COURT: The 1st defendant (D1) was convicted by the jury of four counts of accepting an advantage, totalling $24.8 million. The 2nd defendant (D2) was convicted by the jury of four counts of offering advantage of the same amount. The jury acquitted the other defendants jointly charged in those four counts.
The two groups of counts are corresponding charges. Counts 1 and 5 related to the same incident, so Counts 2 and 6, Counts 3 and 7 and Counts 4 and 8.
The facts of this case are that from January 2007 to May 2008 (the relevant period), 1st defendant was the chief trader of derivative warrant trading group in Deutsche Bank. During this period, the 1st defendant accepted a total of
24.8 million reward offered by the 2nd defendant. The details are set out in the particulars of the respective counts. This reward was in the form of cheques and bank transfers by Mr Ha Shing-ming, Mr Ha Shing-chi and Miss Ha Sau-mei, D3, D4, D5 in the trial. The payments were to the different accounts of the 1st defendant and his wife in Standard Chartered Bank, Hang Seng Bank and Hong Kong and Shanghai Banking Corporation. The detail is set out in annexure B of the admitted facts, exhibit P102.
Mr Ha Shing-ming and Ha Shing-chi are the sons of the 2nd defendant. Miss Ha Sau-mei is the sister of the 2nd defendant. They gave the reward under the direction of 2nd defendant. During the relevant period, 2nd defendant was the authorised person of the securities and commodities accounts of Miss Ha Sau-mei and his wife, Madam Yam Mei-lin opened at Celestial Securities Limited. He traded mainly derivative warrants issued by Deutsche Bank using these two accounts.
D3 and D4 had their own accounts with Celestial Securities Limited, trading mainly derivative warrants issued by Deutsche Bank on their own. The payments were given to D1 as a reward for the information which may be of assistance to D2 and others for their trading in derivative warrants issued by Deutsche Bank. There were frequent telephone conversations between D1 and D2 which were recorded routinely at the trading room of Deutsche Bank. In these recorded conversations there were discussions on market conditions, pricing of derivative warrants, volatility of underlying stock, auto or manual mode of the computer quoting system and the codes of some derivative warrants. After the conversations, D2 and his sons traded in the derivative warrants mentioned in most of these conversations and made a profit.
According to the prosecution expert, Mr Cheng Kai-sum, D2 and his two sons adopted the rapid-fire strategy, that is by buying and selling repeatedly within a short time. They also conducted pair trading substantially. They made a profit totalling about 228 million during the relevant period. Mr Cheng pointed out that the profit making trend in trading Deutsche Bank derivative warrants by the 2nd defendant and his two sons was not sustained in their trading of non-Deutsche Bank warrants. Mr Cheng concluded that the profit from rapid-fire pair trade strategy is not possible without the assistance of D1, who was the market maker in most of the transactions during the relevant period. The trading record supported the inference that D1 assisted in these tradings.
D1 is 39. He was born in Hong Kong. He emigrated to France and received education up to university level in France. He
returned to Hong Kong in 1998 and joined various banks. In 2004 he joined Deutsche Bank to set up a derivative warrants department. He was eventually promoted to the post of chief trader. Mr Bell, senior counsel for D1, pointed out that there is no evidence that Deutsche Bank had suffered any loss as a result of this case; there is no evidence that confidential information or improper information was given by D1; that D1 was just doing his job in supplying information and trading with the other defendants.
D2 is 62, born in Shanghai. He came to Hong Kong in 1955 and finished secondary school education. He then became a telegraph operator working on board ships and subsequently joined Cable and Wireless. In 1972, D2 suffered from a serious burn while at work and needed numerous surgeries. All along he supported his family financially. He got married in 1978 and had two sons, D3 and D4. In 1999 he joined Celestial Securities Limited as a broker.
Mr Tse, senior counsel for the 2nd defendant, pointed out that there was a lapse of two years and eight months after his arrest before this case was tried. This had caused great disruption and anxiety to D2 and his family. Medical reports show that D2 has been suffering from depressive mood symptoms since year 2002. He had diabetes mellitus and hepatitis C. In September 2013, during the trial D2 suffered from diffuse gastritis and cirrhosis of liver. Mr Tse pointed out that since D2’s remand last Friday he was not given appropriate medications for his conditions, however, D2 would not urge this court to seek full medical reports of his conditions, as he wants to be sentenced today.
Mr Tse, senior counsel, pointed out in sentencing this court should only consider the profit made through D5 and Madam Yam’s account, which is about 94 and 37 million respectively. Mr Tse also stressed that it is difficult to ascertain the basis on which the jury convicted the 2nd defendant.
There is no tariff case in sentencing bribery cases. The facts vary with each case. In SJ v Wong Hong Leung CAAR 5/2009, Stock VP, pointed out that the scale of the bribery and the length of time of the corruption plot are factors to be taken into account in sentencing. Stock VP stressed that corruption in public and commercial life is a cancer, deterrent sentence is warranted. I have also considered the authorities submitted by the prosecution, HKSAR v Cheung Mei Kiu (CACC99/2006) and HKSAR v Wong Kwok Wang, Warren ([2008] 3 HKLRD 245).
For the 1st defendant, there was serious breach of trust. Both defendants are of clear record. I bear this in mind in sentencing. This is a complicated case. I do not find any undue delay that warrants extra reduction.
In sentencing, I have taken into consideration the whole 228 million profit as D3 and D4 were obviously trading upon the same information supplied by D1 and under the instruction of D2.
D2 has various medical conditions which require regular medication. The medical reports produced so far indicated that there is nothing life-threatening or so serious that would create extra hardship during his prison terms. There should be sufficient medical facilities in Correctional Services Department to tackle D2’s medical conditions. This is not a strong mitigating factor.
I pass the following sentence after considering all factors. For the 1st count I take a starting point of 4 years’ imprisonment. I sentence D1 to 4 years’ imprisonment.
For the 2nd count I take a starting point of 3 years’ imprisonment. I sentence D1 to 3 years’ imprisonment.
For the 3rd count I take a starting point of 6 years’ imprisonment. I sentence D1 to 6 year’s’ imprisonment.
For the 4th count I take a starting point of 3 years’ imprisonment. I sentence D1 to 3 years’ imprisonment.
Taking into account totality principle, I order 6 months of the terms of the 1st, 2nd and 4th counts be consecutive to each other and consecutive to that of the 3rd count. D1 is sentenced to a total of 7 years and 6 months’ imprisonment. I deduct 6 months for his clear record.
D1 has to serve a total 7 years’ imprisonment.
For D2, the culpability is basically the same. He offered bribes fully knowing the status of D1. I sentence him as follows.
For the 5th count I take a starting point of 4 years. I sentence D2 to 4 years’ imprisonment.
For the 6th count I take a starting point of 3 years’ imprisonment. I sentence D2 to 3 years’ imprisonment.
For the 7th count I take a starting point of 6 years’ imprisonment. I sentence D2 to 6 years’ imprisonment.
For the 8th count I take a starting point of 3 years’ imprisonment. I sentence D2 to 3 years’ imprisonment.
For the same principle adopted in D1’s case, I order that the total sentence of D2 is 7 years and 6 months’ imprisonment. For his clear record, I deduct 6 months.
D2 has to serve a total of 7 years’ imprisonment.
I further order D1 to pay 24.8 million to Deutsche Bank which was the employer of D1 at the relevant period.