HKSAR v. Chang Yau Hung, Alexander
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DCCC271/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NO. 271 OF 2014 --------------------
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--------------------- Reasons for Verdict --------------------- 1.There were two charges in the Amended Charge Sheet. The 1st Charge was for the offence of conspiracy to procure the making of an entry in a record of a bank by deception, contrary to section 210 and sections 159A and 159C of the Crimes Ordinance, Chapter 200, Laws of Hong Kong (“the conspiracy charge”). The 2nd Charge, which was alternative to the 1st Charge, was for the offence of using false instruments, contrary to section 73 of the Crimes Ordinance, Chapter 200, Laws of Hong Kong (“the substantive count”). 2.The prosecution alleged that the defendant had committed either of the two alleged offences jointly with a Filipino lady Madam Rubina Mabolo Khan (“Khan”). Khan was formerly the 1st Defendant in this case. She had however passed away before the commencement of this trial. 3.Before plea was taken from the defendant, his learned counsel Mr. Bruce Lau and Mr. Joshua Choy applied for an order that the prosecution should elect whether it would proceed with the conspiracy charge or the substantive count. Mr. Richard Turnbull, Counsel on fiat for the prosecution opposed the application. For reasons that had already been given, I refused the application and ruled that the prosecution could proceed with the two charges as they stood. 4.The defendant pleaded not guilty to both charges. The undisputed evidence 5.At the material times, Miss Yip Bik-kwan (PW1) was a bank teller working at Counter No. 4 of the Premiere Centre inside the branch office of Hong Kong and Shanghai Banking Corporation (“HSBC”) at 141 Des Vouex Road, Central. Mr. Man Hout-kit, Edmond (PW2) was the manager of that branch and the superior of PW1. Mr. Ho Kai-tat (PW4) was working in the security department of HSBC and was responsible for fraud investigation. The defendant was a regular customer of the branch office in question. He was known to PW1 as “Solicitor Chang”. He had a personal account with HSBC. He was an AssetVantage customer having assets worth over HK$1 million. 6.It was common ground that the defendant came up to the counter of PW1 at the material times and presented two documents purported to be bank drafts issued by HSBC and asked PW1 to deposit the proceeds of these two bank drafts into his personal bank account. One of the purported bank drafts was for the sum of $200 million (Exhibit P1), and the other one was for the sum of $300 million (Exhibit P2). The incident was captured by the CCTV camera of the bank installed at Counter 4 behind PW1. 7.The admissibility of the CCTV footage (Exhibit P21) was not in dispute. There were also parts of the evidence of PW1 and PW2 that were not in dispute. 8.According to the time shown on the CCTV footage, it was at 15:33:37 hours when the defendant was first captured by the CCTV camera that he was inside the bank. He was holding a plastic folder in his hand waiting for his turn to be served. About 5 minutes later, he approached the counter of PW1 after PW1 completed her dealings with another customer. 9.The CCTV footage then showed that when the defendant reached the counter of PW1, he put down his folder on the counter table. He then produced to PW1 firstly a small piece of paper, and then what appeared to be an identity card, and presumably it was his identity card. After that, he took out from the folder two documents with shape and colour apparently similar to those of Exhibits P1 and P2. He placed them on the counter table in front of PW1. 10.It could be seen from the CCTV footage that PW1 then took up one of the two purported bank drafts and looked at it. The other purported bank draft remained at the spot where it was placed by the defendant. There was then apparently some conversation between PW1 and the defendant. The defendant then took back the purported bank draft that was left on the table, took off his pair of glasses, looked at this purported bank draft, apparently said something to PW1 and then pushed that purported bank draft back to PW1. PW1 then also took up that other purported bank draft. Immediately afterwards, the defendant reached for his folder, took out a document from the folder[1], placed it in front of PW1, and then spoke to PW1. A short time later, he took back the document[2], and put it back into his folder[3]. 11.The CCTV footage next showed that PW1 stood up and turned her body a little bit to her right and typed on the computer keyboard directly in front of her. At that moment, she blocked the CCTV camera which was then unable to capture the view of the counter table between the defendant and PW1. After a short time while, PW1 finished typing, and she moved a little bit away from the keyboard, turned to her left with the defendant directly in front of her again. At that moment[4], the CCTV camera was able to capture the view of the counter table between them. Although the CCTV camera failed to capture the movement of the defendant’s hand or hands, it could be seen from the video images that a document was moving out of the position where the defendant’s folder was with both the document and the folder placed horizontally with the defendant, and then the document was moving perpendicularly towards PW1. The only reasonable and irresistible inference to be drawn from the movement of this document was that it was taken out by the defendant who then put it in front of PW1. 12.The CCTV footage continued to show that PW1 then leaned forward towards the defendant, and her back blocked the CCTV camera from capturing the counter table again. She and the defendant apparently had a conversation. About 20 seconds later[5], PW1’s back was not blocking the CCTV camera of the view of the counter table, and it could be seen that the defendant was putting a document back to his folder. At the same time, PW1 took the two purported bank drafts, turned to her right, and walked towards the camera and disappeared from the images[6]. PW1 had not taken with her any of the defendant’s documents other than the two purported bank drafts. At the same time, the defendant was seen putting a document back to the folder (and it could not be seen clearly whether that document was the same document that he had earlier put into the folder). He then remained at the counter alone waiting for the return of PW1. Whilst he was waiting, he took a piece of paper on his right hand side and started writing until shortly before the return of PW1[7]. 13.The CCTV footage then showed that PW1 returned to the counter without the purported bank drafts. She then talked with the defendant. The defendant then took out a document from his folder[8], put it on the table and pushed it towards PW1. But PW1’s back then blocked the CCTV camera which could not capture what was between the defendant and PW1. The two of them then appeared to have some conversation. Later, the defendant took up that piece of document to about his face level[9], and put it down again. The defendant then looked at the direction of where he put down the document which appeared to be the place where he put his folder, but what he was actually looking at or doing could not be seen. After about a minute or so[10], the defendant turned to his right and made a gesture to someone behind him. A few seconds later[11], he stood up from his seat at the counter and went to his right and disappeared from the images. Within a few seconds[12], Khan appeared in the video images, she walked towards the counter of PW1. Later, the defendant reappeared in the video images. He took a chair for Khan. Both of them sat down while PW1 remained standing. 14.What happened next, according to the CCTV footage, was that the defendant took out a document from his folder[13], put it on the counter table[14], and the defendant was saying something to PW1 with Khan looking on. The conversation last for about a minute until the video images showed that PW1 was holding a document in her hand[15], made an about turn and left the counter with the document in her hand[16]. 15.The CCTV footage then showed that about half a minute later[17], PW1 returned to the counter without any document. She spoke to the defendant and Khan. Khan then took out something from her handbag and gave it to PW1. PW1 then left the counter and disappeared from the video images[18]. When PW1 was making the turn to leave, it could be seen she was holding what appeared to be a passport. PW1 had testified that she had asked Khan for her passport. 16.From the CCTV footage, it was clear that PW1 returned to the counter about 13 minutes later[19]. Then, it appeared that she had used her computer to do something for the defendant. After that, the defendant and Khan left the counter[20]. The defendant walked away from the counter first. Khan followed but turned back almost immediately and apparently made some enquiry with PW1. PW1 then pointed to her right. Khan then walked in the direction indicated by PW1 and disappeared from the video images. The defendant was seen standing in the vicinity of PW1’s counter with the folder in his hand. He had at one stage made a phone call. 17.About 3 minutes later[21], PW2 approached the counter of PW1 and spoke to her. Then, PW1 pointed at the direction of the defendant. 18.There was no dispute that PW2 had eventually asked the defendant to go into a meeting room of the bank. The location of the room was marked on a sketch (Exhibit P30). Before the defendant walked in the direction of that room, the CCTV footage showed that he made a gesture to someone on the right hand side of the video images. About 4 to 5 minutes after the defendant made the gesture, Khan appeared in the video images. At that time, she walked in the direction of the meeting room and then disappeared[22]. Disputes over primary facts 19.I had set out in detail what were captured by the CCTV camera of the bank at the material times because the video images provided evidence of facts that was not open to dispute. The only limitation was that the video images were not backed up by sound recording. The video images showed that some parts of the recollection of PW1 about the event might not be entirely accurate, and that she had lumped up events together rather than recounting each one of them in chronological sequence. However, her evidence was by and large fully corroborated by the video images. In fact, as I understood it, the defence was not challenging the honesty and integrity of PW1, or those of any other prosecution witnesses. The only issue was the reliability of their evidence. 