HKSAR v. Harjani Haresh Murlidhar
Read the full judgment text of DCCC 1047/2014 on BabelCite. This District Court judgment was delivered on 4 August 2015.
1. In late June 2014, a company called Dragon Asia Fertilizer Limited (Dragon Asia) entered into a fertilizer contract (the Contract) with Dohigh Trading Limited (Dohigh), a subsidiary of Sinochem Fertilizer Ltd (Sinochem). Dragon Asia was to buy a quantity of fertilizer from Dohigh at USD10,788,000. The named beneficiary on the documents was Dohigh. However, some fraudsters intercepted the emails of Dragon Asia and Sinochem which exchanged the documents by email. The fraudsters changed the
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DCCC 1047/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NO 1047 OF 2014 ------------------
----------------------------------- REASONS FOR VERDICT ----------------------------------- Background 1.In late June 2014, a company called Dragon Asia Fertilizer Limited (Dragon Asia) entered into a fertilizer contract (the Contract) with Dohigh Trading Limited (Dohigh), a subsidiary of Sinochem Fertilizer Ltd (Sinochem). Dragon Asia was to buy a quantity of fertilizer from Dohigh at USD10,788,000. The named beneficiary on the documents was Dohigh. However, some fraudsters intercepted the emails of Dragon Asia and Sinochem which exchanged the documents by email. The fraudsters changed the named beneficiary to Sino Investment and Trading Limited (SIAT). [This company was incorporated in Hong Kong in 2012 by Defendant and Castelino Brian Mario (Brian).] Dragon Asia was thus deceived to cause its bank to deposit 5% of the contract sum (equivalent to USD539,400) as down payment into the US dollar current account of SIAT in the Hong Kong branch of the State Bank of India (SBI). This account is called Account A in the trial. After deduction of USD25 bank charges, USD539,375 was deposited into Account A on 9 July 2014. 2.Brian was in India at all material times. He instructed SBI to make 15 transfers totalling USD327,175 out of Account A between 9 July 2014 and 17 July 2014. The last three sums (USD6,500, USD20,000 and USD12,000) were transferred between 15 July 2014 and 17 July 2014 to SIAT’s Hong Kong Dollar current account (called Account B in the trial). 3.Defendant was Brian’s business partner but he lived in Sri Lanka. He arrived in Hong Kong on 12 July 2014 and remained here. He was arrested on 21 July 2014. 4.Between 15 July 2014 and 18 July 2014, Defendant withdrew cash four times from Account B: HKD30,000, HKD128,000, HKD70,000 and HKD8,000. When Defendant was arrested at SBI on 21 July 2014, he was going to withdraw HKD4,500 from Account B. Charge 5.Defendant pleads not guilty to one count of “Conspiracy to deal with property known or believed to represent proceeds of an indictable offence”. 6.There have been three versions of the charge. The original one dated 10 December 2014 reads as follows:-
7.Obviously, the last clause should not be there. So the amended charge dated 19 December 2014 had that deleted. Under this amended charge, Prosecutor opens his case. The written opening is dated 4 May 2015 and contains 20 paragraphs. Para. 16 is related to a listed prosecution witness Diallo Ibrahima (PW10). This witness is supposed to say he only contactedDefendant in Hong Kong. Defendant should give him USD204,000 on behalf of a Nigerian customer for a mobile phone deal but Defendant failed to do so. PW10 told police that was all and he was never a business agent of Defendant. 8.Prosecutor intends to call PW10 to rebut Defendant’s telling police that an agent Daniel gave him business, which was to handle matters relating to the Contract. Defendant told police that Daniel’s mobile number was 6140 2532. (That was indeed PW10’s number.) 9.Before Prosecutor calls any witness to testify, Defence Counsel reveals the email and Skype records between Defendant and Daniel (also called saint cool or coolsaintt). After viewing such records, Prosecutor has much reservation about PW10. He makes it clear that he would not rely on PW10 at all. He also retracts from Para. 16 of his opening. 10.Nevertheless, Defence Counsel asks Prosecutor to tender PW10 for cross-examination. Prosecutor has to comply with such request but he himself asks PW10 no question. PW10 says in court what he told police. 11.At the end of PW10’s evidence, Prosecutor amends the charge. The Re-amended charge now reads:-
12.The amendments are those underlined. Prosecutor adds Diallo Ibrahima (PW10) and other persons unknown as co-conspirators. He also puts back the start date of the conspiracy to 26 April 2014 to replace 9 July 2014. 13.In the course of the amendment, Prosecutor says the unknown co-conspirators were those perpetrating the email fraud on Dragon Asia and Sinochem. 14.Defence Counsel originally objects to every bit of the amendment. Finally, he backs off and only takes objection to the addition of PW10 as a co-conspirator. He argues that witness has been named as a prosecution witness so it is not right for Prosecutor to treat him as an accomplice of Defendant. 15.It is the Defence side which reveals PW10 as a person collaborating with Defendant. Their case is PW10 brought the business to Defendant. The latter thus dealt with the USD539,375 and the Letter of Credit (the L/C) relating to the Contract. Prosecutor, after seeing Defence Exhibits D1, D3 and D4 (also called Bundles A, C and D), apparently feels that PW10 was the alleged agent. He immediately decides not to rely on PW10. After hearing Defence Counsel’s cross-examination of PW10, Prosecutor is convinced that PW10 was in collaboration with Defendant and some unknown persons. Prosecutor says they were in a conspiracy. Defendant protests his innocence. 16.Prosecutor is entitled to include PW10 and other persons unknown as co-conspirators. He makes it clear that the unknown ones refer to the email fraudsters. He holds the view that PW10 and Defendant communicated on this criminal business as early as 26 April 2014. Thus he makes those amendments. 17.Whether the amendments can be proved or not, it remains to be seen. But Prosecutor is entitled to amend the charge for reasons. I reject Defence Counsel’s objection and allow the charge to be so amended. Dispute 18.Defendant does not dispute that:-
19.Defendant admits Brian, his business partner in SIAT, knew about the deposit in (ii) and instructed SBI to make the 15 transfers in (iii). Brian also consented to Defendant’s taking out the 4 sums of cash in (iv). 20.Defendant says he and Brian were innocent. They knew nothing about the deceit. The fertilizer business was brought to him by an agent called Daniel, who was PW10. 21.Defendant says he was asked to execute the L/C as its named beneficiary. The down payment and the L/C money were to be transferred to accounts designated by the L/C applicant, ie Dragon Asia. The reward would be 15% of the contract price, ie, 15% of USD10,788,000. SIAT would get 12% (USD1,294,560) and Daniel would have the other 3% (USD323,640). 22.Defence Counsel submits that Defendant was duped by PW10. He believed it was all legitimate. He neither knew nor had reasonable grounds to believe the money represented proceeds of an indictable offence. 23.Counsel says Defendant and the fraudsters (including PW10) had different mindsets. They could not be in agreement to form any conspiracy and there was no conspiracy between Defendant and Brian either. Prosecution Case Witnesses 24.On his own motion, Prosecutor calls 5 witnesses. They are:-
The evidence of these 5 witnesses are not in dispute. 25.Prosecutor does not rely on PW10 at all. However, Defence Counsel asks for this witness to be tendered for cross-examination. Prosecutor only asks PW10 such questions to establish his identity but none on the subject matter of the charge. 26.Defence Counsel wants to establish that PW10 was that agent Daniel, who communicated with Defendant on Skype or by email using such alias as saint cool or coolsaintt. He brought the business to Defendant and duped him. In court, PW10 denies all these allegations. The Fertilizer Contract 27.PW1 Carson Yeung is the Chief Operating officer of Dragon Asia. His company has had trading relationship with Sinochem since 2012. 28.In late June 2014, Dragon Asia agreed to buy 24,800 metric tons of DAP (di-ammonium phosphate) fertilizer from a subsidiary of Sinochem. That subsidiary was Dohigh. Dragon Asia was to pay USD10,788,000 for the goods. 29.It is not clear when Dragon Asia started discussing with Sinochem but they struck the deal in late June 2014. The main contact on the Sinochem side was that person at [email protected]. Dragon Asia had earlier found a Bangladesh buyer for the whole lot of goods in May 2014. The goods would thus be shipped from China to Bangladesh. Dragon Asia could earn a book-profit of about USD1,700,000. 30.Originally, Dragon Asia used their agent Asia Commodities Corporation to enter into contract with Dohigh. The proposed contract from Sinochem to Dragon Asia should be that one in Exh P69. Item 10 thereof was titled “Remarks”. Dohigh’s name and bank account details were put down there. However, the fraudsters intercepted this emailed contract and sent Dragon Asia an altered one (Exh P70) from slnochem.com to pass off as sinochem.com. The false contract now had Item 10 titled “Beneficiary” with SIAT’s name and bank account details. 31.Later, Dragon Asia put their name to the contract as the buyer. Their email exchanges with Sinochem continued to be manipulated by the fraudsters. As a result, Sinochem got the correct contract, which stated Dohigh as the beneficiary (Exh 73) while Dragon Asia had the altered one (Exh 72). Dragon Asia was misled to believe SIAT was the beneficiary. 32.According to the terms of the Contract, Dragon Asia was to pay 5% of the contract sum of USD10,788,000 as down payment (USD539,400) via telex transfer (TT) to the beneficiary. The remainder of 95% was to be settled by a Letter of Credit (the L/C). 