HKSAR v. Chiu Raymond Kar Lok

DCCC 122/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 122 OF 2014

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Reasons for Verdict

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1.The defendant faces five fraud charges, contrary to section 16A of the Theft Ordinance, Cap 210.

2.The five charges relate to five separate loans called clean import loans HSBC made to the defendant’s company, Gold Union Footwear Limited (“Gold Union”).  These five separate loans were granted by HSBC on the basis that Gold Union was buying goods, shoes from Mandar Rue Int’l Enterprise Company Limited (“Mandar Rue”).  Ultimately, the five loans totalled US$984,045.69.

The Background

3.The prosecution allege the defendant, when he applied for each loan, falsely represented to HSBC that Gold Union was buying from a supplier, Mandar Rue, and they had a genuine transaction that required HSBC financing according to a facility granted to Gold Union.  Gold Union supplied documents that were false and intended to deliberately mislead HSBC.  HSBC was induced by the documents to grant five separate import loans.  The defendant defaulted all five loans.  The documents that the defendant submitted to HSBC included inaccurate commercial invoices, inaccurate packing lists but genuine bill of ladings in four applications.  Prosecution submit those bill of ladings were related to transactions not involving the defendant’s company, Gold Union.

4.The defendant in evidence agrees the commercial invoices and packing lists do not represent the truth.  He applied for loans at the request of the supplier, Mandar Rue, who required financing.  The defendant admits he was not the buyer of the five loans as the documentation stated.  In short, he agrees the documents falsely represented to the bank Gold Union was buying from Mandar Rue.

5.The prosecution say when the first loan fell due and went unpaid, the defendant admitted to HSBC Management that there were no underlying transactions for all five loans between Gold Union and Mandar Rue.  The defendant told them that he would not be making any repayments.  The defendant denies he admitted this to the staff at a face-to-face meeting.

6.Except for this admission during a meeting with HSBC, essentially, the defendant does not challenge the prosecution’s case.  He agrees the documents misled HSBC but his evidence is he did not intend to defraud HSBC.  He borrowed the money to finance Mandar Rue who was in financial difficulty and believed they would repay the loan in time with 5 per cent commission on top for his troubles.  He did not think Mandar Rue would not repay him nor did he intend HSBC to suffer any loss.

7.Exhibit P62 is the admitted facts between the parties.  The documentary evidence submitted for each loan is set out in paragraphs 9, 11, 13, 15 and 17.  The defendant does not challenge that all commercial invoices and packing lists were false.  They were false in the sense that Gold Union was not the buyer of those purchase orders; the names had been changed.  The defendant said himself if he had not stated Gold Union was the buyer, HSBC would not have granted any loans.  The body of the majority of the invoices and lists were actual orders by other companies, and the bill of ladings submitted in Charges 2 to 5 related to those genuine orders.  Witnesses were called to prove the orders were made but the defendant nor Gold Union were the buyers.

8.It was not challenged the defendant applied for and was granted loan credit facilities by HSBC in March 2012.  It was agreed HSBC would advance money to Gold Union’s approved suppliers upon receipt of relevant trading commercial invoices and shipping documents.  HSBC relying on the truthfulness of those documents would advance money to suppliers directly and settle their invoices.  Gold Union had 90 days to repay each loan.

9.Between 22 and 30 March 2012, the defendant made five applications on behalf of Gold Union for such loans, and the supplier on each occasion was Mandar Rue.

The Prosecution’s Case

The First Loan

10.The defendant submitted to HSBC to support his first loan application: two commercial invoices issued by Mandar Rue to Gold Union and two sets of purchase orders issued by two South African companies buying shoes.  They were Shoez Group and Footwear Trading Limited. These documents are referred to in paragraph 9 of P62, the admitted facts, and seen at P4, annex SCK‑2, a banker’s affirmation. 

11.The prosecution called PW8 of Footwear Trading Limited who flew here from South Africa to give evidence.  He testified the purchase order was originally placed with Gold Union.  His evidence is very simply that Gold Union could not deliver on time, and after several delays, the order was assigned to Mandar Rue.  Gold Union never executed this order.

