HKSAR v. HSU MING TUNG, TONY AND OTHERS

DCCC 241/11

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 241 OF 2011

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REASONS FOR VERDICT FOR D5 AND D6

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1.  D5 and D6 pleaded not guilty to a charge alleging that between 7 December 2007 and 18 August 2008, they laundered HKD14,468, 900 deposited into a Hong Kong and Shanghai Banking Corporation (HSBC) account in the name of Profit Smooth Technology Limited ( Profit Smooth), Charge 12.

2.  At the relevant time, D5 and D6 were directors and shareholders of  Profit Smooth and  signatories to the company’s  HSBC bank account.

3.  It was not disputed that the sum of money referred to in the charge had been transferred into the Profit Smooth bank account from four bank accounts in the name of a company called Gafeng Chemical ( Canada) Company Limited ( Gafeng), a company registered in Hong Kong.

4.  It was not in dispute that Gafeng had submitted 17 bogus Profit Smooth  invoices and other supporting documentation to these four banks to support  loan applications.  It was not disputed that the loans were granted on the understanding that the documents supporting the loan applications were bona fide and related to genuine underlying commercial transactions. Pursuant to these applications, the amount referred to in the charge was transferred into the bank account of  Profit Smooth.

5.  Between 17 December 2007 and 18 August 2008, a sum of just over HKD13.6 million was either transferred by D5 or D6 to the HSBC personal bank account of a person called Ng Hing or withdrawn in cash by cheques signed by D5 or D6. HKD6.1 million was authorized by D5 and HKD7.4 million was authorized by D6.

6.  Two sums each of  HKD100,000 were withdrawn  from the Profit Smooth account  by D5 in cash on 11 and 13 December 2007. HKD300,000 was withdrawn by D6 on 10 December 2007.

7.  Between 28 December 2007 and 23 November 2008, a total of  HKD12,233,940 was transferred from personal bank accounts of  Ng Hing to one of the Gafeng bank accounts.

8.  Most of the money from the Profit Smooth bank account  had been transferred to the personal account of  a person called Ng Hing, a close friend for many years and a senior work colleague of D5 and D6 and a person with whom they shared a deep religious commitment. D5 and D6 said that they had been asked to open the Profit Smooth bank account by Ng Hing and they did not suspect anything untoward about the movement of funds through the account as they had such great trust and confidence in him and believed that he was involved in genuine business transactions.

Background

9.  Gafeng had a mainland subsidiary company called Gafeng Lubricant ( Dongguan) Company Limited  ( Gafeng Lubricant) which operated a factory in Dongguan, to produce lubricant oils for use in vehicles and machines.

­Fraudulent Loan Applications

10.  Over a period of nearly three years, from January 2006 to late 2008,  Gafeng  submitted fraudulent loan applications to six banks. The applications were for credit facilities for import and export loans and were supported by bogus documentation. The applications all purported to relate to genuine commercial transactions. In fact, the invoices submitted were false and the companies with whom Gafeng purported to deal were shell companies which they controlled. One of these companies was Profit Smooth.

11.  In respect of these applications charges of fraud and money laundering were preferred against D1 to D4.

12.  The total amount involved in the fraud charges admitted by D1- D4 was  HKD 179,119,748.

13.  The total amount involved in the money laundering charges admitted by D4 was HKD91, 549,030.

14.  Although D5 and D6 were only charged with an offence relating to the laundering of money though Profit Smooth, evidence was adduced in the course of trial relating to the use of other companies for laundering money,  so I propose to set out briefly the background of such charges the the persons involved.

Listing Fraud – Charge 6 – D1, D3 and D4

15.  D1, D3 and D4 pleaded guilty to a charge of conspiring with others to defraud the American Stock Exchange ( AMEX). At the same time as the fraud charges were being committed, D1 and Ng Hing were involved in a conspiracy with others to have China Green Resources Holding limited ( China Green), a holding company for Gafeng, Gafeng Lubricant and a related company called Green Energy (China) Far East Limited  ( Green Energy) listed in the then American Stock Exchange ( AMEX). Bogus documentation was created  to give a misleading picture as to the  financial status of the companies involved. For a period in 2008, D6 assisted China Green to provide supplementary information to a firm of auditors, Sense Capital Limited ( Sense Capital) to assist with their writing of the prospectus for the listing.

16.  Although it was not part of the prosecution case that D5 and D6 were involved in this conspiracy, extensive reference was made to this matter in the course of evidence.

17.  WestPark Capital Incorporated (Westpark) , a  USA Investment bank, was engaged to underwrite the listing application tp AMEX. China Green engaged Sense Capital as an agent of Westpark in Hong Kong for the proposed listing. China Green later engaged the services of Stonefield Josephson Incorporated, Certified Public Accountants in the USA, as auditor for the listing application.

18.  D1, the financial controller of Gafeng, gave evidence that a huge volume of bogus documentation was created to support this listing application. At the time of their arrest in December 2008, PW4, a Gafeng accounts clerk and D3, a manager with Gafeng, were observed pushing a trolley with three nylon bags  in an industrial building in Kwun Tong. The bags were found to be full of bogus documentation  and accounting records of China Green and its subsidiaries. They admitted that they were intending to dispose of the documentation.

The Defendants – D1 to D4

19.  D1 was the Financial Controller of Gafeng.  The shares of  Gafeng were equally held by the mothers of D1 and  D2, both of whom were directors and shareholders of Gafeng and held shares on behalf of  D1 and D2. D1 pleaded guilty to 9 of the 17 charges on the charge sheet. He was principally involved in making the fraudulent loan applications to the 6 banks and in the conspiracy to defaud AMEX.

20.  D2 was a director of Gafeng and responsible for the production operation on the mainland. He pleaded guilty to one joint charge, with D1, of obtaining by fraud  loans totaling   just over HKD4 million from the DBS Bank using false invoices of a shell company called Brilliant Fine Asia Limited ( Brilliant Fine) which was run by D4, the wife of D1.

21.  D3 was a manager employed by Gafeng. He was responsible initially for assisting in operating the factory on the mainland and later moved back to Hong Kong to assist with  the accounting and administration work in Hong Kong. He was also the director and shareholder of a shell company used by Gafeng called Join Creator Limited (Join Creator). This company was used as a bogus supplier of goods to Gafeng to support loan applications to banks. D3 also assisted in creating false documents to obtain loans from banks and to support the application for listing.

22.  D3 pleaded guilty to charges 5 and 6. Charge 5 was a joint charge with D1 which related to D3 allowing false Join Creator invoices to obtain just over HKD7.9 million from the Industrial and Commercial Bank of  China. Charge 6 was a joint charge with D1 and D4 and related to the conspiracy to defraud AMEX.

23.  D4 is the wife of D1. She was the director and shareholder of  the shell company Brilliant Fine which was used by Gafeng to fraudulently obtain loans from banks. She was also the authorized signatory of the bank account of  Good Billion Corporation Limited ( Good Billion) another shell company. D4 pleaded guilty to charges 2,6,10 and 16. Charge 2 related to her laundering over HKD31 million through the Billion Fine account. Charge 6 was committed together with D1 and D3 and related to the fraudulent application for listing China Green in the USA. Charge 10 related to D4’s laundering of over HKD46 million through the bank account of  Good Billion. Charge 16 was a joint charge of fraud relating to the obtaining of 2 loans from the Public Bank Hong Kong Limited.

Arrests and interviews of D5 and D6

D5

24.  D5 was arrested on 23 March 2009 by ICAC officers. When interviewed D5 told the ICAC that he and D6 were former work colleagues. He said that D6 was a former work colleague of  Ng Hing, who initiated the setting up of  Profit Smooth. D5 said that Ng Hing told him that Profit Smooth would do business with Gafeng. D5 said that he understood that Ng Hing was using Profit Smooth to do private business with Gafeng and Ng Hing wished to cover this up.

25.  D5 admitted that he used the business address of a friend as the company’s registered address to receive mails. D5 said he knew D1, who was his former colleague. D5 admitted signing some Profit Smooth invoices at the request of  Ng Hing and had applied the company chop. D5 said he later became suspicious and refused to sign any further documents. D5 denied that he was aware the documents would  be used to support loan applications.

26.  The admissibility of the record of  interview of D5, Exhibit P5478 A, was not disputed.

D6

27.  At about 0700 hours on 23 March 2009 ICAC officers attended the home of D6. He later attended the offices of ICAC and was interviewed under caution. The admissibility of the  video-recorded record of interview, Ex P5479 A,  was challenged but admitted into evidence after a voire dire.

28.  D6 admitted that he was a shareholder and director of Profit Smooth with D5. He said it was set up for projects on the mainland to develop information technology. He said that Ng Hing was a former colleague and good friend. D6 said that Ng Hing deceived him and D5into lending him money and then fled. D6 said that Ng Hing used their company to carry out transactions. D6 said that he suspected that Ng Hing was doing something illegal but he obtained no explicit answers as to what he was engaged in when they asked him.

29.  D6 said he was worried that Ng Hing might make use of the company to do illegal acts. D6 said that he had worked with Ng Hing and D5 in Stanford Anti- Counterfeit Digital Company( Stanford) until April 2006. D6 said that Ng left the company first , then him and then D5. D6 said that he got to know D1 in the early years of working with Stamford. D6 said that he later became reacquainted with D1 via Ng Hing some 2-3 years before the interview.

30.  D6 said that he had heard of Gafeng. Ng Hing told him it dealt in petroleums. D6 said that Ng Hing told him that he used the Profit Smooth account to deposit money from Gafeng. He said that Ng Hing did not state clearly what the transactions were about. D6 said that he was involved with Profit Smooth from October 2007 until April 2008 when he wanted no more connection with the company. D6 said he was aware that Ng Hing arranged for money to be deposited into the Profit Smooth account and it was then transferred to the personal account of Hg Hing. D6 said that Ng did not explain why (Counter 238). D6 said that Ng Hing told him it was for invoice financing. He said that they were really good friends and he trusted him (Counter 252).

31.  D6 said that he forgot what Ng Hing told him at the beginning (Counter 259). D6 said that Ng Hing had a share in Profit Smooth but not in legal terms. D6 said that Ng Hing helped them in procuring business and assisted in finding investors. He said that Ng Hing had a wide business network and had lots of ideas for doing business.

32.  When asked by the interviewing officer what he meant by invoice financing, D6 said he was not clear but it probably involved loans from banks (Counters 307-311). D6 said they took part in depositing sums of money back into the account of Ng Hing at an early stage (Counter 318). He said that he went to the bank at Admiralty or Jordan sometimes with Ng Hing and sometimes on his own. He said he was relatively free being self –employed whereas D5 was still working for Stanford (Counter 318).

33.  D6 said that he was worried that Ng Hing was involved in money laundering and filed a complaint with the police. He said that the police refused to handle the complaint as there was no complainant.

34.  D6 said that his last contact with Ng Hing was in September 2008. He said that he had lent Ng Hing HKD100,000 which Ng said he would repay on 1 October 2008, but he was unable to locate him.

35.  D6 said he received no reward and signed no invoices.

Admitted Facts Ex 5482

36.  Inter alia, the following facts were admitted :

“Gafeng”

37.  Wealthy Way Investment Limited (利輝投資有限公司) was a company incorporated in Hong Kong on 16.8.2002. On 29.4.2005 it changed its name to Gafeng Chemical (Canada) Co. Limited (加楓石化(加拿大)有限公司) (“Gafeng”). The registered address of the company at different times are as follows:

(a)Room 2104, Chit Lee Commercial Building, 30, Shaukeiwan Road, Hong Kong from 16.8.2002 to 25.2.2003

(b)Flat B, 12/F, Teda Building, 87, Wing Lok Street, Sheung Wan, Hong Kong from 26.2.2003 to 18.4.2005

(c)Flat 1105, Wing Yue Building, 60-64, Des Voeux Road West, Hong Kong from 19.4.2005 to 2.5.2007

(d)Flat 2, 11^th Floor, Wah Sing Industrial Building, 12, Wah Sing Street, Kwai Chung, NT from 3.5.2007 to 20.10.2009

38.  At all material times Fong Lai Ping and Leung Pui Kit, Decem were shareholders and directors of Gafeng; and  Lo Ngan Pui, Kimbo (D2) was director of Gafeng.  Hsu Ming-tung, Tony (D1) was a director between 11.8.2006 and 20.9.2006.

39.  Gafeng was wound up by order of the Court of First Instance, Hong Kong on 21^st October 2009 upon the petition of Dah Sing Bank.

“Profit Smooth”

40.  Profit Smooth Technology Limited (港利通科技有限公司) (“Profit Smooth”) was a company incorporated in Hong Kong on 17.11.2006. Its First Director was Lim Kah Lian and its registered address was Room 1808, Bell House, 525 Nathan Road, Kowloon which was changed to G/F, 81, Hung To Road, Kwun Tong, Kowloon on 1.10.2007.

41.  Yu Shun Lin (D5) and Lee Kin Kwok (D6) became the only two directors of Profit Smooth on 3.10.2007 when Lim Kah Lian resigned as a director on the same day. D6 resigned as a director of Profit Smooth on 30.4.2008 by a Notice given to the Companies Registry filed on 9.7.2008.

