SECRETARY FOR JUSTICE v. WONG HONG LEUNG

CAAR 5/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 5OF 2009

(ON APPEAL FROM DCCC NO. 505 OF 2008)

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BETWEEN

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J U D G M E N T

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Hon Stock VP (giving the judgment of the Court):

Introduction

1.  Pursuant to leave granted by the Chief Judge on 19 May 2009, this is an application by the Secretary for Justice for review of sentence under s. 81A of the Criminal Procedure Ordinance, Cap. 221.

2.  On 22 April 2009 the respondent was convicted after trial in the District Court by Deputy District Judge Eddie Yip of four offences of offering advantages to an agent, contrary to s. 9(2)(a) of the Prevention of Bribery Ordinance, Cap. 201. He was sentenced on 30 April 2009 to a total of 18 months’ imprisonment.

The facts

3.  The respondent was for many years the principal director and major shareholder of a company that manufactures toys, Fook Key Industrial Company Limited (“Fook Key”).

4.  Mattel Asia Pacific Sourcing Limited (“Mattel”) is a Hong Kong company which sources toys for Mattel Inc. in the United States. Before 1 January 2000, Mattel was known as Arco Toys Limited (“Arco”).

5.  With a view to securing purchase orders from Arco and Mattel, the respondent offered and paid bribes to two men, Leung and Lin, who were directors of Arco and Mattel in Hong Kong. The offences were committed on a monthly basis over a period of almost 6 years, namely, between January 1998 and November 2003. Charges 1 and 3 were directed at the period before, and Charges 2 and 4 at the period after, Arco changed its name to Mattel:

(1)  Charge 1 alleged that between 1 January 1998 and 31 December 1999 the respondent offered monetary advantages to Leung, then an employee of Arco, as an inducement or reward for placing production orders of his principal with Fook Key;

(2)  Charge 2 alleged that between 1 January 2000 and 30 November 2003, the respondent offered advantages to Leung, then an employee of Mattel, for the same objective.

(3)  Charge 3 alleged that between 1 January 1998 and 31 December 1999 the respondent offered money to Lin, when he was an employee of Arco, to secure production orders; and

(4)  Charge 4 alleged that between 1 January 2000 and 31 March 2003 the respondent offered advantages to Lin when he was an employee of Mattel with a view to the placing of production orders.

6.  We may conveniently take the remainder of the facts from the applicant’s written submissions:

“In order to find a way to record and pay out such bribes in Fook Key’s books and accounts, the respondent submitted invoices purportedly issued by ... Ko Wah Company ([a company] which the respondent knew had ceased to exist) for Fook Key to make payments about once every month.  The respondent asked the staff of Fook Key to prepare cheques drawn to himself as payee and signed by him as the authorised bank signatory of Fook Key.  He then took the money in cash and used part of it to bribe Leung and Lin.

According to the respondent’s own admissions, Leung and Lin proposed 2% of the business volume as the amount of rebates.  The respondent gave not more than but rather close to 2% of the business turnover between Fook Key and [Arco/] Mattel as bribes to Leung and Lin.

The total amount of payments purportedly made to Ko Wah between March 1998 and November 2003 was $15,640,537.50. …

According to [the evidence of the manager of the accounts department of Mattel], the business volume between Fook Key and Mattel for finished goods between January 1998 and December 2003 was $541,115,774.75.”

7.  2% of $541,115,774.75 is $10,822,315.50. In this regard the judge found that “although the exact amount of bribes was unknown, I am satisfied that [the amount] form[s] a considerable part of [the] payments” made to Ko Wah. It is in addition noteworthy that, according to the respondent himself, 70% to 80% of Fook Key’s turnover was attributable to its business with Arco and Mattel.

At trial

8.  At trial, the respondent did not give evidence or call any testimony on his own behalf save for a statement of admitted facts. It is not entirely easy to discern from the Reasons for Verdict the precise nature of the challenges raised by those acting for the respondent at trial. It is clear that there was at least one application for a stay of proceedings, in part based on the unavailability of Leung and Lin as potential witnesses for the defence. It seems that the defence also challenged the reliability of one of the prosecution witnesses, a man who had embezzled substantial sums of money from Fook Key; and there was a suggestion that admissions made by the respondent in interviews were vague.

9.  The mitigation advanced in the District Court emphasized the fact that at the date of sentence the respondent was aged 71 years with no previous convictions. He is a person from humble origins who had established a highly successful business, a family man with six sons whose good education he had ensured. He had been appointed Chairman of the Board of the Hong Kong and Kowloon Plastic Products Merchants United Associated Limited, was a committee member of the Chinese People’s Political Consultative Conference in Chaozhou as well as in Raoping County and was Permanent Honorary President of the Hong Kong Yiu Ping Clansmen Association.