33.Dragon Asia complied and caused their bank BNP Paribas to pay the down payment into SIAT’s Account A. On 9 July 2014, USD539,375 was deposited into Account A of SIAT. (USD25 bank charge had been deducted from the incoming amount of USD539,400.) 34.Dragon Asia knew of the fraud only when Sinochem alerted them on 17 July 2014 because the latter had not received the money. On the next day, Dohigh held Dragon Asia in breach and revoked the L/C arrangement. They now required Dragon Asia to pay USD10,788,000 in full. Dragon Asia had to comply and a new contract was later signed to execute the final deal. Carson Yeung says that the shipment was thus postponed from August to mid September. 35.Dragon Asia reported the matter to police on 18 July 2014. SINO INVESTMENT AND TRADING LTD (SIAT) 36.It is stated in the Agreed Facts (Exh P79) that SIAT was incorporated in Hong Kong on 15 October 2012. Its registered address was that of its company secretary Multi-Chain Ltd. (Multi-Chain). SIAT’s total issued share capital was HK$1 and that share was held by Brian. 37.SIAT first got its Business Registration Certificate in October 2012. It had been renewed annually. However, since its incorporation on 15 October 2012 SIAT had not filed any tax return or employer’s return with the Inland Revenue Department. 38.SIAT opened accounts in SBI on 19 November 2013. Both Defendant and Brian were signatories to Account A and Account B. Both accounts had no transactions before 9 July 2014, when USD539,375 was deposited into Account A. Account A 39.USD539,375 was deposited into Account A of SIAT on 9 July 2014. 40.Between 9 July 2014 and 17 July 2014, a total of USD327,175 was transferred out of Account A by way of 15 transactions (see page 9 of Agreed Facts Exh P79), leaving in that account a balance of USD211,950 as at 17 July 2014. 41.Of those 15 transfers, the first one was made to the company secretary of SIAT, ie, Multi-Chain. The sum was USD40,000. The last three transfers were all made to Account B of SIAT. They were USD6,500, USD20,000 and USD12,000 respectively. Account B 42.The three transfers (totalling USD38,500) from Account A between 15 July 2014 and 17 July 2014 gave rise to a total of HKD298,157.50 in Account B. 43.Defendant arrived in Hong Kong on 12 July 2014 (Sat). In the next few days between 15 July 2014 and 18 July 2014, he withdrew 4 sums of cash as follows:-
These 4 sums totalled HKD236,000. Account B was left with a balance of HKD62,057.70 as at 18 July 2014. Multi-Chain 44.PW2 Mr Grewal Charanjit Singh was the owner of Multi-Chain. He helped Defendant and Brian to incorporate SIAT and the two Altop companies (Altop Holdings and Investments Limited and Altop Ishichi Solutions and Projects Limited). 45.The three said companies owed Muilt-Chain over USD15,000 of service fees. On 9 July 2014 Brian instructed SBI to transfer USD40,000 to Multi-Chain to settle the outstanding service charges. For the surplus, Brian instructed Multi-Chain to make 5 transfers to UK, 2 to Ghana and one to the Philippines. Grewal says his company rarely provided such transfer service. Nevertheless, the client’s request was carried out. But only the HKD4,000 remittance to the Philippines was successful. The rest all failed. 46.PW3 Hossain (alias Jalal) was the staff who handled those remittance requests through a company called Money Gram. He says the UK and Ghana remittances failed because he was not provided by the client with passport copies of the remittance recipients. Jalal at last, upon instruction, handed HKD146,000 to Defendant in the afternoon of 12 July 2014. Defendant acknowledged receipt by signing on Exh P34. Police Interview 47.Defendant was arrested on 21 July 2014 at the office of SBI. 48.In the evening on 22 July 2014, in the presence of his lawyer, Defendant was interviewed by PW11 DPC 3821. Defendant chose to speak English and there was an Punti-English interpreter to assist DPC 3821. 49.The whole interview lasted over 3 hours so the contents had to be recorded in 2 discs (Exh P47 and P50). The corresponding transcripts are Exh P55 and P56 with certified translations Exh P55A and P56A. 50.In the interview, Defendant said he knew Dragon Asia a little bit. Dragon Asia was to ship fertilizer out of China and he would provide inspection service for the goods at the time of shipment. He had received the USD539,375 and the L/C. Defendant said SIAT was a new company incorporated in Hong Kong in 2012. The company so far did trading and had 3 deals – one was this fertilizer deal and the other two were of sugar sold to Dubai or Ghana. He and Brian would share the company’s earning on a 50-50 basis. 51.Defendant told police that he had known an agent called Daniel. Daniel gave him this fertilizer business. Daniel used mobile 852 61402532 and email address [email protected] to contact him. 52.Defendant said Daniel did all the contacts with Dragon Asia. He himself did not know Sinochem or anything about sinochem.com or slnochern.com 53.Defendant told police that he had other Hong Kong companies called Altop Ishichi Solutions & Projects Ltd, Altop Holdings & Investments Ltd and Sinobest Pacific Investment Ltd. And in Sri Lanka, he had a company called IBEX Management Service PVT Limited, which did quality inspection business. 54.Defendant said he had seen the fertilizer contract but that document was with Daniel. He got the L/C two days before SIAT received that USD539,375 as beneficiary. 55.Defendant told police that he and Brian knew all the transactions in SIAT’s accounts. Brian in India handled the transfers out of Account A. 56.Defendant explained that the USD40,000 transfer on 9 July 2014 to Multi-Chain was to settle about USD15,000 of secretarial service fees. The remainder was collected by himself while in Hong Kong which he used for his own purposes, including spending here and sending to his friend(s) in London. 57.Defendant said the USD75,000 transfer on 9 July 2014 was made to his personal account in Sri Lanka for a hydroelectrical power project, which he had been working on for 2 years. The project would require USD3M more. 58.Defendant told police the third transfer from Account A in the sum of USD50,000 was also made to his personal account in Sri Lanka. Some was spent on the same power project and some was used for other expenses. 59.The fourth transfer on 9 July 2014 was of USD15,000. That was transferred to the account of his son in London as college fees. 60.The fifth transfer on the same day was of USD5,000. That was sent to a consultant in India for the power project. 61.The next two transfers from Account A were made on 10 July 2014. Defendant said one sum of USD15,000 was made to his daughter in London for her use. The other sum of USD15,000 was sent to Cyprus as consultant fee for a company, which provided solution service in relation to bank facility. 62.On 11 July 2014, there were five transfers from Account A. Defendant explained that one sum of USD5,000 was made to the bank account of Altop Holidngs & Investments Ltd, the other USD5,000 was made to the account of Altop Ishichi Solutions & Projects Ltd. The money was to maintain a minimum balance in the account. The third transfer in the sum of USD50,000 was sent to Altop Ishichi Solution & Projects PVT Ltd in India for buying solar panels from China. That India company belonged to Brian and two others. The fourth transfer that day was of USD4,475. It was sent to Dubai to pay for service for the setting up of a company there. The last transfer made that day in the sum of USD9,200 was also sent to Dubai. That was to pay an agent for finding a warehouse to store goods. 63.Defendant told police he arrived in Hong Kong on 12 July 2014. A few days later, Brian in India made three more transfers from Account A:-
The equivalent of this USD38,500 was HKD298,000 approximately. All went to Account B. 64.Police questioned Defendant on some of the documents found in his custody. Referring to Police Item No 34, 39, 41-44, Defendant explained that he had sent some money to London in order to obtain a bank guarantee from HSBC. That guarantee was to gain credit facility from the bank. Defendant said he did this for a client, who would pay him for such service. 65.Referring to Police Item No 35, 36, 38, 45 and 46, Defendant said he had also sent money to Ghana. 66.Defendant told police that after his arrival on 12 July 2014, he himself had withdrawn HKD30,000, HKD128,000, HKD70,000 and HKD8,000 from Account B between 15 July 2014 and 18 July 2014. 67.Defendant said SIAT received the USD539,375 as beneficiary. He was to provide inspection for the fertilizer goods when they were shipped out of China. The shipping date would be 10 August 2014. He was also to handle the documents for the L/C. SIAT would get 15% of the invoice value. The USD539,375 was part of that 15% his company could earn if the deal went through. If the deal did not go through, the USD539,375 would be paid back to Dragon Asia’s bank BNP Paribas less any expenses SIAT had incurred. 68.Defendant told police that he was no crook. He was not cheating, stealing or money laundering but only providing legitimate business service. 69.Defendant told police that he came to Hong Kong this time to set up an office for his companies as well. However, such plan had to be put on hold due to his being arrested. PW10 70.PW10 Diallo Ibrabima is a listed prosecution witness. Prosecution originally want to call him to rebut Defendant’s telling police that an agent named Daniel got him this fertilizer business. Defendant gave 6140 2532 as Daniel’s mobile number. Police found out that was PW10’s number. However, PW10 told police a very different version. He said he had a mobile phone sale deal with an African called Osas. Osas was to pay him USD204,000 for that. Defendant was supposed to give PW10 that money but he never did. [PW10’s statement to police is marked as MFI-1]. 