20.There was no dispute whatsoever that the defendant had produced the two purported bank drafts (Exhibits P1 & P2) to PW1. The only major dispute was whether or not the defendant had produced to PW1 the two alleged supporting documents for proving the authenticity of the two purported bank drafts. PW1 had described these two supporting documents were of A4 size, and identified them to be Exhibit P3 (i.e. a document bearing the description of “HSBC Hongkong Bank Statement dated November 28, 2013”) and Exhibit P4 (i.e. a document bearing the description of “Ferdinand Marcos Cash Account Certification signed on the 28th Day of November 2013”). It was the evidence of PW1 that the defendant produced these documents (i.e. Exhibits P1 to P4) to her, and she took them to her manager PW2. The defence took issue with this part of her evidence. 21.Mr. Lau argued strongly that according to the evidence of PW4, he only received 3 documents (i.e. Exhibits P1, P2 and P3) from PW2 who had testified that after he had been consulted by PW1, he asked PW1 to photocopy the documents for him and he sent copies of those documents to PW4 via email for verification of their authenticity. Since PW4 had not received Exhibit P4 from PW2, Mr. Lau submitted that PW1 had not provided PW2 with Exhibit P4, and it meant that she had not collected Exhibit P4 from the defendant either. 22.In my view, if PW1 meant to say in her evidence that she had collected the two purported bank drafts and the two purported supporting documents (i.e. Exhibits P1 to P4) in one go, and passed all of them at the same time to PW2, her evidence would not be supported by the video images. 23.The video images showed that PW1 had left her counter 3 times after the defendant had approached her for her service. PW1 testified that she left her counter to consult her manager PW2 when she was confronted with an unfamiliar situation. It was clear from the video images that she took with her the two purported bank drafts on the first occasion and the passport of Khan on the third occasion when she approached PW2. On these two occasions, she took no other documents. As far as the second occasion when she left her counter was concerned, the video images showed that she had taken with her what appeared to be a A4 size document, but it also appeared that she had taken only one document with her. The defendant did not object to the admissibility of Exhibit P3. He admitted that Exhibit P3 was seized by the police from PW1 (see the Admitted Facts (Exhibit P29) and its annexure). It meant that he admitted that he had provided Exhibit P3 to PW1. Hence, if the document taken by PW1 when she left the counter on the second occasion was Exhibit P3, she could not have obtained possession of Exhibit P4 from the defendant and passed it to PW2. In light of the fact that the video images showed only one document (other than the two bank drafts and Khan’s passport) had been taken away by PW1, it followed that her evidence that she had also taken Exhibit P4 to PW2 might not be reliable. I found that it had not been proved beyond reasonable doubt that PW1 had obtained possession of Exhibit P4 from the defendant. 24.However, it did not mean that I found PW1 had never seen Exhibit P4. On the contrary, I found that she had seen it on two occasions. 25.It was PW1’s evidence that at the time when the defendant presented the two purported bank drafts to her, the defendant produced two documents in support of these bank drafts and she identified the two purported supporting documents to be Exhibits P3 and P4. This part of her evidence was supported by the video images. As what I had already summarized, after the defendant had presented the two purported bank drafts to PW1 and before she left the counter for the first time, it could be seen from the video that while PW1 was examining one of the two purported bank drafts, the defendant was seen: (1) taking back the other purported bank draft and giving some explanation to PW1 before presenting that purported bank draft to PW1 again, (2) taking out one document from his folder, giving some explanation to PW1, and putting that document back to his folder, and (3) like the second occasion, taking out a document from his folder, giving some explanation to PW1, and putting the document back to his folder. PW1 then left the counter with the two purported bank drafts. It was therefore clear that PW1 was shown a document from the defendant’s folder on each of two latter occasions. In my judgment, it was clear beyond reasonable doubt that at that time, the defendant was trying to convince PW1 that the two purported bank drafts were genuine, and that he was using the document he had shown to PW1 on each of the two occasions to convince her. In my view, the document shown by him to PW1 on each of these two occasions would not be the same document because it would be useless to show and explain the same document twice, and it was indeed the evidence of PW1 that she was shown both Exhibits P3 and P4. I found the evidence of PW1 truthful and reliable. I found this was the first occasion when PW1 was shown Exhibit P4 by the defendant even though PW1 had not taken possession of it. 26.The evidence of PW1 went on to show that after she had taken the two purported bank drafts to PW2, she returned to the counter and asked the defendant who gave him the purported bank drafts. She testified that since she had seen the name of Khan on a document, she asked the defendant whether Khan was with him at that time. This part of her evidence was corroborated by the video images which showed that after PW1 had returned to the counter, PW1 and the defendant had a conversation, then the defendant took out a document and about a minute later, the defendant was making a gesture to his right rear, and it was certain that he was gesturing to Khan since Khan appeared in the video images shortly thereafter. Exhibit P3 did not contain the name of Khan, but Exhibit P4 did. It followed that PW1 must have seen Exhibit P4 before she could give evidence in the way that she did. I found her evidence truthful and reliable. I found that this was the second occasion when PW1 had seen Exhibit P4. 27.This finding was consistent with what the defendant had said during his video-recorded interview. He said specifically that before he went down to the bank from his office with Khan, he had asked Khan whether the purported bank drafts were genuine, and Khan assured him that they were and showed him supporting documents. In the video recorded interview (Exhibit P24), he said that there were “several supporting documents in the folder” (see counter 574). The defendant further said that he could not remember the contents of these documents, but it was apparent on the face of Exhibits P3 and P4 that he was authorized to process the bank account of Armando B. Gaac, and he had with him a bank statement for that account. Hence, Exhibits P3 and P4 were clearly documents that could be used by the defendant to prove that he had been given bank drafts for proceeds to be drawn from the account of Armando B. Gaac. This was clearly the purpose for which these two documents were prepared, irrespective whether these two documents were genuine or not. Hence, when the defendant questioned Khan about the authenticity of the two purported bank drafts, there was simply no reason why Khan would not have provided these two documents to the defendant. I had therefore no doubt whatsoever that the defendant was in possession of Exhibits P3 and P4 at the time when he presented the two purported bank drafts to PW1. 28.There were some other disputes in evidence especially about what had been said by the defendant or by Khan to PW1 and/or PW2. I did not intend to set out the evidence of PW1 and PW2 on their respective conversations with the defendant and Khan, whether or not those conversations took place when the defendant was alone with PW1 or PW2, or when he was together with Khan. It was because, in my judgment, resolution of these differences did not assist me in the determination of the guilt or innocence of the defendant. 29.In my view, these disputes were only on minor and peripheral matters. For instance, while it was not disputed that the defendant had told PW1 that the two purported bank drafts were issued by someone in the senior management of HSBC, it was disputed that he had not said to PW1 specifically that such bank drafts were issued to him. In my view, whether or not he had specifically said so, it was a fact that his name appeared as the payee on each purported bank draft, and hence these bank drafts were purportedly issued by HSBC to him. There was no significance in the differences of the two versions, and in any event, either version did not shed light on whether the defendant knew the falsities of the purported bank drafts if they were found to be false instruments. It was because the defendant could have just repeated to PW1 what he had been told by Khan. Another point of dispute concerned whether Khan had told PW1 that she had no account with HSBC or whether she had merely said that she had cancelled her account. In my view, after she had cancelled her account, surely she would have no account in HSBC. The two versions were therefore not mutually exclusive, and it just depended on what PW1 recalled as to what had been said by Khan, but the meaning was consistent all along. 30.From the evidence of PW1 and the CCTV footage, I had no doubt whatsoever that the defendant presented the two purported bank drafts (Exhibits P1 & P2) to PW1 with the intention of inducing PW1 to deposit the proceeds of these two purported bank drafts into his personal bank account with HSBC. I had also no doubt whatsoever that before the defendant approached PW1 for her service, he had already had in his possession of the two alleged supporting documents (i.e. Exhibits P3 & P4). I had also no doubt whatsoever that he had used these two documents in an attempt to persuade PW1 that the two purported bank drafts were genuine documents, and the only reasonable and irresistible inference to be drawn was that he had already been well aware of the contents of these two documents before he approached PW1 for her service. The out-of-court statements made and documents produced by the defendant 31.On 5 December 2013 when PW2 was making enquiries with the defendant, he told PW2 that the two purported bank drafts were given to him by Khan for the purpose of making a trust. He had also told PW2 that if there were any problem with the purported bank drafts, PW2 could make a report to the police. A report was indeed made to the police. The defendant was not arrested on that day. 32.On 6 December 2013, the defendant went to the Central Police Station and provided to WDPC9637 a UBS flash drive which contained a statement that had been made by him. That statement was subsequently printed out and signed by the defendant (Exhibit P25). The defendant also produced the Irrevocable Escrow Agreement (Exhibit P9) referred to in his statement to WDPC9637. 33.On 17 February 2014, the defendant provided his second witness statement to the police which was dated 6 February 2014 (Exhibit P26). 34.The following was a summary of the defendant’s evidence in these two witness statements.