42.  On 3.10.2007, D5 and D6 became shareholders of Profit Smooth and equally owned the company.  On 17.11.2008, D5 wholly owned Profit Smooth as shown in an Annual Return given to the Company Registry filed on 18.11.2008.

43.  Between 6^th December 2007 and 15^th August 2008 12 “Import Loan Applications” were made to Public Bank (Hong Kong) Limited (“Public Bank”) on behalf of Gafeng supported by invoices of Profit Smooth. The particulars of these 12 loan applications are as follows:

The total of these 12 loans granted by Public Bank was the sum of $9,983,080.

44.  On 5^th March 2008 an “Import Loan Application” was made to Bank of China (Hong Kong) Limited (“BOC”) on behalf of Gafeng supported by an invoice of Profit Smooth. The particulars of this loan application are as follows:

The loan granted by BOC was the sum of $982,200.

45.  Between 12^th June 2008 and 16^th June 2008 two “Import Loan Applications” were made to Citibank N.A.(“Citibank”) on behalf of Gafeng supported by invoices of Profit Smooth. The particulars of these two loan applications are as follows:

The total of these 2 loans granted by Citibank was the sum of $1,519,960.

46.  Between 17^th July 2008 and 21^st July 2008 two “Import Loan Applications” were made to Dah Sing Bank on behalf of Gafeng supported by invoices of Profit Smooth. The particulars of these two loan applications are as follows:

The total of these 2 loans granted by Dah Sing Bank was the sum of $1,983,810.

47.  Acting upon the truth of the content of the application and the invoices, in particular believing that Profit Smooth had sold the goods described in the invoices to Gafeng, Public Bank, BOC, Dah Sing Bank, & Citibank approved the loans applications and released the funds in the total sum of $14,468,900 (ie. the total of the 4 sums $9,983,080, $982,200, $1,519,960 & $1,983,810 less bank charges) which amounts were paid into the bank account (account no. 817-121775-888) of Profit Smooth at The Hongkong & Shanghai Banking Corporation Limited (“HSBC”) between 7 December 2007 and 18 August 2008. The banks would not have approved the loans if they had known that the transactions mentioned in the loan applications and the supporting documents were bogus transactions.

48.  The bank account of Profit Smooth at HSBC was opened on 11.10.2007. In their capacity as directors of Profit Smooth D5 & D6 were the two authorized signatories of this bank account and any one of them could operate the account.

49.  D5 opened a bank personal integrated account with HSBC with No. 495-291858-288 on 19.11.1994. At all material times D5 was the sole signatory to this account.

50.  D6 opened a bank savings account with HSBC with No. 173-1-018741 on 19.10.1996. At all material times D6 was the sole signatory to this account.

51.  In respect of the HKD14,468,900, being the loan proceeds released by the four banks to the bank account of Profit Smooth in HSBC as mentioned above in para.11, D5 and D6 dealt with the money as follows :

(1)Between 7.12.2007 and 18.8.2008, a total sum of $13,606,011.65 was either transferred by D5 or D6 to the personal bank account of Ng Hing at HSBC (No. 633-048145-888) or withdrawn in cash by Ng Hing with cash cheques signed by D5 or D6.  Of this sum a total of $6,130,135.50 had been authorized by D5, and a total sum of $7,475,876.15 had been authorized by D6. The breakdown of the figures is shown in the schedule annexed to this Admitted Facts.

(2)Two sums of $100,000 each was withdrawn by D5 in cash on 11.12.2007 & 13.12.2007

(3)A sum of $300,000 was withdrawn by D6 in cash on 10.12.2007

52.  The bank evidence from HSBC shows that NG Hing’s account No. 633-048145-001 had the total sum of $4,067,040.00 transferred to Gafeng’s bank account at DBS during the period from 28.12.2007 to 4.9.2008. The bank evidence from Hang Seng Bank shows that NG Hing’s account No. 024-384-113999-001 had the total sum of $8,166,900.00 transferred to Gafeng’s bank account at DBS during the period from 31.12.2007 to 25.11.2008. 

Exhibits

53.  Between 1.4.2008 and 15.2.2010 representatives of the 6 banks provided to ICAC certified copies of the loan application forms submitted on behalf of Gafeng, the supporting documents and related files which are produced as Exhibit P234, 235, 237, 245, 247, 248, 255, 258, 259, 268, 269, 270, 278, 293, 295, 302, and 304.

54.  On 10.12.2008 ICAC officers seized some handwritten records and cheque stubs from the office of Gafeng at 7^th Floor, Kyoei Commercial Building, 3, Hillwood Road, Tsim Sha Tsui, Kowloon which are produced as Exhibit P1764, 1765 and 1766.

55.  D5 and D6 have clear criminal records in Hong Kong.

56.  On 2.10.2008, a report of missing person was made to the police station by Informant Madam LAM Ming-wai.  The missing person was named NG Hing, Rick (“missing person”).  The police revealed that the TIC record updated as at 29.10.2008 showed that the missing person had left Hong Kong for the Mainland China at 1453 hours on 2.10.2008 and no further movement of entry into Hong Kong had been recorded.

57.   Police officer contacted with a person by the name Mr LEE through telephone number 9805 4807 to enquire the status or whereabouts of the missing person.

Evidence of the Co – Conspirators – PW4, PW5 ( D1) and PW6 (D3)

58.  Three co-conspirators were called to give evidence. All gave evidence under immunity. PW4, an accounts clerk employed by Gafeng involved in making and knowingly presenting to the banks many false documents was an unindicted co-conspirator whereas D1 and D3 had pleaded guilty to a number of offences as set out above.

59.  Most of the evidence adduced by the prosecution from these witnesses concerned the substantive charges of fraud and conspiracy to commit related offences. To a large extent their evidence was not relevant to the charge facing D5 and D6 since it was not disputed that the monies laundered through the Profit Smooth account were the proceeds of an indictable offence involving the presentation of  false Profit Smooth invoices to four banks.

60.  PW4 gave no evidence in relation to D5. Her evidence concerning D6 was limited to the fact that she said that he had stayed at the Gafeng offices around August and September of 2008 and it was not clear to her what he was doing most of that time as D6 stayed in a different room from her at the offices. She said that sometimes he met with staff of  Sense Capital  who were assisting with the auditing process in connection with the proposed listing of China Green. She said that D6 did not assist in making false documents at Gafeng.

61.  She admitted that she, D1, D3 and others had been responsible for producing an enormous volume of  bogus documentation and accounting records relating to China Green and its subsidiaries which had been produced for the purpose of giving a misleading impression of the profitability of China Green so as to support its listing in the USA. 

62.  On 9 December 2008, PW4 and D3 were arrested at industrial premises in Kwun Tong, pushing a trolley on which were three nylon carrier bags full of such documentation. They were in the process of disposing of these documents when they were arrested.

63.  D3 gave no evidence in relation to D6 and his evidence concerning D5 was largely undisputed. D3 told the court about his meeting with D5 at a café in Lai Chi Kok  on two occasions in December 2007 when he presented to D5  three Profit Smooth invoices, Exhibits 234,5 and 7,  which D5 chopped and signed.

64.  D1 gave no evidence in relation to D5. In relation to D6, D1 claimed that D6 attended meetings at the Gafeng offices with other members of staff when the production of  false documents for the listing process was discussed. D1 claimed that D6 assisted in the making of  false documents. None of these assertions were corroborated by PW4 and D3, as one would have expected had they been true.

65.  D1 also claimed that on one occasion he went into the Gafeng office occupied by Ng Hing when D6 was present and told Ng Hing that the money transfer back to Gafeng had not been made and he should attend to it quickly. He said that he also said that Gafeng had not received the payment transferred from Profit Smooth to Gafeng and that they should check the account  as soon as possible. D1 said that he thought this conversation occurred in August 2008.

66.  I noted in connection with this matter that D1 could not recall the date it took place and also that he had not told the ICAC about mentioning Profit Smooth in that conversation. D6 did not dispute that on one occasion D1 did ask Ng Hing to transfer money back to Gafeng but said that it related to monies given to Ng Hing to carry out a matter in China which Ng Hing had not done and that D1 was requesting the return of such payment.

67.  D1 also gave evidence concerning an alleged conversation with D6, after Ng Hing had disappeared, where he claimed he mentioned the possible involvement with Commercial Crime Bureau of the Hong Kong Police.

68.  In dealing with evidence of these three witnesses I reminded myself of the need for caution. PW4 had been given a full immunity. D1 and D3 would expect to be given credit for their testimony when sentenced for the offences they had admitted. There were a number of discrepancies between the witnesses concerning a number of matters. I do not propose to set these matters out at length. I noted that the events happened many years ago and only recently was D1 asked to recall specific matters involving D6. In the circumstances, I attached no weight to the evidence of D1 insofar as it tended to incriminate D6.

PW7 Wong Hei Man – Senior ICAC Forensic Accountant – Ex 5523

69.  The expertise of this witness was not challenged nor was it challenged that the court needed the assistance of an expert. PW7 produced his report attached to which were a number of annexures dealing with the flow of funds into and out of the Profit Smooth bank account, Annexures D and E. The amount of  bank loans disbursed to various recipients and further disbursements were quantified and set out in Annuxures I to N.

Voire Dire in relation to D6 – Ex 5479

70.  The prosecution sought to adduce in evidence a video-taped record of interview conducted by ICAC officers on 23 March 2009, Ex P5479.

71.  The admissibility of the record was objected to on the grounds of  inducement, deception and unfairness.

72.  Two ICAC officers , PW1 and PW2 , gave evidence for the prosecution. They told the court that on the morning of 23 March 2009 they arrived at the home of D6 at 0700 hours. PW1 said that D6 was told that he was suspected of having conspired with others to offer advantages to bank staff and of assisting others to obtain bank loans by submitting documents containing false information. PW1 said that he further told D6 that he might have contravened certain ordinances which he named and provided the ordinance sections and numbers. PW1 said he cautioned D6.

73.  PW1 said that D6 asked about the case and he was told briefly what it was about. PW1 said D6 said that he was no longer a director of shareholder of the company.

74.  PW1 said that D6 was invited to come back to the ICAC offices. PW1 said that D6 said he had to wait for the babysitter to come and it was arranged that he should attend the ICAC offices at 10.00am that day.

75.  PW1 said that D6 attended his office at 10.00am. PW1 said that D6 read and signed a notice to persons in custody, Ex P5480.  PW1 said that D6 was later interviewed and produced a video tape of that interview.

76.  PW1disgreed that he never told D6 he was a suspect or that he never informed D6 at his home of any offences in which he might be involved. PW1 disagreed that he told D6 that it was not a big deal and that he was simply invited to the ICAC to assist with their investigation of others. PW1 denied he did not caution D6.

77.  PW1 denied that there was no real suspicion that D6 had been involved in offering advantages to bank staff and that that was merely a pretext to justify the ICAC involvement in the case. PW1 denied that  D6 had been misled as to the true nature of the ICAC investigation.

78.  The evidence of PW2 supported that of PW1. There was a discrepancy in their accounts of what took place at the home of D6 in that PW1 said that he never mentioned the names of any co-conspirators to D6 whereas PW2 said that names had been mentioned.

79.  D6 gave evidence consistent with the defence case. He said that he did recall PW1 mentioning the names of some sections and ordinances at his home.

80.  I considered the evidence very carefully. I also read the transcript of the tape recording and viewed the tape. I took into account the clear record of D6 and that he not had any previous dealings with the police or ICAC.

81.  At the outset, PW1 went over the events of their dealings with D6 that morning. D6 was reminded that he was a suspect and had been cautioned. He was reminded as to the nature of the offences about which enquiries were being made.  He was reminded of his reading of the notice to persons in custody. D6 was further cautioned. The record supported the evidence given by PW1 and PW2 as to what had occurred prior to the interview and contradicted what D6 told the court.

82.  I was satisfied so that I was sure that PW1 and PW2 told the truth about their dealings with D6 prior to the interview. I did not accept the evidence of D6 for the reasons set out above.

83.  I was sure beyond reasonable doubt that the interview with D6 was voluntary and I found no grounds to exercise my residuary discretion to exclude the record on grounds of unfairness. I therefore ordered that the record of interview should be admitted into evidence as Ex P5479.

Defence Case

D5

84.  D5 elected to give evidence. He told the court that he is married with one daughter aged 17. He was educated to Form 5 level and his English is poor. D5 said he is a Christian. He was baptized in 2001 by his good friend Ng Hing and attends church regularly.

Ng Hing

85.   D5 said that he got to know Ng Hing in 1998 when Ng Hing was a church team leader. He said Ng Hing led his team which consisted of four families. He said they studied the bible together, prayed together  and mixed together socially with each other’s families. He said Ng Hing baptized him and later his wife and he came to trust him very much. D5 said that in 2007 he knew Ng Hing was operating elderly homes, signboard companies and  companies involved in LCD screens.