12.There was no overseas witness from the other company, Shoez Group, but PW10, a former merchandiser and nephew of the defendant, originally handled this purchase order but said it was never executed or completed by Gold Union.  He had never seen the two commercial invoices issued by Mandar Rue to Gold Union.

13.The evidence of these two witnesses were not challenged in any material way by the defence.

Second Loan

14.The defendant submitted to HSBC to support his second loan application six commercial invoices with six corresponding packing lists issued by Mandar Rue to Gold Union.  He also submitted copies of six bills of lading.  These documents are referred to in paragraph 11 of P62 and seen at Exhibit P4 SCK‑3.

15.The prosecution produced witnesses and evidence to show that the actual orders of those documents were genuine but that the defendant’s company, Gold Union, was not the buyer of those goods from Mandar Rue.

16.PW5 of Betaway Enterprises (Hong Kong) Limited (“Betaway”) produced six sets of commercial invoices with corresponding packing lists that were issued by Mandar Rue to Betaway, the actual purchaser.  She produced P6, P9, P12, P15, P18 and P21.  They were identical to the six the defendant submitted to HSBC except where it says “for the account of” they state Betaway is the buyer with Betaway’s address.  Gold Union is not the buyer of those products.   

17.PW5 submitted the original bill of ladings (P7, P10, P13, P16, P19 and P22).  The defendant had given copies of these same bill of ladings to HSBC to support his loan application.  Not one bill of lading makes Gold Union a party to these transactions.  If they were, they should have been named as the shipper.  In fact, the shipper is named as Betaway.  Also the defendant’s documents contained a company chop and signature for Mandar Rue which several witnesses found unusual as documents from Mandar Rue are normally sent electronically. 

18.To make it absolutely clear that Betaway is the buyer of those six contracts, PW5 produced the orders it received from a South African customer, Pretoria Clothing & Caps (PTY) Limited (“Pretoria”) as well as Betaway’s contracts with Mandar Rue to produce the goods.  They were P8, P11, P14, P17, P20 and P23.

19.PW5 reiterated that Gold Union was not a party to these contracts and received no money for any of these orders.

20.She did give some historical background to the relationship between Mandar Rue, Gold Union and Betaway.

21.She did do business with Gold Union for a while as well as Mandar Rue.  At first, Pretoria through Betaway would buy from Gold Union, but later all contracts were through Mandar Rue and all purchase prices paid to Mandar Rue.  However, Pretoria buyers and customers would come to Hong Kong and look at Mandar Rue’s shoe samples in the defendant’s office.  Mandar Rue had no office here, being a Taiwanese company.

22.PW5 knew that the defendant was often cc’d or sent copies of documents, including commercial invoices and packing lists from Mandar Rue to Betaway.   Even the bill of ladings were sent to Gold Union to forward to Betaway.  This would explain how the defendant had documents and details to supply to HSBC to support the loan application. 

23.PW6 was a witness who worked for Pretoria.  He also produced the same bill of ladings that the defendant submitted to HSBC (P29, 32, 35, 38, 41 and 44).  He produced other documents that evidenced those six contracts but he said unequivocally that Gold Union did not play any role regarding the sales and purchase documents and payments in those transactions.

24.Pretoria brought those goods into South Africa through an importer, Blue Strata Trading (PTY) Limited (“Blue Strata”).  Blue Strata is the consignee of all the relevant bill of ladings.  A witness, PW7, Miss Penelope Henley, flew from South Africa to give evidence.  Her evidence is that Betaway issued invoices to Blue Strata and Gold Union played no role in these six contracts.  These documents were produced by PW5 of Betaway.  They were P49 to P54.

25.PW9 and PW10 were the defendant’s own employees working in the shipping and merchandising departments respectively.  Their evidence threw doubt on the authenticity of the defendant’s documents submitted to HSBC.  In fact, PW10 said the documents did not make sense to him.

26.What all the above witnesses said supported the prosecution’s case that although the bill of ladings were genuine, they did not apply to the purported transactions set out in the invoices or packing lists submitted by the defendant.  They in fact applied to other genuine transactions to which the defendant was not a party.  The defence did not challenge their evidence in any material aspect.