35.In the morning of 7 March 2014, DPC46724 (PW5) arrested the defendant for the offence of forgery and cautioned him. Between 11 a.m. and 12:42 p.m. of the same day, PW5 conducted a cautioned video-recorded interview with the defendant. The defendant admitted that he made the statements in this interview voluntarily. 36.During this interview, the defendant said inter alia the following and produced further documents to the police: -
Out-of-court statements made by Khan 37.During the enquiries made by PW2 in the presence of the defendant, Khan told PW2 that the bank drafts and the two supporting documents were given to her by her client who was a Filipino for the purpose of setting up a trust account. Khan also told PW2 that she had a dinner appointment with someone from the senior management of HSBC the following day. When PW2 asked Khan who was the client that she was acting on behalf, Khan said that her client was Armando B. Gaac. Issues 38.Both Mr. Turnbull and Mr. Bruce Lau leading Mr. Joshua Choy had set out in their respective written submissions the elements of the offence that had to be proved by the prosecution in order to substantiate each of these two charges. It would not be necessary to repeat them because this case did not involve legal disputes but determination of factual issues. 39.From the undisputed evidence, it was clear beyond reasonable doubt that the defendant and Khan had gone to the bank together at the material times for the purpose of depositing the two purported bank drafts (Exhibit P1 and P2) into the personal bank account of the defendant. In addition, it was also clear beyond reasonable doubt that, pursuant to their common purpose, the defendant had presented the two purported bank drafts to PW1 with the intention of inducing PW1 to accept them as genuine, and by reason thereof credit the amount of proceeds represented by the two purported bank drafts into his personal bank account to prejudice of PW1 or to the prejudice of HSBC. The defendant had therefore used the two purported bank drafts personally. Khan had also used the bank drafts through the defendant on the basis of joint enterprise. The prosecution was also relying on this joint act of the defendant and Khan in using the two purported bank drafts as the overt act upon which it was asking this court to infer the existence of the unlawful agreement between the defendant and Khan as alleged in the 1st Charge. 40.From these undisputed facts, there were therefore at most 3 factual issues to be resolved:
41.If the answer to the first issue was negative, the remaining two issues would not arise and the defendant would be acquitted of both charges. On the other hand, if the answer was affirmative, it would be necessary to resolve the second issue. If the answer was negative, the defendant would be acquitted of both charges, and it would only be academic and hence unnecessary to resolve the third issue. However, if the answer was affirmative, the third issue would have to be resolved. If it were proved that Khan had the guilty knowledge, the conspiracy charge would be proved against the defendant; but if she had not the guilty knowledge, the conspiracy charge would not be proved, but the defendant would be guilty of the substantive count but only on the basis that he committed the offence alone rather than jointly with Khan. Falsities of the two bank drafts and the two supporting documents 42.Mr. Lau had made it clear that the defendant was not asserting positively that the two bank drafts (Exhibits P1 & P2) were genuine, but the prosecution was put to strict proof that they were false instruments. 43.PW1 testified that she had worked for HSBC for 25 to 26 years. She was a bank teller at the material times. She had been promoted to be the manager of a branch office of HSBC at the time when she gave evidence. She found the following features appearing on the face of the two purported bank drafts (Exhibits P1 & P2) were different from those of normal genuine bank drafts and had therefore suspicion of their authenticity:
44.PW2 testified that he had worked for HSBC for over 32 years before he resigned on 5 January 2015. PW2 pointed out that since it was printed on the left top corner of each of the two purported bank drafts (Exhibits P1 and P2) the words “HSBC HONGKONG”, these two bank drafts were meant to be issued in Hong Kong but their outlooks had lots of differences from those of genuine bank drafts issued in Hong Kong:
45.As far as Exhibit P3 (i.e. a document bearing the description of “HSBC Hongkong Bank Statement dated November 28, 2013”) was concerned, PW2 testified that he thought it was a false instrument because it appeared on the left hand top corner of the document the words “Hong Kong” but;
46.As far as Exhibit P4 (i.e. a document bearing the description of “Ferdinand Marcos Cash Account Certification signed on the 28th Day of November 2013”) was concerned, PW2 noted that it was not described as a document issued by HSBC. 47.PW4 was called by the prosecution as an expert witness but his expert status was challenged by the defendant. 48.PW4 testified that he had worked in HSBC for 34 years, and in the last 12 years, he worked in its security department responsible for fraud investigation. He received external trainings regarding interviewing skills and identification of bank notes. He acquired the knowledge to identify bank documents, and when he came across false bank documents, he would consult the operational staff at HSBC branches to understand and learn the features of bank statements or documents. He had given evidence in Court for 2 to 3 times. 49.PW4 testified that the two purported bank drafts (Exhibits P1 and P2) were forgeries because:
50.PW4 also testified that the purported HSBC Bank Statement (Exhibit P3) was also a forgery because:
51.Mr. Lau submitted that the evidence of PW1, PW2 and/or PW4 were insufficient to prove beyond reasonable doubt that the two bank drafts (Exhibits P1 & P2) were false instruments. Likewise, he submitted that the prosecution had also failed to prove any of Exhibits P3 to P4 to be false. 52.Mr. Lau submitted that the foundation of PW1’s view on the falsity of the two purported bank drafts was illogical. He argued that since the issue date of each bank draft was 28 November 2013, it was illogical for PW1 to say that there was no premiere account in 1983 as a ground to allege that the two bank drafts were false. There was premiere account in 2013, and indeed according to the evidence of PW1, premiere accounts had been established since 1990, and the defendant was a premiere account holder when he presented the bank drafts for depositing the proceeds into his account. 53.According to my understanding of PW1’s evidence, when she testified that there was no premiere account in 1983 and used it as a ground for suspecting the authenticity of the two purported bank drafts, she was referring to the doubt creating in her mind by the printed sentence on the face of each of the two purported bank drafts, i.e. “Note: Encashment upon presentation of original documents of $500 Billion Dollars Cash Account of Armando B. Gaac with account number 323-734231-607 check with the amount of $500 Billion Dollars issued on January 12, 1983.” In my view, PW1 was telling me that on the face of these two purported bank drafts, instructions were given by the holder of the named settlement account (i.e. Armando B. Gaac) in 1983 to pay money into a premiere account but this could not have happened because the premiere account came into existence only in or after 1990. I shared the view of PW1. In fact, in my view, the plain and ordinary meaning of this sentence was that each of the two purported bank drafts would be en-cashed if it was presented together with the original document of a “check” issued on “January 12, 1983” and drawn upon the Cash Account of Armando B. Gaac which had $500 billion dollars in it. The word “check” had to be a noun and not a verb in the context of this sentence because the word “issued” had to link up with this word to produce a grammatically correct sentence, and “check” as a noun was the American way of spelling a “cheque”, and this interpretation was consistent with the way the issue date of the bank draft was stated. The issue date of each purported bank draft was stated in the American way, i.e. “11/28/2013” with the month in numerals coming before the date. In my judgment, if the two purported bank drafts could only be en-cashed if they were presented together with a cheque drawn upon the settlement account to ensure that there was sufficient fund for payment, then why was it that this cheque for proof of fund had to be one issued on 12 January 1983, which was more than 30 years before presentation of the two bank drafts for encashment? Furthermore, if the two purported bank drafts were to be encashed by funds in an account already with HSBC, why was it necessary to present a cheque from that account for that purpose? Why was it that the money could not be drawn directly from that account? In my judgment, based on the absurdity of the printed sentence on each of these two purported bank drafts, I was entitled to draw the only reasonable and irresistible inference that these two purported bank drafts could not be genuine. 54.Mr. Lau had attacked the evidence of PW2 and PW4 on the ground that they had not made any investigation to find out if the bank account referred to in Exhibits P1 to P3 existed in the Manila branch of HSBC, or whether there was an account held under the name of Armando B. Gaac, or whether there existed such an account in the HSBC Investment Bank instead of its retail banking. 