Sino Trade and Stanford

86.   D5 said that he  worked for Sino Trade Information Technology ( Sino Trade) in Tsim Sha Tsui  with Ng Hing and D6 from 2003 to 2005 on the introduction of  Ng Hing. He said that he did information technology related work. He said that later, in 2005, they all transferred to Stanford Information Technology in Lai Chi Kok which was owned by the same boss as Sino Trade,   Mr Mak (Mak), because Sino Trade had financial problems. D5 said Stanford had 4-5 employees. D5 said that in 2006 to late 2007 he, D6 and Ng Hing all worked at the Stanford Beijing office and came back to work in the Hong Kong office in late 2007.

87.   D5 said that he had heard of D1 from Ng Hing and he knew that D1 appeared in the office of his boss in Stanford in 2003 and that D1 gave assistance to his boss in arranging to have a company listed in the USA, including a company involved in wrist watches.

Profit Smooth

88.  D5 said that Profit Smooth was incorporated on 17 November 2006 with his wife, Lim Kah Lian, as the first director. D5 said that Profit Smooth was set up in order for D5, D6 and Ng Hing to develop business opportunities in their leisure time. He said his wife became the first director as he was working in Beijing at that time and it was more convenient for her name to be used. D5 said that Ng Hing arranged or his accountant, David Lin, to deal with formalities.

89.  D5 said that whilst working in Beijing he did business with a firm called Lucky Technology Limited which dealt in finger-print scanner machines and he became their agent in Beijing. He said he used Profit Smooth for this business as they would not deal with him in a personal capacity. He said that there were 14 transactions with that company from October 2006 to November 2008. D5 said that on two occasions, in December 2006, payments for goods supplied were paid for out of the Profit Smooth bank account. D5 said that Ng Hing said he could make those payments out of the Profit Smooth account. . D5 explained that in 2006 he had lent HKD30,000 to Ng Hing and so Ng Hing allowed him to use some of his money from the Profit Smooth account. D5 produced invoices for 10 of the transactions as part of  Exhibit D5 -2 pages 2,8,10,20,27,29,34, 35,39 and 40. D5 said he retrieved these from his computer. D5 said that the total turnover amounted to around HKD100,000 and his profit was about 30%.

90.  D5 said that payments for most of the transactions were made by paying cash into the bank account of Lucky Technology.

91.  D5 said that the addresses used for Profit Smooth in Nathan Road and later in Kwun Tong were the corporate addresses of a friend of his. He said bank statements and other company documents were sent there but he did not go to collect them very often.

92.  D5 said that, whilst in Beijing, Ng Hing and D6 developed a business plan in relation to a proposed travel information services company called TourChain. He said that the plan was written by D6. He said that the plan never got off the ground because there were no investors. The plan was produced as part of  Exhibit D5-2, pages 44-63.

Profit Smooth Bank Account – Opened October 2007

93.  D5 said that Ng Hing suggested that a bank account should be opened because Ng Hing was expecting investors to invest in TourChain and Ng Hing said that he intended to carry out some business with Gafeng and an account was needed for issuing invoices. He said Ng Hing  arranged that he and D6 would meet an accountant, David Lin, who had dealt with the registration of Profit Smooth,  and go with him to open the Profit Smooth bank account with D5 and D6 as the bank signatories.

Profit Smooth Invoices – Exhibits 234, 235 and 237 CB 105,110 and 115

94.  D5 said he signed these invoices on the 6 December 2007 (Ex 234 and 235) and on the 11 December (237). He said he signed them in the circumstances described to the court by D3.

95.  D5 said that in early December 2007 Ng Hing told him a Gafeng accountant would bring some Profit Smooth invoices for him to sign. D5 said he kept all the company chops and cheque books. D5 said he was later called by D3 and they arranged to meet in a café near to D5’s office.

96.  D5 said that on 6 December he was shown the Profit Smooth invoices  Ex234/5 and saw that the details matched the information given to him by Ng Hing. D5 said he affixed the Profit Smooth chop twice to Ex 234 as the first chop was not too clear. D5 said he did not know who prepared the invoices. D5 said he never discussed signing these invoices with D6. He said he did not think of that.

97.  D5 said that after signing the invoices D3 asked him what business Profit Smooth did and D5 told him it was engaged in a business dealing with fingerprint scanning. D5 said that D3 said he knew nothing about that business so they did not pursue the conversation further.

98.  D5 said he met D3 a second  time on 11 December, again after receiving instructions from Ng Hing.  D5 said he met D3 at the same café. D5 said that he was shown the Profit Smooth invoice  Ex 237 and noted the details matched what he had been told by Ng Hing, and so he chopped and signed it.

99.  D5 said that a few days after he signed the first two invoices he was told by  Ng Hing that the payments were in from Gafeng and he was to go to the bank with Ng Hing to make transfers from the Profit Smooth account to the personal account of  Ng Hing and Ng Hing was also paid in cash. D5 said he was not asked to sign further Profit Smooth invoices.

100.  D5 said that he did not know that the Profit Smooth invoices were being used to get loans from banks or that Ng Hing was engaged in anything illegal. He said Ng Hing told him he was doing business with Gafeng. D5 said that Ng Hing told him he did not want to trade directly in his own name as he did not want his boss at Stanford to find out he was doing outside work. D5 said that Ng Hing told him to transfer the money in the Profit Smooth account into his personal account so he could pay his suppliers on the mainland who had to be paid in RMB. D5 said that he saw no documentation from such suppliers.

101.  D5 said that he withdrew two cash sums on 11 and 13 December 2007 referred to in paragraph 15(2) of  the Admitted Facts  as instructed by Ng Hing. D5 said he did not know that D6 had transferred money out of the Profit Smooth account to Ng Hing.  D5 said he and D6 never discussed this matter.

102.  D5 agreed that Ng Hing left the Stanford Office in February 2008 and that D6 left between March and May 2008. D5 said that Ng Hing was a VP in Stanford and therefore the superior of  D5 and D6 and that their common boss was Mak Ho Fong.

103.  In cross-examination he agreed that Profit Smooth was regarded as belonging to Ng Hing, D5 and D6 to develop their careers.

104.  D5 said that the decision to open a bank account for Profit Smooth in October 2007 was made because they were developing a business plan concerning tourism with a software developer in Beijing and because Ng Hing said that he had come across D1 and they were intending to do business involving lubricants. D5 agreed that the tourism plan  never materialized. He said that they were unable to find investors and the project was abandoned.

105.  D5 said that the initial deposit of HKD2,000  paid when the account was opened was made by him. D5 said that Ng Hing asked him and D6 to open the account and arranged for them to meet an accountant who would accompany them to the bank.

106.  D5 said Ng Hing wished to conceal his involvement in Profit Smooth from not only his boss at Standford but also from persons with whom he was doing other business but D5 said that Ng Hing did not say why he wished such persons not to know.

107.  D5 said that that the cheque for cash withdrawal of HKD300,000 from the Profit Smooth account made on 10 December 2007 was not signed by him, but by D6. He said that Ng Hing told D5 to give D6 a cheque. D5 said he did not discuss this matter with D6 and was not told where the money went. D5 agreed that the only transactions using the Profit Smooth account which he knew to be legitimate were the two transactions whereby Lucky Technology were paid.

108.  D5 said that in relation to the Profit Smooth cheque he signed for HKD3 million in favour of  Ng Hing 28 December 2007 ( page 1473), D5 said that  he accompanied Ng Hing to the bank to make the transfer into Ng Hing’ s account. D5 said that he believed that the monies to meet this transfer had been paid into the account by Gafeng.

109.  D5 said that after signing the first three invoices he signed no further invoices. D5 said that he was worried at the time because the amounts were so huge as compared to the amounts involved in his fingerprint scanning business. D5 said he was concerned that he might be liable. D5 agreed that he told the ICAC that after signing the first three invoices he thought there was something wrong ( counter 322) and  he refused to sign further invoices. He agreed that he told the ICAC that the business should not be able to earn money so easily ( counter 364). D5 agreed that the three invoices he signed triggered huge payments in the Profit Smooth account .

110.  D5 said that he thereafter helped Ng Hing by returning money from the Profit Smooth account to Ng Hing’s account as he thought Ng Hing really had done such business and did not think Ng Hing was doing anything illegal. D5 said that what he meant when he told the ICAC that he was suspicious was that he was concerned he would not be able to pay others as he did not know from whom Ng Hing obtained the goods he supplied to Gafeng.

111.  D5 said that in September 2008 he signed a tax return for Profit Smooth indicating that no tax was payable as no profit had been made. He  said he asked Ng Hing to deal with this but he failed to so so and then disappeared. He said he dealt with the accountant David Lin in connection with this matter. D5 said that he obtained the bank statements and gave them to the accountant to deal with the tax return.

112.  D5 said that he did not know about the withdrawals from the Profit Smooth account authorized by D6 until he later got the bank statements in September or October. D5 said that D6 never told him he was making these transfers at the time they were made.

113.  D5 told the ICAC that after D6 left Stanford it was mentioned that D6 would go to work for Gafeng. D5 later agreed in further cross-examination by counsel for D6 that it was never mentioned that D6 would be employed by Gafeng. D5 said that he understood that D6 was asked to write many marketing- related things.

114.  D5 agreed that on 12 December HKD1 million was paid into the Profit Smooth savings account and then transferred to its current account . D5 agreed that he made out three cheques totaling HKD1 million on the same day and paid them all into Ng Hing’s account within 2 minutes. D5 said he deposited three cheques rather than one as he was told to do so by Ng Hing and he saw nothing odd about doing it in this in that way. D5 said that he could not see the purpose of making the payments in this way and did not think something was being hidden from him.

115.  D5 said that he did not know why D3, an accountant with Gafeng, would bring him Profit Smooth invoices to sign and chop. D5 said he thought it might be that they were business partners. He said he thought the invoices were issued by Ng Hing.

116.  D5 said that the fees for registering Profit Smooth were to be paid by Ng Hing but Ng Hing never paid them.  D5 said that he had been paying them by instalments to the accountant David Lin and still owes him some money.

117.  Three character witnesses were called to give evidence on behalf of D5. They were all from the Hong Kong Church of Christ and included a banker, the senior pastor and a businessman. They all spoke of the high moral principles held by D5. Two of them also knew D6 and said that he was an honest man with great integrity and strong religious principles. The witnesses all knew Ng Hing and said that he had been a highly respected member of their religious community for many years and that D5 and D6 both had reason to trust Ng Hing implicitly. They confirmed much of  what D5 said in his evidence about his own religious practices and about Ng Hing.

Case for D6

D6

118.  D6 elected to give evidence. He told the court that he is married with twin daughters aged 5. He said that he is a member of the Church of Christ and has been a bible talk leader for 15  years. Evidence of  his involvement in the church was produced as D6-1 and 2.

119.  D6 said he met Ng Hing in 1990 through the church when they were both bible leaders. D6 said that Ng Hing was his best man when he married in 1996 and that there was a close relationship between the two families.

120.  D6 said that he worked with D5 and Ng Hing in Sino Trade and later Stanford which were both owned by the same man, Mak Ho Fong. D6 said that he joined Sino Trade in 2003. He said he wrote the business plan for the media promotion company and an investor was found to set it up. D6 said he was a Vice President and Ng Hing was a Senior Vice President. D6 said that shortly after the business was set up D5 joined the company on the introduction of  Ng Hing. D6 said there were about 30 staff. D6 said he was impressed by Ng Hing who had connections in Hong Kong and China and was able to achieve a business turnover of HKD3 million  in three months as he had promised the boss of Sino Trade, Mak Ho Fong.

121.  D6 said that in 2005 Mak decided to move his investment out of Sino Trade and concentrate on Stanford which dealt in digital anti-counterfeit techniques for product verification. D6 said a lot of the Sino Trade staff had to be let go and he, D5 and Ng Hing moved to Stanford. D6 said that they were relocated to the Beijing office so as to explore opportunities for their products on the mainland.

122.  D6 said that, whilst working on the mainland, Ng Hing established business contact with  some very important people. A number of business cards were produced in evidence relating tomany of these people, who were introduced  to him by Ng Hing at business meetings. D6 said that he arrived at the Beijing office 6 months after Ng Hing and he was most impressed with the progress Ng Hing had made in terms of establishing business contacts and his business acumen.

123.  D6 said that Ng Hing introduced him to a venture capitalist called Sammy Wong as a potential investor.

Profit Smooth

124.  D6 said that he became a director of  Profit Smooth on 3 October 2007. He said that he knew the company had been established by the wife of D5. D6 said he became a director of the company at the request of  Ng Hing who told him that he was seeking investors in their TourChain  project on the mainland and a company bank account was required for that purpose.

TourChain Travel Information

125.  D6 said that whilst working in Beijing he wrote the business plan for TourChain at the request of  Ng Hing. D6 said that the business was to provide a travel services retail chain covering all China by using a web –based resource planning platform. D6 said that it was a joint venture between Profit Smooth and  Beijing Vive Science and Technology Company Limited ( Vive).

126.  D6 said that the description of  Ng Hing given in the business plan he drafted for TourChain in April 2007  is accurate, Ex D5-2, page 49. This describes Ng Hing as being aged 38 and  having an MBA in International Marketing. His role in Sino Trade is describe as a trailblazer who provided international marketing services for Hong Kong enterprises. He is described as the founder of Sino Trade and Stanford.