The Third Loan

27.The defendant submitted to HSBC to support his third loan application two commercial invoices with two corresponding packing lists issued by Mandar Rue to Gold Union.  He also submitted two bills of lading.  The documents are referred to in paragraph 13 of P62 and seen at P4, SCK-4.

28.The invoices are dated 15 March 2012 and for the account of Gold Union.  The invoice numbers are I11103JDY and I11104JDY.

29.PW7 of Blue Strata gave evidence and produced two sets of invoices and packing lists she said were genuine and completed contracts.  They were issued by Mandar Rue to Blue Strata and numbered I11103JDY and I11104JDY (P55 and P56).  They are identical to the two sets of documents the defendant submitted to HSBC, except that they are dated 1 January 2012 and for the account of Blue Strata.  In addition, there is no bill‑of-lading number on the defendant’s documents.

30.PW7 said these transactions were for a sale of goods by Mandar Rue to Blue Strata.  The ultimate buyer was a South African company, GA Agency, and Gold Union played no role in these transactions.

31.Mandar Rue would not use the same identical invoice number for two separate contracts.  She said that would not make sense.

32.She also pointed out that it would be impossible to have the same bill-of-lading number for two separate contracts or shipments.  In her documents P55 and P56, the bill-of-lading number stipulated is the same as the two bill of ladings provided by the defendant to HSBC.  PW7 said that her bill-of-lading numbers were genuine and those shipments completed.  The only conclusion from her evidence is that the bill of ladings produced by the defendant were in fact related to PW7’s contracts, contracts that had nothing to do with Gold Union.   

33.Her evidence was not challenged by the defence.

The Fourth Loan

34.The defendant submitted to HSBC to support this fourth loan application one commercial invoice with a corresponding packing list issued by Mandar Rue to Gold Union.  He also submitted a bill of lading.  The documents are referred to in paragraph 15 of P62 and seen at P4 SCK-5. 

35.The prosecution relies for this charge on PW5’s evidence.  PW5 from Betaway produced the original bill of lading whose copy the defendant submitted to HSBC for this fourth loan.

36.PW5 also produced documents that relate to this bill of lading and the transaction behind it.  They include a set of commercial invoice and packing list issued by Mandar Rue to Betaway, P24.  It is identical to the set the defendant submitted to HSBC except in those the buyer is not Betaway but Gold Union and the date of the invoice is different.  PW5’s evidence is that Gold Union was not a party to this order or transaction and received no remuneration.  

37.PW5 also noticed that when comparing her commercial invoice received from Mandar Rue, P24, to the defendant’s, the quantity of goods are different and the packing list details inaccurate, but the gross weight, measurements and number of cartons still correspond with the details in the bill of lading.  Her evidence highlights the defendant’s documents were falsified to increase the amount of the invoice.  Her invoice, P24, was for US$47,880 whereas the defendant’s invoice from Mandar Rue was for US112,000.

38.PW5 also commented on the fact that the goods were shipped in early January, yet the invoice from Mandar Rue to Gold Union was dated 16 March 2012.  She said normally the invoice would be issued a couple of days after the shipment date, not months.

39.PW6 of Pretoria produced the bill of lading for the contract produced by PW5 of Betaway as well as other documents.  He also confirmed that Gold Union was not a party to these goods or this transaction.  PW7 of Blue Strata also confirmed that Gold Union was not a party to this transaction or bill of lading.

40.PW9 and PW10, the employees of Gold Union, also made similar comments when they were shown these documents submitted by the defendant to HSBC.  As Gold Union employees, they were familiar with the contracts of Gold Union.  PW9 said if Gold Union bought these goods from Mandar Rue, then Gold Union should have appeared on the bill of lading as the shipper, not Betaway.

41.PW10 as the merchandiser who dealt with orders said the documents did not make sense to him.

42.The witnesses’ evidence in relation to these documents were not challenged.

The Fifth Loan

43.The defendant submitted to HSBC to support this fifth loan application three commercial invoices and one packing list.  He also submitted two bill of ladings.  The documents are referred to in paragraph 17 of P62 and seen at P4 SCK-6.  There was one invoice numbered IM2021GU and two invoices numbered IM2022GU.  The packing list relates to IM2021GU only.

