HKSAR v. KAM CHI WAH

DCCC 588/2022

[2023] HKDC 829

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 588 OF 2022

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REASONS FOR SENTENCE

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1.  Mr Kam faces a charge sheet consisting of 3 charges as follows.

2.  Charge 1 is Fraud, contrary to section 16A of the Theft Ordinance, Cap 210.  Charge 2 (as alternative to Charge 1)  is Dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1)  and (3)  of the Organized and Serious Crimes Ordinance, Cap 455. Charge 3 is Theft, contrary to section 9 of the Theft Ordinance, Cap 210.

3.  Before me, Mr Kam pleaded guilty to Charge 1 and not guilty to Charge 3.

4.  Prosecution asked that Charge 3 be left on court file not to be proceeded with without the leave of this court or the Court of Appeal.  I so ordered.

5.  Particulars of Charge 1 are that Mr Kam, between August 2013 and 20 December 2016, both dates inclusive, in Hong Kong, by deceit, namely by falsely representing to Union Honor International Enterprise Limited (“the Company”)  that: -

(a)  all the persons listed in all the payroll reports of the Company between August 2013 and December 2016 were entitled to their respective pay as listed in the said reports; and

(b)  all the persons listed in the said reports would receive their respective pay as listed in the said reports,

and with intent to defraud, induced staff of the Company to do an act or a series of acts, namely to approve the said reports and approve of the Company parting with a total sum of $2,276,133.69 Hong Kong currency, which resulted in benefit to the said Mr Kam and in prejudice or a substantial risk of prejudice to the Company.

Facts admitted by Mr Kam

6.  Union Honor International Enterprise Limited (“the Company”)  was a beauty company in Hong Kong with several hundred employees.  Mr Kam joined the Company in May 2013 and was promoted to the rank of senior human resources officer in March 2015.

7.  The Company paid salary on 7^th of each month and bonus on 20^th of each month.

8.  Mr Kam was responsible for handling the payroll of the Company’s employees.  In the middle of each month, he needed to prepare and submit a payroll report to his supervisor and the accounting department for approval.  The report included the employees to be paid and the amount to be paid.  After the report was approved, Mr Kam would give the transfer instructions to Citibank which would pay the Company’s employees accordingly via bank transfer from the Company’s Citibank account (“A/C-1”).  Citibank would provide monthly transfer reports to the Company afterwards but the Company seldom checked it.

9.  On 10 January 2017, PW1 (a female, the Company’s human resources manager)  received report from the accounting department that Mr Kam was paid his December 2016 salary more than once.  PW1 made enquiries with Mr Kam, who initially blamed it on administrative error.

10.  However, later the same day, Mr Kam admitted to PW1 that:

(a)  since July 2013, he had been adding extra employees to the payroll reports and submitted the same to his supervisor for approval; after the payroll reports were approved, he would replace these extra employees’ information with his own information and he then gave instructions to Citibank to deposit these extra employees’ pay into his own Citibank account (“A/C-2”); and upon receiving a transfer report from Citibank, he would reverse information replacement so that the Company would not know that he was paid more than once in that month; and

(b)  he had kept record of the above additions he made to the payroll reports and the extra pay that he had received.

11.  Moreover, he printed out the said record and explained the contents to PW1.  In the printed record, he had recorded 115 of the additions to the payroll reports between August 2013 and December 2016.  The extra pay between April 2014 and December 2016 that he recorded was $2,140,464 in total.  He had not recorded the extra pay between August 2013 and March 2014.

12.  On 10 January 2017, the Company terminated Mr Kam’s employment and PW1 brought Mr Kam to the police station.

13.  On the same day, the police arrested Mr Kam for the offence of Theft and cautioned him. Under caution, Mr Kam said he took the Company’s money for gambling and repaying debts.

14.  Between 9 September 2013 and 6 December 2016, a total of $620,959.04 was transferred from A/C-1 to A/C-2, which represented Mr Kam’s monthly salaries. However, beside the 41 normal salary transfers, there were 113 extra transfers from A/C-1 to A/C-2 between 19 September 2013 and 19 December 2016, totaling $2,276,133.69.  These deposits would then be withdrawn from A/C-2, and most of the time, the monthly balance in A/C-2 remained below $100.

