HKSAR v. Jariabka Juraj

DCCC 54/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 54 OF 2014

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REASONS FOR VERDICT

1.The defendant, a national of Slovakia, pleads not guilty to one charge of incitement to deal with property known or believed to represent the proceeds of an indictable offence, contrary to Common Law and section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Chapter 455.

The charge

2.The particulars of the charge read as follows:

“Jariabka Juraj, between the 10th day of May, 2013 and the 14th day of June, 2013, both dates inclusive, in Hong Kong, unlawfully incited Papaleo Antonio Aldo to deal with property, namely the chose in action owed to Vindex (HK) Limited and/or East Ray (HK) Limited by Hong Kong bank, knowing or having reasonable grounds to believe that the property, in whole or in part directly or indirectly represented the proceeds of an indictable offence.”

“Chose in action”

3.When the Slovakian interpreter read the particulars of the charge he asked for clarification of what a chose in action was.  Mr Wong explained this was the deposits held by Hong Kong banks in the accounts of Vindex (HK) Limited and East Ray (HK) Limited as particularised in the charge.  The Slovakian interpreter said he then understood the term chose in action and proceeded to read the particulars of the charge.  The defendant said he understood the charge and pleaded not guilty.

4.After the charge was read Mr Ross asked for further particulars of the “chose in action” saying that no monies were ever deposited in any bank account and therefore the chose in action could not be the monies in the bank.  Mr Wong explained that as the charge was one of incitement the substantive offence need not be proved and that the reference to chose in action was to the monies which would be deposited in those accounts.

“Hong Kong bank”

5.On first reading the charge I read the reference to “Hong Kong bank” as referring to HSBC.  I clarified this with Mr Wong as there was no mention in the opening that Mr Papaleo was to open a bank account with HSBC.  Mr Wong explained that the reference to “Hong Kong bank” in the charge was not a reference to HSBC but to Hong Kong banks generally without specifying which bank. Although Mr Wong said that it would be better to amend the charge no amendment of the charge has been sought by the prosecution.

Duplicity

6.The particulars of the charge alleging the date of the offence being between the 10 May and the 14 June 2013 Mr Ross submitted that the charge was duplicitous and by virtue of section 4(4) of the Criminal Jurisdiction Ordinance, Chapter 461 the first meeting on the 10 May which took place in Slovakia was not indictable in Hong Kong. 

7.I was satisfied the charge was not duplicitous for the reasons given in paragraphs 11 & 12 of my ruling delivered on the second day of trial (14 May) (a copy of which is annexed to the verdict). 

8.Further I was also of the view that the Common Law position that incitement outside the jurisdiction to do something within the jurisdiction is indictable in Hong Kong and not affected by the Criminal Jurisdiction Ordinance (see paragraph 13 of my ruling).  In addition I would add that even if the meeting in Slovakia was not indictable in Hong Kong the evidence of that meeting would nevertheless still be admissible to explain the meetings and events which actually took place in Hong Kong. 

Introduction

9.Mr Antonio Aldo Papaleo, a national of Italy, was living in Slovakia and working as a freelance journalist.  On the 10 May 2013 Mr Papaleo,through the introduction of Jozef Drlicka,met the defendant in the Goblin pub in Bratislava.  Mr Papaleo was asked to go to Hong Kong to incorporate a company and related bank account for which he would be paid €5,000.  Further meetings between Mr Papaleo and the defendant were held both in Bratislava and Hong Kong.  Mr Papaleo secretly recorded all meetings with the defendant with a pinhole camera. 

10.On the 14 May 2013 both Mr Papaleo and the defendant arrived in Hong Kong.  Whilst in Hong Kong Mr Papaleo went to Acorn Business Services and Consultancy Limited who assisted in the incorporation ofVindex (HK) Limited and East Ray (HK) Limited. Mr Papaleo did not however open any bank accounts and gave various excuses to the defendant as to why the bank accounts could not be opened, including that the banks required proof of business.   

11.Mr Papaleo and the defendant therefore returned to Bratislava for Mr Papaleo to prepare the documentation supposedly required by the banks for opening the accounts.  On return to Bratislava Mr Papaleo reported the matter to the Slovakian police however the police declined to investigate the matter.  Mr Papaleo therefore agreed to return to Hong Kong ostensibly to complete the opening of the bank accounts.  Mr Papaleo arrived in Hong Kong on the 11 June 2013 and the defendant arrived on the 14 June 2013.  In the meantime Mr Papaleo had reported the matter to the Hong Kong police.  At a pre-arranged meeting with the defendant Mr Papaleo pointed out the defendant who was then arrested by the police. 

Prosecution case

12.In summary the prosecution case is that Mr Papaleo was told the business of the defendant was illegal.  After incorporating the two companies Vindex (HK) Limited and East Ray (HK) Limited and opening the bank accounts for these two companies Mr Papaleo was to hand over control of the companies and the bank accounts to the defendant.  Mr Papaleo would then be paid the €5,000. 

13.The paying of €5,000 and all expenses to Mr Papaleo to go to Hong Kong to incorporate companies and open related bank accounts, the control of which were to be handed over to the defendant, the prosecution say that the defendant has incited Mr Papaleo to deal with propertyby concealing the true identity of the person in control of the bank accounts and thereby the true owner of the monies to be deposited  in the bank accounts, knowing or having reasonable grounds to believe that the monies passing through the accounts, in whole or in part directly or indirectly represented the proceeds of an indictable offence.

Defence case

14.The defence case in summary is that in May 2013 the defendant entered into an agreement with Jozef Drlicka to incorporate two companies in Hong Kong.  One was to trade in LED lighting and the other in publishing.  Jozef Drlicka would incorporate the companies and manage the Hong Kong operation but as he did not have a passport Mr Papaleo was asked to go to Hong Kong to incorporate the companies and open the bank accounts on his behalf.  Once Jozef Drlicka was able to travel to Hong Kong Mr Papaleo would then hand over control of the two companies and the bank accounts to him.  The business of the two companies was genuine and there was no intention of laundering money through the bank accounts.

Incitement

15.A person is guilty of incitement to commit an offence if:

(a) he incites another to do or cause to do an act or acts which, if done, will involve the commission of the offence by the other;

(b) he intends or believes that the other, if he acts as incited,

(c) shall, or will do so with the fault required for the offence

(see Smith & Hogan, Criminal Law, (12th ed.), paragraph 13.4).

16.The unlawful act alleged is to deal with property, knowing or having reasonable grounds to believe that the property, in whole or in part, directly or indirectly represented the proceeds of an indictable offence.  The prosecution must prove that the defendant incited Mr Papaleo to deal with property intending or believing that if Mr Papaleo so acted Mr Papaleo shall or will do so knowing or having reasonable grounds to believe that the property, in whole or in part, directly or indirectly represented the proceeds of an indictable offence. 

Prosecution evidence

17.The prosecution called only one witness, Mr Papaleo.  Evidence of four police officers was read pursuant to section 65B of the Criminal Procedure Ordinance, Chapter 221 (exhibits P14-P17) relating to an enhanced version of the video recordings of the meetings.  Facts have also been admitted pursuant to section 65C of the Criminal Procedure Ordinance, (exhibits P10, P10A & D9) including the movement records of Mr Papaleo and Jozef Drlicka.  The movement records of the defendant have been admitted pursuant to section 63B of the Immigration Ordinance, Chapter 115 (exhibit P11). 

18.The bankers’ affirmation of Tang Wan Pong (exhibit P13) relating to the bank account of Elitecon Inc Limited (“Elitecon”) of which the defendant is the sole signatory of the account was admitted pursuant to section 20 of the Evidence Ordinance, Chapter 8.  Mr Ross objected to the admissibility of this affirmation on the grounds that it was not relevant there being no mention of Elitecon in the charge or the evidence of Mr Papaleo. 

19.I overruled this objection.  I was satisfied that the defendant having been shown to have opened a bank account in Hong Kong, which account was in operation at the time the defendant and Mr Papaleo came to Hong Kong and was in respect of a company of which the defendant was the sole director was relevant to the issues to be determined, in particular why Mr Papaleo was required to come to Hong Kong to incorporate companies and open bank accounts for these companies.  I did however later disallow the prosecution cross-examining the defendant on the activities of Elitecon as shown in the bankers’ affirmation as these were not relevant to the charge or if they were relevant then the prejudice outweighed the probative value of this evidence.  

Video recordings and transcripts

20.Mr Papaleo secretly recorded the meetings with the defendant with a pinhole camera.  There were a total of 59 video files recording meetings with the defendant of which the prosecution rely on five, including the first meeting in the Goblin pub in Bratislava and three meetings in Hong Kong, two files relating to the same meeting.  Mr Wong informed the court that all video files had been served on the defence.

21.In the meeting in the Goblin pub Mr Papaleo and the defendant spoke in English whereas communication with Jozef Drlicka was in Slovakian.  There is also some Italian spoken by Mr Papaleo when he answered a phone call.  In the meetings in Hong Kong Mr Papaleo and the defendant again spoke in English.  In two of those meetings Slovakian is spoken by the defendant and Jakub Planka (who met Mr Papaleo at the airport) and there is also some Chinese spoken by passers-by and taxi drivers. 

22.The prosecution only transcribed the English conversation.  Various objections have been taken to the admissibility of both the video files and the transcripts.  I will address each of these objections in the order they were taken. 

23.On the first day of trial Mr Ross objected to the admissibility of three transcripts where only English had been transcribed on the basis that without a full translation of everything said at these meetings the transcripts were inadmissible.  Further Mr Ross submitted that the court being deprived of knowing everything that was said at the meetings the production of partial transcripts was unfair.

24.The use of a transcript being only an aid to the understanding of the recording and that the recording is the evidence and not the transcript I overruled the objection of Mr Ross.  I was satisfied that there was no unfairness in only the English being transcribed as the majority of the conversations that were not translated and therefore transcribed were spoken by or to the defendant in Slovakian.  The reasons for my ruling are contained in paragraphs 1-10 of my ruling delivered on the second day of trial. 

25.As the majority of the conversations that were not translated were in Slovakian I said I would give the defence a reasonable time to prepare such transcripts.  Having taken instructions from the defendant Mr Ross said the defence would like those passages in Slovakian translated and certified.  Mr Ross therefore applied for an adjournment to the following afternoon to seek the assistance of the Slovakian Embassy in sending the tapes to Slovakia for translation and certification.  

26.I enquired of Mr Ross whether he was aware of what was said in Slovakian.  Mr Ross replied that he was aware in general terms of what was said.  Anticipating that sending the tapes to Slovakia may necessitate a long adjournment I suggested other alternatives for Mr Ross to consider, including using the court interpreter to translate the Slovakian passages in court.

27.The next day Mr Ross informed the court that the mother of the defendant had located a translation company in Slovakia who were licensed by a Slovakian court to certify their own translations.  The company required at least 10 working days to prepare a transcript.  Mr Ross therefore applied for an adjournment of at least 10 working days asking that the case be listed for mention only so as to avoid Mr Papaleo making another unnecessary trip to Hong Kong.   

28.Again anticipating a long adjournment I asked Mr Ross why the services of the court interpreter could not be used.  Mr Ross replied that the defence preferred to obtain their own transcript.  I was satisfied the trial should not be adjourned and that the services of the court interpreter be used when necessary.  I therefore refused the application for adjournment and ordered the evidence to commence the following day.  I was satisfied this caused no unfairness to the defendant. 

29.During evidence-in-chief Mr Wong asked Mr Papaleo about certain passages in which Slovakian was spoken.  These passages were then interpreted in court by the Slovakian interpreter.  Much of what was interpreted was unrelated to the purpose of the meeting for example very rude words describing how tired Jozef Drlicka was after shopping. 

30.During cross-examination Mr Ross also referred to certain passages spoken in Slovakian.  When this first occurred it was agreed that the passage being nearly one minute long that the Slovakian interpreter would translate the passage before Mr Ross continued his questioning.  The Slovakian interpreter then prepared a typed written translation of the passage (marked exhibit P1F). 

31.At my suggestion in order not to keep interrupting the cross-examination Mr Ross agreed to tell the Slovakian interpreter which other passages he wished to question Mr Papaleo on.  The Slovakian interpreter then prepared a typed written translation of these passages (marked exhibit P1G), which I note were conversations between Jozef Drlicka and Mr Papaleo after the defendant had left the Goblin pub.

32.In refusing the application I was mindful that although Mr Papaleo was to commence his evidence the next day, a Friday, due to the unavailability of Mr Wong the evidence would not resume until the following Wednesday (21 May).  This I was satisfied would give the defence sufficient time to prepare a draft of the Slovakian passages for use, as they thought fit, in cross-examination of Mr Papaleo and in the conduct of the defence.  Cross-examination only started on the 23 May.

33.Also to be noted is that by virtue of sections 27 and 29A of the Evidence Ordinance only documents certified by a person appointed by the Chief Justice may be admitted in evidence therefore any certified transcript which was obtained by the defence from Slovakia could not be produced in court unless the prosecution agreed.

34.I should also mention here that prior to Mr Papaleo giving evidence no application was made that the defence needed time to prepare their own transcript of the English passages so as to verify the accuracy of the transcripts.  The only reference to the accuracy of the English transcripts was after an adjournment to obtain a certified transcript of the Slovakian passages was refused. 