127.  D6 said that Ng Hing invested between HKD2-300,000 to pay staff members of  Vive. D6 said the project failed as Ng Hing failed to get any outside investors.

128.  D6 said that, before he left Stanford in April 2008, Ng Hing was involved in an outdoor LCD screens project on the mainland that involved  cooperation between the municipal government and an LCD company in Korea and concerned placing screens in shopping centres. D6 said that he was told that there was a chance he could become the China Director of the project.

129.  D6 said that after he left Stanford in April 2008 he worked from home for a Beijing company called PDAger which dealt in location based technology. D6 said that Ng Hing told him that because of his business plans D6 need not be too serious in seeking other work.

130.  D6 said that he resigned as a director of Profit Smooth in April 2008 because he felt that Ng Hing should be dealing with his own business and he was concerned about the financial risks if suppliers failed to pay. D6 said that at that time there was a “low chance” TourChain would succeed.

 Withdrawal of HKD300,000 from the Profit Smooth account on 10 December 2007

131.  D6 said that Ng Hing called him and said that he wished to withdraw money from the Profit Smooth account and that D5 was not free. D6 said that Ng Hing told him to get a cheque from D5. D6 said that, when he got the cheque, the amount was filled in and he took the cheque to the bank where he met Ng Hing. D6 said he withdrew HKD300,000 and gave it to Ng Hing. D6 said that he did not give Ng Hing a cash cheque for HKD300,000 as Ng Hing said he needed the money quickly to go to the mainland to pay his suppliers and D6 thought this method would be quicker.

Transfers from Profit Smooth Account made by D6

132.  D6 said that he made the 8 transfers out of the Profit Smooth account to the bank account of  Ng Hing, as shown in the annexe to the admitted facts, at the request of  Ng Hing who told him that D5 was not available. D6 said that on each occasion he went to the bank with Ng Hing. D6 said that he considered that the money belonged to Ng Hing and related to Ng Hing’s business. D6 said that he found it very normal.

Loans to Ng Hing  - HKD200,000

133.  D6 told the court that, before Ng Hing disappeared he had lent Ng Hing HKD200,000 in two lots of  HKD100,000. D6 said he advance him the first HKD100,000 in early 2007. D6 said that Ng Hing told him a friend of his needed money and Ng Hing guaranteed D6 that he would repay the money.  D6 said that he lent Ng Hing a further HKD100,000 just before he disappeared. D6 said that Ng Hing told him he was having cash flow problems and that if  D6 did not lend him money Ng Hing would go bankrupt.

Visits to the Police Station

134.  D6 said that he went to the police station shortly after Ng Hing disappeared to report Ng Hing as a missing person. He said he went to the station with Ng Hing’s wife and D1 but D1 did not actually go into the station with them.

135.  D6 said that he went to the police station a second time in early to mid-November , this time with D5. D6 said that he discovered that Ng Hing had borrowed money from other members of their church and he and D5 were worried that Ng Hing might have been money-laundering. D6 said that they discussed the matter with a member of their church who was a lawyer and it was decided that they should report the matter to the police. D6 said that the officer to whom they had reported told them that as nothing had happened it was just a case involving  a missing person and there was therefore no need to file a report. D6 said he did not recall the number of the officer to whom he reported or his name.

D1

136.  D6 said that he met D1 in 2004/5 at the offices of Stanford in Tsimshatsui. D6 said that he heard from Ng Hing that D1 was working there on a freelance  basis.

137.  D6 said that he again met D1 in July or August of 2008. D6 said that Ng Hing told there was a big project concerning China Green  which was soon to be listed in the USA. D6 said that Ng Hing introduced D1 to him in a coffee shop in Tsim Sha Tsui and Ng Hing told D6 that D6 could help D1with the listing of China Green as D6’s written and verbal English skills were good.

Gafeng

138.  D6 said that he went to the China Green office from September to October 2008. He said that he went there in office hours except for public holidays. D6 said that by that time China Green was ready to be audited for listing. He said that his major duty was to act as a public relations officer. D6 said that China Green had to communicate with a foreign bank in the USA. D6 said that, shortly before listing, he was to go to the USA to participate in a roadshow to attract investors. D6 said he met with personnel from Sense Capital who were responsible for preparing the prospectus which was near completion by the time he joined China Green.

139.  D6 said that his main role when he joined China Green was to supply Sense Capital with information relating to the prospectus and he had a communications role for the proposed listing. D6 said he proof-read materials which were then returned to Sense  Capital. D6 said that he spent much of his time researching online materials relating to biodiesel and energy prices. D6 said that he took this as an opportunity to learn about the industry and to prepare for the forthcoming roadshow.

140.  D6 said that he never worked for Gafeng and never told D5 that he did so. D6 said he knew that Gafeng was a subsidiary of China Green and that Gafeng had a factory on the mainland. D6 said the name of the company on the office door in Tsim Sha Tsui was China Green and not Gafeng. D6 said that he did mention the name of Gafeng to D5 either on the telephone or face to face but never said that he was working for that company. D6 said he was aware that Ng Hing did business with Gafeng and he told D5 that he assisted in transferring money to Ng Hing from Gafeng and he was aware that D5 had also done that.

141.  D6 said that he attended meetings with D1 and Sense Capital in connection with the listing.

142.  D6 said he was paid no money for his work for China Green. He said that Ng Hing told him that a permanent post would be given to D6 in the company after listing and that the salary would be very good. D6 said that Ng Hing told him that they would also work together on other projects. D6 said that he regarded these matters as good learning opportunities.

143.  D6 said that he never took part in discussions concerning bogus documentation whilst he was at Gafeng.

144.  He said that he recalled that on one occasion D1 came into Ng Hing’s room whilst he was present and said to Ng Hing that he had  not yet transferred the money back to D1’s company and asked him to do it as soon as possible. D6 said that he had not much to do and Ng Hing asked him to accompany him to the bank so he went to Ng Hing’s bank with Ng Hing. D6 said that he understood that D1 had given money to Ng Hing to conduct a capital examination on the mainland. D6 said that D1 had complained that it had taken too long and was of no assistance so he asked Ng Hing to go to the bank and transfer the money back to the company account. D6 said that there was no mention of  Profit Smooth during that conversation. D6 said that this happened in around early to mid-September 2008.

145.  D6 said that in late October, after Ng Hing had disappeared , D1 told him that the listing of China Green was  hopeless and he faced bankruptcy due to cash flow problems. D6 said that D1 told him that Ng Hing had taken away HKD3 million and Ng Hing had not yet returned HKD4 million to him. D6 said that D1 told him that the banks would not grant further loans. D6 said that D1 asked him if he had lent any money to Ng Hing and he told D1 that he had. D6 said that D1 told him his company did not need him any more and that he was to be careful about his relationship with Ng Hing. D6 said that he was very angry and left.

146.  D6 said that he had never seen the Profit Smooth invoices which were used by Gafeng to get loans from banks and that he was never aware that Profit Smooth was used for that purpose.

ICAC Video Recorded Interview with D6- Ex 5479 ( VRI-D6)

147.  D6 was taken by his counsel through various questions and answers in the VRI.

148.  At counters 120 and 122, D6 told the ICAC that at one stage he began to suspect that Ng Hing was doing something illegal. D6 said that this related to the time after Ng Hing had disappeared.

149.  D6 told the ICAC that Ng Hing gave him no explicit answer as to what business he was engaged in. D6 said that this related to the period in May or June 2008. D6 said that he did not know what kind of product Ng Hing was dealing in. D6 said that he only knew it involved industrial materials and that Ng Hing did mention copper plate and lubricant. D6 said that he did not intend to imply that they became suspicious at that time, he said that, at 126 B, he explained that he only became suspicious after Ng Hing disappeared.

150.  D6 was referred to counters 199 to 210. D6 was asked about Gafeng and he told the ICAC that Ng Hing told him it was a company that sold petroleum products. D6 told the ICAC that Ng Hing  had told him about the company because Ng Hing borrowed the account of  Profit Smooth and there were some transactions Ng Hing “got some deposits made into the account of [Profit Smooth].” D6 said that the conversation with Ng Hing took place in September 2008, after he joined China Green. D6 said that the subsidiary company was Gafeng and Ng Hing told him that the company was dealing in lubricant so it was close to the product Ng Hing was trading in. D6 said that he knew China Green was large scale so he thought that this was why the turnover of  Ng Hing’s business was so large.

151.  At counter 234 D6 said his decision to quit Profit Smooth as a director in April 2008 was because he no longer wanted anything to do with Ng Hing’s business as he did not know much about it. D6 said that this was a quick response and he said it referred to the time after Ng Hing disappeared. D6 said that originally he was a victim and then he was a defendant and he did not want any relations with Ng Hing. D6 said he wanted to go into further explanation but he was interrupted by the ICAC officer. D6 said that the real reason he quit was because he did not want to shoulder any more risk and wanted Ng Hing to carry on with the business on his own. D6 said that he continued to make transfers out of the account because he regarded the money as belonging to Ng Hing.

152.  At 252 D6 told the ICAC that the transactions related to invoice financing. D6 said that Ng Hing told him on the way to the bank to cash HKD300,000 in December 2007 that money would be coming into the Profit Smooth account and that he needed the money in cash to go to the mainland to pay for goods. D6 said that this was what he understood invoice financing to mean. He said that he thought it was so professional and he accepted it. D6 said that he was not interested in knowing any more about these trading matters, he was not interested in the business so he did not ask Ng Hing anything further about it. D6 said that he had no  banking experience and did not know what invoice financing meant.

153.  D6 was asked about counters 556 to 557 where he agreed with the ICAC officer that, in relation to invoice financing, he probably knew that a deal was required before a loan could be applied for to a bank. D6 said, in relation to this answer, that the ICAC kept asking him questions about invoice financing and before being asked that question the officer had shown him Profit Smooth documents and bank documents and he was asked if he had seen them before. D6 said the investigator got impatient and he simply agreed with what the ICAC officer said to him about the documents.

154.  In cross-examination D6 said that D5 had set up Profit Smooth without any reference to him and he had not discussed the setting up of the company with Ng Hing.

155.  D6 agreed that he told the ICAC that Ng Hing was the major shareholder in Profit Smooth. D6 said he tried to explain that in legal terms this was not the case but it was the position as far as he and D5 were concerned. D6 said that when it was proposed that investors would be sought for TourChain it was intended that monies would be deposited in the Profit Smooth account and that was why the bank account was set up. D6 said that Ng Hing had invested HKD300,000 in getting TourChain started.

156.  D6 said that the reason Ng Hing did not become a director of  Profit Smooth was because Hn Hing was hoping to become involved in a firm in Szechuan on the mainland which was a cooperative between the municipal authority and a Korean LCD producing company. D6 said that the project concerned the erection of  LCD screens outside shopping centres and Ng Hing told D6 that Ng Hing had a chance to become a director of  this new company which would be listed. D6 said that Ng Hing told him that he would have to declare if he was involved in any other companies and he thought it was better not to become a director of  Profit Smooth for that reason.

157.  D6 said that he agreed to become a director of  Profit Smooth in October 2007 because of his involvement in the TourChain project. D6 said that Ng Hing asked him to become a director of the company and to open a bank account which would received money from TourChain investors. He said that in the end, they failed to get any investors. D6 said he was never told that the reason for setting up the bank account was to enable Ng Hing to trade on his own using the Profit Smooth account.

158.  D6 said that he was clear about his responsibilities as a director of  Profit Smooth and he was aware that this could attract both criminal and civil liability.

159.  D6 said that he was aware that Profit Smooth would be liable to pay tax on any profits made. D6 said that Ng Hing said he would take care of this.

160.  D6 said that he estimated that one reason why money was paid into the account of  Profit Smooth and not directly to Ng   Hing was that Ng Hing might have to file tax returns and doing business between two companies would be better.

161.  D6 said that Ng Hing did tell him that he was going to use Profit Smooth to do trading but D6 said that Ng Hing  said that this was because it was better to use a company name. D6 said he did not discuss this with Ng Hing in detail and did not discuss the situation at all with D5. D6 said that he did not discuss the arrangements with D5 because he felt it was Ng Hing’s business. D6 said that he never asked to see the bank accounts. He said that he only came to know about the transfers made by D5 when he was charged. D6 was reminded that in his VIR at counter 320 he told the ICAC that D5 made the initial transfers and he did the later transfers because D5 was busy.

162.  D6 was referred to counters 251 to 260 where D6 told the ICAC that Ng Hing had said that the transactions concerning Profit Smooth involved invoice financing. He was also referred to 307-14 where he told the ICAC he thought that he thought invoice financing involved borrowing from banks. I noted that D6 had said in his evidence in chief that it was the ICAC who had brought up the issue  of invoice financing and banks after showing him Profit Smooth documents and banking documents. I also noted that D6 was not shown any banking documents by the ICAC officer.

