R. v. LO CHAK-MAN and Another

IN THE COURT OF APPEAL

1995, No. 744
(Criminal)

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J U D G M E N T

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Litton, V.-P. (delivering the judgment of the court) :

1. On 7 November 1996 this court dismissed the applicants' appeals against conviction on one count of assisting another to retain the benefit of drug trafficking, contrary to section 25(1)(a) of the Drug Trafficking (Recovery of Proceeds) Ordinance, Cap 405. We now deal with their applications for leave to appeal against sentence.

2. In the court below, Bewley J sentenced each of the applicants to twelve years' imprisonment. In respect of the 1st applicant Lo Chak-man (D1) the judge also ordered him to pay $1 million towards the prosecution costs and further ordered that, in default of payment, he should serve two further years' imprisonment. As to this, the judge realised after he had passed sentence that he did not have the power to order further imprisonment in default of payment of the prosecution costs and sought to revoke that order. It is common ground that the judge had no power to order the further two years' imprisonment and, insofar as it is necessary to do so, we discharge that order.

3. The maximum sentence under s25(5) of the Ordinance is 14 years' imprisonment and a $5m fine.

4. The judge approached his sentencing task in this way:

" The 1st defendant has a clear record and the 2nd defendant has a previous conviction for drug trafficking but I propose to deal with them both on an equal basis.

The 1st defendant played a lesser part in lending his signature as required but not otherwise directly involved in money laundering. He is a hairdresser.

The 2nd defendant, on the other hand, was totally involved, albeit in a lowly capacity, in laundering LAW Kin-man's drug money. They were both, however, essential cogs in the money laundering machinery. They have expressed no remorse.

The matters urged in mitigation carry little weight in the circumstances of this case. The maximum sentence is intended to be passed in the worst case situation. This trial, in my opinion, reflects just that. It may be that consideration should be given to increasing the maximum sentence to life imprisonment. Those who launder drug money are almost as bad as drug traffickers themselves. It is merely one step along the line. It is essential that the drug trafficker be hit where it hurts most, in his profit, and that heavy deterrent sentences are passed.

The major player in the uplifting of LAW Kin-man's drug money after his arrest was his sister, LAW Wai-wah. Had she been convicted with these defendants, she would likely have been sentenced to 14 years' imprisonment. The maximum discount I feel able to give these defendants for the lesser parts they played and the mitigating factors such as there are is two years."

5. Where the judge referred to this case as the "worst case situation" he was, as counsel submits, clearly focussing upon the activities of the drug trafficker Law Kin-man: who, in the three years commencing December 1986 had laundered a "tidal wave" of drug money through his various nominee accounts: some US$84.3m plus HK$16m. This was, as counsel submits, the wrong focus. The applicants were, in effect, being punished for a much wider spectrum of criminality than was justified by the charge itself. There is substance in this submission.

6. The activity for which the applicants stand convicted is that of assisting Law Kin-man to retain the benefit of drug trafficking, which only became a crime in Hong Kong on 1 December 1989 a few days before the offence was committed. What Law Kin-man did before that date, and such part as the applicants might have played in the money-laundering process before that date, cannot weigh in the sentencing scales. Insofar as the judge took that into account, and proceeded on the basis that the present case "reflected the worst case situation", he erred in principle. In consequence, this court must now look at the question of sentence for both applicants afresh.

7. The 1st applicant is one of Law Kin-man's younger brothers. He was, in December 1989, 27 years old and a hairdresser by profession. He had opened a new hairdressing saloon, which he had been operating for a few months, when he was arrested on 19 December 1989. He then spent a year in detention before he was released on bail. The 1st applicant remained on bail until his conviction in October 1995. He is now married and has a 4 year old daughter.

8. D1's participation in the criminal arrangement, whereby the retention or control of Law Kin-man's proceeds of drug trafficking was facilitated, came about because of his written authorization given to Nomura to uplift the total of US$5.172m in the account of Valoria Investment Ltd. with Nomura: an account where D1 was the sole signatory. The uplifts occurred on two occasions: The bulk of the funds were removed on Monday 11 December and the balance a week later, after all Valoria's positions with Nomura had been liquidated.

9. As can be seen, the sums involved were substantial: But not the "vast sums" the judge had in mind in relation to Law Kin-man's activities over the three years preceding December 1989.

10. At the time of his conviction, D1 had a clear record.

11. Turning to Tsoi Sau-ngai (D2), he had, prior to December 1989, served Law Kin-man as the judge said in a "lowly capacity" for a number of years. His involvement in the criminal arrangement consisted of his effecting the four uplifts of funds from two branches of the BCC. These totalled approximately HK$15m.

12. Like D1, D2 also spent one year in detention, after his arrest, before he was released on bail. He was, at the date of his conviction, 40 years old and lived in humble circumstances. He is also married, with two children: a 9-year old son and a 4-year old daughter.

13. Unlike D1, D2 cannot claim the credit of a clear record.

14. The judge, taking the relevant circumstances in the round, treated the applicants on an equal basis. He took as his starting point the maximum of 14 years and gave to each applicant a two-year discount, thereby resulting in the term of 12 years. Plainly, the starting point of 14 years was too high. It was in fact doubly wrong, because the judge equated the applicants' respective roles with that of Law Wah-wah, the "major player" who, if sentenced, would, as the judge said, have started at the maximum of 14 years.

15. In considering the appropriate sentence for the applicants, we bear in mind the fact that this is almost a unique case. The offence was committed within a few days of the arrangement for uplifting the money in the various accounts becoming a crime. The trial was much delayed because a High Court judge had initially quashed the indictment under the Bill of Rights and the matter went all the way to the Privy Council. The case has been hanging over the appellants' heads for many years: to the extent that when they were eventually tried and convicted, the section under which they were first charged had been replaced by new statutory provisions. Nothing we say therefore can provide guidance in similar cases.

16. The person who initiated the arrangement for removing the funds was Law Wai-wah, Law Kin-man's sister, the brain behind the operation. It was Law Wai-wah who contacted the personnel at the BCC and at Nomura in order to set in train the transactions in question. The defendants were, as the judge described it, "cogs in the money laundering machine".

17. It is difficult, at the end of the day, to say that one or other of the applicants deserved greater punishment. D1's criminality could be said to be greater than D2's because he was the sole shareholder of Valoria (an offshore company) and the sole signatory on Valoria's account. D2's functions vis-a-viz the accounts in the BCC were purely mechanical. On the other hand, D1 could claim credit for a clear record, whilst D2 could not. Neither applicant had derived personal gain from assisting Law Kin-man in the arrangement.

18. In our judgment we should treat the applicants alike. Their respective sentence of 12 years' imprisonment is quashed.

19. The proper starting point might in our judgment have been in the region of 9 years, but having regard to the history of these proceedings and other mitigating factors referred to earlier, and the fact that the matter has been hanging over the heads of these applicants for such a long time, we feel that some discount must be given. In the result the applicants are sentenced each to a term of imprisonment of 7 years.