15.  Between August 2013 and December 2016, Mr Kam had added the names of 97 employees in total who had left the Company or who were not entitled for pay that month into the payroll reports and Mr Kam had given instructions to Citibank to deposit these 97 employees’ pay into A/C-2.  These extra pay under the names of these 97 employees, a total sum of $2,276,133.69, were eventually transferred from A/C-1 to A/C-2.

16.  In a subsequent cautioned VRI conducted on 12 April 2017, Mr Kam stated: -

(a)  he graduated from university in 2011 and joined the Company in May 2013 as a human resources officer; in around April of 2015 or 2016, he was promoted to the rank of senior human resources officer;

(b)  the Company had 500 odd employees in 2013 and it grew to 800 odd in 2017; he was responsible for handling their pay;

(c)  he would verify the information in the payroll reports and then submit them for his supervisor’s inspection; after the accounting department and the boss approved it, he would provide the employees’ names and their pay information to the bank so funds would be released; the bank would later issue a transfer report;

(d)  in the payroll reports, he added employees who were not entitled to salary or bonus, such as employees who have just resigned or employees who have not gone to work for a long time;

(e)  he himself had kept the record of the additions that he made to the payroll reports and the amounts recorded corresponded with the actual amount transferred by the bank; he kept these records because he feared that making too many false additions may affect the corresponding employees;

(f)  due to pressure, he had been gambling since university days; his gambling amount grew and he started to borrow money to gamble; later, he started taking money from the Company to gamble and repay debts; and

(g)  the court declared him bankrupt on 7 March 2017.

Criminal record

17.  Mr Kam has a clear record.

Antecedents

18.  Mr Kam is aged 36 (26-30 at the time of the offence), a university graduate.  After graduation, he worked for the victim company till January 2017.  He has worked as a restaurant waiter and in the human resource and administration field between then and now.  Before March 2021, he resided with his pre-marital family.

Mitigation

19.  Mr Martin Yeung of solicitor mitigated on behalf of Mr Kam.  The following is a summary of the mitigation submissions.

20.  After Mr Kam’s arrest, he has worked at various restaurants as a casual labourer.  In May 2018, he turned to work for a logistics company as HR & Administration Assistant.  He was promoted several times and became the HR & Administration Manager in March 2021.  He resigned in May 2023 in anticipation of a lengthy sentence.

21.  Mr Kam met his wife in May 2011.  They started dating in September 2012. In October 2021, they got married.  Their baby girl was born about one year later.  The family of three lived in rented premises until only recently.  In order to cut family expenses, mother and child have moved in to live in the maiden home.

22.  On the facts of the offence, Mr Kam voluntarily disclosed to PW1 more than what the latter initially discovered.  On the same day, Mr Kam voluntarily accompanied PW1 to the police station and cooperated fully with the police, providing full admissions.  Mr Kam’s actions indicate a high degree of remorse.

23.  After arrest, Mr Kam was released on police bail.  In around June 2017, he was released from police bail, but police investigations were ongoing. During 2017-2019, Mr Kam made several follow-up phone calls to the OC case to ask about the progress; he was simply told that investigations were still in progress.

24.  It was not until 25 May 2022 that Mr Kam was charged; and he was summoned to appear before a magistrate on 7 July 2022, ie 5 years and 6 months after arrest.

25.  From January 2017 to June 2018, Mr Kam took part in 20 counselling service and 8 group sessions with Family Service Caritas – Hong Kong for gambling cessation services.

26.  From 2017 to 2020, Mr Kam accumulated 152 hours of volunteer and charitable work, in hopes of contributing to society and living a renewed life.

27.  On 7 March 2021, Mr Kam’s Bankrupcy Order dated 7 March 2017 was discharged.

28.  Mr Kam pleaded guilty to the charge at the earliest opportunity.

29.  The case of HKSAR v Cheung Mee Kiu, CACC 99/2006, laid down the sentencing guidelines for a case of fraud and breach of trust.  For theft involving $1M to $3M, the sentencing range was 3-4 years.  Subsequently in the case of HKSAR v Ng Kwok Wing & Lai Hoi Yan Vivian, CACC 398/2007, the sentencing range for $1M to $3M was increased to 3-5 years, and the appropriate sentence for theft of $2M is 4 years’ imprisonment.

30.  In the present case, it is submitted that an appropriate starting point for theft in the sum of $2,276,133.69 is approximately 4 years and 3 months.

31.  It is submitted there was a time lapse of over 5 years and 4 months between arrest and charge.  It is also submitted that the bulk of the evidence against Mr Kam was his own admissions to the police.