35.In answer to the court whether the English transcripts were agreed Mr Ross said that the defence wanted the Slovakian expert to confirm the accuracy of the English passages as well.  I expressed the view that the defence in deciding whether to accept the accuracy of the transcripts ought already to have checked whether the transcripts were accurate and that if because of the sound quality they wished an expert to verify the accuracy then an application should have been made on the first day of trial. 

36.Mr Ross however was later to complain about the late service on the defence of the transcripts.  This occurred during an application made on the 10 June (day 14 of the trial) when renewing an application for an adjournment to apply to the Court of First Instance for an order that a letter of request be issued to assist in obtaining the evidence of Jozef Drlicka. 

37.When the prosecution said any such application should have been made a long time before Mr Ross complained that the transcripts were only served 2 weeks before trial at which time the defence knew the prosecution were only relying on five of fifty nine video files.  Not only was no application made by the defence that they needed time to verify the accuracy of the five transcripts, no application was made that the defence be given time to consider whether any of the other video files were required in the conduct of the defence.

Enhancement

38.More than once I expressed my surprise that the prosecution did not ensure as far as possible that when the video of the meeting in the Goblin pub was played in court that everyone was able to hear as clear as possible what was said.  Without doubt what was said is at times very difficult if near impossible to hear.  Mr Papaleo, the defendant and the Slovakian interpreter have all used headphones in court to enable them to better hear what was said. Whilst considering my verdict I have also used headphones to listen to the video.  Many hours have been spent doing this. 

39.I said I was also surprised the police did not refer the matter to their technology division for assistance whether by the provision of better equipment or software to play the video so as to better hear what was said.  In the afternoon of the 26 May (day 8 of the trial) during cross-examination of Mr Papaleo the prosecution said they had an enhanced version of the video of the meeting in the Goblin pub.  At that time the enhanced version had not been served on the defence.  The case was stood down for Mr Ross to listen to the passage he wished to question  Mr Papaleo on to see if he had any objection to the enhanced version being played to Mr Papaleo.  Mr Ross had no objection. 

40.On the 30 May (day 10 of the trial) after Mr Papaleo had completed his evidence Mr Ross objected to the admissibility of the enhanced version of the video.  The basis of the objection was that the defence had no time or resources or the ability to confirm the enhanced version was accurate and that the cross-examination of Mr Papaleo had been based on the unenhanced version.  Although the defence had not listened to the enhanced version Mr Ross submitted that there may be material on the enhanced version which was useful or detrimental to the defence and that if the defendant elected to give evidence he may be cross-examined on those parts. 

41.Mr Wong confirmed that the enhanced version was only produced in an attempt to make listening to the video a little clearer.  The prosecution did not seek to introduce a new transcript or rely on anything which was not in the transcript of the unenhanced version.  In these circumstances I overruled the objection of Mr Ross.  In so doing I was mindful that there would be three days holiday before resumption of the case which therefore afforded the defence the opportunity to listen to the enhanced version and make any further submissions when the trial resumed. 

42.As it happened due to other court commitments of Mr Ross the trial did not resume until the 5 June some six days later.  On the 5 June Mr Ross informed the court that he did not maintain his objection as to the admissibility of the enhanced tape, which was marked exhibit P17A.  The remaining witness statements of the police officers relating to the enhanced tape were read pursuant to section 65B of the Criminal Procedure Ordinance (exhibits P14-P17) after which the prosecution closed their case.  I would add that although at times the voices are clearer on the enhanced audio for the parts where there is difficulty in hearing what was said I find no appreciable difference. 

Admissibility of P1

43.The video files are all contained on an external hard drive (exhibit P1). After the close of the prosecution case Mr Ross submitted that the external hard drive being a copy of a copy was not admissible in evidence.  Mr Ross submitted there was no satisfactory explanation why the original video files could not be produced. Mr Ross also submitted that the prosecution had failed to comply with the requirements of section 22A(2) of the Evidence Ordinance.  Mr Ross repeats this submission at paragraph 11 of his written final submission.

44.Mr Papaleo testified that before he went to the Goblin pub he met with Evan Brada, a former colleague of his at the Slovak national television.  Evan Brada who was fully aware of what Mr Papaleo was going to do, helped Mr Papaleo set up the pinhole camera, which belonged to the Slovak national television. 

45.After the meeting with the defendant in the Goblin pub Mr Papaleo transferred the recording from the memory card of the pinhole camera to the hard disk of his computer.  Evan Brada also made a copy.  In cross-examination Mr Papaleo explained that it is normal practice to give a copy to who he called his “investigative twin” so that there was a back-up.  The camera and memory card were then returned to Evan Brada for reuse by the Slovak national television which Mr Papaleo explained was normal procedure as the camera and memory card are used by the television station every week.  Mr Papaleo said he passed the hard disc to the Hong Kong police, which he identified as the external hard disc (exhibit P1) shown to him by Mr Wong.

46.On arrival in Hong Kong Mr Papaleo bought a camera to secretly record the meetings with the defendant.  Mr Papaleo later copied all video recordings in Hong Kong onto the same external hard disc given to the Hong Kong police.  

47.In cross-examination Mr Papaleo said he borrowed the external hard disc from a friend.  This was when he realised there was not enough memory on his computer to hold all the video files he had recorded.  Mr Papaleo therefore borrowed the external hard disc and transferred all the videos on to the external hard disc.  However on arrival in Hong Kong Mr Papaleo realised that the recordings of meetings after he returned to Bratislava had not been transferred to the external hard disc. 

48.Mr Papaleo did not in any way manipulate, edit or cut the video files.  Mr Papaleo explained that when storing files it would be usual to cut the non-important parts of the files such as test recordings.  One example given by Mr Papaleo was that he did not cut the part at the beginning of the first video where he is preparing the camera with Evan Brada prior to going to the Goblin Pub.

49.Another example that the video files have not been cut is that before meeting the defendant in the Goblin pub Mr Papaleo went to the toilet.  This is indicated in the transcript by “urinating sound” (see transcript, P1A, counter 18) and was referred to in Mr Papaleo’s evidence when the video was played in court.

50.Mr Papaleo explained that due to technical problems with the cameras used or the battery was exhausted he was not able to record the whole of every meeting or all of the meetings.  Mr Papaleo estimated that about 50-60% of the meetings or parts of meetings were captured on video, all of which he handed over to the Hong Kong police. 

51.Also to be noted is that the time and date are wrong for all the videos.  Mr Papaleo explained he was never able to make the camera from the Slovak national television work with the correct time and date.  Mr Papaleo was unable to set the time and date before he used the camera he bought in Hong Kong because he did not have a computer in Hong Kong.  When Mr Papaleo realised all the dates and times were wrong he renamed the directories the video files were kept in to give a logical progression to the files and so that he could remember what was recorded.

52.In cross-examination Mr Papaleo explained that he was not preparing evidence to prove in a court and that for his undercover investigation the facts were important and not the date or time.  I also note that there was no challenge to Mr Papaleo’s evidence that the meetings took place and the dates of those meetings.  Further the defendant testified about these meetings.

53.Mr Papaleo regarded the video files on the external hard disc (exhibit P1)as “original” files because they had not been modified, altered or cut by him or anyone else.  I accept the evidence of Mr Papaleo that neither he nor anyone else had modified, altered or cut the video files.  I was satisfied Mr Papaleo had accounted for the original video files and ruled the external hard disc (exhibit P1) admissible in evidence.  The fact the original was not produced goes only to the question of weight to be attached to the evidence.  I was also satisfied that Mr Papaleo being the person who made the videos and the copies that the provisions of section 22A of the Evidence Ordinance did not apply. 

54.In summarising the evidence and reaching my verdict I only refer to the video evidence where I have viewed and listened to those parts and satisfied myself as to the accuracy of what was said as transcribed in the five transcripts.  I have not referred to any part of any video which has not been transcribed or translated by the Slovakian interpreter in court.

55.The file name of each file is contained in paragraph 1 of the admitted facts (exhibit P10) and the file path of each file is shown at the beginning of each transcript under the reference “File S/N”.  The transcripts of these five videos were marked for identification as exhibits P1A-E.  For ease of reference I will refer to the five videos as videos A, B, C, D & E.   I refer to the counter numbers in the transcripts and on some occasions also to the time elapsed on the video.

Defence evidence

56.Admitted in evidence is that the defendant does not have any previous convictions in Hong Kong (see paragraph 6 of the admitted facts, exhibit P10).  I direct myself in accordance with the decision in HKSAR v Tang Siu Man[1997-98] 1 HKCFAR 107.

57.The defendant elected to give evidence.  The defendant also wished to call Jozef Drlicka.  The defence having been informed by the prosecution on the first day of trial that Jozef Drlicka would be arrested if he came to Hong Kong applied for an adjournment for the evidence of Jozef Drlicka to be taken overseas. These are my reasons for refusing that application. 

58.On the first day of trial (13 May 2014) Mr Ross said the defence were ready subject to the court ruling on the objection taken as to the admissibility of the transcripts of the video recordings.  No mention was made as to any difficulty in calling a witness.  Mr Papaleo completed his evidence after 5 p.m. on the 28 May, which was day 9 of the trial.  The further conduct of the trial was then discussed with the parties during which Mr Ross mentioned for the first time the difficulties in calling Jozef Drlicka. 

59.Mr Ross said there were three ways in which the evidence of Jozef Drlicka could be taken overseas: by live television link; applying for letters of request or by seeking mutual legal assistance. 

60.Section 79B of the Criminal Procedure Ordinance provides that a witness in fear may give evidence by live television link.  Mr Ross accepted that Jozef Drlicka was not a witness in fear.  Further as pointed out at the time even if Jozef Drlicka could be said to be a witness in fear the live television link is to another room located in the same premises as the courtroom and not overseas (see the definition of live television link in section 79A of the Criminal Procedure Ordinance).

61.Part VIIIA of the Evidence Ordinance provides for the obtaining of evidence in other jurisdictions for use in criminal proceedings in Hong Kong.  Application is first made to the Court of First Instance for a letter of request to be issued to the court or tribunal exercising jurisdiction in a place outside Hong Kong to assist in obtaining evidence for the purpose of those criminal proceedings (see section 77E of the Evidence Ordinance).  Application can be made by the Secretary for Justice or any person charged with an offence.  Mr Ross however stated that the defence preferred not to go that route because of the time delay involved.

62.The third way, which Mr Ross said was a faster way, was by way of mutual legal assistance pursuant to an application made under the Mutual Legal Assistance in Criminal Matters Ordinance, Chapter 525.  Unlike letters of request however a request for mutual legal assistance can only be made by the Secretary of Justice.  Mr Ross however understood that ad hoc arrangements could be put in place within a matter of days whereby a request could be made by email from the Hong Kong government to any government for assistance.  Mr Ross therefore called upon the prosecution to assist in making a request to the Slovakian government for assistance. 

63.I expressed my surprise that no application had been made on the first day of trial with regards to the difficulty in calling Jozef Drlicka.  Mr Ross explained he had only been informed that Jozef Drlicka would be arrested on the first day of trial and only become aware of this ad hoc arrangement a day or so before.  Whilst I expressed my surprise that the difficulty in calling Jozef Drlicka was only mentioned at the end of the 9th day of trial I said I could not determine any application for adjournment until the application was made. No application for adjournment was made at that time and the trial was adjourned to the 30 May to accommodate the diary of Mr Ross.

64.On the 30 May the prosecution adduced all remaining evidence save for the production of the enhanced video.  Just before lunch on the 30 May during further discussions on the progress of the trial Mr Ross again referred to the calling of Jozef Drlicka.  Mr Ross informed the court the prosecution had declined to assist in making a request to the Slovakian government for assistance and therefore this left the defence to apply to the Court of First Instancefor an order that a letter of request be issued.  I note subsequently on the 5 June when applying for an adjournment Mr Ross told the court that he had been informed by the prosecution that a request for mutual legal assistance takes about the same time as an application for letters of request and therefore there was no advantage in seeking a request for mutual legal assistance.

65.The trial was adjourned to the afternoon when Mr Ross informed the court that having discussed the matter with the defendant over the lunch adjournment the defence position was that they wished to delay deciding whether or not to call Jozef Drlicka until after the defendant had elected whether or not to give evidence and if he did after his evidence was completed.  I again made clear I could not determine any application for adjournment until the application was made. 

66.The defence requiring the calling of witnesses concerned with the enhanced video necessitated the trial being further adjourned to the 5 June, again to accommodate the diary of Mr Ross.  Anticipating the prosecution would close their case on the 5 June before adjourning further discussions took place with regard to the conduct of the defence case. 

67.This partly arose due to the unavailability of the Slovakian interpreter there being only one Slovakian interpreter available in Hong Kong for court interpretation.  The interpreter was only available until the 13 June after which he would be out of Hong Kong until the 16 July and again from the 23 July to the 8 August.  As I was on leave between the 16 and 23 July if the trial was not concluded by the 13 June then adjournment to August was unavoidable. 

68.The continuation of the trial was also affected by the fact Mr Ross had a High Court trial starting on the 6 June.  I therefore indicated that if the defence case starts on the 5 June I will continue until the defence case finishes subject to any application made for an adjournment to call Jozef Drlicka.  The only other alternative was to adjourn the defence case to August.  The case was stood down for Mr Ross to take instructions whether the defence wished to start on the 5 June or adjourn to August.  Having taken instructions Mr Ross informed the court that the defence wished to start on the 5 June and not adjourn to August.  Mr Ross said he would return the High Court brief although I note he never did which caused a delay in the commencement of the High Court trial and a late start of this trial on the 6 June. 