71.Before the trial proceeds, Defence Counsel makes Prosecutor aware of the existence of the Skype and email communication records between Defendant and the alleged agent Daniel. Those records are later produced as Defence Exh D1, D3 and D4 (also called Defence Bundles A, C and D). The records show Defendant communicated with Daniel, who also called himself saint cool using the email address [email protected]. Defendant used his email address of [email protected] to communicate with this Daniel/coolsaintt/saint cool, who Defendant says is in fact PW10. 72.Bundle A is basically the Skype communication record of Defendant and coolsaintt between 3 July 2014 and 17 July 2014. Counsel says the same can be found in Bundle D, which is a complete record of the two’s Skype communication between 18 November 2013 and 17 July 2014. Counsel says Bundle A is simply produced because of that page 1 (for 2 September 2013), which is not included in Bundle D. That page 1 shows coolsaintt skyped Defendant saying he would love to do a lot of business with the latter. Coolsaintt invited Defendant to talk. 73.Some of the registered times in Bundle A might be a few hours earlier than those for the same entries in Bundle D. Defendant in court says the faster times were those in Sri Lanka. The slower times registered in Bundle D were all Hong Kong times. 74.Bundle D also contain SMS exchanges between Defendant and the user of 6140 2532, which is and was PW10’s mobile number. (See Bundle D; 62-77; 62-77 are the page numbers.) 75.Having viewed those communication records, Prosecutor apparently doubts what PW10 told police very much. He makes it clear that he would not rely on PW10 so he chooses not to call him to testify. Prosecutor retracts that Para 16 of his opening concerning PW10’s evidence. When Defence Counsel asks for this listed witness to be tendered for cross-examination, Prosecutor just asks PW10 a few questions to identify himself. He asks him no question relating to the subject matter of the charge. 76.Defence Counsel tries to establish that PW10 was the agent Daniel, who brought the fertilizer deal to Defendant and later asked Defendant to transfer most of the USD539,375 to different accounts. Counsel also tries to establish that PW10 had duped Defendant to work for him. 77.When PW10 is asked by Defence Counsel of all these matters, he is reminded of his right to silence. Yet, he chooses to answer all questions. He denies all the allegations. He sticks to what he told police. He accepts the SMS messages in Bundle D, 62-77 were from him. However, he says he was talking only about the USD204,000 of the mobile phone deal. PW10 denies he was Daniel/coolsaintt/saint cool. He denied he was involved in those email or skype exchanges in Bundles A, C and D. 78.After hearing PW10’s evidence, Prosecutor is satisfied that PW10 is Daniel/saint cool/coolsaintt. He is of the view that PW10 collaborated with Defendant in the alleged conspiracy. He thus names PW10 as a co-conspirator in the charge. 79.In court, PW10 says he came from West Africa in 2008. He has since married a Hong Kong woman and set up a company here called Panafric Link Ltd. He traded in mobile phones and parts. 80.In June 2014, someone called Osas who lived in West Africa placed an order with him for 12,000 second-hand phones. The price was USD204,000 and PW10 would earn USD6,500 from the deal. 81.PW10 says Osas told him that Defendant was his friend and coming to Hong Kong. Defendant would give the USD204,000 to PW10. 82.PW10 denies that he had previously communicated with Defendant or had already met the latter in November 2013. PW10 also denies he was Daniel/coolsaintt/saint cool though he admits he had been using the mobile number 6140 2532 for years. 83.PW10 says Defendant was supposed to meet him on 14 July 2014. The latter, however, failed to show up and held out the excuse that he was busy. PW10 told Defendant that if he had no time for a meeting, he could just deposit the USD204,000 into the bank account of Panafric Link Ltd. Defendant, however, said that could not be done in one go. The two finally met on 15 July 2014. Defendant still could not say when he would pay. Throughout the incident, PW10 had not received any amount from Defendant. 84.Defence Counsel asks PW10 whether he knew Po Lam Recycle Co. PW10 at first says he has never heard of that company. Counsel then reveals PW10’s own SMS message to Defendant dated 14 July 2014 (Bundle D, 74-75). PW10 then says he just forgot but now he can remember Po Lam was his friend’s company. PW10 says Osas gave him the name and account information of this company and one other (which company name he cannot remember) for Defendant to deposit money. PW10 says he had told Osas that Defendant could not make the transfer in one go. Thus Osas gave him the names of those companies. He then related the names to Defendant. PW10 says he was only concerned with the USD204,000. He knew of no other amounts. 85.PW10 says he had told Osas that Defendant would not deposit the money. Osas then threatened to recall the money. That was why he (PW10) sent the SMS text to Defendant on 16 July 2014 (Bundle D, 62-63). 86.Defence Counsel queries PW10 why in those SMS messages he sounded very much like coolsaintt. PW10 explains he merely liaised between Osas and Defendant. He conveyed the former’s words to the latter. He thinks Osas might be coolsaintt although he knows Osas’s skype ID was ezeji_michael rather than coolsaintt. PW10 says his own Skype identity was presoccerlink and not saint cool or coolsaintt. 87.PW10 says he was not Daniel/coolsaintt/saint cool. He denies he was involved in or knew the fraud relating to Dragon Asia and Sinochem. He denies Counsel’s suggestion that he had duped Defendant. Defence case DW1 Defendant 88.Defendant is aged 62, born in India but has been living in Sri Lanka for many years. He has a clear record. He elects to give evidence in court. 89.Defendant says he has a Master of Commerce degree. In Sri Lanka, he had run his family garment factory and once had his own factory, which closed down in 2004. He now has a company in Sri Lanka which is called IBEX Management Services. He also partnered with Brian to set up SIAT and the two Altops in Hong Kong in 2011/2012. They intended to open an office in Hong Kong but this had been put on hold due to his arrest. Defendant produces Exh D7, which is his email communication with Kenneth Mak, a manager of Hong Kong Government’s ‘Invest Hong Kong’ program. He also produces SIAT’s business plan for 2013-2018 (Exh D8). 90.Defendant says he had been a business consultant to the Ghana government for some years. He also helped people to discount letters of credit or obtain bank facilities. That earned him commission. He was also a trader of many commodities including sugar, cocoa shells, Manganese and electronic goods. He would act as an agent to source and buy goods to ship to the buyers. He calls this ‘confirming-house business’. The normal range of commission for such business is 10-15%. Defendant also says he has invested in a hydroelectrical power project in Sri Lanka. 91.Defendant produces Exh D2 as evidence of some of the businesses he had dealt with or been involved in. 92.For his businesses, Defendant had been to a number of places including multiple entries to Hong Kong and China. He says he had previously gone to China to make inspection of goods. Exhs D9-D11 are copies of his old and current passports. 93.Defendant says that in 2013, while dealing with someone called Eledan, he came to know the existence of coolsaintt on email. At that time, there was no direct contact between the two. Coolsaintt only emailed him directly on 1 September 2013. Coolsaintt later said he lived in Hong Kong and asked for Defendant’s mobile number (Bundle C, 1). Defendant gave coolsaintt his Skype identity (Bundle C, 5). Since then, the two had communicated on Skype, as well as by email. Defendant says that on some occasions they also talked on phone. Coolsaintt’s number was 6140 2532 (Bundle C, 20). Defendant says they met for the first time in Hong Kong in November 2013. Coolsaintt then told Defendant he was called Daniel. 94.Coolsaintt told Defendant on 2 September 2014 that he would love to do a lot of business with Defendant (Bundle A, 1). Since then, coolsaintt had been asking Defendant to provide him bank accounts. 95.Defendant explains in court that in doing confirming-house business, he had to provide bank accounts for the buyers to deposit money to buy goods. The purchase list would come with the money. Defendant then acted on the buyer’s instruction to source/buy the goods and send them to the buyer. Defendant says he had required coolsaintt to state that incoming funds must be clean (eg, on Bundle C, 13). As agent, coolsaintt would get 3% as commission from Defendant if a deal went through. 96.Defendant says coolsaintt talked a lot about bringing him business but nothing succeeded before the fertilizer deal. 97.Regarding the fertilizer deal, Defendant says coolsaintt first mentioned that on Skype around 4 July 2014. They also talked on phone around 12:05:40 am that day (Bundle D, 20). The two further communicated by email and on Skype. 98.Defendant says that when he was still in Sri Lanka on 7 July 2014, coolsaintt sent him that email on Bundle C, 31. Defendant saw the L/C (Bundle C, 34-36) attached to that email. He was sure then he got coolsaintt’s order. He sent the L/C to Brian, who was in India. Defendant told Brian they had got a very good order and he himself was going to Hong Kong for that. In order to execute the L/C, he would have to go to China to inspect the goods before shipment. Brian approved and told Defendant to make sure the deal went through. 99.Defendant thus came to Hong Kong on 12 July 2014. He also wanted to open an office for his companies here, for which matter he had been seeking advice from Mr Kennth Mak of the official ‘Invest Hong Kong’ program. 