to proceed with the record of interview at that time.

27.PW3 had clearly abused the defendant’s condition to obtain the record of interview.  There was clearly doubt as to whether the defendant was fit to make a statement.  Asking the defendant for background information to prepare an antecedent statement was wholly irregular, especially in view of the nature of the offence. 

28.One of the defence allegations was that the alleged answers in the record of interview were fabricated by PW3.  PW3 explained that he did not know the defendant’s background at the time of the interview and it was therefore impossible for him to make up the answers.  However, he subsequently admitted that he had in fact asked the defendant about his background prior to the commencement of interview and he had all the family background information contained in the statement.

29.I did not find PW3 to be a credible or reliable witness.  I rejected his evidence.  After careful consideration of the evidence, I found that the prosecution was unable to prove beyond all reasonable doubt that the record of interview was voluntary.  That record of interview was accordingly ruled inadmissible.

The defence evidence

30.The defendant is 58 years old.  He is married and his wife and daughters live in Taiwan.  He had attained primary 3 education and is unable to read English.  He is unemployed and is living on Comprehensive Social Security Allowance.  The defendant is suffering from a number of illnesses including asthma, hypertension, depression, auditory hallucinations and emphysema.

31.The defendant used to be a hairdresser.  In 1972 the defendant was the owner of two salons in Hong Kong.  In 1982 he opened a further salon in Taiwan.  The salon in Taiwan closed down in 1986.  The two salons in Hong Kong were making a loss each month because of the high rental and eventually closed down in 1995 and 1998. 

32.In 2005 the defendant’s parents passed away and he inherited a 500 square foot property.  The defendant had a very good friend called Ah Fung.  They met in about 2001 and became very good friends who met regularly for meals and drinks.  Ah Fung was a businessman who carried on business as a decoration contractor and second-hand car dealer.

33.In 2007 Ah Fung invited the defendant to join his second-hand car dealing business.  Ah Fung asked the defendant to contribute a share of the capital in his second-hand car dealing business.  The defendant therefore paid Ah Fung $250,000 in cash and became a shareholder of the business.  Ah Fung was responsible for dealing in the cars whilst another friend Ah Keung was responsible for car repairs.  Thereafter, the defendant had also lent Ah Fung a total of $70,000 in cash over several occasions to assist Ah Fung to repay his credit card and gambling debts. 

34.In September 2007, the defendant had kidney failure and went into coma.  He was hospitalized for a month.  After discharged from hospital, he discovered that he had lost his two telephones.  All his telephone numbers were stored inside the SIM cards of his telephones, the defendant therefore lost contact with Ah Fung and Ah Keung. 

35.In May or June 2011, the defendant met Ah Fung again outside a park in Jordan and they renewed contact.  The defendant asked Ah Fung about his investment.  Ah Fung stated that the second-hand car business had closed down and he could at most return the investment capital to the defendant.  Ah Fung also promised to repay his debt of $70,000 to the defendant. Ah Fung explained that he was about to complete a decoration project and he would repay the defendant when he was paid for his work.

36.Before December 2011, the defendant and Ah Fung met again for five to six times.  In late December 2011, the defendant and Ah Fung met for a meal to celebrate the Winter Solstice.  A Pakistani male joined them for that dinner.  Ah Fung told the defendant that he was doing decoration work with a Pakistani employer.  Ah Fung stated that he could ask the Pakistani employer to make out a cheque of $320,000 to the defendant.

37.On 28 December the defendant received a telephone call from Ah Fung.  Ah Fung explained that he had received payment for the decoration work and he would give the defendant a cheque as repayment. They arranged to meet outside the Mong Kok branch of the Standard Chartered Bank on the same afternoon.  When the defendant arrived at the bank, Ah Fung gave him the cheque for $988,750, that is P2.  The defendant immediately queried Ah Fung about the amount on the cheque.  Ah Fung explained that by chance the customer was almost running out of cheques, the customer had therefore made out a cheque for the whole of the decoration fees to the defendant.

38.Ah Fung asked the defendant to cash the cheque and return the amount to him after deduction for repayment of the loans.  In the meantime Ah Fung would go to the Hong Kong and Shanghai Bank to deal with another cheque.  Ah Fung promised to wait for the defendant either outside the bank or in the Fu Lam Restaurant on the other side of the road.  The defendant was then arrested when he attempted to cash the cheque.

Submissions

39.The prosecution submitted that the defendant’s version of events was preposterous and asked the court not to accept the same. The prosecution pointed out that there was no relationship between the defendant and BNE and there was no reason for the defendant to receive that cheque.  In those circumstances there were clearly grounds for the defendant to believe that the amount of the cheque were proceeds of an indictable offence.

40.The defence submitted that the defendant’s evidence was satisfactory and reasonable and urged the court to accept it.

Verdict

41.I have considered the evidence, submissions and the cases cited by counsel very carefully.

42.PW1’s evidence was basically not in dispute. Her evidence was clear and direct.  There was basically no cross-examination. PW1 was only asked to clarify certain matters.  I found PW1 to be honest and credible.  I accepted her evidence.

43.PW3 was called solely for the purpose of producing the record of interview.  Since I have already ruled that the record of interview was inadmissible, PW3’s evidence is not relevant.

44.I agree with the prosecution that the defendant’s evidence was wholly ludicrous.  There was no evidence that the defendant was in any way employed or had any source of income since 1998. There was also no suggestion that he had or expected any other source of income after the death of his parents.  The property which he allegedly inherited was his only asset, yet he alleged that he could produce a total of $320,000 in cash at the drop of a hat.

45.Two, initially the defendant stated that his last salon closed down in 1998.  Later he said that his salon was still in operation after 1998.