69.On the 5 June the remaining prosecution evidence relating to the enhanced video was read pursuant to section 65B of the Criminal Procedure Ordinance.  The prosecution then closed their case.  After I overruled the objection made as to the admissibility of the external hard disc (exhibit P1) I ruled the defendant had a case to answer. 

70.The defendant elected to give evidence.  Before the defendant began his evidence Mr Ross made his first application for an adjournment.  The grounds of the application were twofold.  Notwithstanding that on the 28 May Mr Ross had estimated that he would be half a day in his examination-in-chief the first ground for an adjournment was that there was a danger the defendant would not finish his evidence before the 13 June (the last day the Slovakian interpreter was available). 

71.In the morning the parties had indicated that at the conclusion of the defence case they would need time to prepare written submissions which could not be completed before the 13 June which would necessitate the case being adjourned to August for submissions.  Mr Ross therefore applied for the defendant’s evidence to start in August. 

72.The second ground was to enable an application to be made to the Court of First Instance for an order that a letter of request be issued to assist in obtaining the evidence of Jozef Drlicka. Although letters of request may take anything between 6-12 months from the date of application to the preparation of the deposition of the evidence Mr Ross only applied for an adjournment to August to see what progress had been made by that time. 

73.Notwithstanding the brief had not been returned for the High Court trial starting the next day Mr Ross specifically stated he was not applying for an adjournment so he could conduct the High Court trial. 

74.I rejected both grounds for an adjournment.  There were still six and half days available to hear the evidence of the defendant.  Whilst accepting that it would be undesirable to have the defendant’s evidence part-heard I was quite satisfied there was more than sufficient time (as was shown to be right the defendant concluding his evidence on the morning of the fourth day of giving evidence) in which to conclude the defendant’s evidence.  Further as noted earlier on the 30 May the defence requested that the case starts on the 5 June and not adjourn to August.

75.I also refused the application for adjournment for an application to be made to the Court of First Instance for an order that a letter of request be issued.  I was satisfied the application was made too late.  At the commencement of the trial the defence stated that they were ready to proceed without any mention of difficulties in calling witnesses. 

76.Further in my view the prosecution case being that Jozef Drlicka arranged the meeting between Mr Papaleo and the defendant it was obvious that if Jozef Drlicka was to come to Hong Kong he would be arrested.  This should have been anticipated by the defence and applications for letters of request made before the commencement of the trial. 

77.Further in my view although the application for adjournment was until August consideration of the application must take into account that to obtain evidence pursuant to a letter of request may take anywhere up to 12 months, if not longer.  I was satisfied that it would be undesirable to adjourn for such a long period of time now that the trial had started and with no certainty as to when the trial would continue. 

78.Notwithstanding the defence had been informed on the first day of trial of the arrest of Jozef Drlicka not only was no application made at that time but also when applying for an adjournment (some 16 working days later) no information was placed before me as to the procedure involved where letters of request were issued to the courts of Slovakia and the likely time required to obtain the evidence. 

79.I therefore relied on my experience, in particular a case which was before me where letters of request were issued in December 2013 for evidence to be obtained in Malaysia.  By the 5 June a decision was still awaited from the High Court of Malaya.  I communicated this information to the parties during the applications for adjournment to call Jozef Drlicka.

80.On the 10 June (day 14 of the trial) after the defendant completed his evidence Mr Ross renewed his application for an adjournment to apply for letters of request to obtain the evidence of Jozef Drlicka.  I again refused this application for the same reasons given earlier namely that the application was too late and that an adjournment for a long period of time was undesirable now that the trial had started.  Having refused the defence application I direct myself as to the impact of the absence of Jozef Drlicka on the conduct of the defence (see for example R v Holgate (No. 1) [1996] 3 HKC 315 as applied in HKSAR v Chan Kong On & others [2011] 2 HKLR 1085).

81.I now turn to consider the evidence of Mr Papaleo and the defendant.  I will first summarise the evidence of both Mr Papaleo and the defendant. 

Antonio Aldo Papaleo (PW1)

82.Mr Papaleo, an Italian national, testified that he was a professional freelance journalist living in Slovakia.  Mr Papaleo understood Slovakian however because he made many mistakes he did not like to speak Slovakian except with friends or when using some colloquial language. 

83.Mr Papaleo had previously worked for the Italian, Swiss and Slovak national television corporations.  Mr Papaleo was the Chairman of the Association of European Journalists in the Czech Republic (see exhibit P12B).  Mr Papaleo was interested in news of a public interest such as corruption, organised crime and trafficking in human parts. 

84.One of Mr Papaleo’s interests was to investigate financial crime.  Frustrated by the difficulties in getting real information on the outside Mr Papaleo had for more than a couple of years posed as a corrupt journalist who had serious drug and alcohol problems.  Mr Papaleo regarded this as the best way to make contact with the underworld in Bratislava and Prague so he could “fish” for a good story to report. 

Meeting in the Goblin Pub, Bratislava on the 10 May 2013

85.Posing in this way Mr Papaleo met the defendant in May 2013.  As noted earlier Mr Papaleo secretly recorded all the meetings with the defendant, although only some of video files of these meetings have been produced in evidence. The first meeting took place on the 10 May 2013 in the Goblin pub in Bratislava.  The video of this meeting (video A, transcript exhibit P1A),was played in court. 

86.The meeting was arranged by Jozef Drlicka, who Mr Papaleo described as his ‘informer’ and later as his “recruiter” having recruited him to go to Hong Kong. In answer to the court Mr Papaleo said he had never been to Hong Kong before. 

87.Two or three days prior to the meeting Jozef Drlicka told  Mr Papaleo that he had a Slovakian friend working in Hong Kong who needed urgent help in order to do his business in Hong Kong.  Jozef Drlicka further said the business was illegal but not criminal meaning not involving guns or drugs.  In answer to the court at the end of his evidence Mr Papaleo explained that the use of “not criminal” meant that there was no physical risk to his safety.

88.During the meeting in the Goblin pub Mr Papaleo was asked to go to Hong Kong to incorporate a company and open a related bank account, the control of which he would give to the defendant including the pin codes and everything necessary to operate the bank account. 

89.Mr Papaleo’s main interest was to understand what kind of illegal activities lay behind this request.  Mr Papaleo therefore asked about the nature of the business activities.  However neither the defendant nor Jozef Drlicka told Mr Papaleo the origin of the funds to be transacted. 

90.In video A Mr Papaleo can be heard at the end of counter 66 to ask the defendant, “Can I know what’s the product?”  There appears to be a short reply from the defendant at counter 67 however apart from saying “Okay” the remainder of the reply is not audible.  Mr Papaleo explained that the defendant asked him if Jozef Drlicka had explained everything to him.  Mr Papaleo replied to the defendant that Jozef Drlicka had explained something very quickly.  On the video Mr Papaleo can be heard saying at counter 69 very quickly and that he does not know very much.   

91.Shortly after at counter 76 the defendant is heard saying to Mr Papaleo “…one company….and open bank account.”  This is followed by thedefendant in the passage between counters 81-100 mentioning 10% risk; no cash operation; transfer of money via the company and offshore company. 

92.However this passage is very difficult to hear.  Mr Papaleo explained in court that the defendant was telling him like any business there is a risk.  When Mr Papaleo asked what risk the defendant said it was not a big risk because it was not a cash operation only money transfer concerning an offshore company and that no tax was payable. 

93.Mr Papaleo asked why Jozef Drlicka could not incorporate the company and open the bank account.  Mr Papaleo was told that Jozef Drlicka had a fresh passport which would not be useful or valid for such operations and that someone who was not Slovakian or Czech was needed. 

94.In video A at counters 135 and 139 Jozef Drlicka can be heard to say he had a fresh passport however due to the music being played in the pub it is again very difficult to hear what else was said.  In cross-examination Mr Papaleo disagreed that once Jozef Drlicka had a fresh passport and could therefore take over the control of the bank accounts he would take over the running of the two companies. 

95.Mr Papaleo was promised a reward of €5000 once he returned to Bratislava.  This can be heard in video A between counters 102-105, the transcript accurately recording the conversation at that time.  Mr Papaleo testified that the money was to be paid after he handed over control of the company and the bank account to the defendant.  The defendant would also pay Mr Papaleo’s travel and living expenses in Hong Kong and two nights’ accommodation in Bratislava.  

96.The next day when the defendant bought the air tickets for Mr Papaleo they mostly discussed the logistics of the trip.  The meeting was recorded by secret camera which recording has not been produced in court.  The defendant also told Mr Papaleo that if he was asked by customs the purpose of his trip he was to say for tourism.

Hong Kong

97.Mr Papaleo arrived in Hong Kong on the 14 May when he was met at the airport by Jakub Planka.  The movement record shows Mr Papaleo arriving at the airport at 07:17:06 (see admitted facts, exhibit D9).  Jakub Planka took Mr Papaleo to the Island Pacific Hotel (see exhibit P3).  Jakub Planka gave Mr Papaleo a mobile phone on which was stored the defendant’s phone number and that of Jakub Planka. 

98.The next day Mr Papaleo met the defendant at 9 a.m. at the IFC mall when the defendant instructed Mr Papaleo to go to what Mr Papaleo called a “company house” to incorporate two companies Vindex (HK) Limited and East Ray (HK) Limited.  The company names were given to Mr Papaleo by the defendant and are the same names written on a piece of paper found by the police inside luggage in the residence of the defendant (see paragraph 4 of the admitted facts, exhibit P10). 

99.The video recording of this meeting is contained in two files (video B, transcript exhibit P1B & video C, transcript exhibit P1C).  In video B between counters 58-70 the defendant is seen giving Mr Papaleo the telephone number 25212515 to ring and make an appointment with “Offshore Incorporations”.  Mr Papaleo is then heard at counter 71 making the telephone call. 

100.Mr Papaleo explained that the meeting is on two files because he was not sure how long the camera was charged therefore he tried to economise on the battery and would stop the camera when he thought the meeting had ended.  On hearing the defendant was going to send a SMS with the exact names of the two companies Mr Papaleo restarted the camera. 

101.Video C was played in court and shows at the beginning the defendant using his telephone to send by SMS the names of the two companies which are repeated by Mr Papaleo at counter 2.  Notwithstanding the agreement as to the accuracy of the transcript I am satisfied although mispronounced Mr Papaleo was saying East Ray and not “X-S-Ray”.

102.The defendant explained to Mr Papaleo that HK was to be added to the names of the companies so as not to mix up with two existing companies.  The defendant did not however tell Mr Papaleo about the business of Vindex (HK) Limited and East Ray (HK) Limited.   

103.In cross-examination Mr Ross put to Mr Papaleo that the day after the meeting in the Goblin pub he met the defendant at Jozef Drlicka’s home when the defendant told him that the two companies to be set up would be doing publishing and LED sales.  Mr Papaleo replied that he did not go to Jozef Drlicka’s home on the 11 May and that he was only told in Hong Kong how to justify the creation of the company by saying that his business was publishing and lights.

104.In video B prior to giving Mr Papaleo the telephone number the defendant can be heard between counters 32-49 instructing Mr Papaleo what to say on the telephone including that he needs two companies with bank accounts; and to use the Standard Chartered Bank and not HSBC.  This is followed by the defendant instructing Mr Papaleo what to say about the business of the two companies, namely say something that you will be a publisher or something like that and that you will be buying and selling products, LED lights  (see counter 50).   

105.When this part of video B was played in court Mr Papaleo was asked if there was any genuine business. After expressing his opinion whether there was any genuine business Mr Papaleo went on to say that when he was back in Slovakia the defendant instructed him how to prepare false reference to prove he had a business.

106.Mr Papaleo was also asked if he knew the reason why he was not to open a bank account with HSBC.  Mr Papaleo explained that the defendant told him not to use HSBC because of the anti-money laundering views of the bank.  Mr Papaleo however did not remember whether this was mentioned by the defendant on this or some other occasion. 

107.Mr Papaleo then went to the first “company house” who said they needed three or four days to incorporate the companies.  Mr Papaleo met up with the defendant again to inform him of this.  The defendant then instructed Mr Papaleo to go to Acorn Business Services and Consultancy Limited (“Acorn”).  Acorn offered the service of changing the name of two existing companies whereby the documents would be prepared that day and be ready for collection the next day. 

108.The next day Mr Papaleo collected the company documents (see exhibits P4-P7).  The cost of $14,000 (exhibit P2) and $2,800 (exhibit P8) for incorporating the two companies was paid by money given to Mr Papaleo by the defendant.  After leaving Acorn Mr Papaleo met the defendant who requested Mr Papaleo to start to open the bank accounts. 

109.At the request of the defendant Mr Papaleo also asked Acorn for banking introduction services.  As noted earlier in video B the defendant is heard instructing Mr Papaleo to ask for two companies with bank accounts with the Standard Chartered Bank and not HSBC (see paragraph 104).  Acorn arranged for Mr Papaleo to go to the Standard Chartered Bank. 