100.Defendant says he saw the telex transfer copy coming with coolsaintt’s email on 8 July 2014. He forwarded that to Brian, who checked to confirm the USD539,375 had been deposited into SIAT’s Account A. He and Brian decided jointly on all the subsequent transfers out of Account A. Twelve of the fifteen ones took place between 9 July 2014 and 11 July 2014 while Defendant was still in Sri Lanka. Brian gave instruction to SBI from India. 101.Defendant arrived in Hong Kong from Sri Lanka on 12 July 2014. He says that between that date and 21 July 2014 (when he was arrested) he communicated with Brian by phone and Skype on alternate days. They mostly talked about the fertilizer deal, the secretarial service company and also opening office here. 102.Defendant says he needed funds in Hong Kong. Brian then made three more transfers from Account A to Account B between 15 July 2014 and 17 July 2014. 103.Defendant says this was the first time he had had any successful deal with Daniel. It was also the first time he had tried to execute such a deal, which he thought was a kind of confirming-house business. He only noticed one error on the L/C which was about SIAT’s address. That could be amended so he was not worried. Defendant says the L/C was issued to SIAT by a prominent bank (BNP Paribas). He would not doubt its propriety or why coolsaintt gave him the deal. Defendant says such very good offer did not surprise him because the commercial world was like that. He says the supplier would have their own reasons to nominate SIAT as beneficiary though he himself did not know why. He felt no need to enquire more from coolsaintt. He would not go to speak to Dragon Asia (the L/C applicant) for any enquiry because it was not right to go behind the agent. 104.Defendant says he all along believed the whole thing was legitimate and he would only disperse the money if coolsaintt could show him written confirmation from the owner of the money. But coolsaintt never did. Thus he kept the money. He and Brian, however, had used part of the USD539,375. They thought they could do that for their own cash-flow needs because if the deal went through SIAT would earn 12% of USD10,788,000. That would be more than the USD539,375. Should the deal fail, the money would be returned to BNP Paribas less any charges by SIAT in the executing process. 105.Defendant denies he was a party to any scam or conspiracy. He denies he knew or had any reasonable grounds to believe the USD539,375 represented proceeds of an indictable crime. DW2 Benson Tam 106.Tam has been operating a trading company called Skytones International Limited. He first met Defendant in 1984 and has been doing business with Defendant for years. Defendant either bought goods from him or Defendant would act as an agent to introduce business to him. In the latter case, they would share the profit on a 50-50 basis. 107.Defence Counsel asks Tam about confirming-house business. Tam rather uses the term ‘consolidation business’ for his answer. He explains such business is to source and buy goods from the suppliers and send them to the buyers. The agent can earn a commission of 12-15%. That percentage can be higher or lower. Tam says in such business, he would have to give his bank account details to the buyers for the latter to send the money for the goods. Tam has not been asked to detail on how the buyer communicated to the agent on what to buy. 108.Tam points out the documents in Bundle B, 31-37 as those deals he and Defendant had been involved in Ghana. Skype and Email 109.Defendant produces Bundles A, C and D (Exh D1, D3 and D4) plus Exh D12 to show what he had communicated with coolsaintt. Defedant says all these had been stored in his electronic records. They are now printed out as they have been stored without editing. There are some blank pages in Bundle C. Defendant says it is printing form and not editing. Prosecutor has no quarrel with that. I shall refer to these Skype and email records in the Discussion section. Final Submission 110.Both parties have prepared written submission. Prosecution 111.Prosecutor accepts Defence Counsel’s assertion that PW10 was Daniel/coolsaintt/saint cool. He also accepts the authenticity of Defence Exhs D1, D3 and D4 (Bundles A, C and D respectively). Prosecutor indeed relies on them but interpret them differently from Defence Counsel. He says Defendant’s communication with coolsaintt clearly shows Defendant agreed with coolsaintt to use Account A to move funds. Prosecutor submits that Defendant might not know about the fraud at the outset but he gradually had grounds to believe the money in Account A was proceeds of an indictable crime. Prosecutor says Defendant at the end must be well aware that coolsaintt was a party to a fraud. 112.Prosecutor asks this court not to accept Defendant as a reliable and honest witness or a proper businessman. 113.Prosecutor says Defendant could not have either honestly or reasonably believed what he was doing was legitimate. He points out that Defendant did not know coolsaintt well. He did not know much about the fertilizer deal either. The offer to him was too lucrative. It was unreasonable for SIAT to be entitled to nearly USD1.3M (12% of the contract price) as reward for such a simple task. It was unreasonable for Defendant not to raise any questions about the propriety of the deal. Defendant should at least be suspecting. Prosecutor suggests Defendant really turned a blind eye to the obvious suspicion. Defence 114.On the other hand, Defence Counsel submits Defendant is a creditable witness, who honestly and reasonably believed what he was doing was legitimate. Coolsaintt knew the fraud and duped Defendant into business by keeping the latter in the dark. 115.In his 33-page submission, counsel speaks of 4 areas:-
Discussion Fraud 116.It is not in dispute that some fraudsters perpetrated a scam on Sinochem and Dragon Asia by intercepting their emails. The fraudsters monitored the exchange of the fertilizer contract. They used pretence emails to mislead Dragon Asia into believing that the named beneficiary of the Contract was SIAT. Dragon Asia thus instructed their bank BNP Paribas to remit the down payment of USD539,375 into SIAT’s Account A. This money was proceeds of a fraud, which was an indictable offence. Account A and Account B 117.It is also not in dispute that the two owners of SIAT, Brian and Defendant, jointly dealt with the 15 transfers which were made between 9 July 2014 and 17 July 2014 out of Account A, totalling USD327,175. The last three transfers totalling USD38,500 (equivalent to HKD298,157.5) went to SIAT’s Account B. Between 15 July 2014 and 18 July 2014, Defendant took out a total of HKD236,000 by 4 withdrawals from Account B with Brian’s approval. PW10/Daniel/coolsaintt/saint cool 118.Prosecutor and Defence Councel both assert PW10 was a fraudster. PW10, however, protests his innocence in court. 119.Coolsaintt on email gave 6140 2532 as his mobile number to Defendant. That was in fact PW10’s phone number. PW10’s texts to Defendant (Bundle D, 62-77) were also in line with and had the same tone as coolsaintt speaking to Defendant on Skype and email. I do not accept PW10’s explanation in court that coolsaintt was probably Osas and he was merely speaking to Defendant adopting Osas’s words. In fact, PW10 spelt the word ‘counter’ wrong as “canter” in his text (Bundle D, 73). So did coolsaintt on Skype (Bundle D, 52, 9:50:24 pm). 120.I have no doubt PW10 was Daniel/coolsaintt/saint cool. 121.Coolsaintt (PW10) gave Defendant a passport copy bearing his own photo but a false name of OBI Danny (Bundle C, 87). That he would not reveal his true name to Defendant shows he had something to hide. 122.There were two occasions when coolsaintt transmitted the fraudster’s emails to Defendant, saying those messages were from people instructing him. PW1 Carson Yeung identifies those as coming from the fraudsters. So, those instructing coolsaintt must be members of the fraud gang. 123.Whether coolsaintt was part of the gang is not clear. But it is irresistible to infer coolsaintt knew there was fraud going on and that was why he would not expose his true identity. Defendant’s Businesses 124.I bear in mind that Defendant has a clear record. As such, he should be seen as a person of good character. 125.Prosecutor tries to establish by his cross-examination of Defendant that the latter’s claim to his many businesses is incredible. However, I do not think Prosecutor’s effort has rendered DW2 Mr Tam or those business documents in Bundle B incredible or unreliable. I accept Tam’s testimony. Also, the documents in Bundle B have not been demonstrated to be false or bogus. I believe Defendant was involved in such businesses as evidenced by the documents and as Tam says. I also accept Defendant was sincerely talking to Mr Mak of www.investhk.gov.hk. He really wanted to set up an office in Hong Kong for his companies. I accept Defendant had engaged himself in many businesses including what he called confirming-house business. One can really do business of many kinds at the same time. 126.Defendant denies to Prosecutor that he for reward lent his accounts to others to conduit money. However, there is ample evidence in his Skype and email communication (Bundles C and D) to show he talked about that with coolsaintt. Skype and Email 127.On 3 January 2014, coolsaintt asked Defendant to send him Hong Kong accounts for money coming from different places depending on the business. (Bundle D, 1, 10:11:54-10:13:15 pm.) 128.On 26 January 2014, coolsaintt said they sometimes needed accounts in Singapore. He especially asked about Deutche Bank Singapore. Defendant said, “non my own”. Instead, he offered one in Dubai. Coolsaintt said they need accounts in Dubai, Singapore and Hong Kong. (Bundle D, 2-3, 8:10:07-10:46:03 pm.) 129.On 2 February 2014, coolsaintt says he had been making tons of money online. He