55.I was of the view that none of these arguments cast any doubt on the falsities of the two purported bank drafts (Exhibits P1 & P2). They bore the words “HSBC HONGKONG” on their left top corners. These words clearly conveyed the impression that they were issued in Hong Kong. It was therefore not necessary to check with the Manila branch of HSBC because it was clear from the evidence of PW1, PW2 and PW4 that the genuine bank drafts issued in Hong Kong would not be in the format as they now appeared in Exhibits P1 and P2. In other words, irrespective whether or not there was such an account in the name of Armando B. Gaac in the Manila branch, a bank draft issued in Hong Kong to be settled by money in that account still would not have been drawn in the same format as Exhibits P1 and P2. The checking with the Manila branch of HSBC was therefore wholly unnecessary, although there was no harm in doing the checking exercise. 56.In determining whether the two purported bank drafts were false instruments or not, I noted that it was accepted by Mr. Lau that if any of the features of these purported bank drafts had been established beyond reasonable doubt to be different from that of a genuine bank draft, it would be open to this Court to find that the purported bank drafts were false instruments. 57.I had no doubt whatsoever that the evidence given by PW2 and PW4 that the colour of the HSBC logo appearing on the two purported bank drafts (Exhibits P1 and P2) was different from that of the HSBC logo in a genuine bank draft was correct. In my judgment, any genuine bank draft issued by any branch of HSBC in this world would have the same colour or combination of colours because all these branches belonged to the same HSBC group, and hence there could only be one logo. However, a comparison of the HSBC logo appearing on the name card of PW2 (Exhibit P31) with the two purported bank drafts (Exhibits P1 and P2) clearly showed that the genuine HSBC logo had a sharper red colour than the purported red colour on the two purported bank drafts, and that the white colour part of the genuine logo had been changed into blue in the two purported bank drafts. On this ground alone, I found that the prosecution had already succeeded in proving beyond reasonable doubt that Exhibits P1 and P2 were false instruments. 58.In addition, I also accepted the reasons given by PW1, PW2 and PW4 as valid grounds that proved the falsities of the two purported bank drafts. Whether or not PW4, and indeed PW1 and PW2 as well, should be regarded in law as experts was not important. It was because I had no doubt whatsoever that each one of them had extensive experience acquired through their day-to-day work in the course of their lengthy employment with HSBC in dealing with its documents, including bank drafts and bank documents issued by HSBC in Hong Kong, and that the experience of each one of them was sufficient to enable each one of them to give reliable evidence on the features of genuine and false bank drafts and bank documents issued by HSBC. Of course, I had also stated my view on and the finding arising from the sentence printed on the face of the two drafts relating to the presentation of a cheque allegedly issued on 12 January 1983. 59.Regarding the purported “HSBC Hongkong Bank Statement” (Exhibit P3) and the “Ferdinand Marcos Cash Account Certification” (Exhibit P4), they were used by the defendant to prove the authenticity of the two purported bank drafts, and according to his video-recorded interview, he had been provided with these documents by Khan to prove the two purported bank drafts. When it had been proved beyond reasonable doubt that the two purported bank drafts (Exhibits P1 & P2) were false instruments, the only reasonable and irresistible inference to be drawn had to be that Exhibits P3 and P4 were also false instruments because they were used to prove something that were untrue to be true. 60.Furthermore, I accepted the evidence of PW2 and PW4 on the falsities of Exhibit P3. Their evidence clearly proved that a HSBC bank statement issued in Hong Kong, as what Exhibit P3 purported to be, was not in the format as Exhibit P3. In addition, I found that the document itself was sufficient to show that it was a false instrument. Although it was headed “Bank Statement”, it was clear from the contents of the document that it was not a bank statement but a demand for payment. The last sentence “please be advice to settle the above account as early as possible to avoid additional penalties” spoke for itself (and I left the issue of grammatical error aside for the time being). This document alleged that Armando B. Gaac owed the bank penalties, basic bank charges and miscellaneous charges in the respective sums of US$8 million, US$2 million and US$5 million. However, it gave no particulars why the alleged penalties, basic bank charges and miscellaneous charges had been incurred, and there was no breakdown as to how each massive sum was arrived at. On the other hand, a genuine bank statement should have recorded each and every transaction within or relating to this bank account. Besides, if Armando B. Gaac owed the bank US$15 million as stated in this purported Bank Statement, why didn’t HSBC deduct this sum of money directly from the account of Armando B. Gaac when the very same document stated that this account had US$500.5 billion in it? It did not make sense that the Bank would need to demand payment instead of recouping the penalties and charges from the source. 61.In addition, this purported Bank Statement was purportedly signed by “Stuart T. Gulliver” who was described in the document as “CEO, HSBC Investment Bank”. The evidence of PW2 was that he never saw a bank statement signed by the CEO of HSBC. I had no doubt that his evidence was true. I could also take judicial notice that “Stuart T. Gulliver” was the CEO of HSBC rather than one of the banks of the HSBC Group. It made no sense that the CEO of such a large and international banking corporation would sign on the bank statement of one of its clients when he would not be involved in the daily operation of this client’s account, and he was not the CEO of “HSBC Investment Bank”, but the CEO of HSBC. It was also doubtful that there was such a bank called “HSBC Investment Bank”. Mr. Lau produced extracts from the Year Book of HSBC (Exhibit D1) to prove that HSBC had investment bank. I was sure that HSBC dealt in the investment banking business in addition to its retail banking business, but the issue was whether or not the HSBC group had a bank called the “HSBC Investment Bank”. In the extract produced by Mr. Lau, he pointed to two names. They were “HSBC Investment Bank Holdings Limited” and “HSBC Investment Bank Holdings plc”. However, neither name was the same as “HSBC Investment Bank”. There were only some similarities. From the evidence produced by the defence, the only reasonable and irresistible inference to be drawn was that Mr. Lau, his legal term and the defendant could not find any proof that there was a bank in the name of “HSBC Investment Bank” as stated in Exhibit P3. I certainly accepted that the defendant had no burden to prove anything, but I had no doubt whatsoever that the evidence produced by the defence did not cast a doubt on the finding that Exhibit P3 was a false instrument. 62.Exhibit P4 was purported to be a Certification issued by the Ferdinand Marcos Cash Account. It was not purported to be a HSBC document. For this reason, PW1, PW2 and PW4 could not give direct evidence on its authenticity. However, as I had already pointed out, the fact that this document was provided by Khan to the defendant to prove the genuineness of the two purported bank drafts meant that it had to be false because the purported bank drafts were in fact false. Mr. Turnbull had also pointed out that the Certification stated the wrong name of HSBC, which should be “Hongkong and Shanghai Banking Corporation”, but the name “Hongkong Shanghai Bank Corporation” as stated in the document had the word “and” and the “-ing” after “Bank” missing. I accepted that this was one of the errors on the face of the documents that pointed to its falsities. 63.On top of that, I noted that this Certification purported to certify that both the defendant and Khan had the authority to process the account of Armando B. Gaac which had US$500 billion. Leaving aside whether it was credible that the defendant would be given such an authority for the time being, it was clear that there was an inexplicable error in the document. This document certified that Khan and the defendant were endorsed by “head of Ferdinand Marcos Cash Account (FMCA) Zacarias Z. Zaragoza” to process the account of Armando B. Gaac. Under the signature column, the person signing was described as holding the position of “(FMCA) Head Record Division”, and the name of the person signing was “Zacarias Z. Zaragosa”. This document had therefore contradicted itself. In my view, the “head” of Ferdinand Marcos Cash Account was not the same as the “Head Record Section” of the Ferdinand Marcos Cash Account. In addition, according to the document, the person giving the power to the defendant and Khan had the surname of “Zaragoza”, with the spelling ended with “za”, but the person signing had the surname of “Zaragosa” with the spelling ended with “sa”. It was just inconceivable that the person signing this document would have made a fundamental error regarding his own name, especially when this was not a document without significance but a document giving power to two other persons to handle a massive sum of US$500 billion. 