110.The defendant and Jakub Planka escorted the defendant to the bank but did not go in the bank with him.  Mr Papaleo explained that they did not go with him to any “company house” or bank because they said they were known to everybody and did not want to be seen with him.  On one occasion when meeting in Starbucks, which was situated in the same building as Acorn, the defendant asked to go somewhere else because it was the end of the working day and he did not want Acorn staff to see them together.  In cross-examination Mr Papaleo said that the defendant did not tell him why he did not want to be seen associating with him

111.Mr Papaleo was surprised that the bank staff would accept everything from him and open the account.  Not wishing to violate Hong Kong law Mr Papaleo therefore made an excuse to leave the bank saying he would contact them later.  Mr Papaleo then met the defendant and lied to him that he had big problems opening a bank account giving excuses such as that the bank needed to do due diligence.  Mr Papaleo made up that the bank required proof of business and that it would take three to four weeks to approve the opening of the account. The defendant then asked Mr Papaleo to visit more banks. 

112.Part of the video recording of this meeting was played in court (video D, transcript exhibit P1D).  In the video Mr Papaleo can be heard telling the defendant the bank required proof of business and time of approval will be three or four weeks followed by the defendant asking Mr Papaleo to talk to the Bank of China (see counters 10-34).

113.The following day being a public holiday this necessitated Mr Papaleos’s flight being changed because the defendant did not want Mr Papaleo to fly back to Bratislava before starting some banking procedure.  The ticket was therefore changed that day, the cost of which was paid by the defendant.   

114.Before leaving Hong Kong Mr Papaleo went to various banks, including Citibank, Bank of China and Hang Seng Bank.  In order to pretend he had been to meetings to open bank accounts Mr Papaleo adopted the strategy of collecting visit cards to show the defendant and again made up various excuses why the bank accounts could not be opened. 

115.With regard to Citibank Mr Papaleo said initially the defendant told him not to go to Citibank because this is where Vindex Ltd and East Ray Ltd had their accounts. On hearing the supposed difficulties Mr Papaleo had in opening bank accounts the defendant told him to try Citibank and if he was asked about the names to say they were different companies. 

116.Part of another video file (video E, transcript P1E) was played in court.  Mr Papaleo identified this as being taken on Monday the 20 May in the IFC mall when the defendant complained Mr Papaleo was not businesslike and was out of contact over the weekend due to drinking alcohol. 

117.The defendant asked Mr Papaleo to return to Acorn to ask for their help in clarifying exactly what proof of business the Standard Chartered Bank required in order for them to open the bank account.  The defendant is heard telling Mr Papaleo to ask Acorn to call Standard Chartered Bank to ask them what they exactly need (see counters 56-64).

118.Unsure whether he would be followed Mr Papaleo went to Acorn however as the request for proof of business was an excuse made up by him Mr Papaleo did not ask Acorn to call Standard Chartered Bank.  Asked if any proof of business was prepared Mr Papaleo replied after returning to Slovakia he prepared one or two at the request of the defendant and Jozef Drlicka which he said were totally invented.

119.Reference is also heard on the video to Mr Papaleo trying Citibank, Bank of China and BEA (see counters 47 & 74-93) followed by the defendant telephoning a bank. The defendant then gives Mr Papaleo a telephone number which Mr Papaleo calls to make an appointment to open a bank account (see counters 93-100).

Bratislava

120.Mr Papaleo left Hong Kong on the 21 May without opening any bank account.  Before leaving Hong Kong Mr Papaleo met the defendant at the in-town check-in when they discussed the situation relating to the banks.  Mr Papaleo agreed he would return to Hong Kong when the time was right to finalise the bank accounts.

121.After returning to Bratislava Mr Papaleo, regarding his journalistic mission completed, cut off contact with the defendant and Jozef Drlicka.  Mr Papaleo consulted with his colleagues who searched for legal advice to decide what to do.  As a result Mr Papaleo produced a complete record of everything that related to the story including all documents and videos.

122.After a few days, on or about the 26 May, Mr Papaleo reported the matter to the Slovakian police.  Mr Papaleo expected the police to act immediately by taking up the investigation or asking him to open the bank account and continue the relationship with the defendant to find out more.  However the Slovakian police told Mr Papaleo to wait for their decision with no guarantee being given that they would do anything.  Pending the reply of the Slovakian police Mr Papaleo felt that he had, as he put it, “to keep the game alive”. 

123.Mr Papaleo therefore contacted Jozef Drlicka and explained his disappearance by saying his father had been very seriously ill resulting in his own fictional drug and alcohol addiction becoming worse.  Jozef Drlicka said to Mr Papaleo that they were to follow up the procedure with the banks in order to produce as soon as possible the proof of business that Mr Papaleo said were requested by the banks so as to ensure the next trip to Hong Kong was successful. 

124.A meeting was arranged to see the defendant on the 3 June.  Mr Papaleo wanted to avoid the meeting because he did not want to go back to Hong Kong before receiving any news from the Slovakian police.  Mr Papaleo therefore tried to create an accident to justify a delay in his return to Hong Kong.  The night before he attended a party at the Italian Embassy in Bratislava inviting Jozef Drlickato go with him.  The intention was to get very drunk and have a hangover the next day so he could not attend the meeting with the defendant. 

125.Mr Papaleo did get very drunk and had an accident resulting in him going to hospital. In cross-examination Mr Papaleo said he fell over the stairs of the entrance of the embassy.  Mr Papaleo did however keep the appointment with the defendant, who was disappointed with Mr Papaleo’s appearance because his face was covered in scratches and therefore was not presentable to go to Hong Kong and deal with the bank.  Mr Papaleo was given a few days to recover before flying to Hong Kong. 

126.In these few days the Slovakian police replied that money laundering was not a specific crime under Slovakian law and as there was no evidence proving the illegal origin of the funds transferred there were no grounds for them to start the investigation.  Disappointed with this reply Mr Papaleo, intending to report the matter to the Hong Kong police, agreed to return to Hong Kong to open the bank accounts. 

127.Before leaving for Hong Kong Mr Papaleo met the defendant again for a minimum of two times to prepare the proof of business supposedly requested by the bank.  Mr Papaleo said there were four or five letters from companies who did not know of his existence saying they had business or possible business with him.  Mr Papaleo said he believed he gave these to the Hong Kong police.  I note none have been produced. 

128.Mr Papaleo again recorded these meetings with the defendant in Bratislava however as noted earlier only after Mr Papaleo arrived in Hong Kong did he realise that the recordings had not been transferred to the external hard disc, exhibit P1 (see paragraph 47). 

129.Mr Papaleo arrived in Hong Kong on the 11 June.  The defendant arrived on the 14 June.  In the meantime Mr Papaleo had reported the matter to the Hong Kong police. At a pre-arranged meeting with the defendant at the IFC mall Mr Papaleo pointed out the defendant who was then arrested by the police. 

130.At the end of examination-in-chief Mr Wong asked Mr Papaleo whether the defendant had ever told him how to deal with the police if he was investigated for setting up the companies and opening the bank accounts.  Mr Papaleo referring to what had been seen on the video of the meeting in the Goblin pub replied that the defendant told him that if something happened he would tell Mr Papaleo what to do but in the case of investigation by the police Mr Papaleo could just show his passport and say he had been to Hong Kong once only and did not know anything about this story. 

131.In video A just after 36:00 minutes the defendant can be heard to say “investigation” (see transcript, counter 237) however again it is very difficult to hear the full conversation at that time.  When this part was played in court Mr Papaleo said that the defendant was explaining the impossibility of investigators finding out anything because one company was in the Czech Republic, one in Hong Kong and Mr Papaleo was Italian and that if anything happened Mr Papaleo could just show his passport and say whatever happened was not his responsibility. 

Jariabka Juraj (defendant)

132.In his evidence the defendant agrees he first met Mr Papaleo in the Goblin Pub in Bratislava; that Mr Papaleo was asked to go to Hong Kong to incorporate companies and open bank accounts; and that he would give Mr Papaleo a reward of €5000 and pay all the expenses.  

133.The defendant however says that these arrangements were all in pursuit of a legitimate business agreement he had with Jozef Drlicka.  In summary the defendant testified that after he finished university he worked as a journalist and was a member of the International Federation of Journalists and a member of the Slovak Syndicate of Journalists Association (see exhibits D2, D3 & D5). The defendant was also involved in running various different businesses.  

134.The defendant said that he believes he understands English but was not able to express himself the same was as he would in his mother tongue. Sometimes the defendant would struggle with the context.  Also the defendant did not know specific terminology and would therefore use basic English. 

135.In 2013 the defendant had the idea of setting up business in the fields of LED lighting and publishing with emphasis on electronic books.  Two companies were to be set up, one for each business.  However the health of the defendant’s mother had rapidly deteriorated and therefore the defendant wanted someone else to look after the businesses so he could minimise his business activities.  At the beginning of cross-examination the defendant said he first became interested in LED business in 2012.

136.The defendant had known Jozef Drlicka for at least 15 years and regarded him both as a friend and business partner.  The defendant wanted Jozef Drlicka to set up the two companies.  In cross-examination the defendant said that he decided to do business with Jozef Drlicka in April 2013.

137.In May 2013 the business contacts of the defendant, who also knew Jozef Drlicka, accepted the defendant’s proposal to do business with Jozef Drlicka.  The two companies were to be established in Hong Kong with each company focusing on one business only. Hong Kong was chosen because due to costs reasons the goods and services such as lighting and book printing would originate from Hong Kong, China or Taiwan and Hong Kong had no VAT. 

138.Jozef Drlicka was to be in charge of the start-up of the firms including the incorporation of the two companies in Hong Kong and the opening of the bank accounts.  The defendant would introduce Jozef Drlicka to all the possible ways of doing business.  In return Jozef Drlicka would contribute and enhance the business with his own contacts.  The defendant would not be taking part in the business activities because of his mother’s health. The defendant produced a medical report dated 2 May 2014 detailing his mother’s health (marked exhibit PD6 for identification).

139.Initially Jozef Drlicka was to be based in Hong Kong.  After finding suitable suppliers the area of operation would be Austria, Slovakia and the Czech Republic.  The decision whether anyone needed to remain in Hong Kong was to be made by Jozef Drlicka.  The defendant said he would not be intervening in this decision.

140.In cross-examination the defendant explained that the first intention was for Jozef Drlicka to go to Hong Kong to set up the companies and open the bank accounts.  This was confirmed by the defendant at the end of his evidence when the court summarised the arrangement he had with Jozef Drlicka.

141.However when the first business trip was to take place Jozef Drlicka did not have a passport.  Jozef Drlicka told the defendant he had either lost his passport or his passport was not valid.  This meant any passport Jozef Drlicka obtained would be a ‘fresh’ passport.  The defendant explained that he had been told by firms that are involved in incorporating companies that it would be more difficult to establish the firm and the bank account with a brand new passport.  At the end of evidence-in-chief the defendant identified a copy of a passport (marked exhibit PD7 for identification) which was issued to Jozef Drlicka in May of this year.

142.Considering the incorporation of the two companies and the opening of the bank accounts would take two or three months entailing several trips to Hong Kong and that he had a small baby Jozef Drlicka considered sending a substitute to incorporate the companies and set up the bank accounts for him.  Jozef Drlicka told the defendant he had a friend (Mr Papaleo) who spoke fluent English; knew how to use a computer; had travelled a lot and can be helpful when preparing business plans, web sites and other administrative steps. 

143.In cross-examination after saying that there would be no transactions in the bank accounts until they were transferred to Jozef Drlicka the defendant was asked why he did not wait until Jozef Drlicka could open the accounts.  The defendant replied that because he had already arranged a business trip to Hong Kong he wished to save his own expenses and because he understood the local conditions for establishing firms he wanted to use this opportunity for Mr Papaleo to join in with his journey.  The defendant also explained he wanted to establish these companies as soon as possible because he wanted to reduce his flying so he could look after his mother.

144.Near the end of cross-examination after saying there was to be no urgent transactions the defendant was again asked why he did not wait for Jozef Drlicka to obtain his “fresh” passport before opening the bank accounts.  The defendant replied that he wanted to urgently incorporate the firms and then open a bank account because if there was any business to occur a bank account number would need to be stated in the contract. 

145.In re-examination the defendant said that he anticipated that Jozef Drlicka would have to wait at least three weeks for a “fresh” passport from Austria.  The defendant said he did not wait the three weeks because at that time they were just about to sign prior to contract a preliminary agreement for the exchange of neon lights for LED lights.  No actual contract was made because the firms remained in the hands of Mr Papaleo.

Goblin pub

146.Jozef Drlicka introduced the defendant to Mr Papaleo in the Goblin pub.  The defendant did not have a very good first impression of Mr Papaleo, who arrived late to the meeting and drank unnecessarily.  Further references were made in the defendant’s evidence to heavy drinking by Mr Papaleo in both Hong Kong and Slovakia and to the taking of marijuana in Slovakia.  The defendant said Mr Papaleo was not acting and that his alcohol and marijuana consumption were real.

147.Jozef Drlicka however convinced the defendant that he did not have to be worried about Mr Papaleo who he had known for five years and said had experience as an owner of his own business.  The defendant also knew this was a good opportunity for Jozef Drlicka and therefore had no reason to doubt his decision to send Mr Papaleo on his behalf.  In the end the defendant said that it was up to Jozef Drlicka to agree with Mr Papaleo the terms of their co-operation and that he accepted the decision as it was Jozef Drlicka who would be responsible for the companies. 