asked Defendant to sign up as soon as possible. (Bundle D, 3, 5:58:33-6:00:54 pm.) 130.On 10 February 2014, coolsaintt asked for China account. He told Defendant about a client sending 650K from China to Hong Kong. Defendant offered his SBI account. [In fact, we can see on Bundle C, 25 Defendant had already emailed coolsaintt on 26 January 2014 his companies’ accounts in SBI.] Coolsaintt said on Skype that he did not want SBI accounts. Defendant then offered him accounts in Bank of China, ICBC and DBS. Coolsaintt also said he needed one account in China for 140K and it had to be a company account. Defendant confirmed with coolsaintt on the DBS account of Skytones International Limited [This is a company of DW2 Mr Tam.] (Bundle D, 3-5, 11:29:21-11:48:32 pm.) 131.Defendant in court says they were talking about getting funds to buy merchandize in confirming-house business. However, there was simply no mention of any type of goods when they talked about accounts. Actually, Defendant and coolsaintt talked about how to get the wired money out the recipient’s account and subsequent handling. Defendant suggested transferring to another account or by cheque release. Coolsaintt, however, wanted cash. Defendant agreed to draw cash by his partner in Hong Kong to give to coolsaintt. Coolsaintt said the money was in China. Defendant then offered a bank account in China. Coolsaintt said he did not know how much would move to DBS because the client was from his friends. (Bundle D, 3-8, 11:29:21 pm on 10 February 2010 – 12:05:41 am the next day.) 132.Coolsaintt further asked Defendant if he had other accounts. Defendant replied he had an HSBC account. Coolsaintt asked Defendant to open one with Deutche Bank in Hong Kong and Singapore. He said he had calls for that. (Bundle D, 8-9, 11 February 2014, 12:07:08-12:16:26 am.) 133.Apparently, coolsaintt was acting as an agent asking Defendant to provide him bank accounts in various places to conduit money for the funders. It was never about buying merchandize. 134.There were more talks of this money-conduit business subsequently. 135.On 21 February 2014, coolsaintt talked about USD104K and asked for Singapore account. Defendant offered him account in Dubai or Sri Lanka. (Bundle D, 10, 11:44:33-11:51:59 am.) 136.On 27 February 2014, coolsaintt said he expected one sum of USD5,000,000 and another of USD65,000 to have gone to the DSB account that Defendant had earlier given him. He asked Defendant to check. Defendant said his colleague in Hong Kong would do that. Coolsaintt said he wanted cash instead of wiring the money to other accounts. Defendant later replied that there were no such amounts in that DBS account. (Bundle D, 10-12, 1:59:01-3:07:28 pm.) 137.On 26 April 2014, coolsaintt asked Defendant to reconfirm the SBI account. Defendant said the account was good. (Bundle D, 13, 5:43:56-5:44:07 pm.). Defendant confirmed the account details as correct. (Bundle C, 25.) 138.On 14 May 2014, coolsaintt asked for accounts again. Defendant mentioned SIAT’s account in SBI. He asked coolsaintt to check his mail. (Bundle D, 16-18, 12:52:38 – 1:31:11 pm.) And on Bundle C, 29, there was a mail from Defendant to coolsaintt that day containing SIAT’s account in SBI. On 3 July 2014, coolsaintt asked Defendant to check if the money had been wired into the account. Coolsaintt said the company had instructed the transfer since 2 July 2014. On 4 July 2014, Defendant asked coolsaintt to give him a copy of the transfer. Coolsaintt replied by email on Bundle C, 28-29 as follows:-
139.That day (4 July 2014), coolsaintt skyped Defendant. The two then talked for over a minute. (Bundle D, 20, 12:05:40 am.) At 12:08:21 am, coolsaintt said, “get back to you as soon as I hear from the clients paying the USD539,400”. (We know this was the down payment of the fertilizer contract.). Coolsaintt told Defendant the deposit came from “Swiss” (Bundle D, 20, 3:32:55 pm) and the sender was “Sino chemical” (Bundle D, 21, 3:40:35 pm). He asked if the money had arrived in Defendant’s account. Defendant replied that he would check and advise coolsaintt (3:41:53 pm). Coolsaintt asked Defendant to get the money out the next day if it came through. (Bundle D, 22, 4:08:03 pm). 140.However, no money came to SIAT’s account on SBI before 9 July 2014. 141.On 5 July 2014, Defendant and coolsaintt communicated again. On email, Defendant told coolsaintt the USD539,400 had not come. (Bundle C, 28, 08:54:14.) 142.Bundle C, 31 shows that on 7 July 2014, Defendant wrote email at 10:51 am telling coolsaintt there was still no money in the account. Coolsaintt replied at 11:01 am saying there might be some delay. He said they need to get the money out. Then at 11:57 am, coolsaintt sent another mail to Defendant. He asked Defendant to check if the attached L/C (Bundle C, 34-36) was correct. [The beneficiary of the L/C was stated as Sino Investment and Trading Limited with address at Room 46011-10, Office Tower, Convention Plaza, 1 Habrour Road, HK Wanchai. Such address was not correct.] 143.On Skype, between 3:16:59-3:17:21 pm that day (Bundle D, 24), Defendant said:-
144.Coolsaintt then replied the L/C was for the remainder of the full contract of 10,000,000, and 500,000 would by sent by TT today. Coolsaintt asked Defendant to see (46A) of the L/C. [Term 46A was under the section titled “Documents Required”.] Defendant then told coolsaintt:-
(See Bundle D, 24, 3:21:14-3:21;58 pm.) In court, Defendant says he asked coolsaintt to amend the wrong address to that of SIAT. 145.At 3:22:39 pm on 7 July 2014, coolsaintt skyped a message to Defendant (Bundle D, 25). He told Defendant that message was an email sent by his contact to the remitter (Bundle D, 24-25, 3:22:02-3:23:08 pm). [PW1 Carson Yeung identifies in court that message had appeared in a scam email from the fraudster. See Exh P85.] 146.On Bundle D, 25-26, we can see that between 3:26:45-3:26:59 pm on 7 July 2014, coolsaintt again talked about (46A) of the L/C. Defendant repeated asking coolsaintt to get that amended fast. At 3:31:45 pm, Defendant said, “also the address must amend”. 147.On Bundle D, 26-27, between 3:34:11 - 3:37:01 pm on 7 July 2014, Defendant asked coolsaintt:-
Coolsaintt replied his contact had the supplier. Then Defendant said:-
Coolsaintt, however, responded:-
Defendant said:-
148.Next, the two talked about the L/C and the “wire transfer”, which was supposed to arrive (Bundle D, 27-38). On Bundle D, 29, at 4:49:41 pm, coolsaintt sent Defendant an email that he said was from those instructing him. [PW1 Carson Yeung again identifies this had appeared in a scam email. See Exh P82.]. 149.At 11:32:37 pm on 7 July 2014, coolsaintt expressed he hoped Defendant was able to take out all the money (Bundle D, 38). At 11:38:11 pm on Bundle D, 39, coolsaintt said:-
150.The next day (8 July 2014), after 3:00 pm, the two talked about the money and the L/C on Skype (see from Bundle D, 40). Between 3:43:39 - 3:43:45 pm, Defendant said the L/C was in Hong Kong for the shipment and there was no trace of the money. (See Bundle D, 41.) 151.On Bundle D, 42, we can see that between 3:55:17 - 3:57:01 pm, coolsaintt told Defendant, “these guys are serious business guys, they just need reliable people to deliver and trust”. Defendant said he hoped those instructing coolsaintt would ship out the DAP (di-ammonium phosphate). He asked, “Is this black or white colour”. Coolsaintt replied he did not know. He said he was only a middle man. 152.Between 10:52:47 - 11:10:12 pm (Bundle D, 44), coolsaintt told Defendant that those instructing had sent the TT copy and he would forward it to Defendant. He asked Defendant what the plan was to take out the money. Defendant said:-
153.Between 11:11:13 - 11:14:09 pm on 8 July 2014, coolsaintt said he wanted the money out immediately to be given to the company. Defendant asked coolsaintt to give him the name of the company. However, coolsaintt asked Defendant to give the money to him and he (coolsaintt) knew who to give the money to. Coolsaintt asked if Defendant would be in Hong Kong or sending someone to withdraw the money. Defendant replied he would be in Hong Kong the next afternoon. (See Bundle D, 45.) 154.On 9 July 2014 in the morning, Defendant told coolsaintt there was no trace of the money yet. On Bundle D, 47, coolsaintt at 12:38:51 pm said:-
155.Defendant did not answer coolsaintt anymore on Skype on 9 July 2014 or the day following (10 July 2014). On 10 July 2014, coolsaintt emailed Defendant, saying those instructing would call the money back tomorrow afternoon if Defendant did not get the money out. Defendant replied by email saying he was in Manila then and he would go back to Singapore before coming to Hong Kong tomorrow. (See Bundle C, 49.) [As Defendant admits in court, he was again lying to coolsaintt because he was in Sri Lanka all along.] 156.On 11 July 2014, Defendant emailed coolsaintt saying he was not running away with the funds. He asked coolsaintt what would happen with the L/C, when the shipment was and if the shipment would be done at all. (See Bundle C, 49.) 157.Between 8:22:06 - 8:23:37 am on 11 July 2014, coolsaintt said the company agent in Hong Kong had been waiting for the money for 3 days and the money would be recalled if they did not get the money that afternoon. (See Bundle D, 49.) A few minutes later, at 8:29:38 am, Defendant told coolsaintt the money had gone to the Hong Kong account the day before and he would send the money on Monday (14 July 2014). However, he still lied to coolsaintt that he was in Manila and had to go to Singapore for business. He promised to arrive in Hong Kong on 12 July 2014. (See Bundle D, 50, 9:46:17 – 9:48:17am.) 158.There were some email exchanges between the two. Defendant said he was in Colombo (Sri Lanka). He could not release the money that day. He would send the money back if coolsaintt could not wait till Monday. (See Bundle C, 53.) 159.Coolsaintt expressed he would like Defendant to release some money that day (Friday) or the day after (Saturday). But Defendant said he could not do that as he would only arrive in Hong Kong tomorrow afternoon but the bank would be closed then. (See Bundle D, 51, 11 July 2014, 9:50:32 – 9:56:01am.) 160.On 12 July 2014 (Saturday), Defendant arrived in Hong Kong around noon. He did not communicate with coolsaintt except telling the latter earlier that morning that he would arrive late in the evening. (See Bundle C, 53.) Coolsaint was annoyed. (See Bundle C, 59.) 161.On 13 July 2014, coolsaintt (who was in fact PW10 with phone number 6140 2532) texted Defendant asking when and where to meet. (See Bundle D, 76-77.) 162.In court, Defendant says they met on 14 July 2014 (Monday) while PW10 says it was 15 July 2014 (Tuesday). Defendant seems to be accurate about the date because on 14 July 2014 at 19:17 pm, PW10 texted Defendant the information of Po Lam Recycle Company. (See Bundle D, 74-75.) That was one of the accounts coolsaintt asked Defendant to put money in. Apparently, they had already met and talked about the disperse of the money. 163.That day later, the two communicated on Skype where coolsaintt urged Defendant to transfer the money at bank counter (Bundle D, 52, 14 July 2014, 9:50:24 pm). 164.The next day (15 July 2014), coolsaintt emailed Defendant saying he got instruction and requested Defendant to transfer, after deducting their 15%, into 3 accounts:-
