HKSAR v. IP CHING SANG

DCCC 212/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 212 OF 2015

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Reasons for Sentence

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1. The defendant has pleaded guilty to one offence of conspiracy to defraud.

2. The conspiracy involved the substitution of a protective material for coating concrete in a series of projects for the Highways Department.

3. The facts agreed by the defendant show that in 1999, the Highways Department awarded a three-year maintenance contract to a company called Hung Mau Realty & Construction.  This contract was for the maintenance of road surfaces and structures.

4. In the year 2000, the defendant, together with a partner, set up Hop Hei Engineering Company, and they obtained the subcontract from Hung Mau to perform the maintenance works.

5. Between November 2000 and August 2001 there were 14 work orders, and those work orders specified the use of Nucem Skin Coat, which is a material for protecting concrete surfaces.

6. Hung Mau had subcontracted that work to Hop Hei, and the total value of the contracts, which is the sum the Highways Department would pay to Hung Mau, was $2,810,602.88.

7. The product, Nucem, was imported from the United Kingdom, and the overt acts of conspiracy were the agreement to substitute that for a substance that was basically water with other things put into it.

8. The defendant told the foreman of the project that the price of Nucem was high and the supply of the goods was not stable, and so there was a scheme to deceive Hung Mau and the Highways Department, and the foreman was told to retain the Nucem packaging paper boxes and the liquid bottles, and later the defendant instructed the foreman to make a mixture of cement powder and water and to pretend that this was the coating, Nucem.

9. According to the sales record of the company that sold Nucem, the amount sold to Hop Hei would cover about 26 per cent of the total concrete surface areas.

10. The prosecution case is basically the Highways Department would not have paid for the substandard materials that were used in rehabilitation work and would not have paid the $2.8 million to Hung Mau.

11. The defendant wound up Hop Hei in 2004 and emigrated to the United States in March 2005.  He was arrested in Hong Kong by the ICAC on 9 January 2011, eventually returning to Hong Kong again in 2015.

12. The defendant’s antecedents are agreed.  He is a man of clear record.  He is aged 58.  He is married.  His wife is, together with his family, living in Washington State.  She is a caretaker at an elderly home.  He has two children, a son and a daughter, both grown up now.

13. The defendant was a truck driver originally after completing Form 5 education in Hong Kong before going into the construction business, where he had been employed for about 20 years.  He had built up his own company, but that went bankrupt in 2003.

14. The defendant’s mitigation is as follows:  that he has a clear record; that he has pleaded guilty, and is entitled, for that reason, to a full one‑third discount; that although the prosecution allege a fraud of 2.8 million, he has never received that money because Hung Mau themselves were wound up in 2005.

15. The product Nucem is a protective material.  It did not affect the structural integrity or safety of the works that were performed.

16. The defendant has also spent a period in custody in the United States and is entitled to credit for that period, that period being agreed as being 2 months and 5 days.

17. I have also had the benefit of seeing a number of letters written both by the defendant, his wife and his children, and other people who have come into contact with him, and these bear out the defendant’s general good character and integrity as perceived by people who have lived and worked with him since he has been in the United States.  These letters show that the defendant is clearly remorseful for his activities.

18. In Hong Kong he had served in civil aid services previously.  He fears that his conviction here may well affect his resident status in the United States where his wife and family live, and his family speak well of him in the letters.

19. I must, of course, determine the appropriate starting point for sentence for the defendant before giving him credit for his plea of guilty and his period of detention.  I have been referred to the case of HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1018.  This deals with the operative guidelines for cases of theft where breach of trust is involved. Although this involves a conspiracy to defraud, clearly the guidelines are relevant to an offence of this nature and the nature of the conspiracy, which involves the agreement to defraud moneys in a position of trust.

20. In a case involving between $1 million to $3 million, the sentencing guideline is between 3 to 5 years.  The determination of the guideline is not purely numerical.  It allows also to be brought into effect issues such as the nature of the conspiracy, its relative age or historicity, and the accrued benefits to the defendant.  On a numerical basis, the defendant’s offence would fall at the high end of the guideline sentence of 5 years.

21. I have determined the matter as follows. Clearly, this is a serious matter involving a breach of trust and a long‑scale deception involving substantial funds.  I will take a starting point for sentence in the middle of the guideline of 48 months or 4 years’ imprisonment.  I will reduce that by one‑third.

22. By my calculation, that leaves a sentence of 32 months’ imprisonment.  I will give benefit to the defendant for the time spent in custody.  That is 2 months and 5 days, but I will formulate it as follows.

23. The final sentence will be one of 29 months and 3 weeks’ imprisonment.