64.In fact, in the exercise of my function as a jury, while it was true that the defence had no burden to prove anything, I was entitled to take into account the fact that after Khan’s arrest on 5 December 2013, Khan’s clients or her superiors, no matter whether they were the alleged Armando B. Gacc, and/or the persons connected with Ferdinand Marcos Cash Account and/or the Sovereign Church of God, had not done anything to prove or suggest that these two purported bank drafts were genuine documents. If there were really such a client or superior of Khan who had a deposit of US$500 billion with HSBC, this client or superior of Khan would no doubt be a very important client of HSBC, and it was just inconceivable that this very important client of HSBC would not have proved the authenticity of these two purported bank drafts and directed HSBC to honour them immediately. It was because it was not just a question of this client or superior of Khan helping out the defendant or Khan, but the very purpose of depositing the proceeds of these two purported bank drafts into the defendant’s bank account was to enable this client or superior of Khan to do business with the project owner introduced by the defendant, and there was simply no reason for this person to have abandoned his interest in business and disappeared. In my judgment, the only reasonable and irresistible inference to be drawn was that the alleged client or superior of Khan was nothing but a sham, or if there were really a person or an organization in the same name as the client or superior of Khan, someone must have stolen their names and purported to act on behalf of them without their authority. 65.For the reasons that I had explained, I found that it had been proved beyond reasonable doubt that each of Exhibits P1 to P4 was a false instrument. The defendant’s knowledge of the falsities 66.The evidence adduced by the prosecution did not include direct proof that at the time when the defendant presented the two false bank drafts (Exhibits P1 & P2) to PW1 for their purported proceeds to be deposited into his personal bank account, he knew that these two bank drafts, as well as the two supporting documents (Exhibits P3 & P4), were false instruments. 67.On the other hand, direct evidence that the defendant did not have the guilty knowledge was found in his out-of-court statements that had been admitted into evidence. These out-of-court statements were given by the defendant when PW2 was making enquiries of him and when he provided his witness statements to the police (Exhibits P25& P26) and during his video-recorded interview (Exhibit P24). All these out-of-court statements were in the nature of a mixed statement because each one of them contained evidence both for and against the defendant. The incriminatory part was that the defendant admitted using the two false bank drafts. The exculpatory part was that he maintained that he believed in the genuineness of those bank drafts, and he gave an account of the circumstances in which he came to possess and use them. There were also the out-of-court statements made by Khan which could be used as evidence for the benefit of the defendant, but could not be used as evidence against him. Hence, all these out-of-court statements were factual evidence for the benefit of the defendant, even though he had not testified at trial. The prosecution had to prove beyond reasonable doubt that the defendant’s denial of guilty knowledge was untrue and could not be possibly true before he could be convicted of any charge. 68.It was the contention of the prosecution that the only reasonable and irresistible inference to be drawn from all the circumstances of this case was that the defendant knew full well at the material times that the two purported bank drafts (Exhibits P1 and P2) were false. 69.In considering what inference or inferences of facts could be drawn from all the circumstances of this case, I agreed with Mr. Turnbull that I should take into account the particular personal attributes of the defendant. 70.The defendant had given full particulars of his personal details, education, professional qualifications, experience and associations in the legal commercial political and social fields in his curriculum vitae submitted to this Court on 9 September 2014 when he applied for an adjournment of this trial. His curriculum vitae were admitted into evidence in this trial pursuant to Admitted Facts No. 2 (Exhibit P32). He had given further information about himself during the video-recorded interview (Exhibit P24). 71.The defendant was at the material times 62 years old. He obtained his Bachelor of Arts degree with honours from the Simon Fraser University. He passed the Hong Kong Solicitors Qualifying Examination. He was qualified to practice in both the United Kingdom and in Hong Kong. At the material times, he had already practiced as a solicitor for over 30 years, and was a consultant of a legal firm consisting of two partners (and he was one of them) and 3 to 4 solicitors. His area of practice was in the company law and the commercial law. He was appointed by the Ministry of Justice of the People’s Republic of China as a China Appointed Attesting Officer. 72.The defendant had also held a number of positions on boards and committees in Hong Kong and the Mainland. He was or had been a legal adviser to 3 mainland city governments (Qinghuangdao, Baoding, and Shahe) , a member of the political consultative committee of Hebei Province, a tribunal member of the Immigration Tribunal, an adjudicator of Amusement Game Centres Appeal Board, an elected Central and Western District Board member, and a legal adviser to over several hundred organizations. He had also been a part-time law lecturer in Polytechnic University. 73.The defendant was also active in the commercial circle. He was or had been the vice-president of the Hong Kong Economic and Trade Association, and an executive committee member of the Kowloon Chambers of Commerce. 74.Given the background of the defendant, I agreed with Mr. Turnbull that the defendant should be well versed in commercial matters, both in respect of its legal side as well as its practical side, and since he professed to have the expertise in and he had practiced in the commercial law and the company law, he would not be a novice to commercial deals involving transfer and receipt of funds. It would also be right to infer that when he managed his own commercial contracts, he had the capacity and ability to exercise at least the same degree of care and attention that would be expected to be exercised by an ordinary businessman. 75.Furthermore, I had also no doubt that the defendant, being a solicitor of over 30 years experience in active practice at the material times, knew full well that the solicitors’ codes of conduct required him not to deposit trust money from his clients into his personal bank account. In addition, he also knew full well of the need of legal practitioners to ensure that money he received in a professional capacity was not the proceeds of crime. In other words, he knew full well that he was under a duty to ensure that the money to be deposited with him or his firm from his clients or people relating to his clients were not of criminal or doubtful origin. I noted that the defendant had said during the video-recorded interview that he had told Khan on more than one occasion that the funds to be deposited with him had to be of good clean clear and non-criminal origin. 76.In light of the background of the defendant, Mr. Turnbull submitted that the defendant could not have failed to notice the falsities of the two purported bank drafts for two reasons. 77.His first reason was that a man in the position of the defendant could not have failed to notice the obvious errors on the face of the two purported bank drafts (Exhibits P1 & P2) as well as the two purported supporting documents (Exhibits P3 & P4), and that the defendant’s alleged failure to notice all or any of these obvious errors was inexplicable and that the only reasonable and irresistible inference to be drawn was that he was well aware of the falsities of the two purported bank drafts. 78.I had already found as a fact that the two purported bank drafts (Exhibits P1 and P2) contained the errors as testified to by PW1, PW2 and PW4. Mr. Lau argued that it was the evidence of PW2 that an ordinary person who was not an experienced bank staff might not be able to find out that these two bank drafts were false, and that PW4 who was tendered by the prosecution as an expert witness testified that he had to consult the operational staff of the bank to understand features of bank statements and documents. 79.I certainly accepted that the defendant might not have the knowledge of a bank staff about the format or features of a genuine bank draft. He had not been trained in that respect and it was not surprising that he did not have the expertise. However, in my judgment, there were two matters that could not have escaped his attention if he had looked at the two purported bank drafts (Exhibits P1 and P2) and put his mind to it. 80.First, as Mr. Turnbull rightly pointed out, no currency was stated in the two purported bank drafts. According to the defendant, the proceeds of these two bank drafts were to be deposited into his personal bank account so that he could act as a paymaster for Khan or her clients. Hence, the first thing he wanted to know would be the amount of money he would receive even though he had only had a glimpse of the bank drafts. It was beyond doubt that he had looked at the amount of the proceeds stated in both bank drafts. The defendant said during the video recorded interview that he thought the amounts were in the US dollars, and Mr. Lau submitted that the defendant might not pay attention to the currency issue because he was all along under the impression that the currency involved was in US dollars. I could not rule out the possibility raised by Mr. Lau, but it would require the defendant to be a grossly negligent person for that to happen. However, the defendant was not only a commercial lawyer with over 30 years experience, he was in fact the recipient of the funds in the drafts, and hence there was all the more reason for him to pay particular attention to how much money and in what currency was given to him. 81.The second matter that in my judgment could not have escaped the defendant’s attention was the presence of that sentence printed on the face of each purported bank draft that the draft would be encashed if it was presented with a “check” issued on 12 January 1983 upon the account of Armando B. Gaac. Even if the defendant did not read the sentence carefully, if he had looked at the purported bank drafts, as a commercial lawyer with over 30 years experience, he should at least wonder why there was a reference on the face of the purported bank drafts to the date “January 12, 1983”. 