148. Mr Papaleo was made aware that Jozef Drlicka would be responsible for the companies’ activities in the future.  Mr Papaleo was also well aware that his role was only temporary and that it was up to Jozef Drlicka to decide whether their co-operation would continue in the future or whether it would be terminated. 

149.Having been told by Mr Papaleo that he was penniless the defendant promised Mr Papaleo a reward of €5,000 if everything ended up how it was meant to be.  This would cover Mr Papaleo’s work time; willingness to travel; experience; language skills; preparation of business plans; web designs; incorporating the companies and opening the bank accounts.  The defendant also paid the expenses of the first trip to Hong Kong including the air fare and hotel accommodation. 

150.In cross-examination the defendant said Jozef Drlicka was to be 100% owner of the LED business.  Asked why then he paid all the expenses the defendant replied that his first intention was for Jozef Drlicka to go and that he would share the cost with Jozef Drlicka.  Jozef Drlicka however did not have enough means to realise the start-up of the company therefore the defendant would pay and Jozef Drlicka would reimburse him later. 

151.Later in cross-examination when asked why he did not open the bank accounts himself as he was in Hong Kong and save €5,000 the defendant replied that the firms were meant to be for Jozef Drlicka who sent Mr Papaleo on his behalf. 

152.Mr Papaleo was made aware the nature of the businesses was publishing and LED products save that the defendant did not tell Mr Papaleo some facts and some trade business secrets, such as market price because he did not trust Mr Papaleo 100%.  The defendant thought he told this to Mr Papaleo after the flight tickets had been purchased and whilst they were still in Bratislava. 

153.At the end of his evidence-in-chief the defendant agreed that in the Goblin pub he mentioned to Mr Papaleo that there could be 10% risk.  The defendant explained that this was, as in life, the unknown risk and that he was talking about risk in general terms.  In cross-examination the defendant clarified that the risk referred to business risk and that if Mr Papaleo continued to work with Jozef Drlicka this risk would then relate to him as well. 

Hong Kong

154.The defendant arrived in Hong Kong on the same day as Mr Papaleo. The movement record, exhibit P11 shows the defendant arriving at the airport at 14:30:45 on the 14 May 2013.  The defendant could not remember when he first met Mr Papaleo after arriving in Hong Kong but believed this was the same afternoon or early in the evening of the same day but definitely the following morning. 

155.The first meeting was in the IFC mall.  Mr Papaleo’s clothes were described by the defendant as strange Mr Papaleo wearing long trousers which required shortening by the use of bulldog clips. The defendant was therefore forced to go shopping with Mr Papaleo to buy him some suitable clothing.

156.At the meeting the next morning the defendant instructed Mr Papaleo to first purchase the two companies.  The defendant asked Mr Papaleo to search on the internet to find companies that sell other companies or help in incorporating companies. Mr Papaleo could then choose which company to use.  Initially the defendant did not make any recommendations however as the display screen of Mr Papaleo’s telephone was not working properly the defendant used his telephone.

157.One company was found but because the cost was too high their services were not used.  The defendant then asked Mr Papaleo to go to Acorn, with whose services the defendant had previously been satisfied with.  The defendant pointed out to Mr Papaleo that he might be asked some specific information such as address verification therefore it was important to have some proof of address with him.  Two companies East Ray (HK) Limited and Vindex (HK) Limitedwere set up by Acorn.  The defendant paid the costs of Acorn in incorporating the two companies.

158.The defendant did not go with Mr Papaleo to Acorn because he had other duties to attend to.  In cross-examination the defendant said he had to manage his own matters including emails and that he needed Mr Papaleo to learn.

159.The defendant agreed with Mr Papaleo’s evidence that he did not want to be seen together with Mr Papaleo by Acorn staff.  Referring to the shortened trousers incident the defendant explained this was because the way Mr Papaleo behaved was not according to what he expected.  Also because Mr Papaleo had borrowed money from Jakub Planka the defendant did not have a good feeling to be seen together with him.  Further as the firms were to be transferred to Jozef Drlicka there was no need to be seen together with Mr Papaleo.

160.The names of the two companies East Ray (HK) Limited and Vindex (HK) Limited were similar to two other companies in Hong Kong namely East Ray and Vindex (i.e. without HK in the name).  The defendant explained the names were chosen for branding purposes whereby the name was used and thereby the costs such as printing were lowered.  The defendant drew comparison with Coca-Cola and the Virgin group of companies.

Elitecon Inc Limited

161.The defendant controlled another company in Hong Kong, Elitecon Inc Limited (“Elitecon”) (see banker’s affirmation, exhibit P13).  The defendant explained he did not use Elitecon, whereby he would save the expenses of incorporating two new companies, because he did not want to mix the businesses up.  Further Elitecon had nothing to do with Jozef Drlicka and the defendant did not want other people involved in Elitecon. 

Bank accounts

162.After incorporating the two companies the next step was for Mr Papaleo to open the bank accounts for these companies.  Again because of other duties and the fact the bank accounts were to be for Jozef Drlicka the defendant did not go with Mr Papaleo to open the bank accounts.  Mr Papaleo was unsuccessful in opening the bank accounts because he did not meet all the requirements of the bank including address proof and verification of the businesses. 

163.In cross-examination when asked why he did not go to any bank with Mr Papaleo the defendant repeated that he was doing his own work saying that he had things to discuss with Jakub Planka.  The defendant also explained Mr Papaleo was there because he did not want to spend two, three, four hours waiting in a bank.

Slovakia

164.One of the banks suggested preparing business plans and therefore the first trip to Hong Kong was concluded with Mr Papaleo returning to Slovakia to prepare the business plans with Jozef Drlicka.  However no business plans were prepared. The defendant therefore told Mr Papaleo that due to his attitude and irresponsibility his co-operation in the future was not welcome and that he was not entitled to his reward of €5,000.  Mr Papaleo begged the defendant and promised he would prepare the business plans.  Still no business plans were prepared Mr Papaleo just pretending he was working on the business plans. 

165.One day Mr Papaleo had a black eye and scratches on his face.  Mr Papaleo told the defendant he had been at a social event when he was under the influence of alcohol and was smoking marijuana with a friend following which he did not remember what actually happened.  The defendant believed Mr Papaleo had been in a fight and reminded him to look after his health because once the business plans were ready he would need to return to Hong Kong. 

166.Mr Papaleo used his injuries as another excuse not to work on the business plans. Also because Mr Papaleo was using a friend’s mobile phone the defendant and Jozef Drlicka were unable to get in touch with him for a few days.  Eventually they traced Mr Papaleo and met him in a hostel.  Mr Papaleo said he had started working on the business plans but as the hostel did not have a computer he could not continue with the work. 

167.Later Mr Papaleo informed the defendant that it was possible to continue with opening the bank accounts and that he would show the defendant the business plans after his arrival in Hong Kong.  The second trip to Hong Kong was therefore arranged the expenses of which were again paid by the defendant.  Jozef Drlicka instructed the defendant that after transferring the companies and bank accounts to him the co-operation with Mr Papaleo would be terminated. 

168.The defendant arrived in Hong Kong on the 14 June and was arrested the same day when he met Mr Papaleo at the IFC mall.  At no time did the defendant seek control of the two companies or intend to take control of any bank accounts that would be opened.  The defendant did not incite Mr Papaleo as particularised in the charge.

Consideration of the evidence

169.In reaching my verdict I remind myself of the burden and standard of proof and that the burden is on the prosecution throughout.  The defendant has to prove nothing.  I direct myself that I must be sure of the guilt of the defendant before I can convict.  On the other hand if the court thinks that the defence evidence pointing to innocence is true or may be true, it would follow that the defence has raised sufficient doubt in the prosecution case and the defendant entitled to be acquitted.

170.I remind myself that when drawing inferences from the evidence the inference must be a compelling one and the only one that no reasonable man could fail to draw from the direct facts proved. 

171.There is a material conflict in the evidence as to why Mr Papaleo needed to go to Hong Kong to incorporate two companies and open bank accounts for these companies.  In summary Mr Papaleo says he was recruited by Jozef Drlicka who said the defendant needed urgent help in his business in Hong Kong, which was described as illegal but not criminal.  Mr Papaleo was to hand over control of the companies and the bank accounts to the defendant. 

172.The defendant on the other hand says that he had reached a business agreement with Jozef Drlicka whereby Jozef Drlicka would run the companies in Hong Kong.  As Jozef Drlicka did not have a passport Mr Papaleo went to Hong Kong as a substitute for Jozef Drlicka.  The control of the companies and bank accounts were to be handed over to Jozef Drlicka.

173.I have carefully considered all the evidence and the written and oral submissions of Mr Wong and Mr Ross.  Unless otherwise stated I accept the evidence of Mr Papaleo. At times Mr Papaleo gave his opinion as to what he thought the evidence meant for example that during the meeting in the Goblin pub the defendant was describing a scheme of embezzlement (see transcript exhibit P1A, counter 96). In reaching my verdict I have disregarded the opinions of Mr Papaleo. 

174.I have no hesitation in rejecting the defendant’s evidence.  I do not find his evidence credible.  I do not find credible the defendant’s evidence as to why he did not himself set up the two companies and open the bank accounts.  I find inherently improbable that if there was a legitimate business agreement between the defendant and Jozef Drlicka that Mr Papaleo would be required to go to Hong Kong to incorporate the two companies and open the bank accounts only to then transfer ownership to Jozef Drlicka, in particular considering the defendant had already arranged a business trip to Hong Kong.

175.The defendant was familiar with the procedure involved in incorporating companies and setting up bank accounts in Hong Kong.  On the 21 August 2012 (some nine months earlier) the defendant had incorporated Elitecon.  In cross-examination the defendant agreed he set up Elitecon at Acorn.  Six days later on the 27 August the defendant opened a business integrated bank account for Elitecon with HSBC (see paragraphs 15 & 16 together with exhibits TWP-1(1) – (39) of the bankers’ affirmation, exhibit P13). The defendant could therefore quite easily have incorporated the companies and set up the bank accounts himself without the need of sending Mr Papaleo to Hong Kong thereby saving paying Mr Papaleo a reward of €5,000 and incurring relatively substantial expenses sending him to Hong Kong.

176.I do not find credible the defendant’s evidence that notwithstanding he formed an adverse impression of Mr Papaleo in Bratislava he nevertheless still agreed to Mr Papaleo going to Hong Kong to incorporate the companies and open the bank accounts.  Similarly I do not find credible the defendant’s evidence that notwithstanding the way Mr Papaleo was dressed when they met in Hong Kong and his heavy consumption of alcohol while in Hong Kong that he still wished Mr Papaleo to incorporate the companies and open the bank accounts. 

177.When asked by the court why having such an unfavourable impression of Mr Papaleo did he want him to set up the companies and open the bank accounts the defendant replied; “Me, personally, honestly, I really didn’t want that”.  Asked why then he did not stop Mr Papaleo the defendant replied he would have done had he not been arrested and because Jozef Drlicka kept begging him he gave Mr Papaleo a chance. 

178.I find inherently improbable that the defendant would accept Mr Papaleo having formed an adverse impression of him from the very beginning.  I find inherently improbable that if there was a legitimate business agreement between the defendant and Jozef Drlicka that the defendant would be willing to allow someone, who he described on one morning in Hong Kong of being unsteady on his feet and smelling of alcohol, which was not a fresh smell of alcohol but was like a smell after drinking all night long, to help him incorporate the companies and open the bank accounts.   

179.I do not find credible the defendant’s evidence in cross-examination that he relied on Jozef Drlicka because he trusted him.  In answer to the court when asked why he needed to approve Mr Papaleo to go to Hong Kong if he trusted Jozef Drlicka and Jozef Drlicka was to make all the decisions the defendant replied because he was paying for the costs of establishing the companies; he wanted to make sure this was done diligently so that the companies could operate properly; and that Jozef Drlicka was a trigger happy person who needed to be directed and given boundaries.

180.I find inherently improbable that in these circumstances the defendant would accept Jozef Drlicka’s recommendation and approve Mr Papaleo to go to Hong Kong, in particular having from the very beginning formed an adverse impression of Mr Papaleo.   

181.I do not find credible the defendant’s evidence that the first intention was for Jozef Drlicka to go to Hong Kong to set up the companies and open the bank accounts and only because Jozef Drlicka did not have a passport was Mr Papaleo recruited.  Whether or not Jozef Drlicka in fact had a passport I am satisfied this was only an excuse given to Mr Papaleo during the meeting in the Goblin pub, in particular considering that according to the defendant Jozef Drlicka’s English was very poor.

182.In evidence-in-chief the defendant said Jozef Drlicka only knew five words of English.  From viewing Video A it would appear that Jozef Drlicka could speak more than five words of English.  During the meeting Jozef Drlicka said he could not speak English.  At the end of the first day of evidence when video A was played to Mr Papaleo the court interpreter translated the Slovakian spoken at counter 174 which included Jozef Drlicka saying he did not speak English.  When the court clarified about the spoken English of Jozef Drlicka the defendant said Jozef Drlicka’s English was very poor. 