44.The bill of lading states the consignee is an entity from Croatia and the goods delivered to Slovenia.

45.PW10 said the consignee was not a customer of Gold Union nor did the company have any customers in Croatia.  The defendant’s documents therefore did not make any sense to him.

46.PW9 was also sure Gold Union had no clients in Croatia and if the invoice of the defendant’s documents were accurate, then Gold Union should be the consignor in the bill of lading, not Dwingwell Trading Company Limited.  PW9 knew of Borovo, the consignee, and knew that Borovo was a customer of the consignor, Dwingwell Trading.  Gold Union had previously done business with Dwingwell Trading.

47.The evidence of PW9 and PW10 about these documents and their observations which throw doubt on the veracity was not challenged.

48.It was put to PW9 that he in fact filled in all the application forms for loans submitted to HSBC and it was he who printed out all the supporting documents for each loan.  He denied this.

49.The prosecution set out to prove the genuine bill of ladings produced by the defendant were not related to the invoices he submitted at the same time.  The invoices and packing lists had to have been falsified from genuine transactions that did not involve Gold Union as a buyer.  The witnesses that were called to give oral evidence and produce documents proved the bill of ladings related to transactions but not the transactions stated in the defendant’s forged documents submitted to the bank.

50.In addition to this, the prosecution relies on the evidence of HSBC staff who repeated what the defendant said to them during a meeting at the bank on 2 May 2012.

51.PW2, Miss Ng Wan-yuk, was a Senior Vice President of the HSBC Commercial Banking, gave evidence of how the defendant became a corporate customer and what banking and loan facilities he was granted.  Mandar Rue was deemed an approved supplier to Gold Union.  She explained what documents were required before a loan was approved.  When the first of the five import loans fell due and went unpaid, PW2 called the defendant.  He asked for a few extra days.  Two weeks later, the defendant told PW2 he would not be repaying any of the loans.  A meeting was scheduled for 2 May.  Defendant told those in the meeting that he had debts with other banks and his business had failed.  He could not make any repayments.  He was asked how he came by the documents to make five loan applications if his company was in trouble.  He told them there were no such transactions.  

52.He was asked why the money had been wired to a supplier.  The defendant told them the money borrowed helped Gold Union repay this supplier for previous transactions, not these five.  PW2 was shocked by this explanation. 

53.PW2 said that if HSBC had known there were no transactions behind the five loan applications, the bank would not have approved the loans.

54.When it was put to her that the defendant did not say there were no transactions behind the loans, she disagreed.

55.PW3, Mr Tam Kai-ming, was in May 2012 a corporate recovery department manager.  He dealt with clients who were not repaying loans on time.  It was in this capacity that he attended the meeting with the defendant on 2 May.  He had never met the defendant prior to this meeting.  It was discussed whether the defendant could repay HSBC, and the defendant told the meeting that it was not possible as he had had problems with the business since late 2011.

56.PW3 could not understand how he or why he applied for five loans in March 2012, so asked him how he could provide invoices and bills of lading if he had no business.

57.PW3 recalls the defendant saying that a Taiwanese supplier gave him the documents.  PW3 had copies of those documents at the meeting.  PW3 asked if the goods of these loans existed, and the defendant admitted there were no such transactions. 

58.The defendant went further and said he owed the Taiwanese supplier a debt and they gave him these documents to go to the bank to get loans and use the money to repay the debt to this supplier.  He admitted there were no underlying transactions behind the loans.  PW3 recalls he produced the documents during the meeting but the defendant did not look at them in any detail.

59.Like PW2, it was put to PW3 that the defendant never said there were no transactions behind the loans.  PW3 denied this.  It was not put to either witness that they had exerted any pressure on the defendant or oppressed him in any way.  It was not alleged he was tricked or forced to make any admissions.  It was not part of the defence case that he made an admission but did not make it voluntarily.

Defence Case

60.The defendant elected to give evidence.  He set up Gold Union in 1997 and had at one time 13 employees in Hong Kong and some in China.  In 2010, he only had customers in South Africa and their currency depreciation and bad economy started to affect his business.  Orders were slow by the end of 2011. 