165.Defendant replied to coolsaintt that he needed clear account details, BRC (business registration certificate), passport copy of the account holders and that coolsaintt should mention “this is the supplier nominated by the L/C applicant”. He also required coolsaintt to send him the latter’s passport and invoice for the 3% commission. (See Bundle C, 63.) 166.Several hours later at 10:58 am, coolsaintt emailed Defendant account information, BRC and passport copies of the recipients for the USD97,500 and USD204,000. He, however, asked Defendant to hold back the USD200,600 for the time being. (See Bundle C, 69-73.) 167.At 12:57 pm, still on 15 July 2014, coolsaintt emailed Defendant another company’s information for the transfer of the USD200,600. The name of that company was Guangzhou Queenswing Solar Energy Co Limited. (See Bundle C, 76-78.) 168.At 1:24 pm that day, Defendant again requested coolsaintt to give him confirmation that it was the L/C applicant’s request to transfer the USD97,500 and USD204,000. Defendant asked coolsaintt to provide a bank account in Hong Kong and his passport copy for the transfer of the 3% commission. (See Bundle C, 74.) 169.That evening, at 19:24:29, coolsaintt reminded Defendant by email that he had to transfer the USD200,600. He also provided an account in the name of Lee Siu Chung for Defendant to transfer the 3% commission. (See Bundle C, 80.) 170.The next afternoon (16 July 2014), coolsaintt was annoyed that Defendant still had not transferred any money. He said, “I don’t know what decision this people will take if they woke up and know their agent haven’t received the money”. The two then talked on phone. (See Bundle D, 54, 3:18:29-3:23:43 pm.) 171.Coolsaintt complained that the recipients had already waited for 4 days and they might call the money back. (See Bundle D, 54, 8:58:43 pm.) 172.Coolsaintt had made the same complaint by email that day. In reply, Defendant grumbled that he was asked to move money to various accounts. That would cause the bank to investigate. He asked coolsaintt to let him get through this properly. (See Bundle C, 79.) He asked coolsaintt to send him his passport copy. Coolsaintt quickly did. (See Bundle C, 83 and 87.) The document he sent had a photo. In court, PW10 denies he sent that document but he admits it was his own photo. The name appeared there as ‘Danny OBI’. [PW10 says in court he had a business friend called Sunny OBILO. Apparently, PW10 (coolsaintt) put his photo on the other man’s passport. He altered ‘OBILO’ to ‘OBI’ and ‘Sunny’ to ‘Danny’.] 173.Coolsaintt continued to complain on Skype about Defendant’s failure to transfer the money as instructed. On Bundle D, 55, between 9:26:55-10:14:55 pm on 16 July 2014, he threatened that he would agree to recall the money. He said if Defendant did not give him the TT copy, they money should be sent back the next day. 174.At 11:20:54 pm, Defendant responded to say that recall would not worry him but he must secure his account in case of queries. At 11:22:21 pm, Defendant said he would send back the money after the L/C expired. Coolsaintt then suspected Defendant had taken the money out. He asked Defendant to prove the money was still in his account. (See Bundle D, 56.) That was already 2:54:27 am on 17 July 2014. 175.Later that day, coolsaintt on Skype asked about the progress but Defendant only responded at 5:10:50 pm saying he had gone to the bank but the staff was busy. Coolsaintt suspected Defendant was stalling again. He asked him to return the whole sum to the remitter. (See Bundle D, 56-57, 5:09:47 – 5:25:59 pm.) 176.There was no more communication except that Defendant tried to Skype coolsaintt on 25 April 2015. However, there was no response from coolsaintt. 177.Defendant in court says there was one last set of emails from coolsaintt between 21 July 2014 and 23 July 2014. That is produced as Exh D12. On page 1, coolsaintt emailed Defendant at 3:16 pm on 21 July 2014 asking what the situation was. (But we know Defendant had already been arrested by noon that day.) 178.On the subsequent two days, coolsaintt further emailed Defendant accusing the latter of running away with the money. He threatened to report Defendant to the police. (Page 1 of Exh D12.) 179.The Skype and email records are not in dispute. They speak for themselves. Agreement between Defendant and Coolsaintt 180.It is apparent from their Skype and email communication that Defendant offered different accounts in different places for reward upon coolsaintt’s request. I do not accept Defendant’s explanation in court that it was for the buyers in confirming-house business to send in money for the merchandize. There was no discussion at all of who was to buy what. Defendant says that in confirming-house business the buyer would only send the purchase list together with the money. This defies logic. Nobody would send purchase money before detailed discussion of contract terms including goods specification. I am sure in those Skype and email discussions Defendant and coolsaintt were talking about money conduit or money moving for reward. In this case, the two had reached an agreement, which was for Defendant to use his SIAT account to receive the down payment and the L/C money as the named beneficiary of the Contract and the L/C. Then Defendant had to transfer the money (after deduction of 12% for SIAT and 3% for coolsaintt) to other accounts according to coolsaintt’s instruction. Coolsaintt later asked Defendant to transfer USD200,600, USD204,000 and USD97,500 to different accounts. It was known to Defendant that coolsaintt was only an agent acting for others. Defendant heard from coolsaintt that those instructing him (coolsaintt) were the people remitting the USD539,375 and asking him (Defendant) to execute the L/C too. 181.Defendant tries to impress the court that he was asked to execute the L/C, which named SIAT as beneficiary. Therefore, he used Account A of SIAT to receive the down payment and later the L/C money, if the L/C could be executed successfully. It is obvious from the facts of the case that such saying is stating the fact in the reversed order. The truth is Defendant had to receive the whole contract sum (the down payment and the L/C money) with Account A. It was for the latter sum that he had to execute the L/C. 182.SIAT was only incorporated in Hong Kong in 2012. It had no established business or reputation. It was not an L/C specialist. Why would someone pick SIAT for the job? Why would someone entrust an unrelated company (SIAT) to receive first the USD539,375 and later a much greater sum of over UDS10M through execution of the L/C? And more puzzling still, why would someone give SIAT 12% (USD1,294,560) and coolsaintt 3% (USD323,640) as commission for such a simple task? I am sure it was only because Defendant could offer SIAT’s account as available for coolsaintt’s side to use that account to receive money for conduit. That was the reason (and the only reason) why SIAT was named as beneficiary on the Contract and the L/C. I am sure Defendant was aware of such reason. 183.Their communication shows that as early as 26 January 2014, Defendant upon request had offered coolsaintt his SIAT account in SBI. Coolsaintt asked Defendant to confirm its correctness on 26 April 2014. (Bundle C, 25.) By then, nothing had been mentioned of the fertilizer deal. The first vague reference of the matter appeared in coolsaintt’s email on 3 July 2014 at 20:05:45 (Bundle C, 29) when he asked Defendant to check if the money had been wired in. Their subsequent communication confirmed the two were talking about the fertilizer deal. The down-payment figure of USD539,400 was mentioned in their Skype communication (Bundle D, 20, 4 July 2014, 12:08:21 am) and email exchanges (Bundle C, 28). Coolsaintt was keen to see that after deduction of 15% (3% for coolsaintt and 12% for Defendant) the money would be transferred as soon as possible according to the wish of those instructing him. Defendant and coolsaintt were also concerned with the L/C, which if executed, would lead to the remaining 95% (USD10,248,600) going to SIAT’s account as well. Then, both would earn much more according to the stated commission percentage. Stalling 184.SIAT got the USD539,375 on 9 July 2014. Defendant and Brian immediately started making use part of this fund for their own purpose. They had totally taken out USD327,175 from Account A. Defendant says in court that they had cash-flow needs. They thought they could earn their commission and were merely using what they would be entitled. [As at 17 July 2014, only USD 211,950 remained in Account A. As at 18 July 2014, the balance in the other SIAT account (Account B) was merely HKD62,000 odd.] 185.Despite coolsaintt’s urge, Defendant did not leave Sri Lanka until 11 July 2014. He only arrived in Hong Kong on 12 July 2014. That was a Saturday. Upto his arrest on 21 July 2014, Defendant still had not transferred any money as coolsaintt instructed. Nor did he give coolsaintt his 3% commission. 