163.  D6 was asked about dealings with Gafeng. I noted that at counter 208 D6 said that Ng Hing mentioned Gafeng to him because Ng Hing borrowed the account of Profit Smooth. There were some transactions and Ng Hing had some deposits made into the account of  Profit Smooth. D6 said he asked Ng Hing which company it was and he said that Ng Hing mentioned Gafeng. At 213-220 D6 said that he never had any contact with Gafeng until Ng Hing spoke to him about the company and Ng Hing said that there were transactions between Profit Smooth and Gafeng. When asked to give further details about the transactions D6 said that Ng Hing did not state it clearly. In cross-examination D6 agreed that Ng Hing mentioned to the ICAC about  Gafeng in the context of  invoice financing  at counters 357 to 362. D6 said that Ng Hing did mention this way of doing things once and when D6 went to work at China Green in September 2008 Ng Hing said he did business with Gafeng as one of his purchasers. D6 said he understood that Ng Hing had many purchasers as he engaged in different types of trading business such as copper plate and aluminium materials.

164.  D6 was then referred to counters 373 where he said it was possible that one or all of the transactions related to Gafeng.

165.  D6 said that at the time of the interview he could not recall if he had seen the Profit Smooth bank statements. He then said he saw one of them and just took a glance before he went to the police with D5. In re-examination D6 said he looked at only a few of the statements.

166.  D6 denied that he knew that the Profit Smooth invoices were to be used for showing to banks. He said that he knew that there must be a Profit Smooth invoice for monies to be paid into the bank account of  Profit Smooth. D6 said that Ng Hing told him he would handle this matter himself.

167.  D6 said that when he worked for  China Green he knew that  Gafeng was 100% owned by China Green and that D1 was the financial controller of  Gafeng. D6 insisted he only worked for China Green from September 2008.

168.  D6 said that, on the occasion he was present when D1 asked Ng Hing to transfer money back to Gafeng, he did not know where the money in Ng Hing’s account had come from . D6 said that he understood it was money that had previously been given to Ng Hing by Gafeng to conduct a capital examination on the mainland. D6 disagreed that this incident took place in August 2008.

169.  D6 agreed that when he worked at China Green his job was to coordinate information between Sense Capital and China Green. He said that he saw the draft China Green listing prospectus when Ng Hing first mentioned it to him in July or August 2008. He said he saw the draft again in mid-September.

170.  D6 agreed that, on 21 July 2008, HKD30,000 was transferred from the account of Profit Smooth to his own bank account. He said he signed the transfer form at page 1527 of the Banker’s Affirmation. D6 said that Ng Hing told him he had earned a little bit more money so Ng Hing was able to repay D6 part of the money he owed him.

171.  D6 agreed that, when the Profit Smooth bank account was opened, no mention was made of the TourChain business. D6 said that when the bank opening document was completed, the most direct business was that of D5 with Lucky Technology.

172.  D6 agreed that Profit Smooth never reported any profits. He said that Ng Hing was going to deal with that matter.

173.  D6 said that he went with D5 to report the disappearance of  Ng Hing. D6 said he did this after discussing the situation with D5 and a brother in the church who is a lawyer.

DW’s 7 and 8 – Character witnesses

174.  A pastor and member of the Church of Christ were called to give character evidence in relation to D6. They told the court that they knew D6 to be a committed Christian, honest, reliable and a man of great integrity. They said that D1 and Ng Hing were both bible talk leaders, a position only afforded to committed members of the church. They said that there would have been deep trust between D6 and Ng Hing.

Directions

175.  I reminded myself that the prosecution bring this case and are required to prove the guilt of each defendant beyond reasonable doubt. I am required to consider the evidence for and against each defendant separately. I reminded myself that the prosecution had to establish each element of the offence to the required standard.

176.  Both the defendants have clear records. This is relevant to the issues of credibility and propensity. A person with a clear record is more likely to be telling the truth and less likely to commit a criminal offence. In this case  there was positive evidence of good character which I took into account in respect of each defendant.

177.  I also bore in mind that most of the character witnesses were connected with the Church of Christ and their evidence referred to not only D5 and D6 but also to Ng Hing whom they regarded as brothers in Christ. D5, D6 and their character witnesses spoke of the deep and committed religious principles by which they lived and which they considered to be shared by Ng Hing whom they all trusted. D5 and D6 trusted Ng Hing not only because he was their senior work colleague but because he was also their religious brother and mentor for many years. A number of character witnesses were called from the Church to speak of  the deep faith of all three and the considerable trust  that existed between them. I also bore in mind that D5 and D6 regarded Ng Hing as being far more experienced than them in business matters.

178.  I reminded myself that PW4, D1 and D3 were accomplices and gave evidence under immunity. I took this into account when considering their evidence and treated their testimony with caution. I reminded myself that they had motives to lie. PW4 enjoyed a full immunity from prosection. D1 and D3 were given immunity on the basis that they gave full and truthful evidence and would expect a  reduction in sentence for their cooperation in the prosecution of the other defendants. I reminded myself that their would be a temptation for them to give their evidence in a way which would show them in the best possible light. I also took into account that they were centrally involved in the indictable offences and D5 and D6 were charged with dealing with the proceeds of some of those indictable offences. D5 and D6 were not charged with fraud offences. By the time D1 and D3 had indicated that they wished to assist the prosecution many years had elapsed since the commission of the offences and their original interviews with the ICAC would not have covered in any detail their involvement with D5 and D6.

179.  I reminded myself that before a court may draw an inference from facts, the facts must be proved beyond reasonable doubt and any inference must be the only reasonable inference which can be drawn from those facts.

180.  In relation to D5, a video-record of interview with ICAC officers was admitted into evidence. There was no issue as to its voluntariness and I was not invited to use my residuary discretion to exclude it. An ICAC record of interview with D6 was admitted following a voire dire. I reminded myself that the statements were mixed and that exculpatory statements made by them in relation to themselves or other defendants were admissible as evidence of their truth. I reminded myself that inculpatory statements made by the defendants in relation to other defendants were not admissible and I disregarded such statements.

181.  I reminded myself that, if I rejected matters asserted by the defendants in evidence or in their records of interview, that did not mean they were guilty of the charge. I had to consider the evidence which I did accept and decide whether or not that evidence established the guilt of the defendants to the required standard. I bore in mind their clear records and positive good character  when considering the assertions made by them in evidence and in their records of interview.

The Law

Dealing with the proceeds of an indictable offence

182.  Section 25(1) of the Organized and Serious Crimes Ordinance, Cap. 455, provides:

“. a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence, he deals with that property".

183.  In HKSAR v. Wong Ping- shui and Another (2001) 4 HKCFAR 29, the Appeal Committee held that, in a prosecution under this section, the prosecution does not have to prove that the property represents the proceeds of an indictable offence.  The Appeal Committee held that the actus reus of the offence is dealing with property.  The status of the property is only an element of the mens rea of the offence. In the present case I had no doubt that the proceeds did represent the proceeds of an indictable offence.

184.  The mens rea of s.25(1) has two parts, “knowing” and “having reasonable grounds to believe”. “Know” included evidence of the person’s involvement with the commission of the indictable offence, or by admission that he knew that the property was the proceeds of an indictable offence: Seng Yuet-fong v. HKSAR [1999] 2 HKC 833 836D. “ Reasonable grounds to believe” contains objective and subjective elements: (a) objective element – requires proof that there were grounds that a common sense, right thinking member of the community would consider sufficient to lead a person to believe that the property in whole or in part represented any person’s proceeds of an indictable offence; (b) subjective element – requires proof that those grounds were known to the defendant: HKSAR v. Shing Siu-ming and Others [1999] 2 HKC 818 at 825H.

185.  The Court of Appeal in HKSAR v. Yam Ho-keung CACC 555 of 2001 affirmed the reasoning of the trial judge that where there are reasonable grounds for believing in a number of scenarios which might give rise to the property being dealt with, the defendant holds reasonable grounds for believing in them all. If one of those scenarios is related to an indictable offence, that is sufficient basis to convict. The essential point is whether the defendant was aware of those reasonable grounds, not the nature of the actual belief he had formed on the basis of those grounds.

186.  “Dealing” is broadly defined in section 2(1) of the Ordinance and includes receiving, concealing, disposing or converting property. I  considered the limited defence provided by s. 25(2),  which provides that in proceedings against a person under subsection (1) it is a defence to prove that the person intended to disclose to an authorized officer such knowledge, suspicion or matter as mentioned in section 25A(1) in relation to the act in contravention of a subsection (1) is concerned and there is a reasonable excuse for his failure to make such a disclosure in accordance with s. 25 A(2).

187.  S 25 A provides that where a person knows or suspects that any property (a) in whole or in part, directly or indirectly represents any person’s proceeds of ; (b) was used in connection with; or (c) is intended to be used in connection with , an indictable offence, he shall as soon as is reasonable for him to do so disclose  that knowledge or suspicion, together with any matter on which that knowledge or suspicions is based, to an authorized officer. An authorized officer includes a police officer.

188.  I considered these sections in relation to the contention made by D5 and D6 that some time after Ng Hing disappeared in mid-November, they went to Cheung Sha Wan police station to file a report to the police about  the lending of the Profit Smooth bank account to Ng Hing and their concern that there might be a problem. According to D5 the officer told them that, as they and Ng Hing were common friends, even if they made a report this would not mean they would escape liability and they were then invited to leave. D6 said that they went to the police station after discussing this matter with friends from their church including one who was a lawyer. Neither D5 nor D6 could recall the name or number of the officer to whom they reported and it was an admitted fact that there was no record of such a report.

189.  I also took this evidence into account when considering their assertions that they trusted Ng Hing and thought that they had done nothing wrong. Such a report would draw attention to their activities and put them at risk of police investigation.

Evaluation of the Evidence

190.  It was not disputed that D5 and D6 dealt with the HKD14,468,900 deposited into the account of  Profit Smooth between the 7^th December 2007 and 18 August 2008 and that the monies represented the proceeds of an indictable offence. The issue for the court to decide was whether D5 and D6 knew that the money, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence or had reasonable grounds to believe so.

Ng Hing

191.  It was not disputed that  a person called Ng Hing was responsible for arranging payments from Gafeng into the Profit Smooth account and that most of the funds were returned to Gafeng’s account by Ng Hing. Ng Hing had known D1, the boss of Gafeng, for many years. D1 and other persons connected with Gafeng including PW4 and D3, who gave evidence for the prosecution under immunity and  who were employees of Gafeng, were all involved in submitting false  invoices and other false documents  to Gafeng’s bankers in support of  applications for loans. This fraud on the banks started in January 2006. D1 said he had met Ng Hing in 2003/4 when he worked for another company.

192.  A short curriculum vitae of  Ng Hing was included in a business plan prepared by D6 in 2007 to promote a tourism services business on the mainland called TourChain , D5-2, page 49. D6 said that the description of  Ng Hing therein is accurate. Ng Hing is described as being 38, holding an MBA in International Marketing. It states that Ng Hing had been a trailblazing chief financial officer and marketing and sales manager for a number of  companies. He is described  as having extensive business connections and dynamic management skills in new market development and sales team management.

193.  D1 said he again met Ng Hing in 2007 in connection with a property transaction. D1 said that he became aware that Ng Hing knew a number of  bank personnel and was familiar with matters involving finance. D1 said that he explained to Ng Hing how he had been obtaining loans from banks using false invoices. D1 said that Ng Hing told him that D1 should try to get Gafeng listed in the USA and the money raised could be used to repay all the bank loans.

194.  D1 said that Ng Hing introduced him to personnel of the Dah Sing Bank, Citibank  and Bank of China for the purpose of  making bogus loan applications to such banks. D1 said that, in late 2007, Ng Hing started to work for Gafeng with a view to assisting in the listing of Gafeng’s parent company, China Green. From December of that year Gafeng started to use false Profit Smooth invoices to obtain loans from banks.

195.  Ng Hing disappeared on or about 1 October 2008. D1 said that substantial sums of money paid to Profit Smooth had not been returned to Gafeng and the personal cheques drawn by Ng Hing in favour of Gafeng amounting to HKD2.5 million had been dishonoured. D1 said that they were unable to repay the bank loans and were forced to abandon their intention to have China Green listed in the USA.

Ng Hing, D5 and D6

196.  Ng Hing had been a close friend and senior work colleague of D5 and D6 for many years. They shared deep religious convictions and were committed Christians.

D5

197.  D5 said that he is married with a daughter aged 17. He said that he met Ng Hing in 1998. D5 said that he started to attend church meetings at the Hong Kong Church of Christ where  Ng Hing was a bible talk leader. The church has branches in a number of districts. He said that Ng Hing led 3-4 families to study the bible and live by religious principles. D5 said that he and D6 would visit the work place of  Ng Hing in Quarry Bay and they would read the bible together. D5 said that Ng Hing was one of those who baptized him in 2001 and  later his wife. D5 said that their respective families had very close social and  religious ties.

198.  D5 said that, through the introduction of  Ng Hing, in 2003 he came to work for Sino Trade,  a media promotion company owned by Mak Ho Fong. D5 said that Mak Ho Fong also owned another company called Stanford, an anti-counterfeit digital technology company. D6 also worked for Sino Trade.

199.  D5 said that in 2005 Sino Trade suffered a huge trading deficit. He said that many of the staff of about 30 were fired and he, D6 and Ng Hing were transferred to work for Stanford which only had 4-5 employees.