183.At the end of re-examination when asked how Jozef Drlicka would do the job once he is in Hong Kong and everything was working if his English was poor the defendant replied he would have to find someone to help him with this.  The original plan being that Jozef Drlicka would go to Hong Kong to incorporate the companies and open the bank accounts I clarified with the defendant how he would do this if he could not speak English.  The defendant replied that this would have been very difficult but at first he would have been at the meetings with Jozef Drlicka. 

184.I do not find this answer credible, in particular notwithstanding the unfavourable impression the defendant had with Mr Papaleo he said he was too busy to go with Mr Papaleo yet he would have gone with Jozef Drlicka.  I find inherently improbable that someone whose English was very poor would be entrusted to open bank accounts; incorporate companies and operate the business in Hong Kong.  In addition I find inherently improbable that if Jozef Drlicka was to run the businesses the meeting in the Goblin pub would have been largely conducted in English.

185.I do not find credible the defendant’s evidence that he wanted to keep the businesses separate i.e. one company for LED lighting and one for publishing. 

186.In cross-examination the defendant said Elitecon had nothing to do with LED lighting and that the business of Elitecon was some marketing activities and providing short-term capital support for start-up companies, an example of which was produced in re-examination (exhibit D8).  Yet when applying for the business account of Elitecon the defendant stated the business was “LIGHTING PRODUCTS e.g. LED” (see exhibit TWP-1(1) to the bankers’ affirmation, exhibit P13). 

187.Towards the end of cross-examination on being shown TWP – 1(1) the defendant said this showed he had been interested in LED business since 2012 and that when establishing Elitecon he intended to trade in LED lights.  In re-examination the defendant explained at that time he had made some analysis and was looking for a partner but the project did not materialise.  In answer to the court the defendant said that the LED business with Jozef Drlicka was a fresh start and not a continuation of the business started when Elitecon was set up. 

188.In cross-examination the defendant admitted he lied to Mr Papaleo with regard to the turnover of the business.  This occurred when Mr Wong cross-examined the defendant on the reference to €1 million during the meeting in the Goblin pub (see transcript exhibit P1A, counter 214).  The defendant explained that because Mr Papaleo was asking about the procedure during the incorporation of the firm this was more or less said for the purpose of incorporating a firm and that he lied about this because he could not really tell what the estimate would be and so he thought it was a quick solution to tell Mr Papaleo something as he had no intention of discussing this with him further. 

189.As noted earlier (see paragraph 104) in video B the defendant can be heard instructing Mr Papaleo what to say about the business of the two companies, namely to say something that you will be a  publisher or something like that and that you will be buying and selling products, LED lights (see transcript exhibit P1B, counter 50).  The defendant goes on to say the turnover of the business could be €1 million (see counter 52).

190.Having lied about this to Mr Papaleo earlier in the Goblin pub I am satisfied that the defendant was simply making things up for Mr Papaleo to tell the “company house.”  I am equally satisfied that when telling HSBC the business of Elitecon was “LIGHTING PRODUCTS e.g. LED” the defendant was again making this up. 

191.In video B the defendant is also heard telling Mr Papaleo not to go to HSBC (see transcript exhibit P1B, counter 48).  In cross-examination after agreeing that it was possible he said this to Mr Papaleo the defendant explained he said this because HSBC had complicated rules for opening accounts for newly founded companies and that he believed it was necessary to have a partner in the company who came from Hong Kong. 

192.The defendant however as sole director and shareholder of Elitecon was able to open an integrated business account for Elitecon with HSBC within 6 days of Elitecon’s incorporation (see paragraph 175).  The banking documents show the day after opening the account a case deposit of $3000 was made into the account (see paragraph 17 of the bankers’ affirmation, exhibit P13).  The defendant appeared therefore to have no difficulty in opening a bank account with HSBC. 

193.When the court drew this to the defendant’s attention the defendant replied that it was not easy to open the account for Elitecon explaining that he believed there had been three meetings that lasted several hours and that in the first meeting approval to open an account was not given.  Asked by the court why he did not try HSBC before deciding to return to Slovakia the defendant replied that the conditions in banks change quite quickly and that in May prior to meeting with Jozef Drlicka he telephoned HSBC from Slovakia and was told that it was not very easy to open an account for a new firm. 

194.I did not find this evidence credible.  I accept Mr Papaleo’s evidence that he was told not to go to HSBC because of their anti money laundering views.   

195.In cross-examinationthe defendant said he had acquaintances that had companies with the names of East Ray and Vindex.  When asked if they had any connection with his companies the defendant replied, “No, more or less no.”  Asked by Mr Wong what kind of branding purposes could be served if there was no connection between the companies the defendant explained that at first his companies would do their independent activities as would the other companies and that it would look good to say that the companies presented themselves as one brand name. 

196.When the court sought clarification whether the defendant was saying he was using another company’s name without permission the defendant said that if his companies were able to build up the brand name the owner of the brand name would be rewarded. 

197.I do not find credible the defendant’s evidence that he chose the names East Ray (HK) Ltd and Vindex (HK) Ltd for branding purposes, what Mr Ross described in his oral submission as trying to piggy back the reputation of another company, which Mr Ross said may not be a legitimate business practice but that people do that kind of thing. 

198.I remind myself that the rejection of the defendant’s evidence is not determinative of the issues in the case.  The defendant has to prove nothing. A case in which defence evidence is called and is not believed is no different from one in which no evidence is called.  In either case the burden is on the prosecution to prove the defendant’s guilt beyond reasonable doubt.

Why was Mr Papaleo asked to go to Hong Kong to incorporate a company and open a related bank account?

199.The issue to be determined is why was Mr Papaleo asked to go to Hong Kong to incorporate a company and open a related bank account?  In determining this issue I have carefully considered the submission of Mr Ross that Mr Papaleo’s evidence is neither credible nor reliable.

“Illegal but not criminal”

200.As noted earlier Mr Papaleo testified that prior to meeting the defendant Jozef Drlicka told him the business was illegal but not criminal, meaning not involving guns or drugs (see paragraph 87).  During the playing of video A when explaining what was said at counter 239 Mr Papaleo said the defendant confirmed to him the business was not a legal business.   

201.Mr Ross submits this evidence is not supported by any of the video files produced to court (see paragraph 6 of the written submission of Mr Ross).  After video A was played in court Mr Papaleo was asked by the court if he could hear the defendant say “illegal” or “not legal”.  Mr Papaleo replied that because of the poor quality of the sound recording he could not hear that said.  Mr Papaleo then went on to say that it was very clear in his memory that during the meeting in the Goblin pub Jozef Drlicka used the term “illegal” twice and the defendant “not legal” once.

202.In cross-examination Mr Papaleo said the defendant also told him this before he went to Hong Kong but could not remember whether this was in the meeting in the Goblin pub or the day after.  Mr Ross then referred Mr Papaleo to paragraph 2 of his witness statement (marked “A” for identification) in which he states that when he met the defendant in a specific pub the defendant told him that “this financial operation was not legal but not such not dangerous”. 

203.Mr Ross then put to Mr Papaleo that from the statement it was clear this was said in the Goblin pub.  Mr Papaleo confirmed this is what he was told by the defendant but could not remember whether he was told in the Goblin pub or the day after that the financial operation was illegal but that he was told in the Goblin pub that it was not dangerous.

204.Whilst one can hear in video A the defendant make reference to financial operation, tax, offshore companies and just business (as particularised by Mr Ross in paragraph 6 of his submission) due to the background noise in the pub the full conversation and therefore the context these words were spoken simply cannot be heard.  No reliance can be therefore placed on this part of the video. 

205.I note the reference to financial operation at counter 241 is preceded by the defendant saying at the end of counter 239, “…no drugs, no taxes”.  Although Mr Papaleo said in evidence this was when the defendant was explaining the impossibility of investigators finding out anything and what he should do if there was any investigation, again without being able to hear the full conversation and therefore the context in which no drugs was mentioned no reliance can be placed on this part of the video.

206.Due to the difficulty in hearing what exactly was said during the meeting I find that video A neither supports nor contradicts the evidence of Mr Papaleo.  However in video C after the defendant sends the names of the two companies East Ray and Vindex to Mr Papaleo by SMS the defendant is heard saying “And listen, there’s no risk there.  It’s no guns, nothing, yeah?” The defendant then continues to tell Mr Papaleo that he cannot be complained about (see transcript P1C, counter 5). 

207.I am satisfied this supports Mr Papaleo’s evidence that he had been told no guns were involved.  I accept the evidence of Mr Papaleo that he was told by the defendant the business was not legal.

Control of the bank accounts to be given to the defendant

208.Similarly Mr Ross submits the evidence of Mr Papaleo that the control of the bank accounts was to be handed over to the defendant is also not supported by any of the video tapes produced to court (see paragraph 8 of the written submission of Mr Ross).

209.The defendant can be heard saying to Mr Papaleo “…one company…. open bank account” (see video A, transcript P1A, counter 76).  Although the full passage at counter 76 is very difficult to hear I note nowhere in video A can the defendant be heard telling Mr Papaleo to hand over control of the bank accounts. 

210.After video A was played in court Mr Wong asked Mr Papaleo to explain why no mention was made in the meeting of giving the defendant control of the bank accounts. Mr Papaleo explained that because he had been told this by Jozef Drlicka prior to the meeting he tried to elicit other information during the meeting in the Goblin pub. 

211.I accept the explanation of Mr Papaleo as to why there was no mention of giving the defendant control of the bank accounts in the meeting in the Goblin pub.  Notwithstanding there is no mention in any of the videos to the words “illegal” or “not legal” or reference to handing over the bank accounts to the defendant I find this does not cause me to doubt the evidence of Mr Papaleo.

212.Although not referred to by Mr Ross I have also considered the evidence of Mr Papaleo that at one stage he was told by the defendant to bribe the bank officers to speed up the process.  This was said in examination-in-chief when video E was played in court.  Mr Papaleo continued by saying he was sure that there must be a later video in which he is lying to the defendant saying that he followed his instructions and offered something to bank officials to speed up the procedure.  When cross-examined about this Mr Papaleo said he believed this was captured on video but was not sure.  The fact no video has been produced in which this is heard does not cause me to doubt Mr Papaleo’s evidence. 

213.I have also considered the evidence of Mr Papaleo that the defendant mentioned the anti-money laundering views of HSBC (see paragraph 106).  This also is not heard on any video produced in court.  On video B the defendant tells Mr Papaleo that if he is asked to use HSBC to say he had a bad experience with HSBC (see transcript P1B, counter 48).  Clearly the defendant was making up something for Mr Papaleo to say which was not true.  I accept Mr Papaleo’s evidence of what he was told.  The fact no video has been produced in which this is heard does not cause me to doubt Mr Papaleo’s evidence.

Control of the companies to be given to the defendant

214.In court copies of the company documents of East Ray (HK) Ltd and Vindex (HK) Ltd were produced (exhibits P4-P7).  When asked where the originals were Mr Papaleo explained that he handed the documents given to him by Acorn to the Hong Kong police.  The Hong Kong police returned the documents to him which are now kept with his papers in Europe.  Mr Papaleo also explained that other company documents such as the memorandum and articles of association and the company chops were retained by Acorn. 

215.Mr Ross submits that as Mr Papaleo retained the company documents this is inconsistent with the defendant taking control of the companies as alleged by Mr Papaleo (see paragraph 9(2) of the written submission of Mr Ross). 

216.I have no hesitation in rejecting this submission.  I accept Mr Papaleo’s evidence-in-chief that he kept the originals as these would be needed to show to the banks.  This was also the reply given to the court at the end of Mr Papaleo’s evidence when clarifying whether there was any reason why he did not hand over to the defendant the documents given to him by Acorn.  Although Mr Papaleo was never going to open a bank account he would need to keep the documents so as to continue the pretence he was opening a bank account. 

Proof of business

217.Mr Papaleo testified that he lied to the defendant that the Standard Chartered Bank required proof of business (see paragraph 111).  Mr Ross submits that Mr Papaleo’s evidence that the defendant asked him to prepare business documents with false information is not credible because this was not mentioned in any of seven witness statements made by Mr Papaleo.  Further Mr Ross submits that Mr Papaleo’s explanation given in cross-examination that he regarded this as a minor matter is equally not credible (see paragraph 9(5) of the written submission of Mr Ross). 

218.This arose when Mr Ross put to Mr Papaleo that after he returned to Slovakia the defendant asked him to prepare business plans in connection with the two companies.  Mr Papaleo replied that the defendant asked him to prepare the false confirmation of business activities together with Jozef Drlicka.  Asked whether it was his opinion that the defendant was asking him to falsify documents Mr Papaleo replied, “No, he actually instructed me and my informant how to do it.” 

219.After Mr Papaleo explained that although these meetings had been video recorded they had not been transferred to the external hard disc due to a lack of memory Mr Ross asked Mr Papaleo whether he had enough memory to remember whether he told the police that the defendant instructed him to falsify documents. 

220.Mr Papaleo replied that he had surely told the police but did not recall if this was in any of his statements.  Mr Papaleo explained that he had checked his statements to see that there was nothing false in the statements and said that he was comfortable that a total of 20 pages could not cover every single specific fact of the story.  Asked by Mr Ross if he thought this was an important part of the story Mr Papaleo replied that he thought it was a minor offence and that he highlighted more important things in his statements. 