46.Three, despite being very good friends and doing business together, the defendant did not know the full names of Ah Fung or Ah Keung.  Ah Fung and Ah Keung did not know the defendant’s full name either. According to the defendant, he invested 250,000 in the second-hand car dealing business and became a shareholder.  If Ah Fung and Ah Keung did not even know the defendant’s full name, it is difficult to see how the defendant could have been registered as a shareholder.

47.Four, although he was allegedly a shareholder of the business, the defendant did not know the address or even the name of the company.

48.Five, the defendant stated that he discovered that he had lost his telephones after he was discharged from hospital.  That was why he lost contact with Ah Fung.  However, according to his own evidence, when he regained consciousness in hospital, he asked the doctor to contact his friends and they came to the hospital.  Ah Fung was supposed to be a very good and trusted friend and business partner, they met up regularly for meals and drinks.  Despite that, the defendant had no idea about Ah Fung’s telephone number.

49.Six, according to the defendant, he met Ah Fung by coincidence on the street and they renewed their contact and relationship in May or June 2011.  Before December 2011, they had met up to have meals five to six times.  There was no suggestion that they would lose contact again at that stage.  The defendant had waited for about three years for repayment, he trusted Ah Fung without reservation.  There was no reason why he could not wait for Ah Fung to issue a cheque to him or for Ah Fung to cash or clear the cheque before he is repaid. 

50.Seven, initially, the defendant alleged that up to the date of the trial, Ah Fung was unaware of the defendant’s full name.  When he was confronted with the fact that the cheque, P2, was made out to him, he changed his evidence and stated that he had supplied his full name and identity card at the Winter Solstice dinner.

51.Eight, the defendant admitted that he had no relationship with BNE and he did not know anyone in BNE.  There was no reason why BNE would agree to write out a cheque in the defendant’s name to pay for the alleged decoration fees.

52.Nine, Ah Fung was at the Standard Chartered Bank on the day in question.  The cheque was a bearer cheque.  Even if the customer was running out of cheques, the cheque could have been written out to Ah Fung, Ah Fung could then cash the cheque and repay the defendant immediately.

53.Ten, the defendant alleged that Ah Fung owned over 600,000 from the cheque. The defendant waited for about 45 minutes inside the bank before he was arrested, despite that Ah Fung never even suggested going to the bank to check on the progress.

54.I found the defendant wholly dishonest, incredible and unreliable.  I reject his evidence.

55.Counsel has cited a number of cases including Sze Kwan Lung and others v HKSAR, FACC Nos.5 and 6 of 2004, and Liberato v R, 159 CLR 507.

56.In Sze Kwan Lung, supra, the Court of Final Appeal dealt with the question of joint enterprise and the proper approach to defence evidence.  The court relied on Liberato, supra, and held that even if the defence evidence was not positively believed, the court cannot find an issue against an accused contrary to that evidence if that evidence gives rise to a reasonable doubt as to that issue.

57.In an offence of dealing in proceeds of an indictable offence, the prosecution need not prove the commission of the original offence that gave rise to the proceeds.  The prosecution is only required to prove that the defendant knew or had reasonable grounds to believe that the property represented the proceeds of the offence, HKSAR v Lee Ching [1998] HKEC 278.

58.If the prosecution alleges that the defendant knew that the funds he dealt with were the proceeds of an indictable offence, there must be evidence of the person’s involvement with the commission of the indictable offence, or by admission that he or she knew that the property was proceeds of an indictable offence, Seng Yuet Fong v HKSAR [1999] 2 HKC 833 and 836.  The prosecution has already made it very clear that there is no such allegation in the present case.

59.The prosecution alleges that there were reasonable grounds for the defendant to believe that the funds were proceeds of an indictable offence.  This involves a consideration of both objective and subjective elements.  For the objective element, the prosecution must prove 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.

60.As for the subjective element, the prosecution must prove that those grounds were known to the defendant and the grounds were reasonable, that is, anyone looking at those grounds would so believe.  See HKSAR v Shing Siu Ming and others [1999] 2 HKC 818 and 825H, HKSAR v Ma Zhujiang and another [2007] 4 HKLRD 285, HKSAR v Yam Ho Keung, unreported, CACC555/2001.

61.In HKSAR v Lung Yun Ngan and another, unreported, CACC482/2010, the court held that the necessary mental element of the offence can exist even if a defendant does not himself believe that the property in question constitutes the proceeds of an indictable offence provided that he knows of the grounds upon which objectively such belief is reasonably based.

62.In HKSAR v Yam Ho Keung, supra, the Court of Appeal held that where there are reasonable grounds for believing in a range of scenarios which might have given 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.

63.Counsel submitted that clearly the defendant had no suspicion that the property were or may represent the proceeds of an indictable offence.  He stayed in the bank and waited for 45 minutes.  He made no attempt to flee.

64.With respect to counsel, according to the evidence of PW1 which was not challenged, PW1 had taken away the defendant’s identity card.  The defendant’s identity had been revealed and fleeing would only raise or add to suspicion.  There was no dispute that the defendant was unemployed for over 10 years prior to his arrest.  He was living on CSSA at the time of arrest.  He had no relationship with BNE or anyone working in BNE. There was no reason for BNE to issue him with a bearer cheque of close a million dollars.  Any common sense, right thinking member of the community would consider that there are grounds to believe that the property in whole or in part represented the proceeds of an indictable offence.

65.The defendant was clearly aware of those grounds.  Both the objective and subjective elements are clearly satisfied.  I find that the prosecution has proved the charge beyond all reasonable doubt. The defendant is accordingly convicted.