61.He had previously had business with Pretoria but they later switched their orders to Mandar Rue.  He explained that he had a lot of money owed to Gold Union and could not afford to fulfil their orders.  So he did not want Pretoria as a customer any more.  Defendant explained that despite that, he helped Mandar Rue fulfil their orders and would receive a 5 per cent commission.

62.He explained that Gold Union would receive the bill of lading from Mandar Rue to pass on to Betaway because Mandar Rue did not have an office in Hong Kong. 

63.By January 2012, the defendant owed other banks too much money and all his facilities had been frozen.  He could not get any credit.  At the same time, Mandar Rue had financial troubles and asked the defendant to use his banking facilities to borrow money to help them out.  Defendant could not do that at this time.

64.However, in March 2012 when HSBC granted him facilities, he told Mandar Rue if they had any genuine contracts, he would consider borrowing money on their behalf from HSBC.

65.Defendant had copies of bill of ladings that were sent to Betaway via Gold Union from Mandar Rue.  He said he knew from these that Mandar Rue had contracts with Pretoria and Pretoria would honour their invoices.  He borrowed the HSBC’s money and had it paid directly to Mandar Rue, using the documents he submitted.  He agreed with Mandar Rue that they would repay him within 60 to 70 days as he had to repay HSBC within 90.  He would get a percentage in commission.

66.He agreed he was not the buyer of the contracts as he represented to HSBC.  He said he knew Mandar Rue did ship goods to South Africa because Gold Union was involved in the production.  He knew they were genuine.  So under those circumstances, he borrowed money from HSBC to give to Mandar Rue.

67.He said, when I put to him that he was not then buying from Mandar Rue as stated in the documents, he said that if he had not named Gold Union as the buyer, it would be impossible to apply for a clean import loan.  He said Mandar Rue was selling to Pretoria, not him, but to finance Mandar Rue, the documents had to show Gold Union was the buyer.

68.His evidence was he agreed to finance Mandar Rue because he trusted them.  He believed they would repay him in time.  He was familiar with their buyer, Pretoria.  So he was willing to help them in this way and he would receive a commission from them that he needed badly.  In short, he was getting a commission from Mandar Rue for lending them HSBC’s money.  He did not intend to defraud HSBC because he believed Mandar Rue would repay him in time.

69.He explained why for the first loan transaction he was originally the buyer of the shoes and had a purchase order to fulfil from Footwear but later assigned the purchase orders to Mandar Rue with Footwear’s consent.  He said despite the bank transferring the money to Mandar Rue for this order, Mandar Rue failed to pay the shoe factory. The defendant did not want to disappoint this footwear customer and despite his anger at Mandar Rue, he gave this client to Mandar Rue.  So, in this case, Mandar Rue received the money from HSBC and was paid by Footwear, paid twice.  His evidence made no sense. 

70.In cross-examination, he agreed that the HSBC staff had no reason to frame him but yet their evidence contained lies.  He agreed the loans were approved on the basis that Gold Union was a buyer and he represented to HSBC that Gold Union was a buyer.  He agreed that through the commercial invoice and packing list, he was representing to the bank Gold Union was buying products from Mandar Rue and needed credit.  

71.It was put to him that he was delighted with the facilities offered by HSBC and considered the loan facility a lifesaver as Gold Union had cash flow problems.  He agreed.  Yet he decided to use the loan facility to finance Mandar Rue and not his own company, Gold Union.  He explained he did this because Mandar Rue would pay him 5 per cent commission for the financing.  He agreed he decided to use the HSBC loans to finance Mandar Rue.  He said Mandar Rue prepared the documents for the loans and would send them the day before or the day the loan application was made.  He said he did not discuss the contents with Mandar Rue nor did he know the contents of the invoice or karaoke they sent him.  Again this made no sense.

72.He agreed that all the witnesses called from Betaway, Blue Strata, Pretoria and Footwear were telling the truth, and the transactions of the bills of lading were previous genuine transactions but not transactions of the documents he submitted to HSBC.