200.  D5 said that Mak Ho Fong had some of his companies listed in the USA with the assistance of D1. D5 said that Ng Hing told him that D1 was an expert in listing matters. D5 said that in 2006 and until late 2007, he, Ng Hing and D6 worked at the Stanford office in Beijing which had about 10 employees. D5 said he worked in computer related matters, Ng Hing in business promotion and sales and D6 in marketing technology.

Profit Smooth

201.  Profit Smooth was incorporated in Hong Kong on 17 November 2006 with the wife of D5 as its first director. The registered address at Bell House in Nathan Road Kowloon was the office of  a friend of D5. The registered address was changed to 81, Hang To Road, Kwun Tong on 1 October 2007. D5’s friend had moved his office to that address at that time.

202.  On 3 October 2007 D5 and D6 became directors and equal shareholders of Profit Smooth and D5’s wife resigned as director. D6 resigned as a director of  Profit Smooth on 30 April 2008 by a notice given to the Companies Registry on 9 July 2008. The Profit Smooth Annual return filed on 18 November 2008 indicated that Profit Smooth was wholly owned by D5.

203.  According to the evidence of D5, whilst D5, D6 and Ng Hing were working in Beijing, they considered using their leisure time to develop their own careers.

204.  D5 said that he later became aware that Ng Hing was actively working on the registration of Profit Smooth. D5 said that as they were all working in Beijing at that time, Ng Hing suggested that D5’s wife should become the first director as she was in Hong Kong. D5 said that he supplied Ng Hing with his wife’s identity details and provided as the registered address the address of one of his friends who had an office in Hong Kong. According to D5, Ng Hing told him that he did not want to become a director of Profit Smooth or a signatory to the bank account as he did not want his boss at Stanford to know that he was trading on the side.

205.  In his record of  interview at counters 146 -192, D5 was asked why Ng Hing used Profit Smooth. D5 said that Ng Hing borrowed their company. D5 claimed that he only learned that Ng Hing had borrowed Profit Smooth after business had been done ( counter162). D5 said that Ng Hing told him that it was not convenient for Ng Hing to do business in his own name as he was responsible for supervising the sales department at Stanford and Ng Hing was afraid his boss would find out.

206.  At 187 D5 was asked why Ng Hing did not set up a company himself or ask his family to do so, why he asked D5 and D6. D5 replied that Ng Hing did not ask them  “to do other things… That is, he thought, noticed our weaknesses, noticed that we… er, wished to do unauthorized outside work”. D5 was then asked if Ng Hing explained the reason he needed to use Profit Smooth for issuing invoices and D5 said that Ng Hing did not explain (counter 190).

207.  I noted that D6 claimed that he was told by Ng Hing that Ng Hing did not want direct involvement in Profit Smooth because he did not wish to jeopardize opportunities of taking up senior positions in companies on the mainland with whom he was hoping to enter into joint ventures.

208.  D5 said that, in 2006, he started to have business dealings with a company called Lucky Technology Ltd (Lucky Technology) who were dealing in fingerprint scanning machines. D5 said he started to sell their machines on the mainland and was granted an agency by Lucky Techonology.

209.  D5 said that he used the name of Profit Smooth in his dealings with Lucky Technology  because they would not deal with him in a personal capacity. D5 said that this business had nothing to do with D6 or Ng Hing. D5 said that there were about 14 transactions between Profit Smooth and Lucky Technology and correspondence and documentation relating to 10 of  the transactions were produced as part of  Exhibit D5-2.

210.  D5 said that the total amount of money involved in his business with Lucky Technology was approximately HKD100,000 and covered the period from October 2006 to November 2008. I noted that one of the earlier Lucky Techology invoices produced, D5-2 (p.2) is dated October 2006, the month before Profit Smooth was incorporated. The invoices refer to “Beijing Profit Smooth Technology Limited”  and use the Beijing residential address of  D5 and his contact telephone numbers. I noted that, notwithstanding D5’s claim to know little English,  much of the e-mail correspondence between the companies was conducted in English.

211.  D5 paid for most of the goods supplied by cash transfers to Lucky Technology. On two occasions, on the 11 and 14 December, cheques drawn on the Profit Smooth  bank account were used.  D5 said the money had been put into the account in  connection with the business of  Ng Hing but he was allowed to make these withdrawals as part repayment of  money Ng Hing owed him.

212.  D5 said that he allowed Ng Hing to use the Profit Smooth name and account to do separate business with Gafeng in the same manner he had used the company to do business with Lucky Technology.

213.  D5 said that he was told by Ng Hing to open the Profit Smooth bank account for two reasons.  He claimed that Ng Hing needed to do business with Gafeng and an account was needed for issuing invoices. He also claimed that Ng Hing was working with D6 using the name Profit Smooth  to develop a company on the mainland under the name TourChain to set up a platform for tourism and was seeking investors. D5 said that Ng Hing told him that an investor or investors were about to agree to invest  in this project and Profit Smooth needed a bank account for that reason.

214.  D5 said that, for setting up Profit Smooth and the bank account, he used an accountant called David Lin as instructed by Ng Hing.

Ng Hing and D6

215.  D6 is a married man with twin daughters aged 5. He is marketing a manager and has a degree in finance.

216.  D6 has known Ng Hing for about 20 years. As I have stated above, they are both members of the same church and became bible talk leaders at the same time. He was best man at Ng Hing’ s wedding and their families are very close. D6 had lent HKD200,000 to Ng Hing, HKD100,000 in 2007 and a similar sum  just before Ng Hing disappeared.

217.  In 2003 Ng Hing invited D6 to write a business plan which led to the setting up of  the media promotion company Sino Trade which was owned by Mak Ho Fong. Both Ng Hing and D6 were employed by Sino Trade and D6 introduced D5 to work there about 6 months later. D6 was employed as a Vice-President of the company and Ng Hing as the senior Vice President. D6 said he was very impressed with Ng Hing’s business acumen. D6 said that within a short time of  Sino Trade being set up, Ng Hing had demonstrated that he was able to execute a sales plan. Ng Hing had also established sales teams on the mainland and in Hong Kong and had achieved a turnover of HKD 3million.

218.  D6 said that in 2005 Sino Trade was closed down. D6 said that the reason for this was that Mak Ho Fong had limited resources and wished to switch his investment to Stanford. Ng Hing said he worked at Stanford with Ng Hing and D5 until January 2008 when he left because of office politics. D6 said that during part of that period they worked in the Beijing Stanford office. D6 said that, whilst working in China with Ng Hing, Ng Hing arranged meetings with important and influential people employed in various  large companies and with government officials. Business cards of such people were produced as part of  Ex D6-4.

TourChain

219.  D6 said that Ng Hing invited him to write up a business plan with a view to setting up a business which provided a platform for tourism, which he intended to call TourChain. D6 said that Ng said that they would use Profit Smooth to help set up the company.  D6 said there was considerable  e-mail correspondence concerning this project and Ng Hing introduced him to a venture capitalist call Sammy Wong whose business card D6 produced. The business plan for this company was produced as part of  D5-2, pages  44 to 63. It describes the project as a joint venture between a Beijing company and Profit Smooth.

220.  D6 said that Ng Hing told him that he was expecting to attract an investor to this project and urgently wanted D6 to become a director of  Profit Smooth and to open a bank account into which the investment would be paid. D6 said that this was the only reason he was given for the opening of the bank account. I noted that D5 claimed that he had been told that one of the reasons for opening the account was to receive payments from Gafeng.D6 said that Ng Hing arranged for the accountant David Lin to attend to the necessary arrangements.

221.  D6 said that Ng Hing spent about HKD2-300,000 on the TourChain project by paying for staff in China. D6 said  that the project failed because Ng  Hing failed to attract any investors.

222.  D6 said that, at the same time that the TourChain project was being promoted, Ng Hing was also seeking to promote a joint venture between a Korean company and a mainland municipality concerning using  large screens outside shopping complexes for advertising purposes. D6 said that Ng Hing told him that Ng Hing had a chance to become a director of the company which was to be listed. D6 said that Ng Hing told him that he did not wish to become a director of Profit Smooth because  he would have to declare this if he was to become a director of  the mainland company. I noted that this was not the reason which D5 claimed he had been given for Ng Hing not becoming a director of  Profit Smooth.

223.  D6 said that he resigned as a director of  Profit Smooth on 30 April 2008 for three reasons:  he said that he considered the chances of the TourChain project succeeding were low and he thought Ng Hing should be dealing with his own business and he did not wish to accept the financial risks involved.

China Green

224.  It was not disputed that, at some time in 2008, at the request of  Ng Hing,  D6 gave assistance to China Green, the holding company for Gafeng, in relation to its intention to obtain a public listing in the USA. His job was to give supplementary information to Sense Capital, a company which was preparing the prospectus for the proposed listing. D6 had to communicate between China Green and Sense Capital. He had to do research and studies about bio-diesel knowing that he would be part of a team to conduct a road-show in USA to promote the company. D6 was not paid a salary, but Ng Hing told him that a permanent post such as marketing director or investor relations director would be given to him after the listing.

Bank Account of Profit Smooth

225.  The bank account of  Profit Smooth at HSBC was opened on 11 October 2007 by D5 and D6 who became the authorized signatories of the account. Only one signature was required to operate the account.

226.  I noted from the bank opening documents signed by D5 and D6, Banker’s Affirmation Bundle 4 page 1272,  that the estimated annual business turnover was HKD1.5 million. The business is described as trading and the nature of the business “ Security and Access control equipment, CCTV, Fingerprint identifier”. There was no reference to trading in lubricants or the proposed TourChain project. I noted that the only person engaged in the work described was D5 and he dealt in cash. The only occasion on which he used the account for his business was for two small payments made in December 2007 and he said that he was allowed to use the Profit Smooth funds as part repayment of an outstanding loan made by him to Ng Hing.

227.  The company cheque books and chops were kept by D5.

228.  Bogus Profit Smooth invoices were presented to four banks with which  Gafeng  held accounts and had negotiated loan facilities. The bogus invoices were used to support loan applications to the four banks and, as a result, HKD14,469,070 was paid into the Profit Smooth bank account. When the loans were paid into the Profit Smooth account, the money was transferred out very shortly thereafter.

229.  Between 7 December 2007 and 18 August 2008, a total sum of HKD13,606,011.65 was either transferred by D5 or D6 to the personal account of Ng Hing at HSBC ( No. 633-048145-888) or withdrawn in cash by Ng Hing with cash cheques signed by D5 or D6. The amount authorized by D5 was HKD6,130,135.50 and the amount authorized by D6 was HKD7,475,876.15.

230.  All funds moved out of the account before 13 June 2008 were authorised by D5 except for a cash withdrawal made by D6 on 10 December 2007.

231.  All subsequent transfers were made by D6.

232.  On 10 December 2007 a sum of HKD300,000 was withdrawn by D6 in cash.

233.  On 11 and 13 December 2007 two sums, each of HKD100,000, were withdrawn by D5 in cash.

234.  The bank evidence from HSBC shows that Ng Hing’s account N.. 633-048145-001 had the total sum of  HKD4,067,040 transferred to Gafeng’s account at DBS during the period from 28 December 2007 to 4 September 2008. The bank evidence from the Hang Seng Bank shows that Ng Hing’s account No. 024-384-113999-01 had the total sum of  HKD8,166,900 transferred from that account to Gafeng’s Bank account at DBS during the period from 31 December 2007 to 25 November 2008.

235.  All the deposits and withdrawals from the bank account of Profit Smooth had been summarized in the report of  PW7, Ex 5523, at annexures D and E.

236.  It can be seen that the majority of deposits made into the account related to the Gafeng loans from the four banks. The only three substantial deposits made otherwise were (a) the sum of HKD3.3 million transferred from a savings/time deposit account on 28 December 2007: (b) HKD1 million transferred from the bank account of  D4 on  23 April 2008 and  (c) HKD300,000 cash deposited by Lam Chi Kin Anthony on 3 January 2008 [ Annexe E pg820]. There was no evidence relating to the identity of  Lam  Chi Kin, Anthony. The substantial part of the three deposits was transferred out of the account soon after they were deposited. The third deposit was made to cover an overdraft in the account. D5 said that these three deposits related to the business of  Ng Hing.

237.  As for the loans deposited by the four Gafeng banks, the monies was transferred out from the account soon after they were deposited but in irregular sums. The majority went to the personal account of  Ng Hing.

 Monies relating to D5

238.  I have mentioned above the two sums of HKD100,000 withdrawn in cash by D5 on 11 and 13 December. D5 said he gave this money to Ng Hing.

239.  On 11 and 14 December 2007 the amounts of  HKD6,110 and HKD12,233 were paid to Lucky Technology.  D5 told the court that he had made 14 transactions amounting to about HKD100,000 with this company and he said that, although he was trading under the name Profit Smooth , these were the only two payments made out of the Profit Smooth account. D5 said that he regarded the money in the account as belonging to Ng Hing and that Ng Hing allowed him to make these two payments from the Profit Smooth  account in part repayment of  loans D5 claimed he made to Ng Hing on two separate occasions in 2006 totaling HKD30,000.