82.I had also no doubt whatsoever that the defendant had read the two supporting documents (Exhibits P3 and P4), and that he knew what was written in these two documents as he had used them to explain to PW1 that the two purported bank drafts were genuine. 83.Mr. Turnbull pointed out that, the last sentence in the purported “HSBC Hongkong Bank Statement” (Exhibit P3), i.e. “please be advice to settle the above account as early as possible to avoid additional penalties” contained the clear grammatical error that the word “advice” should have been “advised”. Mr. Turnbull submitted that this error should be readily apparent to a man of the defendant’s education and legal commercial experience. Mr. Lau argued that the defendant had only very limited time to look at the document and hence he might not notice the grammatical error. He further argued that it would be very common for even very experienced lawyer to make grammatical mistakes. 84.Mr. Turnbull also submitted that the defendant knew that the proper name of HSBC was “Hongkong and Shanghai Banking Corporation”, as he was able to spell out the proper name of HSBC during the video-recorded interview, and he therefore knew that the name “Hongkong Shanghai Bank Corporation” as stated in the purported “Ferdinand Cash Account Certification” (Exhibit P4) was wrong. Mr. Lau argued that the defendant did not really have knowledge of the correct spelling and he could not have spotted the error from Exhibit P4. 85.I had already referred to the absurdities relating to Exhibit P4 in that the person endorsing the defendant with the authority to process the account of Armando B. Gaac and the person signing the Certification did not have their names spelt in the same way, and the descriptions of their title were different. 86.In my judgment, if the defendant had been careful enough to read the documents, he could have discovered the grammatical and spelling errors on these documents as pointed out by Mr. Turnbull. In addition, I was of the view that the defendant as a commercial lawyer with over 30 years experience should have had a lot of queries about the authenticity of Exhibits P3 and P4 if he had put his mind to them. 87.First, in respect of Exhibit P3, although it purported to be a “HSBC Hongkong Bank Statement”, it contained no record of transactions in and out of the bank account concerned as what a normal bank statement would have done, but it was clearly on the face of it a demand for payment, and the demand was for a huge sum of US$15 million. I was sure that the defendant had come across many bank statements both in his professional and personal capacity, and he could not have missed the oddities of this document. 88.Second, in respect of the purported “Ferdinand Marcos Cash Account Certification” (Exhibit P4), I found that it contained the most unusual feature that the defendant as a commercial lawyer of over 30 years experience should have questioned. This Certification purported to certify that the defendant was “endorsed by” head of Ferdinand Marcos Cash Account (FMCA) to process the account of Armando B. Gaac with the amount of US$500 billion (or US$500,000 million). According to the defendant’s own statements, he was to receive the proceeds of the purported bank drafts to act as a paymaster only. It meant that he would receive some money and then pay them out. He needed not process the bank account of Armando B. Gaac, not to mention that he had only entered a contract to act as a paymaster to deal with US$25 million, and not 20,000 times of that amount to US$500 billion. If he had thought of the matter, he must have realized that it was incredible that he would be given power to process an account with US$500 billion by someone unknown to him and without prior consultation with him. 89.1 agreed with the submissions of Mr. Turnbull that, given the particular personal attributes of the defendant, there was a strong and compelling case against him that he knew that the two purported bank drafts (Exhibits P1 and P2) and the two purported supporting documents (Exhibits P3 and P4) were false instruments, or at least he had reasons to believe that they were documents of suspect nature. 90.Mr. Lau argued strongly that the defendant was tired after a long flight, and he further pointed to the evidence of Mr. Zhau Yan (DW1) that the defendant had gone through a long trip in USA and had less than 2 hours of sleep before he boarded the plane travelling back to Hong Kong. I had no doubt whatsoever that the defendant was not tired at the time after he had arrived in Hong Kong. No matter how tired he was before he boarded the plane, the flight took some 15 to 16 hours, and if he was really tired after the trip in the States, he would certainly have slept in the plane. The CCTV footage showed that the defendant had never behaved as if he were tired. The CCTV footage did not show that he had taken a nap, or that he had yawned, and in fact when PW1 left her counter leaving the defendant alone, it could be seen that the defendant used the paper available on the counter table and made some writing. He had also made telephone calls on more than one occasion. Even when he was waiting for his turn to be served by PW1, and before PW2 asked him to go into a meeting room, he did not need to sit down to take a rest. 91.Mr. Lau also argued that the defendant had only limited time to read the documents. It was clear from his movement record (Exhibit P27) that he arrived at the Hong Kong International Airport at about 1:57 p.m. and he appeared in the bank at about 3:30 p.m. I would accept that he had only about an hour and probably less than an hour to look at the two purported bank drafts and the two supporting documents and to speak to Khan. However, in my view, even if the time factor hindered his power to notice all the errors on the face of the documents, he could not have failed to notice the suspect nature of the documents if he had put his mind to it. 92.The second reason put forward by Mr. Turnbull to support his submission that a man in the position of the defendant could not have failed to notice the two purported bank drafts were false was that the agreement entered into between the defendant and Khan (Exhibit P9) before he deposited the two purported bank drafts did not stand commercial scrutiny. Mr. Turnbull argued that the errors contained in the escrow agreement, coupled with the defendant’s very limited knowledge of the background of Khan as well as the source of funds, would be enough to cause him and indeed any lawyer to conclude that the agreement was bogus. Furthermore, the defendant had ample time of about 4 weeks between 8 November and 5 December 2013 to consider the terms of the escrow agreement and to ascertain the source of funds and to check the background of Khan, but he had not done anything. Mr. Turnbull submitted that there was no valid reason why a responsible lawyer would not have done so, and the only reasonable and irresistible inference to be drawn from his failure was that he was well aware of the intended fraud. 93.On the other hand, Mr. Lau argued that the defendant had provided all possible assistance to the police for their investigation. He argued that the documents provided by the defendant to the police were of paramount importance to the police investigation. The documents (Exhibits P10 to P20) showed the basis why the defendant had believed in Khan and tendered the two purported bank drafts to PW1. Mr. Lau submitted that the allegation that the defendant had actual knowledge of the falsities of the bank drafts was disproved by the existence of the agreements and documents which Khan had provided to the defendant. 94.I had considered all the documents produced by the defendant to the police. I had no doubt whatsoever that if the defendant had studied these documents carefully and put his mind to them, the suspect nature of all these documents would be readily apparent to him. 95.According to what the defendant had said during the video recorded interview, Khan attended his office on 2 November 2013, asked him questions about a certificate of deposit from the Standard Chartered Bank, and asked him to act as a paymaster to distribute profits to her partners as she might earn US$25 million. The defendant said not only he stressed to Khan that the money had to be clean and legitimate, but Khan had to provide him with all the information about the deal. He said that Khan then provided him with the information by two emails (Exhibits P19 and 20) on 4 November 2013. 96.According to what the defendant had said, the documents provided to him on that occasion were a Joint Venture Agreement made between Mr. Roberto R. Germido and Mr. QiHeng Peng on 28 October 2013 (Exhibit P14), and copies of a HSBC Bank Reference Letter Application Form (Exhibit P13), and the passport of Peng (Exhibit P11) and the passport of Germido (Exhibit P12). 97.In my judgment, this Joint Venture Agreement did not stand commercial scrutiny. It stated that Germido as the “Asset Provider” was desirous of “leasing” US$200 million to Peng as the “Asset Lessor” for a period of 30 calendar days, and in return, Asset Provider would receive US$25 million and a direct payment of the designated account specified by Asset Provider in the amount of US$200,000. In my view, there were a number of obvious doubtful points.