32.  Mr Yeung submitted there was inordinate delay in prosecution.  He relied on the following authorities/case: -

(a)  HKSAR v Chan Yuk Kwan, CACC 26/2001, especially para 21 per Keith JA;

(b)  HKSAR v Chu On Chi, CACC 484/2006, especially para 10 per Cheung JA; and

(c)  HKSAR v Chiu Chi Wing, CACC 234/2012, especially a lengthy passage of Scook v R (2008)  185 A Crim R 164 recited therein; and

(d)  HKSAR v Chan Chun Ming, HCCC 221/2020.

33.  It is submitted that during the delay of over 5 years, Mr Kam and his family had suffered significant stress, suspense, and uncertainty, such as whether he should wait until service of his sentence before getting married. In the end, Mr Kam decided to marry his wife in October 2021.  His wife became pregnant in around January 2022.  During his wife’s pregnancy, they were struck with news of prosecution, which was a devastating blow to Mr Kam and his pregnant wife.  Nonetheless Mr Kam is prepared to accept the legal consequences of his actions.

34.  During the period of delay, Mr Kam has undergone substantial rehabilitation shown by his participation in gambling cessation counselling services, charitable work, and partial repayment of his personal debts during his bankruptcy.  Marriage and emergence of his newborn child has also fundamentally changed his view on life.  He hopes to reunite with his family soon after serving his sentence.

35.  The court is urged to give a sentencing discount of no less than 40% (inclusive of the 1/3 discount for a timely plea).

36.  Mr Yeung submitted on behalf of Mr Kam a total of 6 mitigation letters, some material relating to Mr Kam’s job performance, his participation in gambling cessation counseling, his volunteering activities in various charities, and a Certificate of Discharge from Bankruptcy (where applicable, with English translation).  I note (without adverse innuendos)  that the counseling and the volunteering activities were generally undertaken post-offence.

37.  The mitigation letters were well written by PW1, Mr Kam’s elder sister (but signed also by his mother and younger sister), his parents-in-law, his elder sister-in-law, his wife and Mr Kam himself.  The contents are generally that during the long wait of 5 years, Mr Kam felt lost and stressed; that the news of prosecution broke when his wife was pregnant and it brought huge emotional burden on him; that Mr Kam was a kind, filial, responsible person; his problem lay with his gambling activities which have now been eradicated; that Mr Kam was deeply remorseful and turned himself in; that he was the spiritual pillar of the family.  All the letter writers asked for a lenient sentence for Mr Kam so that he may turn over a new leaf and reunite with his wife and young daughter earlier.

Sentence

38.  I have examined the “Chronology of Case Investigation” dated 9 June 2023 and signed by fiat counsel.  The longest and most significant time lapse appeared to be between April 2019 and December 2021 (2 years and 8 months)  when legal advice was pending.  Judging from the complexity of the case and the estimated time needed to cross-check the bank transaction records with the victim company’s records and Mr Kam’s self-kept records, I would have thought that legal advice should not take longer than 9 months to complete.  As such, there had been a delay of about 1 year and 11 months which I think is explicable on the basis of disruption to normal civil process caused by Covid 19 and social unrest during the better part of that period.  Having said that and recognizing that the whole of Hong Kong, and not just Mr Kam, was suffering at the time, it still cannot be said that Mr Kam was in any way responsible for the said delay.

39.  In the premises, I accept that there had been inordinate (or undue)  delay in prosecution.  From the material placed before me, I also accept that Mr Kam would have suffered additional stress as a result of the inordinate delay over and above the normal amount of stress pertaining to a timely disposal of a criminal action.

40.  To an extent, I accept that, whilst waiting, Mr Kam has attempted (with some success)  to rehabilitate himself from his gambling problem.  He has also embarked on a new life with his marriage and the birth of his baby girl.

41.  This is a classical breach of trust case for which a deterrent sentence is warranted.  I accede to Mr Yeung’s submission and adopt a starting point of 4 years and 3 months’ imprisonment.  For the delay in prosecution, I will grant Mr Kam an additional discount over and above the customary discount of 1/3 for a timely plea.  The resulting discount (all inclusive)  is 41% from the starting point.

42.  There are no other mitigating circumstances to justify a further reduction in sentence.

(Mr Kam, please stand)

43.  The sentence for Charge 1 is therefore 30 months’ imprisonment.