221.Mr Papaleo was then referred to his first witness statement (marked “A”) and confirmed there was no mention in the statement that the defendant instructed him to falsify documents and further confirmed this was also not mentioned in the following six statements. 

222.Whilst the falsifying of documents is clearly not a minor matter having carefully considered all the evidence I accept the explanation given by Mr Papaleo for this omission. The fact Mr Papaleo did not include this in any witness statement does not cause me to doubt his evidence. 

Correction of evidence by Mr Papaleo

223.In his oral submission Mr Ross submits Mr Papaleo is unreliable because many times he corrected his evidence the following morning.  This occurred twice during the six days that Mr Papaleo gave evidence, once in chief and once in cross-examination. 

224.On the fourth day of giving evidence (23 May) Mr Papaleo sought to correct which bank was introduced by Acorn and on which day he went to that bank.  The day before Mr Papaleo had said the bank introduced by Acorn was Hang Seng Bank but that he was not sure about this.  As for the date Mr Papaleo had initially said the 17 May but corrected this to the 16 May after seeing more of video D. 

225.The next day Mr Papaleo corrected this by saying that Acorn was only able to arrange an appointment with the Standard Chartered Bank on the 18 May as there was a public holiday on Friday the 17 May.  This last correction would appear to be incorrect because video D makes reference to the defendant saying, “Tomorrow is free day. Saturday they work” (see transcript P1D, counter 71). 

226.I find nothing at all surprising about the correction of dates and names of banks, in particular when describing events almost one year later.  This does not cause me to doubt Mr Papaleo’s evidence.

227.On the fifth day of giving evidence (26 May) Mr Papaleo sought to add the definition of a journalist specified in official documents by the General Assembly of the United Nations.  This arose from the cross-examination by Mr Ross the day before as to the credentials of Mr Papaleo as a journalist including that in video A Mr Papaleo had shown a false press card to the defendant. 

228.Mr Papaleo also added his understanding of why he was asked about this explaining he showed two absolutely original and genuine authentic press cards (exhibits P12A and P12B) and that it was Jozef Drlicka who had asked him to obtain a false press card for his use. 

229.As Mr Papaleo continued to add matters which appeared unrelated to the charge I advised Mr Papaleo to wait for further questioning from Mr Ross.  The fact Mr Papaleo wished to add these matters does not cause me to doubt his evidence.

Whether Mr Papaleo is a journalist

230.Mr Ross also makes further submissions as to whether Mr Papaleo is in fact a journalist or professional journalist concluding with the submission that he is a person who wishes to be a famous journalist and is prepared to lie in order to advance himself (see paragraph 10 of the written submission of Mr Ross).

231.In cross-examination Mr Papaleo confirmed to Mr Ross that the name of his informant was Jozef Drlicka.  Mr Ross orally submitted that a professional journalist does not readily reveal the name of his informant or the source of his information and that Mr Papaleo was simply pretending to be a journalist. Further Mr Ross submitted this was inconsistent with what Mr Papaleo had told the police in his first witness statement (marked “A”), namely that “As a professional journalist my duty is to protect my source of information.” 

232.In evidence-in-chief Mr Papaleo had not revealed the name although when referring to his informer at the beginning of his evidence he said he would, if asked, give his name and surname.  The name was revealed when Mr Ross asked Mr Papaleo whether the name of his informer was Jozef.  Mr Papaleo agreed and went on to explain that although he called him his informant he did not recognise his status as an informant because he was not consciously helping him.  Mr Papaleo then agreed with Mr Ross that the full name of his informant was Jozef Drlicka.

233.Mr Ross then asked Mr Papaleo why he told the police, “As a professional journalist my duty is to protect my source of information.”  Mr Papaleo repeating that Jozef Drlicka did not consciously help him in his investigation explained that he reconsidered the matter.  No longer regarding Jozef Drlicka as an informer Mr Papaleo made a further statement two days later giving the details of Jozef Drlicka to the police (in fact according to further questions from Mr Ross this statement was made four days later). 

234.This is consistent with Mr Papaleo’s evidence-in-chief when he first referred to his “informer” he said, “I had the chance through a person which I used to name ‘my informer’ to meet Juraj Jariabka…”  I accept the explanations of Mr Papaleo.  The fact Mr Papaleo confirmed to Mr Ross that the name of the person he referred to as his informer was Jozef Drlicka does not cause me to doubt his evidence or that he is a journalist.

“Podvodnik”

235.Mr Ross cross-examined Mr Papaleo whether in the Goblin pub Jozef Drlicka accused him of being a fraudster by having a false press card.  This arose from the use of the Slovakian word “podvodnik” which the Slovakian court interpreter translated as meaning “fraudster”.   This is heard in the 57 seconds of non-English spoken at counter 252 of the transcript P1A. 

236.Mr Ross first put to Mr Papaleo that Jozef Drlicka had tried to get him a press card from the Slovak Syndicate of Journalists and had approached the Slovak Minister of Culture to get the press card for him but they had declined to assist because Mr Papaleo’s publications were not acceptable.  Mr Papaleo disagreed saying this was all nonsense giving his reasons why including that the Ministry of Culture do not issue press cards. 

237.Shortly after Mr Ross referred to the part of the meeting in the Goblin pub where Mr Papaleo is seen handing a card to the defendant.  Mr Ross puts that at that stage Jozef Drlicka said Mr Papaleo was a fraudster.  Mr Papaleo said he could not recall anything like that but if that was said he did not understand. 

238.Further Mr Papaleo said that the cards were with him now and that they were absolutely regular and real issued to him for regular reason.  Subsequently these were produced at the end of Mr Papaleo’s evidence (exhibits P12A & P12B). 

239.Video A was then played to Mr Papaleo.  Prior to playing the Slovakian court interpreter translated the parts of the passage which Mr Ross wished to cross-examine upon (see exhibit P1F).  Between 41:44 and 42:00 minutes of video A Mr Papaleo is seen holding some cards, one of which he hands to the defendant after which the defendant is heard saying “But this card you don’t show in the airport” (see transcript P1A, counter 253). 

240.The showing of the card is during the 57 seconds of non-English spoken during which the Slovakian word “podvodnik” is used.   Mr Papaleo said he did not understand most of what Jozef Drlicka said in Slovakian and so replied in Italian, “I don’t know.”  At the end of evidence in answer to the court Mr Papaleo said that he did repeat the word “podvodnik” when saying in Italian that he did not understand what was said.

241.Mr Papaleo went on to explain whilst he understood Slovakian this did not mean he understood 100% and that he understood what people said if they were speaking on specific subjects.  Asked by  Mr Ross if he understood the word “podvodnik” Mr Papaleo said “No, honestly, first time” but said he could not exclude that he had heard the word before.  Mr Papaleo said the word he used for false or fake was “falošný”.  The Slovakian court interpreter agreed this means false or fake. 

242.Mr Ross submits the evidence of Mr Papaleo that he does not know the Slovakian word “podvodnik” means fraudster is not credible (see paragraph 9(3) of the written submission of Mr Ross).  I have no hesitation in rejecting this submission.  I accept the evidence of Mr Papaleo that whilst he understood Slovakian he did not know the word “podvodnik”.  The fact Jozef Drlicka used this word in the meeting at the Goblin pub does not cause me to doubt that Mr Papaleo is a journalist.  Nor does this cause me to doubt Mr Papaleo’s evidence.

243.Although not referred to by Mr Ross in his final submission I should add that in cross-examination Mr Ross asked Mr Papaleo whether he was a member of the Syndicate of Slovak Journalists.  Mr Papaleo replied that he was but had not collected his syndicate card because he was not able to pay the membership fee of €40.  Asked by Mr Ross if he knew the name of the head of the syndicate Mr Papaleo replied Tamara Valkova.  Asked to spell the name Mr Papaleo could spell the given name but was not sure about the surname. 

244.Mr Ross then asked Mr Papaleo whether his date of birth was 20 June 1970.  Mr Papaleo replied his birthday was 20 April 1970.  Mr Ross then showed a letter (marked PD1 for identification) signed by Tamara Valkova stating that “Mr Antonio Aldo Papaleo, born on June 20^th, 1970 has never been a member of the Slovak Syndicate of Journalists”.  Asked why the letter says he has never been a member Mr Papaleo repeated that he had not paid his membership fee and therefore had not collected his card. 

245.I accept the evidence of Mr Papaleo that he was a journalist.  The fact he did not pay his membership fee for joining the Syndicate of Slovak Journalists, the participation in which Mr Papaleo described as voluntary, does not cause me to doubt his evidence. 

Whether Jozef Drlicka had been to Hong Kong

246.When cross-examined on the subject of Jozef Drlicka having a fresh passport in one answer Mr Papaleo said that the fresh passport was the same passport Jozef Drlicka used to go to Hong Kong in August 2013.  When the court clarified whether he was saying that Jozef Drlicka came to Hong Kong in August 2013 Mr Papaleo explained that he had been informed of this.

247.Put by Mr Ross that Jozef Drlicka had never been in Hong Kong Mr Papaleo replied he was sure he had been in August 2013 because he started to show around Bratislava the witness statement (marked “A”) and was telling people he was to go to Hong Kong to help the defendant. 

248.Mr Ross submits that Mr Papaleo’s evidence that Jozef Drlicka had been to Hong Kong in August 2013 is not credible (see paragraph 9(1) of the written submission of Mr Ross).

249.Admitted in evidence is that Jozef Drlicka had never been to Hong Kong (see the admitted facts, exhibit P10A).  Whilst the admitted facts contradict what Mr Papaleo said taking into account this was not based on the personal knowledge of Mr Papaleo I am satisfied this contradiction does not cause me to doubt his evidence.  Further I note the passport of Jozef Drlicka shown to the defendant at the end of his evidence-in-chief (see exhibit PD7) was issued in May this year and therefore on that passport he could not have travelled to Hong Kong in August 2013.

Alcohol and drugs

250.Mr Ross further submits by reason of his alcohol and drug habits Mr Papaleo is neither a credible nor reliable witness (see paragraph 9(4) of the written submission of Mr Ross). 

251.Clearly Mr Papaleo drank alcohol as can be seen in the meeting in the Goblin pub. Further Mr Papaleo accepted while in Hong Kong he had been drinking and in Slovakia he got very drunk at a party at the Italian Embassy. 

252.In cross-examination when Mr Ross asked Mr Papaleo if he had around five beers in the Goblin pub, Mr Papaleo replied, “Obviously, and I wash my mouth with whisky every morning before I meet the defendant.”  I am satisfied Mr Papaleo was not saying he washed his mouth with whisky every morning rather only before he met the defendant no doubt as part of posing as a corrupt journalist with serious drug and alcohol problems.

253.The fact Mr Papaleo consumed alcohol does not cause me to doubt his evidence.

Drugs

254.In cross-examination Mr Papaleo denied he had ever taken any drugs.  At the beginning of cross-examination Mr Ross put that on the 3 June at the party at the Italian Embassy in Bratislava Mr Papaleo took cannabis. 

255.In a very long answer Mr Papaleo explained how he introduced himself to the defendant as a person with very serious problem of alcohol and drugs.  Mr Papaleo said as he could not show visible symptoms of drug taking such as marks left from injecting drugs he told the defendant he drunk methamphetamine.  Mr Papaleo concluded the answer by saying that on the 3 June Jozef Drlicka offered him to smoke marijuana from his pipe.  Quoting Bill Clinton Mr Papaleo said he took a puff but did not inhale. 

256.Later in cross-examination when Mr Ross put to Mr Papaleo he had been smoking marijuana almost every day for five years Mr Papaleo replied absolutely not and disagreed that he was under the influence of any dangerous drugs when filming any of the meetings with the defendant.   

257.I accept the evidence of Mr Papaleo that he posed as a corrupt journalist with serious drug and alcohol problems in order to try investigate financial crime. I accept his evidence that he never took drugs.

Exaggeration of evidence

258.I have also considered the submission of Mr Ross that Mr Papaleo exaggerated his evidence when saying that a member of the public gallery behaved aggressively towards him (see paragraph 9(6) of the written submission of Mr Ross). 

259.This occurred shortly before lunch on the first day Mr Papaleo gave evidence.  Mr Papaleo asked to go to the washroom.  When he returned Mr Papaleo told the court that when leaving for the washroom he was approached by a man who made contact with him very aggressively for 10 seconds.  This made Mr Papaleo feel very intimidated.  I stopped Mr Papaleo from continuing and said that no doubt the police will make appropriate enquiries.  The case was then adjourned for lunch. 

260.Mr Ross cross-examined Mr Papaleo about this incident asking how the man behaved aggressively towards him.  Mr Papaleo replied that he stared at him in a very aggressive manner for more than 10 seconds.  Asked if he knew this person was the Deputy Head of the Slovakian Diplomatic Mission to China based in Beijing Mr Papaleo replied, “I had no idea who was that man.  I assumed that he was, by the way he look at me and by his aggressive behaviour, I was assuming he was related with the defendant.  Now that I know who he was, I better understand why.”  Mr Ross then asked Mr Papaleo whether he was trying to give the impression that the Slovakian Government is involved in money laundering.  Mr Papaleo replied, “No, I am not trying to give an impression to anyone about anything.”

261.I reject the submission that Mr Papaleo was exaggerating his evidence.  Mr Papaleo very properly mentioned this incident to court before continuing with his evidence.  This incident does not cause me to doubt Mr Papaleo’s credibility or reliability.