240.  On 31 December 2007 HKD5000 was transferred to the personal account of  D5 (pg 1476). D5 said that he had  settled a telephone bill for telephones used by himself, Ng Hing and D6 and this was reimbursement for that bill.

Monies relating to D6

241.  D6 made the cash withdrawal of  HKD300,000 from the Profit Smooth account on 10 December 2007. D6 said he gave this money to Ng Hing.

242.  On 21 July 2008 HKD30,000 was paid to the personal account of  D6. D6 said that this was part repayment of  a loan he had made to Ng Hing in 2007.

Evidence in relation to D5 concerning the Profit Smooth Account 3 Profit Smooth Invoices Signed by D5- Exhibit 234/5/ 7, CB 105,110 and 115.

243.  17 bogus Profit Smooth invoices were used to support applications for loans from four banks between 6 December 2007 and 15 August 2008.

244.  The first three bogus invoices, Exhibits 234,5 and 7, were signed by D5 as the authorized signatory and he also used the issued company chop to chop the invoices. The first two invoices were signed on 6 December and the third on 11 December.

245.  The remaining invoices were signed by persons connected with Gafeng and they used a different Profit Smooth chop obtained by Gafeng staff.

246.  The circumstances in which D5 signed and chopped the invoices were largely undisputed  but I noted he gave a different account to the ICAC when he was interviewed.

247.  D5 said in evidence in chief that, on the day he signed the first two invoices ( 6 December 2007),  he received a phone call from Ng Hing. Ng Hing told him that he would be contacted by an accountant from Gafeng, D3, for him to sign and chop the invoices. D5 said that Ng Hing told him the amount involved and the description of the goods. D5 said that he was later contacted by D3 and they arranged to meet at a café near to the Stanford office in Lai Chi Kok. D3 told the court that he brought along two sets of documents for each invoice.

248.  D5 said that he looked at the invoices and noted that the amounts and goods description accorded with what he had been told by Ng Hing. D5 said that he read the invoices before he signed and chopped them. D5 said that when he chopped the first invoice the chop mark was smudged so he chopped the document a second time. D5 said that he did not know who prepared the invoices and he noted that the Gafeng chop had not been attached.

249.  D5 said that before leaving the café he discussed with D3 his business concerning fingerprint scanning machines but, as D3 showed little interest in the conversation, they soon parted.

250.  D5 said that on 11 December he was again contacted by Ng Hing about signing an invoice, He said that he was then contacted by D3 and similar arrangements were made for the signing and chopping of the Profit Smooth invoice Ex 237. I noted that, in his record of interview at counters 224-242, D5 told the ICAC that Ng Hing had prepared the invoices he signed and brought them to him to sign at the Stanford office in Lai Chi Kok.

251.  I noted also that D5 was asked if he knew anyone at Gafeng and he said that he  knew the boss because he previously worked in the company D5 worked for and he had seen him several times. He said his name was Tony( D1) (counter 220). D5 was asked further questions about “Tony” from counter 389. He said that D1 worked for Sino Trade but in a different office to him. D5 said he saw him at meetings in the office and he was assisting his boss to get one of  his companies, which dealt in wrist watches, listed. At counter 428 he said that he knew that D1 was someone from Gafeng according to Ng Hing. In his evidence in chief he said that he was nervous when questioned by the ICAC and what he meant to say was that he only saw D1 at the offices of Stanford in Tsim Sha Tsui two or three times. D5 said that he never spoke with D1 and had heard from D6 that D1 was helping Mak Fong to get a company listed.

252.  D5 said he never discussed these invoices or signing them with D6. D5 said he did not think of that. D5 said that he did not think Ng Hing was doing anything illegal.

253.  I noted that the first two invoices purported to relate to deals in excess of HKD1.5  million and the third was for over HKD900,000.  I found incredible D5’s assertion that he never discussed the situation with D6, his co-director in Profit Smooth, joint bank account signatory, and work colleague.

254.  The invoice was brought to him by the counter-party to the transaction. D5 said that he had no idea who had prepared the invoice. As far as he was aware, Profit Smooth had no offices or staff. The Profit Smooth invoices had no reference to anyone at Profit Smooth. The only address on the invoice was the registered address of  Profit Smooth which belonged to his friend who had no connection with Profit Smooth and whose address was being used as a matter of convenience.

255.  At this time, D5 was not unfamiliar with dealing with invoices. He had been dealing with Lucky Technology who had supplied him with invoices relating to their dealings. The invoices contained full contact details of both parties eg D5-2 (2).

256.  D5 saw no documentation relating to any company which might be supplying Profit Smooth.

257.  Following the signing of the first two invoices on 10 December 2007 D5 went to the bank with Ng Hing to transfer HKD1 million and HKD400,000 from the Profit Smooth savings account to its current account. D5 then signed three cheques in favour of  Ng Hing in the sums of HKD400,000 x1 and HKD300,000 x 2 which were all presented between 1217 and 1220 hours that day, Bankers affirmation bundle 4 pages 1448/50/52. On the same day, D6 went to the bank with Ng Hing and, at 1700 hours, withdrew HKD300,000 in cash ( page 1454) which D6 says he gave to Ng Hing. D5 and D6 said that the cheque was written by D5 and signed by D6.

258.  On 11 December 2007, the day D5 signed the third invoice,  a cheque for HKD6,110 signed by D5 in favour of Lucky Technology was presented at the bank and D5 withdrew HKD100,000 from the account in cash, which he claims he gave to Ng Hing.

259.  According to both D5 and D6, none of  these events were discussed between them notwithstanding that they were working in the same office.

260.  On 12 December 2007, D5 arranged for HKD150,000 to be transferred from the Profit Smooth savings account to the current account. The following day D5 withdrew HKD100,000 in cash which he claims he gave to Ng Hing.

261.  On 13 December 2007 the sum of HKD917,090 was paid into the Profit Smooth account from the Gafeng Public Bank account. D5 had signed the  Profit Smooth invoice Ex237, CB 115, on 11 December 2007.

262.  On 14 December D5 signed a Profit Smooth cheque for HKD12,223.50 in favour of Lucky Technology. The same day he transferred HKD500,000 from the Profit Smooth savings account to the current account and signed a cash cheque ( page 1464) for HKD500,000 which he said he gave to Ng Hing.

263.  On 17 December 2007, D5 transferred HKD430,000 from the Profit Smooth Savings account to its current account.

264.  On 19 December 2007,  D5 signed a cash cheque for HKD80,000 on the Profit Smooth account and on the following day, a cash cheque for HKD166,000 ( pages 1466/8).

265.  On 27 December 2007 D5 transferred a further HKD15,000 between the two Profit Smooth accounts ( Page 1470).

266.  On 28 December 2007 HKD3.3 million was paid into the Profit Smooth Time/ Savings account. The same day D5 drew a cheque  for HKD3 million in favour of  Ng Hing which was presented at the bank that day (page 1473). D5 said that Ng Hing told him that the HKD3.3 million was deposited into the account by customers. D5 said that he did not ask which customers and he believed that the payment was from Gafeng. D5 said that Ng Hing told him that he needed to make the withdrawals of monies in cash to pay for goods he obtained on the mainland. D5 agreed that the withdrawals did not match the payments. D5 said that he did what Ng Hing told him to do without asking questions.

267.  D5 only signed the first three invoices. He was aware that further payments were made into the Profit Smooth account after that because he signed bank documents and cheques transferring funds and paying monies to Ng Hing. D5 said that he refused to sign further  invoices because he was concerned about the huge sums involved. He said that the amounts involved were huge as compared with the relatively trivial amounts involved in his Lucky Technology trades.

268.  D5 told the ICAC at counter 171 of  his VRI that, whenever an invoice was to be issued, it should be issued in the name of Profit Smooth and, after that, persons would deposit money into the account of  Profit Smooth. D5 agreed that he told the ICAC that he felt suspicious after he signed the first three invoices and refused to sign further invoices. D5 told the ICAC at counter 322 that, after he had twice signed invoices he thought there was something wrong and he did not really want to do it because he did not even know what kind of business was done. D5 went on to say that, after that, he refused to sign any further invoices. D5 further agreed that he told the ICAC that he thought that Ng Hing should not earn money so easily.

269.  I noted that a further HKD5,977,480 was paid into the Profit Smooth account as a result of  7 further Profit Smooth invoices dated between 25 February 2008 and  12 June 2008 and all the monies were transferred out of the Profit Smooth account to the account of Ng Hing as a result of cheques drawn on the account by D5. D5 agreed that he accompanied Ng Hing to the bank on each of the occasions that cheques were presented.

270.  D5 told the court that he continued to help Ng Hing because Ng Hing really had done such business so he gave the money back to Ng Hing. D5 said that Ng Hing told him he dealt with the further invoices himself. D5 said that Ng Hing did not tell  him how he did it and he did not ask. D5 said he did not see any further invoices and did not enquire about them. I noted that the only official company chops were kept by D5.

271.  D5 was asked about the withdrawals made from the Profit Smooth account which were authorized by D6 between 26 May 2008 and 18 August 2008. D5 said that, at a later time, from mid-2008, D6 did not work at Stanford.  D5 said that it was mentioned that D6 would go to work for Gafeng to write marketing related things.  D5 said that he had never heard of China Green. D6 said that he knew nothing about these transfers until he later got the statements around September or October 2008. D5 said that D6 never told him he was making these transfers even when they went to the police on 2 October 2008 when they went to the police station with Ng Hing’s wife to report his disappearance. In further cross-examination by counsel for D6,  D5 said that D6 might have mentioned that he had signed the transfers before going to the police station.

272.  D5 was questioned by the prosecutor about filing tax returns for Profit Smooth. D5 said that he did remind Ng Hing that he would have to file a tax return and he said that Ng Hing told him he would fix it himself. D5 said that he gave all the bank statements in relation to the company’s tax returns to David Lin, the accountant. D5 said that he took the initiative of contacting the accountant.

273.  D5 said that Ng Hing had  agreed to pay the fees for the registration of  Profit Smooth. D5 said he later learned that they had not been paid and he agreed to pay such fees to David Lin  by instalments.

274.  D5 said that he did not very often collect the Profit Smooth  bank statements from his friend’s office as the office was quite far away.

D6 and the Profit Smooth Bank Account

275.  As I have stated above, D6 said that he became a director and bank signatory for Profit Smooth at the invitation of  Ng Hing. D6 said that he knew it had been established by D5’s wife. D6 said that he became a director because Ng Hing told him that he was anticipating investments in respect of  the TourChain project and it was necessary to have a bank account.

276.  D6 said that Ng Hing also said that, because of the two projects he was involved in setting up on the mainland, he did not want to have to disclose his directorship of another company. I noted that this was not the same reason D5 said he was given by Ng Hing.

277.  He said that David Lin, Ng Hing’ s accountant, made all the necessary arrangements and he went to the bank with D5 and David Lin to open the bank account. D6 agreed that, when the bank account was opened, there was no mention made of the TourChain business. D6 said that when D5 filled in the particulars the most direct business was that of  D5 and the TourChain payment was to be by way of investment rather than trading.  I noted that, at no time, did D6 have any involvement with D5’s business with Lucky Technology.

278.  D6 said in evidence that D5 had set up Profit Smooth without any reference to him and he had no discussion with Ng Hing about its setting up. D6 said that he thought Profit Smooth had done no business until the money transfers into the bank account arranged by Ng Hing.

279.  I noted that, when D6 was asked by the ICAC why Profit Smooth was set up, he told them that the main purpose was that they had some projects on the mainland. He said they wanted to develop something in relation to “IT” ( counter 74).

280.  I noted that D5 said in evidence that the setting up of  Profit Smooth was the idea of Ng Hing, D6 and himself to develop their own careers when they were working in Beijing. This assertion was not challenged by counsel for D6.

281.  I also noted that D5 said that it was the suggestion of  Ng Hing that he set up Profit Smooth with D6 because their pay was not high and they wished to take advantage of  the convenience of working in Beijing to do some trading on their own ( Counter 78). When D5 was asked by the ICAC why Ng Hing did not use his family members to set up Profit Smooth, D5 said that he thought Ng Hing “noticed their weaknesses, noticed that they wished to do unauthorized outside work” (counter 188). I reminded myself that any incriminating comments made by D5 in his record of interview would not be admissible against D6.

282.  I noted also that, with regard to the opening of the bank account, D6 told the court that it was to receive deposits in relation to the TourChain project whereas D5 said that he had been told that it was set up also  for Ng Hing’s dealings with Gafeng.

283.  D6 said that, in relation to the cash withdrawal of HKD300,000 made by him on 10 December 2007, he made this withdrawal at the request of  Ng Hing. D6 said that Ng Hing called him and told him that he wished to make a withdrawal from the Profit Smooth account and D5 was not free. D6 said that Ng Hing asked him to collect a cheque from D5 and go with him to the bank. D6 said that when he collected the cheque from D5 the amount was already filled in. D6 said that he went to the bank together with Ng Hing and that Ng Hing told him he was trading in some industrial material and a trade had already been done. D6 said that Ng Hing told him the suppliers were on the mainland and he had to pay them in cash immediately. D6 said that he gave the cash to Ng Hing.