98.For the above reasons, I had no doubt whatsoever that if the defendant had studied this Joint Venture Agreement and put his mind to it, he would have realized that this could not be a genuine agreement. 99.According to what the defendant had said in his video recorded interview, after Khan had produced to him such Joint Venture Agreement and the related documents (Exhibits P11 to P14), he told Khan to sign an agreement with him to confirm (counter 224). However, what he said during the video recorded interview was not consistent with what he had said in the witness statements he had provided to the police. In the witness statement dated 6 February 2014 (Exhibit P26), he stated specifically that Khan and her husband were interested in investing in the mainland, but the project owner wanted to see the money first before he would negotiate with her because there had been too many empty talks, and for that reason, Khan said she wanted to put money into his escrow account so as to prove her intention and sincerity to start the dialogue with the project owner, and she entered into the Irrevocable Escrow Agreement (Exhibit P9) with him. If what the defendant had said in his witness statement were correct, the alleged Joint Venture Agreement between Germido and Peng should not be connected with the subsequent Irrevocable Escrow Agreement, except that this Joint Venture Agreement might have been used by Khan to show that she had some big clients, but the falsities of the Agreement were, in my view, readily apparent on the face of it to any competent lawyer. 100.As far as the Irrevocable Escrow Agreement (Exhibit P9) was concerned, I agreed with the submission of Mr. Turnbull that the defendant as a commercial lawyer of over 30 years experience would know readily that it could not be a genuine agreement, although I relied on some reasons different from those advanced by Mr. Turnbull. 101.Mr. Turnbull pointed out that in clause 11 of this Agreement, it stated that this agreement should be governed by and construed in accordance with the substantive laws of “the state of Hong Kong S.R.S”, but Hong Kong was not a state, and it was not referred to as “S.R.S.” I would certainly expect that the defendant as a commercial lawyer of over 30 years experience would have paid particular attention to the law applicable to the agreement because there could always be dispute arising from an agreement, and as a lawyer, he would ensure that there was no ambiguity in that contractual provision. I certainly disagreed with the submission by Mr. Lau that this was only an innocent failure in spotting the spelling mistake. 102.Mr. Turnbull also referred to clause 23 of the agreement, which stated in capital letters inter alia the following, “IF RECEIPT OF THE ESCROW PROPERTY AND THE DISBURSSEMENT OF FUNDS HAS NOT BEEN MADE ACCORDING TO THRE AGREED TIME SCHEDULE WITHIN THE AGREEMENT, THE ESCROW PROPERTY SHALL BE RETURNED TO THE PARTY WHO PROVIDED THE FUNDS OR DOCUMENTS”. Mr. Turnbull pointed out that in the phrase “THRE AGREED TIME SCHEDULE”, the word “THRE” was a mistake and the correct word should be “THE”. On this point alone, I was more inclined to say that this could have been a minor spelling mistake that the defendant could have failed to spot. 103.The more important point raised by Mr. Turnbull was that there was no time schedule set out in this Irrevocable Escrow Agreement as to when and to whom the funds should be paid. If this Escrow Agreement was entered into for the purpose of Khan putting in money with the defendant to show her intention and sincerity to start business talk with the Mainland trader, and this was what the defendant had said in his witness statements to the police, I would have thought that there should not be a time schedule for paying in and paying out of the escrow property. It was because the money deposited into the account was to be used to show that Khan had the money to do business with the Mainland trader. Once she paid in the money, she could start the business talk, and if she did not pay, she did not breach any contract. After she had paid in the money, it was not necessary to have a time for payment out because it was all along her money, and she could demand for the return of the money from the defendant at any time. There was also no need to specify to whom the money should be paid. It was because there could only be one payee according to the purpose of this agreement as stated by the defendant in his witness statements, and that payee was Khan herself. Judging from this perspective, I did not find it surprising or sinister that there was not a time schedule in the Irrevocable Escrow Agreement. However, what was strange was that this Agreement would have referred to a time schedule that was non-existing in the first place. 104.Furthermore, in my judgment, when the various clauses of this Escrow Agreement were studied carefully, it did not make sense.
105.In my view, this Irrevocable Escrow Agreement was full of errors which were not just grammatical ones. The important jurisdiction clause was wrong when it referred “Hong Kong SAR” as “Hong Kong S.R.S” which the defendant who was not only an experienced commercial lawyer but also a person closely involved in politics could not have failed to overlook if he had read the document. The various references in the Agreement to other escrow funds, more than one service provider, and the agreed time schedule were inexplicable because none of them existed in the first place. I agreed with the submission of Mr. Turnbull that this Agreement did not stand commercial scrutiny. 106.This document would of course be very attractive to the defendant. It was because once he received the US$25 million from Khan as escrow property and held the money on trust for Khan, which of course required him of doing nothing other than banking the money into a designated trust account, he would be entitled to receive $200,000 “initial fees” which were “non-refundable” and he could charge additional fees according to Clauses 4 and 5 of the Agreement respectively. It had not been stated in the Agreement what was the currency of this sum of $200,000. However, it was very likely that the defendant was thinking that he would receive US$200,000 because Mr. Lau submitted that the defendant understood all along that the dealings were in US currency. 107.The next document provided by the defendant to the police was a Joint Participation Agreement purported to have been made between Suc Ho Europe SRL which was represented by Khan and a mainlander Mr. Gan Minhui on 26 November 2013 with Consultant Intermediate Group represented by Dunn as a witness to the agreement (Exhibit P10). The defendant said that Dunn provided him with this document on 27 November 2013 when he had of course already signed the Irrevocable Escrow Agreement (Exhibit P9). In his video recorded interview, the defendant described that this Agreement involved some conversion of US dollars into Euros between the parties (counter 290) and the transactions were made at the same bank (counter 292). 108.In short, the terms of this Joint Participation Agreement appeared to be that Mr. Gan was “the USD Exchange Asset Provider” who had some “restricted USD heritage asset” in the sum of US$1 billion, and Khan’s company was the “Euro Exchange Asset Provider” who had the ability to cause the “restricted USD heritage asset” to be exchanged into “unrestricted Euro cash equivalent asset” on a dollar for dollar basis, and Khan’s company would be responsible to convert the US$1 billion into Euros at a discount of 15% of the money (which meant that Khan’s company had earned 15%), and then for the remaining balance, Khan’s company and Mr. Gan would take 5% and shared on a 50/50 basis, and Dunn’s company would obtain 1%. Khan’s company could then used the remaining sums to trade for one year and one day, and the profits would be shared on the basis of 40% to Khan’s company, 40% to Mr. Gan, and 20% to Dunn’s company. 109.In my judgment, any lawyer would certainly ask the question what was the “restricted USD heritage asset” meant in the agreement. If it were money and apparently it were money because it was stated in the agreement that the heritage asset was located in HSBC Hong Kong at 1 Queen’s Road Central, why was it referred to as “heritage asset”? Money with bank had no heritage value. The other important questions to ask were why the money was restricted, and why Khan’s company could turn something restricted into unrestricted. Was it legal? The next question arose would of course why the defendant needed to be involved and he was specifically named as the paymaster in the agreement. It made no sense to say that Mr. Gan would send the “restricted USD heritage asset” to the defendant first pending performance by Khan’s company. It was because Khan’s company needed not pay anything to Mr. Gan before it received this so-called “restricted USD heritage asset”, and it was Khan’s company and not the defendant who had the ability to convert such restricted asset into unrestricted Euros. It meant therefore that even if Mr. Gan forwarded the “restricted USD heritage asset” to the defendant first, it was just for the defendant to pass them onto Khan’s company. If so, why didn’t they do it among themselves? Even after Khan’s company had converted the restricted USD heritage asset into unrestricted Euros, no matter for the initial 5% sharing or the subsequent sharing of 40% trading profits to be paid by Khan’s company to Mr. Gan, it just required payment from Khan’s company. If Khan’s company was willing to pay, it could pay directly to Mr. Gan, and it did not require the intervention of the defendant. If Khan’s company was not willing to pay Mr. Gan, the defendant could do nothing to ensure payment. Hence, what was the need to have the defendant acting as a paymaster? Furthermore, the defendant’s remuneration was not specified in the Agreement, and it was absolutely absurd that if the defendant who was to act as a paymaster involving assets worth US$1 billion under the Agreement was not consulted whether he was willing to act as the paymaster before Khan’s company, Mr. Gan and Dunn’s company signed this Joint Participation Agreement. It made no commercial sense. It had every hallmark of a bogus agreement. 