73.He agreed he was told by HSBC when granted the loan facility that it stated the loans were to pay suppliers’ invoices.  He agreed that he knew the money borrowed was for Gold Union to pay supplies bought, not for him to finance or loan money to Mandar Rue.

74.When it was put to him that he defrauded HSBC, he replied, “You can say that if you look at this sentence.”  When asked again the same question, he replied, “Yes, based on the paperwork, yes.”

75.He agreed that he was representing to HSBC through the documents that he was a buyer when in fact he was not.  He agreed that he knew if HSBC was aware that Mandar Rue was not selling goods to Gold Union, they would not have granted any loans.

76.He agreed in cross-examination that all the invoices and packing lists were forged in that he was not a buyer as stated. In re-examination, he clarified that only the buyer’s identity is false in those documents, and he knew that when he made the applications that this was false.

Submissions

77.The defendant is a man with a clear record, and I warned myself of the likelihood and propensity of a man in his position committing these offences.

78.The prosecution has the burden of proof and must prove all elements of the fraud charge beyond reasonable doubt.  The defendant has nothing to prove.

79.The prosecution submit the defendant did confess to PW2 and 3 that these were no underlying genuine transactions to the five loans granted.  They submit the evidence of these witnesses were credible and reliable.  They had no reason to frame the defendant.  In any event, the evidence of other witnesses support the admission made by the defendant himself.  He made use of genuine transactions and their documentation to defraud the bank by altering the details of such documents and inducing the bank to accept them as genuine.

80.The prosecution submit these admissions alone suffice to prove all five charges.

81.The prosecution say in addition to these admissions made by the defendant to HSBC staff, for Charges 2 to 5, the evidence is overwhelming.  The defence do not challenge the evidence of those witnesses involved in the transactions relating to the bill of ladings the defendant submitted to HSBC.  The defendant admits in oral evidence that the bill of ladings submitted by him were in relation to some other previous transactions.  Those witnesses produced their own documents to show their transactions were covered by those bill of ladings and that the defendant or Gold Union were not a party to those sale contracts.  There is no reason to doubt their evidence or documents.

82.The prosecution submit that it follows therefore that the documents the defendant submitted must be forged.  Firstly, the contents of those invoices and packing lists are strikingly similar to the documents produced by the witnesses.  Some dates have been changed to make them relevant to the application for loan dates.  Other details have been changed to inflate the total amount to be paid yet correspond to the details of the genuine bill of ladings.

83.Secondly, the defendant admits the name of the buyer had to be Gold Union to apply for such loans.  He must have known that the documents were forged when he submitted them.  To say he did not read their contents is ludicrous and far-fetched.

84.Whether he is the author is neither here nor there.  I am sure he knew the contents were false when he submitted them.

85.The prosecution lastly submit the defendant had the necessary intent to defraud HSBC.  They submit if the court accepts the documents were false and designed to induce HSBC to lend Gold Union money, then the court can infer the defendant intended to defraud HSBC.

86.The defence submit the defendant genuinely believed he was a party to genuine transactions referred to by the witnesses because he was involved in the production and completion of purchase orders (paragraph 8.2 of page 6 of D2).  In paragraph 14 on page 10 and paragraph 18.1 of page 13 of D2, it was submitted the defendant did not have the necessary dishonest intent to defraud the bank because he was confident the money would be repaid by Mandar Rue before the due date.  He did not intend HSBC to suffer any loss.

87.In paragraph 16, page 11 of D2, defence counsel submits the defendant truly believed the transactions were genuine ones before submitting the applications.  That, with respect, was not his evidence. He said he knew those transactions existed, some had been completed months before the loans given, but he admits he was not buying the goods in the invoices from Mandar Rue.  That is what the bank views as the transaction they relied upon to lend Gold Union money.

88.The charge requires the prosecution to prove deceit, here a false representation to HSBC by the defendant.  It must prove the defendant made it with intent to defraud the bank.  He made it to induce HSBC to grant a loan which either resulted in a benefit to Gold Union or in prejudice or substantial risk of prejudice to HSBC.