186.In his emails to coolsaintt, Defendant complained that he was asked to move money to many accounts. He worried that would arouse the bank to investigate and thus endanger his own account. Defendant also more than once asked coolsaintt to confirm that the L/C applicant had instructed the transfers. Coolsaintt, however, paid no heed. Defendant in court says he therefore would not transfer any money as instructed. He also would not give coolsaintt his full commission lest the latter became unkeen on the L/C matter. 187.I am sure Defendant was stalling transfer or payment. He had used a large portion of the money with Brian for their cash-flow needs. They did not have enough money for the time being to disperse as coolsaintt requested. So, Defendant stalled on paying out. He must be hoping to execute the L/C in time. Then he would have more than enough to make up for the shortfall. Knowing 188.Prosecutor says Defendant and Brian knew the money came from fraud, so they dared appropriate that USD539,375. But this is only a hypothesis. There is no direct evidence that Defendant or Brian knew the fraud. Nor is there sufficient evidence for such inference. I find Defendant only stalled on payment because of cash-flow problems. He was not refusing to transfer the money at all but would only do it later. He would have enough money to do that if the L/C was executed. I believe Defendant’s telling the court that should the L/C deal fail, he would borrow from the bank to repay the owner of the money less any expenses incurred. 189.Prosecutor even says Defendant was a member of the fraud gang just as coolsaintt was. I do not agree. If Defendant was part of the fraud gang, he would know enough and therefore need not ask coolsaintt if there was any supplier of the fertilizer or offer himself to provide inspection for the goods. 190.Defence Councel submits that Defendant was duped into the business. I accept that coolsaintt had not told Defendant anything of the fraud. There was no discussion of that in their Skype/email communication. 191.Defendant cannot be held to know the USD539,375 represented proceeds of an indictable offence. Having Reasonable Grounds to Believe 192.Prosecutor submits that if Defendant did not know the fraud, he can still be convicted of conspiring with others to launder money on the ‘having reasonable grounds to believe’ limb. 193.Defendant was educated. He had engaged himself in many businesses. He was experienced. He answers Prosecutor that he is a prudent merchant. In the police interview and in court, he does not speak or behave like a dump person. He maintains to police and in court that he believed what coolsaintt assigned him to do was all legitimate. 194.Prosecutor submits nobody would give 15% of USD10,788,000 (almost USD1.6M) to another company or someone simply to execute an L/C (even though inspection of goods would have to be done.) Defence Counsel retorts that Dragon Asia only had to find a buyer in Bangladesh and could gain even more – around USD1.7M (book-profit). 195.The two companies’ position cannot be compared. Dragon Asia was the buyer and had to shoulder buyer’s risks and burdens, eg, paying out the 5% down payment (USD539,400) and engaging a bank to issue an L/C for more than USD10M. On the other hand, SIAT only had to get the documents for the L/C with inspection of the goods (estimated by Defendant to cost only around USD50,000). 196.Defendant answers Prosecutor that he did not ask coolsaintt or the contract parties why SIAT was chosen. He explains that he did not feel any need to. He says he should not go beyond the agent as a matter of commercial practice. 197.I agree it might not accord commercial practice for Defendant to go beyond the agent to speak direct to Dragon Asia or Sinochem. However, there is no reason why Defendant should not ask coolsaint to understand why he/SIAT was chosen. Defendant in court simply answers Prosecutor that he did not see the need to. He says the commercial world was like that. I disagree. The commercial world is always a real world. It was never like that. I do not find Defendant’s explanation reasonable. I am sure the truth is that Defendant did not want to ask coolsaintt anything which would jeopardize their business. Defendant just eyed on the mega profit. That would be 12% of USD10,788,000, which he and Brian could share equally. I am sure Defendant knew he/SIAT was chosen only because of the availability of SIAT’s account to receive the down payment and the L/C money. To get the latter sum, Defendant would have to execute the L/C. 198.Defence Counsel asks the court to note that Defendant had stayed in Hong Kong from 12 July 2014 till 21 July 2014 when he was arrested. Counsel says that was not a fleeting stay typical of a money launderer. 199.Defendant had to wait for the L/C to be executed. For that, he had to go to China later to inspect the goods. Defendant also planned to open an office here for his companies. He certainly had to stay in Hong Kong for some time. 200.Defence Councel asks the court to note that Defendant not just asked coolsaintt questions about the goods but also took caution by asking coolsaintt for the L/C applicant’s confirmation to disperse the fund. 201.The few questions Defendant asked coolsaintt about the goods (see para 147, 151 and 156) would not help him to understand much about the background. The so-called caution measure taken by Defendant of asking for the L/C applicant’s confirmation before dispersing the money would not help him to understand more of the deal either. In fact, as I shall explain later such insistence was merely a tactic to delay the transfers coolsaintt requested. 202.Defence Councel says Defendant believed the money was legitimate. But belief should be confidence in the truth or existence of something not immediately suspeptible to rigorous proof. The whole situation here is, however, so questionable that it calls for immediate rigorous proof or due diligence enquiry. Someone for no good reasons wanted to use SIAT’s name on the Contract and the L/C as beneficiary and required SIAT’s account to receive the down payment and the L/C money. A huge and totally disproportionate reward (12% of USD10,778,000) was offered to Defendant. Defendant in such circumstance ought to think or dig deep into the matter. Yet, he did not but simply turned a blind eye to the situation. He chose not to perform any due diligence enquiry. He was unreasonably contented with the scarce information he had of the highly suspicious deal coolsaintt brought him. His belief that the money was legitimate was, therefore, ill-founded. 203.The ‘having reasonable grounds to believe’ test is anyone looking at the grounds Defendant had would believe the property Defendant dealt with represented proceeds of an indictable offence. Defendant’s belief (even mistaken or fallible) is a ground that has to be taken into consideration. However, it is not an over-riding or determinative ground. I am sure anyone looking objectively at the grounds Defendant had would believe differently from Defendant, who was in fact turning a blind eye to a highly questionable situation which he must have so appreciated. Anyone looking objectively at such grounds Defendant had would believe the money involved represented in whole or in part, directly or in directly the proceeds of an indictable offence. Defendant ought to have known that but he chose not to. He was only concerned with the profit. Substantive Offence and Conspiracy 204.Defence Counsel complains about Prosecution’s alleging conspiracy instead of substantive money laundering. He also complains the conspiracy allegation is convoluted. 205.Defence Counsel does not make the aforesaid comments until his final submission. If any objection is taken of the charge, it ought to be raised before the trial begins. Anyway, I do not find the charge is convoluted though it has been amended twice. The final version of the charge is clear. It alleges Defendant between 26 April 2014 and 21 July 2014 conspired with Brian, Diallo Ibrahima (PW10/coolsaintt) and other persons unknown to deal with the USD539,375, knowing or believing the money in whole or in part, directly or indirectly represented the proceeds of an indictable offence. Prosecutor states in court that the added Diallo Ibrahima (PW10/coolsaintt) was a fraudster and “other persons unknown” refer to the other fraudsters, ie, those who were involved in sending out pretence emails to Dragon Asia and Sinochem. 206.It is clear from the charge that Prosecution are not just concerned with the receipt of the USD539,375 but also how it was obtained by fraud and how it was to be dispersed after staying in Account A. As such, a conspiracy charge is appropriate to embody the allegation, which is wide but not convoluted. 207.I agree with Defence Counsel’s submission that what is sufficient for a substantive offence may not be good enough for a conspiracy. Of course, there are different requirements. The actus reus is different; the mens rea is different too. It has been properly pointed out that a conspiracy is an agreement to do an unlawful act or to do a lawful act unlawfully. No doubt, the actus reus required is the forming of such an agreement; the mens rea is an intention to form that agreement. 208.The reference of ‘unlawful’ in conspiracy definition does not mean the parties have to know what they agreed to do was a crime; ignorance of the law is no defence. It would be a conspiracy if they agreed to do something, which on the facts known to them, was unlawful. 209.Much has been said of the mens rea required for conspiracy. It is most clearly expressed as per Viscount Dilhorne in R v Churchill [1967] 2AC, 224 at 237:-