110.On 5 December 2013, the defendant received the two false bank drafts (Exhibits P1 and P2) from Khan for the total sum of $500 million, and according to what the defendant said in his video recorded interview, he thought they were for US$500 million even though the false bank drafts did not specify the currency. The obvious question that anyone in the position of the defendant who had thought about the matter would have asked why he was given these two bank drafts when under the Irrevocable Escrow Agreement, he was to be put in fund of US$25 million only. 111.Mr. Lau sought to argue that when the defendant received these two false bank drafts, he believed that he was receiving them pursuant to the Joint Participation Agreement (Exhibit P10). According to the calculation made by Mr. Lau in his written closing submissions, the defendant was to receive US$799 million under that Agreement and hence the $500 million stated in the two false bank drafts would not cause the defendant to think there was any problem, not to mention that he would not have thought that they were false. 112.In my judgment, Mr. Lau’s submission was not supported by evidence. The defendant had never said that he thought that he got these two bank drafts as a result of the Joint Participation Agreement (Exhibit P10). On the contrary, in his witness statement dated one day after the incident (Exhibit P25) in which after he had stated that he had introduced Khan to the grass project and elevated bus project in the mainland, and that Khan preferred to retain a lawyer to keep the project fund, he said the following, “The objective of the bank draft is to put the money into my escrow account pending the registration of the project vehicle (SPV), the preparation of the project proposal and all the logistic work. Under this circumstance, I agreed to set up the escrow account to hold the funds.” In his next witness statement dated 6 February 2014 (Exhibit P26), he stated that Khan had put the money into his escrow account to prove her intention and sincerity to start the dialogue with the project owner. He never mentioned the two false bank drafts had any connection with the Joint Participation Agreement. On the contrary, the only reasonable and irresistible interpretation of his witness statements was that when he banked in the two false bank drafts, he was acting pursuant to the Irrevocable Escrow Agreement (Exhibit P9). Then, the question was why he would receive and tried to bank in two bank drafts for $500 million when the Agreement only provided for payment of $25 million, and he had made no clarification with Khan. The defendant had purported to explain in the video recorded interview that subsequent agreement would be signed to reflect the correct amount. However, it was clear that it was not an instantaneous answer given by him during the interview when he was questioned by PW5, and what he said was not subject to cross-examination, and I attached no weight to it. 113.There were other acts by the defendant that were also questionable:
114.I agreed with the submission of Mr. Turnbull that the defendant who had been a lawyer with over 30 years experience practicing particularly in the commercial law and the company law, and a person who had been active in the commercial and political fields for years could have easily noticed the many errors and apparent implausibility on each and every document provided to him by Khan and Dunn. I was of the view that the defendant could have easily come to the conclusion that all these documents were bogus in nature and could not represent genuine business transactions, and hence he would have known that any bank draft provided to him for banking in could be false instruments. Having considered the evidence, I found that the prosecution had built up very strong case against the defendant based upon circumstantial evidence that he was well aware of the falsities of the two false bank drafts (Exhibits P1 and P2) when he presented them to PW1. 115.In addition, the defendant as an experienced practicing lawyer should know he should not deal with money with unknown origin. However, not only he had failed to abide by this rule, he had even tried to deposit the proceeds of the two bank drafts which he said was trust money from his client into his personal bank account, which was undoubtedly a serious breach of the solicitors’ code of conduct. I agreed with Mr. Turnbull that the prosecution had built up a very strong case against the defendant that he was trying to benefit himself when he presented the two false bank drafts to PW1 with full knowledge of their falsities. 116.Mr. Lau submitted that there were lurking doubts about the defendant’s guilt that could not be excluded in this case. I should only deal with some of them which appeared to be more relevant or important.
117.I had considered this submission of Mr. Lau very carefully. I could not find fault with it, and indeed on the contrary, I found it quite persuasive. In my view, the whole foundation of the prosecution case against the defendant was that there had been so many errors on the face of virtually each and every document that the defendant could not have failed to notice them, and hence the inference was that he was well aware of these errors and hence the falsities of the bank drafts. But this foundation had to be shaken by the question that if he had been well aware of these errors and implausibility, why he did not change them? If he were really a guilty party, it would help him more to escape liabilities when the documents contained no or little flaws so that he could depict himself as a victim of the deception. 118.In my judgment, this was a reasonable doubt that the prosecution had failed to resolve. Furthermore, in considering whether or not the defendant was guilty of the offence charged, I had to take into account his clear record which benefitted him in two respects. First, it was less likely for him to commit any of the offence charged. Second, it was more likely that what he had said in his out-of-court statements were true. 119.After considering all the evidence in this case, it was wholly inexplicable that the defendant with his education, professional qualification and expertise could have failed to spot not one of the so many errors and implausibility that were apparent from all the documents. In my view, there could only be two possible reasons. First, he did not look at the documents at all and did not know what they were about. Second, he did look at the documents but he never put his mind to any of the documents. His action of banking in the two false bank drafts into his personal bank account without verifying the source of money was also wholly inexplicable because any solicitor who knew his professional duties and obligations would not have behaved in the same manner as he. There was in my view only one possible reason for his action. He wanted to bank in the bank drafts, and if the deposit was successful, it would have meant that he had secured an earning of at least $200,000, be it Hong Kong dollars or US currency, because according to the Irrevocable Escrow Agreement, the $200,000 initial set-up fees were not refundable to Khan. I would not use the term “greed” against him, but his desire to make quick money was readily apparent and this might have blinded him and caused him to have failed to exercise the necessary degree of professional expertise and caution. In my view, he was undoubtedly grossly negligent in handling this matter. He had demonstrated that he was not a competent solicitor. The defendant had stated during his video recorded interview that he believed in Khan because he knew all the friends that she knew, and she gave him the impression that she was very honest to him, she was knowledgeable, her English was very fluent, her family appeared to be relatively rich and she wore lots of jewellery, she was a Christian, he himself was a Christian and it was easy for him to believe in other persons, and Khan had told him that she would use the money to be earned in the future for building churches and other things. In fact, he called Mr. Gary Chan (DW2) to give evidence on these matters. If the defendant really believed Khan because of these matters, it seemed to me that he was a very naïve person. However, all these matters were insufficient to fix him beyond reasonable doubt with the requisite guilty knowledge, i.e. that he had agreed with Khan to present the two false bank drafts for the purported proceeds to be deposited into his personal bank account, or that he knew or had reasons to believe the two bank drafts were false instruments when he presented them to PW1. 120.Under these circumstances, I had to find that the prosecution had failed to prove one of the essential elements of the two charges. I therefore find him not guilty of both charges, and he was therefore acquitted and discharged. 121.It would not therefore be necessary for me to discuss further whether Khan had the requisite guilty knowledge, or whether she was being manipulated by people behind her as an innocent agent.
[1] The time shown on the CCTV footage was 15:39:35.2. [2] The time shown on the CCTV footage was 15:39:43.2. [3] The time shown on the CCTV footage was 15:39:45.1. [4] The time shown on the CCTV footage was 15:39:52.1. [5] The time shown on the CCTV footage was 15:40:13.1. [6] The time shown on the CCTV footage was 15:40:16.2. [7] The time shown on the CCTV footage was 15:42.13.1. [8] The time shown on the CCTV footage was 15:42:17.1. [9] The time shown on the CCTV footage was 15:42:33.2. [10] The time shown on the CCTV footage was 15:44:02.2. [11] The time shown on the CCTV footage was 15:44:05. [12] The time shown on the CCTV footage was 15:44:11. [13] The time shown on the CCTV footage was 15:44:27.1. [14] The time shown on the CCTV footage was 15:44:33.1. [15] The time shown on the CCTV footage was 15:45.10.2. [16] The time shown on the CCTV footage was 15:45.12.2. [17] The time shown on the CCTV footage was 15:45:56.1. [18] The time shown on the CCTV footage was 15:46:33.1. [19] The time shown on the CCTV footage was 15:59:02.2. [20] The time shown on the CCTV footage was 16:02:20.2. [21] The time shown on the CCTV footage was 16:05:16.1. [22] The time shown on the CCTV footage was 16:10:48.2. [23] Or Gan Minhui in Putonghua. [24] It was referred to by PW5 during the video-recorded interview as Police Exhibit No. 11. [25] It was referred to by PW5 during the video-recorded interview as Police Exhibit No. 12. [26] It was referred to by PW5 during the video-recorded interview as Police Exhibit No. 10. [27] They were referred to by PW5 during the video-recorded interview collectively as Police Exhibit No. 13. [28] It was referred to by PW5 during the video-recorded interview as Police Exhibit No. 14. [29] It was referred to by PW5 during the video-recorded interview as Police Exhibit No. 15. |