89.The prosecution must prove the defendant had the requisite intention to deprive HSBC of its loans granted.  Defendant knew that by making such false representations, the bank stood to lose and were at risk of suffering a financial loss.  Was the defendant dishonest?  Any test of dishonesty would follow R v Ghosh [1982] QB 1053.

My Findings

90.I have carefully considered the evidence of all prosecution witnesses and the defendant.  I have considered the documentary evidence produced by the prosecution witnesses.  I found no reason not to find all those witnesses truthful and credible.  This only in reality applies to PW2 and PW3 because only their evidence as to what  the defendant said to them on 2 May is in dispute. 

91.The only other matter challenged was whether PW9 printed out the supporting documents for the defendant’s loan applications.  I believed his denial.

92.I had no difficulty in believing PW2 and PW3’s evidence.  There was no reason or motive for them to frame the defendant.  I find the defendant told them he made those five applications but that there were no transactions behind them.  He did not buy the goods as stated from Mandar Rue.  I believe he told them he owed Mandar Rue money, so made those applications to borrow money from HSBC to repay his debts to Mandar Rue.  This evidence alone is enough to prove the charges beyond reasonable doubt.  I am satisfied that the admissions were not as a result of oppression, duress, trickery or any threats from any HSBC staff.  I am sure they were said voluntarily by the defendant.

93.However, even if there were no admissions made to PW2 and PW3, the evidence of the defendant himself is enough to prove the charges beyond reasonable doubt.

94.He admits the documents he submitted were false.  Gold Union was not a buyer as alleged.  He admits he did not borrow from HSBC as mandated, as a buyer who required credit to pay invoices of his supplier.  He borrowed under such terms to lend it to Mandar Rue for a fee.  He was lending Mandar Rue HSBC’s money and receiving a commission for this service.  Obviously, HSBC would not have lent the money if the truth be known to them.

95.I have no hesitation in finding he deliberately deceived HSBC.  He acted dishonestly when he submitted the false invoices, and I can infer he intended to defraud HSBC.

96.An inference of guilt can be drawn against an accused if it is the only inference to be drawn.  I am sure here the inference is compelling, the only one to be drawn, and no reasonable man could fail to draw it from the direct facts proved and what is admitted by the defendant himself. 

97.I am sure the truth is he owed Mandar Rue money and did use these loans to repay them.  I reject his evidence that he thought he would use his much needed credit facility to help out a supplier in need and make a small commission from it.  It is too far-fetched.  Whatever the real truth, it is not necessary to determine it.  The prosecution does not need to prove why a fraud was carried out.  Only that it was by the defendant.

98.Much has been made of distinguishing Charge 1 from Charges 2 to 5.  In my findings, PW8 of Footwear clearly said and it was unchallenged purchase orders the defendant submitted to HSBC as proof of the transaction was cancelled in that the defendant or Gold Union did not execute it.  In fact, there was no reason for Mandar Rue to issue an invoice to Gold Union for these goods because Mandar Rue never supplied them.  As for the purchase order of Shoez Group, PW10, the defendant’s own employee, said it was cancelled and never executed by Gold Union.  The bank were induced to grant a loan as a direct result of the false representations made to it by the defendant in this and all other loan applications.

99.I rejected the defendant’s evidence and the defence submission that he genuinely believed because he helped with the orders he was a party to genuine transactions that entitled him to borrow credit from HSBC.  In any event, the transactions he relied upon to borrow money, Gold Union buying from Mandar Rue, did not exist.  He admits that is the case.

100.I also rejected the defence submission that because he believed Mandar Rue would repay the money before the due date, he had no dishonest intent to defraud HSBC.  He did not intend the bank to suffer any loss.  I am sure, as he admitted to PW2 and PW3, he borrowed the money under false pretences to repay the debts he owed Mandar Rue.  He was never expecting Mandar Rue to repay those loans.

101.I reject the defendant’s evidence and defence submissions but as I said earlier, I accept the evidence of the prosecution witnesses entirely.  Despite the defendant’s clear record, prosecution can prove beyond reasonable doubt all elements of the fraud offence for all five charges.  The evidence of the prosecution as well as the defendant’s own admissions of guilt in evidence made the case against the defendant overwhelming.

102.Accordingly, the defendant is convicted as charged.