Chain Agreement 210.Some unknown fraudsters managed to deceive Sinochem and Dragon Asia. They wanted to take money out of the altered Contract and the altered L/C. Coolsaintt (PW10) took instruction from these fraudsters. He lured Defendant into letting them to use SIAT’s account (Account A) to receive the money. I am not sure whether coolsaintt was in fact one of the fraud gang but I am sure he was at least a knowing agent. 211.I accept that coolsaintt had not told Defendant the fraud but Defendant in the circumstance as he was aware ought to have known the money he was asked to deal with represented proceeds of an indictable crime. 212.Bundles C and D clearly show coolsaintt and Defendant had been talking about using accounts to move money for others in order to earn rewards. Defendant offered his SIAT account in general as early as 26 January 2014. But nothing of the present deal was mentioned before 3 July 2014. Then, Defendant readily took on this business coolsaintt gave him. 213.Counsel says Defendant later refused to carry out coolsaintt’s instruction to transfer the money to various accounts or to give him the 3% commission. Their minds thus had departed from each other. 214.According to what Defendant says in court, he was not refusing to transfer the money or to give the 3% commission. He was merely waiting for coolsaintt to provide him with written confirmation from the L/C applicant that the money was to be so dispersed. However, I am sure Defendant was not sincerely concerned about the written confirmation. He had not at the beginning asked coolsaintt for any written confirmation of coolsaintt’s offer to him. He apparently trusted coolsaintt had all the authority from the money owner to give him the order. Why should he suddenly become cautious and require written confirmation to disperse the money? The request was clearly a delay tactic. As said, Defendant and Brian had cash-flow needs. They had taken out USD327,175 from Account A. Defendant wanted to stall on payment. He hoped he could have time to execute the L/C before its expiry on 10 August 2014. I am sure Defendant was not refusing coolsaintt’s request; he was merely stalling due to cash-flow problems. 215.Defendant says in court that he was sure he got coolsaintt’s order when he received the latter’s email on 7 July 2014. He then told his business partner Brian. There is no evidence that Brian asked Defendant for more information or Brian himself made any due diligence enquiry about the deal. Like Defendant, Brian was turning a blind eye to the highly suspicious situation and approved Defendant to take on coolsaintt’s order. Brian and Defendant kept on liaising. Both were of the same mindset. They agreed to deal with the money under scarce information and ill-founded belief. Each ought to have known from the grounds he had that the money represented crime proceeds. Both just chose not to pay heed to that. 216.There was a chain agreement to deal with the money: first between the email fraudsters and coolsaintt on an unknown date before 3 July 2014; then between coolsaintt and Defendant on or about 3 July 2014; and subsequently between Defendant and Brian. It came to an end on 17 July 2014 when coolsaintt said at 5:23:54pm, “since you didn’t do what u are suppose to do, ... the money is going back and if you touch or take out any cent … the money have to be complete when it returned to the remitter.” (See Bundle D, 56.) Coolsaintt would no longer endure Defendant’s stalling. He asked Defendant to return the money. He thus terminated his agreement with Defendant. 217.Prosecutor and Defence Counsel agree that people knowing the money they dealt with represented crime proceeds and people only having reasonable grounds to believe so can conspire together to launder money. Such legal view must be right. Conspiracy only requires the agreeing parties to have the same intention to agree to do an unlawful thing (in this case, to launder the USD539,375 which could be done under either limb – ‘knowing’ or ‘having reasonable grounds to believe’). The parties do not have to possess the same degree of knowledge. Their mindsets must have the aforesaid intention in common but need not be identical. As long as the parties agree to do something in common which, on the facts known to them, is unlawful. They are in a conspiracy. Conspiracy in Hong Kong 218.Defence Counsel submits that if there was any conspiracy, it might be one made by some parties overseas to launder money in Hong Kong rather than one made in Hong Kong to launder money. 219.It is not clear where the email fraudsters were situate; Brian was in India at all material times; Defendant was in Sri Lanka before he arrived here around noon on 12 July 2014. However, PW10 (coolsaintt) was based in Hong Kong. There is no evidence he had not been in Hong Kong since 3 July 2014 when he talked specifically about the deal with Defendant. Defendant met him here on 14 July 2014. Thus, the agreement among all can be deemed as one made in Hong Kong because of the link with coolsaintt. Their agreement was to deal with the USD539,375. (Actually, they had also agreed to deal with the L/C money upon execution of the L/C. However, this latter part is not made a subject of the charge.) Honest and Reasonable Belief 220.Defence Counsel submits that Defendant honestly and reasonably believed the money was legitimate. Therefore, Defendant cannot be found guilty of laundering the money or conspiring with others to do so. Counsel says even if Defendant’s belief was not reasonable due to lack of due diligence, merely an honest belief would be a defence to both the substantive charge and the alleged conspiracy. 221.Prosecutor disagrees. He says only an honest and reasonable belief can be considered as a valid ground. A mere honest view cannot be sufficient. Prosecutor contends that Defendant was neither honest nor reasonable in his belief. 222.Defence Counsel relies on these passages:-
223.In that expression in Yan Suiling, the highest court was deciding whether the trial judge was unreasonable not to accept that defendant’s belief. That was clearly a matter of fact finding. The highest court was not saying if a defendant was found to hold an honest belief, then he/she must be acquitted. That cannot be the right interpretation. Otherwise, the test propounded in Pang Hung Fai (FACC 8/2013) would be watered down to a purely subjective test. The approved test on ‘having reasonable grounds to believe’ is that the jury should consider such grounds the accused had for believing and that anyone looking at those grounds objectively would believe the property represented proceeds of an indictable offence. An alternative interpretation is whether the accused ought to have known the property represented proceeds of an indictable offence. 224.The accused’s belief is certainly a ground that must be considered but it is just one of the grounds. It is not to be deemed as an over-riding or all-decisive ground. Justice Spigelman NPJ in Pang Hung Fai had this to say, “That does not mean that any such ‘perception or evaluation’, to use the words of the ground of appeal, is entitled to weight, let alone determinative weight.” (Para 83 of the judgment.) 225.As to that expression in Karmara, it is a generally correct statement. A mistake of law is not a good defence. Thus, an accused cannot plead he did not know dealing with money in certain circumstance was money laundering. He can, however, plead a mistake of facts if he really held a sincere belief in the circumstance which if true would make the illegal conduct legal. 226.In the present case, Defendant pleads he had a sincere belief of the nature of the fertilizer deal and thus the source of the money and the L/C. 227.As said in para. 202, Defendant’s so-called ‘belief’ was ill-founded. It was no more than a thought casually held as a result of lack of due diligence enquiry, which enquiry a person in Defendant’s position and with his capability ought to have made and could have made. Defendant in the circumstance ought to have come to alert as early as coolsaintt offered him the 12% reward. It was unreasonably lucrative and highly suspicious. Defendant ought to have known there was something highly irregular in the deal and, therefore, he ought to have known the USD539,375 represented in whole or in part, directly or indirectly the proceeds of an indictable offence. 228.At page 120 of the Karmara judgment, Lord Hailsham described the defences in that case as a claim of right made in good faith. In the present case, I find Defendant’s so-called ‘belief’ was just ill-founded and equivalent to turning a blind eye to obvious suspicion. It, therefore, could hardly be said to be sincere or in good faith. Verdict 229.I find as I am sure Defendant between around 3 July 2014 and 17 July 2014 conspired with his agent Diallo Ibrahima (coolsaintt), his business partner Brian and other persons unknown (those fraudsters instructing coolsaintt) to deal with the USD539,375. On the part of Defendant and Brian, they had reasonable grounds to believe the money in whole or in part, directly or indirectly represented the proceeds of an indictable offence. For the fraudsters and coolsaintt, they of course knew so. 230.Although the start date and the end date of this conspiracy were not those stipulated in the charge, they were within the alleged period. I, therefore, need not make any amendment to the charge. I can still convict Defendant of the charge as aforesaid and I so convict him.
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Cases cited in this judgment
Further hearings and rulings under DCCC 1047/2014