284.  At an early stage in his interview with the ICAC, D6 told the officer that Ng Hing borrowed their company ( Profit Smooth) to carry out transactions ( counter 116/8). D6 told the ICAC that at that time “we began to suspect that …[Ng Hing] had done something illegal…. I found it suspicious so I asked him about it.” ( counter 120). At counter 122 D6 said that Ng Hing did not give him an “explicit reply about what business he was engaged in.”

285.  In his evidence, D6 said that this suspicion he was referring to did not arise until after Ng Hing had disappeared. However, on reading the questions and answers, it is quite clear that this suspicion arose before the disappearance as D6 refers to asking Ng Hing about his suspicion and receiving no explicit reply.

286.  D6 said he did not discuss the matter with D5.D6 said that he never asked to see the bank statements. This was notwithstanding their status as company directors, bank signatories and the fact they were work colleagues.

287.  D6 said that he next became involved in moving money out of the account in May 2008, the month after he resigned as a director of Profit Smooth.

288.  D6 said that he resigned as a director on 30 April 2008 as at that time he was aware that Ng Hing had used Profit Smooth to do many tradings.

289.  D6 said in evidence that he thought the business had become mature and that he thought that Ng Hing should be dealing with matters himself. D6 said that he was also concerned that he would be involved in financial risks as companies involved might fail to pay. D6 said that he could not afford that risk and he raised the matter with Ng Hing who arranged for him to resign as a director. I noted that D6 continued to be a signatory for the bank account.

290.  D6 told the ICAC that the reason for his withdrawal was because he no longer wanted to have any connection with the business because he did not know much about it (counter 234).  At counters  242- 250 D6 told the ICAC that Ng Hing told him that there were some transactions involving transfers to Profit Smooth and then back to him and that Ng Hing did not make any explanation except to say that is was for invoice financing.

291.  D6 was asked by the ICAC why, at that stage, he did not close the company (718). D6 said that some money had to be spent on closing the company and he and D5 were in a passive position, that they did not rely on the business of  Profit Smooth. D6 said that D5 had a job and he was providing a marketing consultancy services (721 to 728). D6 said that because he was flexible he went to the bank with Ng Hing to make the transfers instead of D5, who was still employed by Stanford.

292.  I noted that, by the time of D6’s resignation from Profit Smooth, there had been seven substantial payments into the account. So even by then, according to D6, he had no clear idea as to what was going on. Nevertheless, he went on to transfer to Ng Hing millions of dollars paid into the Profit Smooth account after his resignation.

Transfers effected by D6 to Ng Hing

293.  Between 26 May and 18 August 2008, D6 transferred out of the Profit Smooth account a total of HKD7,475,876.15. The first two transfers, made on 26 May and 28 May, were for HKD713,760 and HKD1,779,920 respectively. Four of the remaining transfers were for amounts exceeding HKD900,000 and one was for just short of that amount (18 August). Most of the transfers were made on the same day the deposits were made into the Profit Smooth account.

294.  D6 told the court that, in relation to these transactions, he thought it was very normal and that Ng Hing told him his trading was going very well.

295.  When asked about these transactions by the ICAC at counter 250 D6 said that Ng Hing  “just told him that there were some transactions…….In fact, he didn’t make any explanation.”

296.  At counter 252 D6 said that Ng Hing told him that it was for “invoice financing”. D6 was later asked what Ng Hing told him at the beginning and he said that he had forgotten (counter 260). At 309 D6 was asked what invoice financing meant, as far as he understood it, and he said that “Probably it means to borrow from a bank..I think there might be some dealings with the bank(s)”. D6 went on to say that this was a rough guess and he was not very clear about it. D6 said that he would go personally with Ng Hing to the bank to make the transfers for which he was responsible. D6 told the ICAC that Ng Hing told him that the company involved was Gafeng but that he was not told that each transfer was made for this purpose (counter 368). D6 told the ICAC that he was willing to help Ng Hing, having  so little information, because of their long relationship and trust.

297.  In relation to the invoice financing D6 told the ICAC that  he was shown no documents. D6 said, at 424, that he was not clear whether D5 had signed any documents.

298.  Counsel for D6 was critical of the ICAC asking what he described as  a leading question at counter 556 about invoice financing relating to bank loans which led to D6 replying that the invoices probably did relate to bank loans. In his evidence, when asked about this question and answer, D6 said that the officer kept asking him about invoice financing and that, before the officer put this question, he had been shown Profit Smooth documents and bank documents. D6 said he told the officer that it was not clear to him and the officer became impatient and, since D6 had been shown so many documents and asked if he agreed that it related to bank loans, he said that it did.

299.  With regard to this matter, I noted that, at no time, was D6 shown any bank documents. I had also viewed the video recording of the interview. I noted that it was in fact D6 who had first mentioned invoice financing, much earlier in the interview at counter 252, when he told the ICAC officer that Ng Hing told him that the transactions in which he was involved concerned invoice financing. When D6 was asked what that meant (counter 309) D6 said: “Probably it means to borrow, borrow from a bank- I think there might be some dealings with the bank(s)”. These replies were made before D6 had been shown any documents by the interviewing officer and were certainly not as a result of any leading questions.

General Observations

300.  As the Court of Appeal has stated on a number of occasions, bank accounts are valuable personal properties. An adverse inference will inevitably be drawn against a person who allows another to use his account to deposit and withdraw funds without adequate explanation or without making proper enquiries. In this case, even if I were to accept their evidence, neither D5 nor D6 made proper enquiries as to the reasons for the transfers being made through the Profit Smooth account.

301.  Both D5 and D6 said that they had known Ng Hing for many years, both professionally and socially, and that they shared a deep and committed Christian faith. Many witnesses were called to confirm this. They said that, because of these matters, they trusted Ng Hing and did not believe that he would involve them in anything illegal.

302.  Obviously there had to exist a trust between Ng Hing and the two defendants. Ng Hing used the bank account which they had opened to launder substantial sums of money and he had to be confident that D5 and D6 would  agree to sign cheques and transfers authorizing the movement of funds to him and not use the funds for themselves.

303.  In my view, it must have been anticipated the suspicions of the bankers dealing with the Profit Smooth account might have been aroused   because of  the amount of money involved, the way in which the funds were moved through the Profit Smooth Bank account, the fact that monies all came in from a company and were moved out in cash or transfer to a personal account. Ng Hing had to be confident that D5 and D6 could deal with any queries that might be raised. In many cases of this type, launderers use the bank accounts of family members or get family members to set up companies and open bank accounts.

304.  I noted that both D5 and D6 claimed that they were given different reasons as to why Ng Hing did not become a director of Profit Smooth and the reason for the opening of the account. I also noted that the reason given to the bank by D5 and D6 for the opening of the account was not the reason that it was opened. If the defendants were telling the truth as to what they were told by Ng Hing in relation to these matters and if I were to accept that they had not been told the real reason for the opening of the account, namely the laundering of monies fraudulently obtained from banks by Gafeng, Ng Hing was taking a considerable risk. D5 and D6 had worked together for a number of years and worked in the same office for several months after the account was opened. Had they compared what they claimed they were told by Ng Hing these discrepancies would have been obvious. I was sure that both defendants were lying as to what they claim they were told by Ng Hing.

305.  Moreover, I found incredible the assertions made by both D5 and D6 that they did not discuss with each other their dealings with Ng Hing. They allowed the Profit Smooth bank account, for which they were both responsible, to be used for the transfers of huge sums of money. Even if  I were to accept their evidence, neither of them were given anything like a cogent or persuasive explanation as to the reason Ng Hing used the account in the way he did. The account was not used for a one-off transaction. There were 17 payments into the account over a period of  8 months involving over HKD14.4 million. The monies paid into the account were then almost immediately transferred out of the account, often in irregular sums, either in cash or to the personal  bank account of  Ng Hing. There was no detailed enquiry as to how Ng Hing was able to effect these trades.  Profit Smooth had no staff and no offices and D5 had seen three invoices which made no reference to anyone involved with Profit Smooth.

306.  D5 signed and chopped the first three Profit Smooth invoices, two on the 6 December and the third on 11 December 2007. As I have commented above, the invoices were most odd in that there was no reference whatsoever to anyone related to Profit Smooth and the address supplied was that of  D5’ s friend, which was being used as the registered address. The amounts involved were substantial. D5 was not unfamiliar with invoices because he had, at that time, conducted business with Lucky Technology and invoices had been supplied to him in relation to this business. Furthermore, the three invoices were presented to him by a person who was described to him as the accountant from Gafeng, the counterparty. All these matters would have given rise to grave suspicions.

307.  I do not believe that D5 would not have discussed these matters with D6, the only other director of Profit Smooth, the co-signatory of the bank account and his work colleague working out of the same office. Nor did I believe that they did not discuss the substantial cash and other transfers being made out of the account.

308.  With regard to D5, he had the only chops for Profit Smooth. He said that he refused to sign and chop any further invoices after the first three invoices were signed.  He told the ICAC that he thought there was something wrong ( counter 322). Yet he was obviously aware that  further amounts were being received into the  Profit Smooth account. He obviously knew about such payments into the account because he agreed to transfer such sums to Ng Hing. He would know that these amounts were from Gafeng as for each of the 17 transfers from the Gafeng bankers, the Profit Smooth bank accounts showed that the transfers were from Gafeng. D5 made no meaningful enquiries as to how these payments to Profit Smooth were possible. D5 asserted that he continued to assist Ng Hing because he did not think Ng Hing was doing anything illegal. D5 claimed that he did not even discuss this matter with D6.

309.  D5 told the ICAC at counter 322 that after he signed “ for two times, I thought there was something wrong and I didn’t really want to do it, because I didn’t even know what business was done. Well, after that, I refused to sign for him, and for those, the , the one who signed subsequently, I have no idea, which , which person that was”. I noted that this situation arose within the first month of the commencement of the laundering.

310.  I have set out above D6’s involvement in the Profit Smooth dealings and transactions.  He claims not to have known the account was set up for the Gafeng dealings but does not seriously question what is going on at an early stage when, on 10 December 2007, he withdrew HKD300,000 from the account in cash which he claims he gave to Ng Hing. D6 said he went to the bank because D5 was unable to attend the bank but D6 claims, incredibly, that he did not discuss what was going on with D5 even though he told the ICAC and the court that he was not sure what was going on.

311.  According to the evidence, D6 resigned as a director of Profit Smooth on 30 April 2008 either because he did not know much about what was going on, as he told the ICAC, or because he was concerned about the amounts involved and thought Ng Hing should accept responsibility. Yet, even after that, he transferred millions of dollars from the Profit Smooth account to the personal account of  Ng Hing.

312.  I took into account the evidence of  D5 and D6 that they claimed they went to the police station in November 2008 to report the lending of the Profit Smooth account to Ng Hing. D6 said that they did this after they had discussed the situation with a member of their church who was a lawyer. They said that the police told him that there was no need to file a report because the matter only concerned a missing person and nothing had happened. There was no record of this matter being reported to the police. I found it incredible that the police would have shown such little interest in this matter had they been shown the bank records and it had been explained to them how the monies were moved through the account.

313.  Counsel for D5 submitted the report to the police station supported the defendants’  assertion that they did not know what was going on and that they had been taken advantage of. He also submitted that by reporting the matter to the police they were  putting themselves at risk of investigation. D1 said that after Ng Hing had disappeared, he was told by D1 in late October that the listing of China Green was hopeless, the company was facing bankruptcy due to money flow problems, that Ng Hing had taken away HKD3 million and not returned a further HKD4 million to him. D6 said that D1 told him that the banks would not grant further loans that his company faced bankruptcy. In my view, it must have been obvious to D6 that there would be an investigation into the activities of  Ng Hing. D6  said he and D5  asked a lawyer in his church about the matter and  later went to report the matter to the police. I took the view that even if they did in fact report the matter to the police, it was done with a view to putting themselves in a more favourable light.

314.  I took the view that,  in any event, this did not amount to a disclosure as envisaged under s.25 of OSCO, as I was sure that their knowledge of the suspicious activities arose almost 12 months previously.

315.  With regard to D6, I also noted that, if the proposed listing of China Green in the USA had succeeded, he was promised a senior position in that company. He had been working with Ng Hing in relation to this matter in the months prior to Ng Hing’s disappearance.

316.  I considered the evidence for and against each defendant separately. I considered their clear records and their positive good character. In this case many witnesses were called to attest to the high Christian values espoused by both defendants, their integrity, strong family values and also the very high degree of trust that existed between them and Ng Hing.

317.  Having considered the totality of the evidence, I had no doubt whatsoever that there were grounds known to each defendant which would have led a right thinking member of society to come to the conclusion that the monies being paid into and out of the Profit Smooth account were the proceeds of an indictable offence.

318.  However, as I have set out above, I rejected much of what the defendants told the court. I was sure from the evidence that they were either aware of what Ng Hing was doing or deliberately chose to close their minds to what was occurring.

319.  I had no doubt that the prosecution had established each and every ingredient of the offence against each defendant to the required standard.