262.In his oral submission Mr Ross submits the evidence of Mr Papaleo is unreliable because he was unable to say how long he had known Jozef Drlicka.  In cross-examination when Mr Ross asked Mr Papaleo how long he had known Jozef Drlicka Mr Papaleo replied he was not sure probably three years, maybe two and a half years.  When Mr Ross suggested he had known Jozef Drlicka for five years Mr Papaleo replied he did not know but that he had known him for some time before he was introduced to the defendant. 

263.It is not at all surprising someone cannot remember exactly how long they have known someone.  This does not cause me doubt Mr Papaleo’s reliability.  Nor does the fact Mr Papaleo may have got the definition of money laundering wrong as submitted by Mr Ross at paragraph 9(7) of his written submission. 

264.Notwithstanding a probing cross-examination conducted over three days I find Mr Papaleo to be a credible and reliable witness, who gave cogent and compelling evidence.  Having carefully considered all the evidence I find as a fact, inter alia, the following:

(a) Mr Papaleo was a freelance journalist who was interested in investigating financial crime;

(b) Mr Papaleo posed as a corrupt journalist who had serious drug and alcohol problems so he could make contact with the underworld in Bratislava and Prague in order to “fish” for a good story;

(c) posing in this way Mr Papaleo met the defendant through the introduction of Jozef Drlicka;

(d) prior to the first meeting with the defendant on the 10 May 2013 in the Goblin pub in Bratislava Jozef Drlicka told Mr Papaleo that he had a Slovakian friend working in Hong Kong who needed urgent help in order to do his business in Hong Kong;

(e) Jozef Drlicka said the business was illegal but not criminal in that it did not involve guns or drugs;

(f) Mr Papaleo secretly recorded all the meetings with the defendant;

(g) Mr Papaleo was asked to go to Hong Kong to incorporate a company and open a related bank account for the company;

(h) after incorporating the companies and opening the bank accounts the control of the companies and the bank accounts would be given to the defendant;

(i) after Mr Papaleo handed over to the defendant control of the companies and the bank accounts the defendant would pay Mr Papaleo a €5,000 reward;

(j) the defendant paid all the expenses of going to Hong Kong and incorporating the companies;

(k) Mr Papaleo and the defendant went to Hong Kong both arriving in Hong Kong at different times on the 14 May 2013;

(l) in Hong Kong the defendant instructed Mr Papaleo to incorporate two companies giving him the names of the two companies East Ray (HK) Ltd and Vindex (HK) Ltd;

(m)the defendant instructed Mr Papaleo to go to Acorn for assistance in incorporating the two companies and to ask for bank introduction telling Mr Papaleo what to say about the business of the companies and to use the Standard Charted Bank and not HSBC;

(n) East Ray (HK) Ltd and Vindex (HK) Ltd were incorporated on the 15 May 2013;

(o) the defendant then instructed Mr Papaleo to open bank accounts for these two companies;

(p)Mr Papaleo went to various banks but did not open any accounts giving various excuses to the defendant why accounts could not be opened including making up the bank required proof of business;

(q) Mr Papaleo returned to Slovakia where he was asked by both the defendant and Jozef Drlicka to prepare the proof of business supposedly requested by the bank;

(r) the defendant instructed Mr Papaleo andJozef Drlicka how to falsify the documents; and

(s) Mr Papaleo prepared four or five letters from companies who did not know of his existence saying they had business transactions with him.

Why was Mr Papaleo asked to incorporate East Ray (HK) Ltd and Vindex (HK) Ltd and open related bank accounts?

265.Having carefully considered all the evidence and submissions I am satisfied so I am sure the only inference to draw is that Mr Papaleo was asked to go to Hong Kong and incorporate East Ray (HK) Ltd and Vindex (HK) Ltd and open related bank accounts so that:

(1)the true holder and user of the bank accounts would be unknown; and

(2)the subsequent use of the bank accounts could not be traced to the defendant.

266.I am satisfied so I am sure the only inference to draw is that the disguising of the true holder and user of the bank accounts was because the bank accounts would be used to launder proceeds of an indictable offence. 

267.I find inherently improbable that if the business of the companies and the use of the bank accounts was for legal business that Mr Papaleo would at some considerable cost have been required to come to Hong Kong to incorporate the companies and open the bank accounts, in particular considering that the defendant was not only in Hong Kong at the very same time he also had experience in Hong Kong of incorporating a company and opening a bank account for that company.  The defendant could therefore have quite easily incorporated the companies and opened the bank accounts himself without any involvement of Mr Papaleo. 

Inciting Mr Papaleo to deal with property

268.By asking Mr Papaleo to go to Hong Kong and incorporate the two companies and open the bank accounts I am satisfied so I am sure that the defendant incited Mr Papaleo to deal with property, Mr Papaleo knowing or having reasonable grounds to believe that the property, in whole or in part, directly or indirectly represented the proceeds of an indictable offence.

269.Dealing in relation to property is defined in section 2 of the Organized and Serious Crimes Ordinance and includes:

(b) concealing or disguising the property (whether by concealing or disguising its nature, source, location, disposition, movement or ownership or any right with respect to it or otherwise).

270.I am satisfied so I am sure that opening bank accounts on behalf of someone else facilitates money laundering by disguising the actual holder and user of the bank accounts and thereby the true owner of the monies which would be passing through the accounts.  I am satisfied so I am sure that by asking Mr Papaleo to incorporate the two companies and open the company bank accounts, the control of which were to be given to the defendant, the defendant incited Mr Papaleo to deal with property. 

Knowing or having reasonable grounds to believe

271.The mens rea of dealing has two parts “know” or “having reasonable grounds to believe”.  The prosecution submit Mr Papaleo had actual knowledge and in the alternative that there existed reasonable grounds for Mr Papaleo to believe the monies which would be passing through the accounts in whole or in part, directly or indirectly, represented the proceeds of an indictable offence. 

Knowledge

272.Mr Papaleo having been told the business was illegal but not criminal I am satisfied so I am sure that Mr Papaleo knew that the bank accounts would be used to launder proceeds of an indictable offence.

Reasonable grounds to believe

273.In HKSAR v Shing Siu Ming & Others [1999] 2 HKC 818, a case under the former Drug Trafficking (Recovery of Proceeds) Ordinance, Chapter 405, the Court of Appeal considered the expression “having reasonable grounds to believe”.  The court said,

“This phrase, we are satisfied, contains subjective and objective elements. In our view it requires proof that there were grounds that a commonsense, right-thinking member of the community would consider were sufficient to lead a person to believe that the person being assisted was a drug trafficker or had benefited there from. This is the objective element. It must also be proved that those grounds were known to the defendant. That is the subjective element.”

274.On appeal to the Court of Final Appeal in Seng Yuet Fong v HKSAR [1999] 2 HKC 833 Mr Justice Litton giving the judgment of the court said,

“To convict, the jury had to find that the accused had grounds for believing; and there was the additional requirement that the grounds must be reasonable: That is, that anyone looking at those grounds objectively would so believe.”

275.The objective and subjective elements were considered in HKSAR v Pang Hung Fai CACC 34/2012 where the court held that the meaning of having reasonable grounds to believe as set out in Shing Siu Ming was correct.  The court went on to say that the order in which the two stage test has come to be applied did not unfairly prejudice a defendant however the more logical approach was first to ask the question: what were the facts known to the defendant and the objective factual circumstances in which he found himself and of which he was aware at the time at which he dealt with the property which is the subject of the charge?  The second question to ask then is: do those facts and circumstances provide reasonable grounds to believe that that property in whole or in part represented the proceeds of an indictable offence?

276.I am satisfied so I am sure that being asked to go to Hong Kong to set up two companies and then open bank accounts for those companies for which he was to be paid a reward of €5,000 upon handing over control of the companies and the bank accounts to the defendant, Mr Papaleo had reasonable grounds to believe that the bank accounts would be used to launder proceeds of an indictable offence. 

277.As the Court of Appeal observed in HKSAR v Wong Chor Wo & another CACC 314/2006 at para 108:

“In the normal course of events, if a man allows another person to use his bank accounts 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 has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.”

Intending or believing that if Mr Papaleo so acted Mr Papaleo shall or will do so with the fault required for the offence

278.The defendant having instructed Mr Papaleo to set up the companies and open the bank accounts for which the defendant would pay Mr Papaleo €5,000 upon control of the companies and bank accounts being handed over to him, I am satisfied so I am sure that the defendant incited Mr Papaleo to deal with property intending Mr Papaleo to act as incited with Mr Papaleo knowing or having reasonable grounds to believe that the monies to pass through the accounts, in whole or in part, directly or indirectly represented the proceeds of an indictable offence.

279.I have carefully considered everything said by Mr Ross both individually and collectively.  Nothing said by Mr Ross causes me to doubt the findings I have made. 

280.I am satisfied so I am sure there are no material and significant discrepancies, improbabilities or omissions in the evidence, which cause me to doubt the findings I have made.  I am satisfied so I am sure the prosecution have proved all the elements of the charge beyond reasonable doubt.  The defendant is convicted as charged.

DCCC 54/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 54 OF 2014

____________

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RULING

1. The defendant pleads not guilty to one charge of incitement to deal with property known or believed to represent the proceeds of an indictable offence.  The prosecution case principally relies on a series of meetings between the defendant and Mr Papaleo Antonio Aldo, an Italian journalist living in Slovakia.  The initial meeting was set up in Slovakia on the 10 May 2013 by an informant of Mr Papaleo with further meetings taking place in Hong Kong.  In summary the prosecution allege that at these meetings the defendant incited Mr Papaleo as particularised in the charge.

2. Mr Papaleo secretly recorded the meetings with a pinhole camera.  The prosecution will call Mr Papaleo to give evidence and produce the tapes of five meetings.  Although not objecting to the admissibility of the tapes Mr Ross does object to the admissibility of the transcripts of three of the tapes. 

3. In summary the basis of this objection is that there are a number of passages in three of the tapes which have not been translated. Without a full translation Mr Ross submits the transcripts are inadmissible.  Further the court being deprived of knowing everything that was said at the meetings the production of partial transcripts is unfair. 

4. The language used by the defendant and Mr Papaleo was English.  Mr Wong says that 95% of the first meeting was in English and almost all of the remaining meetings were in English.  The passages which are not translated are in the main referred to in the transcripts as “non-English spoken”.  There are also some passages in Chinese and Italian which have also not been translated. 

5. The parties have agreed that in the first meeting there are 72 “non-English spoken” passages and two Italian passages which are not translated.  61 of the “non-English” passages occur during the meeting of which 55 are a three-way conversation in Slovak between the defendant, Mr Papaleo and his informant. The other six are by passers-by.  The other “non-English” passages are either before or after the meeting.  One of the two Italian conversations was during the meeting when Mr Papaleo answered his telephone.  The other Italian passage is before the meeting when Mr Papaleo went to the toilet. 

6. In the fourth meeting there are 9 “non-English spoken” passages.  Five passages are spoken by the defendant and two by a male called Jakub Planka (alleged to be the accomplice of the defendant).  The remaining two passages are by passers-by.  In the fifth meeting there are 2 Chinese passages spoken by a taxi driver prior to the meeting and 5 passages between the defendant and Jakub Planka during the meeting.  There is also one Italian passage spoken by Mr Papaleo after the meeting. 

7. The prosecution having been unable to transcribe what was said in Slovakian, there apparently being nobody in Hong Kong who does such translation service, rely only on what was said in English between Mr Papaleo and the defendant. 

8. Mr Ross relies on the general principle that all documents to be admissible must be in a language the court is able to understand.  This submission with respect misunderstands the purpose of a transcript.  The use of a transcript is only an aid to the understanding of the recording and that the recording is the evidence not the transcript.

9. I have considered whether there is any unfairness to the defendant arising from the absence of a full transcript of these three meetings.  I am satisfied there is no unfairness.  The majority of the conversations that have not been transcribed are spoken by or to the defendant in Slovakian. 

10. Subject to the parties agreeing the accuracy of the English transcripts I therefore rule the prosecution may produce at trial the transcripts as an aid to the understanding of the recordings. If the defendant wishes to transcribe those parts in Slovakian he is free to do so and make what use of them he wishes.  If time is required to prepare such transcripts I will allow a reasonable time to do so. 

11. Mr Ross also submits the charge is duplicitous.  In summary the basis of this submission is that the offence of incitement is not a continuous offence. Referring to the date of the charge which covers a period of just over one month and to the prosecution opening Mr Ross submits different incitements are alleged.  Further submission is made that by virtue of section 4(4) of the Criminal Jurisdiction Ordinance, Chapter 461 the first meeting being a separate incitement and taking place in Slovakia is not indictable in Hong Kong.

12. I do not agree the charge is duplicitous.  Duplicity is a matter of form and not a matter relating to the evidence called in support of the charge (see R v Greenfield (1973) 57 Cr App R 849).  The charge does not allege the commission of more than one offence.  Further in my view the opening clearly alleges a continuous course of conduct which could fairly be regarded as forming part of the same criminal enterprise. 

13. I am also of the view that the Common Law position that incitement outside the jurisdiction to do something within the jurisdiction is indictable in Hong Kong is not affected by the Criminal Jurisdiction Ordinance.