HKSAR v. Yu Lai Lai Agnes

DCCC 415/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 415 OF 2012

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Reasons for Sentence

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1.The defendant was convicted after trial of one count of fraud contrary to section 16A of the Theft Ordinance; the victim is Hang Seng Bank (the bank) which has lost HKD $15,424,000.00 as a result of the fraud.

2.The defendant, now aged 63, and her son (not prosecuted) were the directors of a trading company called Jatrade at the material times. By an arrangement with the bank, Jatrade was being allowed to borrow money known as export trade loans to finance its operation. It was only a paper application- the bank officers would not meet the applicant in person- it was all done by fax, post and telephone call. In the course of the application, Jatrade would have to submit proofs of a business deal such as commercial invoice together with proofs of goods being delivered like the courier’s waybill.

3.In processing the loan application, the bank officers mainly concerned themselves with whether the loans applied for exceeded the invoice amount and Jatrade’s credit line with the bank. They rarely did background check on the deals Jatrade claimed to have concluded with the overseas buyers to confirm that the supporting documents in fact were telling the truth.

4.Jatrade had successfully borrowed money from the bank by this way for years, and it went on until November 2008, the whole thing stopped when Jatrade defaulted on its repayments for the loans. The default related to the 15 loans, the subject matters of the charge, which were applied for by the defendant in the previous two months, i.e. September and October of 2008.

5.A floating charge over all receivables created by Jatrade in favor of the bank was registered with the Companies Registry in January 2009. Notwithstanding that, not one single cent had been repaid by Jatrade to the bank and the total loan amount of HKD $ 15,424,000.00 remained unpaid at the time when Jatrade waswound up by Court in September 2009 and it is as of today still outstanding.

6.The court has found that the invoices and waybills used by defendant in submitting to the bank for the loans were false.

7.Defendant is a person of previous good character. In mitigation, defense counsel briefly took me through the defendant’s background, her past health problems. Her antecedent statement states that she has suffered from brain tumor for which a regular check up is required. There are also letters from her long-time friends pleading leniency on her behalf; they both speak well of the defendant.

8.Defense counsel submitted that the fraud defendant practised on the bank was akin to LC Fraud (Letter of Credit) but in a rather crude form.

9.Call it whatever you like, but we must not lose sight of the fact that these were unsecured loans and the bank lost over 15 million as a result of the defendant’s caper. Come to think of it, 15 million is indeed a lot of money.

10.Defense counsel said in his closing speech that Jatrade found itself caught in the world financial crisis in 2008; it struggled for another year before it collapsed. To me, what is also the hard fact is that the loans became due in November 2008, and despite the bank’s charging order on all the receivables of Jatrade in January 2009, the bank was unable to recover any money from Jatrade even though Jatrade was carrying on business for another year- that only tells me one thing- the defendant had had no intention of making any repayment at the time when she took out the loans.

11.Cheung Mee Kiu CACC 99/2006 is the leading authority on sentencing for the offence of theft involving breach of trust and it sets the guidelines for amount being stolen over $15 million, the term for consideration is one of 10 years or more.

12.It may be argued that there existed a certain level of trust between the defendant on behalf of Jatrade and the bank given their not-too-short business relationship before the offence, but in my view, it certainly wasn’t the kind of trust as envisaged in Cheung case, which basically dealt with trust an employer puts in his employee.

13.What I’ll do is treat the present case as a case without breach of trust, make references to the guidelines of Cheung case and reduce the term by taking into account the element of the lack of breach of trust.

14.With breach of trust, it is 10 years or more; now without such element; I’ll take 7 years.

15.I’ll reduce the term by a further 4 months to reflect her clean record, apart from that, there aren’t any other strong mitigating features in her mitigation justifying further reduction.

16.For the offence of which she was convicted, the defendant is sentenced to a term of 6 years 8 months imprisonment.