The judge’s approach

10.  The judge referred to one case, Attorney General v Shamsudin [1987] HKLR 826 for its observation, at p. 832, that sentences could not be brought below a level which would afford some deterrent against crime “and, where substantial fraud or corruption is concerned, preserve the integrity of Hong Kong’s commercial reputation.”

11.  The judge noted the respondent’s personal circumstances. However, he noted as well the fact that the scheme of bribery persisted on a monthly basis for almost 6 years and that it was a case that involved premeditation and planning. He added, rather curiously we think, that: “The sum of bribes in itself, which is not ascertainable for a certainty but apparently not a nominal figure, would be an insignificant element in the sentencing of the defendant.”

12.  He then took 20 months as the starting point for each charge and gave a discount of two months because of the respondent’s clear record, age and contribution to the community, thereby arriving at a sentence of 18 months for each charge which he ordered to run concurrently, making a total of 18 months’ imprisonment.

The grounds

13.  The gravamen of the application is that these sentences were individually and cumulatively manifestly inadequate and, to the extent that they were made to run wholly concurrently, wrong in principle. It is said that the judge failed to accord proper weight to the seriousness of commercial corruption, especially commercial corruption of the magnitude revealed in this case; and imposed sentences that failed to give effect to the need for deterrence emphasised by the very case which he cited.

Analysis

14.  In one of the cases to which we have been taken, Attorney General v Bow Ki-lun and another [1995] 2 HKCLR 168, reference was made with approval, at p. 171, to the headnote in Attorney General v Hector Joseph Carlyle [1977] HKLR 60 which states:

“The court would be slow to interfere with the inadequacy of a sentence and would do so only when a sentence of the lower court was very clearly wrong having regard not only to the circumstances of the offence but also to those of the offender.”

15.  A similar sentiment or test is found in Attorney General’s Reference (No. 4 of 1989) 11 Cr App R (S) 517 at 521:

“The first thing to be observed is that it is implicit in the section that this Court may only increase sentences which it concludes were unduly lenient.  It cannot, we are confident, have been the intention of Parliament to subject defendants to the risk of having their sentences increased – with all the anxiety that this naturally gives rise to – merely because in the opinion of this Court the sentence was less than this Court would have imposed.  A sentence is unduly lenient, we would hold, where it falls outside the range of sentences which the judge, applying his mind to all the relevant factors, could reasonably consider appropriate.  In that connection regard must of course be had to reported cases, and in particular to the guidance given by this court from time to time in the so-called guideline cases.  However it must always be remembered that sentencing is an art rather than a science; that the trial judge is particularly well placed to assess the weight to be given to various competing considerations; and that leniency is not in itself a vice.  That mercy should season justice is a proposition as soundly based in law as it is in literature.” (Second emphasis added).

16.  Mr Plowman SC on behalf of the respondent emphasised in his able and measured submissions that the court should be slow to intervene with the sentencing discretion of a judge; that there was in this case no breach of trust as in the case of HKSAR v Lui Kin Hong Jerry (No. 2) [2001] 2 HKC 513, to which we have been referred; and that the bribes did not endanger the public in the sense of corruption that results, for example, in the use of sub-standard building material.

17.  He has emphasized as well the respondent’s age, the industry of this family man and we have looked at letters from a couple of associations with which the respondent is connected. We have taken these into account.

18.  We are satisfied in this case that the individual and cumulative sentences imposed were very clearly wrong or, applying the test in Attorney General’s Reference No. 4, so lenient as to fall outwith the range of sentences which were reasonably open to the judge on the facts, and with regard to the circumstances of the offender.

19.  Bribery offences are committed in such a variety of circumstances that to offer tariff guidelines would be impractical. Yet there are factors that cannot properly be overlooked. These obviously include, though are not restricted to, the scale of the bribery and the length of time over which it is committed, neither of which factor has been accorded anything like sufficient weight in this case. If corruption involving the illicit payment of sums in the region of $10 million over a period of six years in order to secure highly lucrative orders – in this case, business valued at over $500 million – attracts, after trial, a sentence of 18 months’ imprisonment, it is difficult to see what sentences will be called for or expected in, say, cases of one-off bribes, cases of soliciting or offering advantages without payments being made, or where the payment is of a considerably smaller sum than that in this case, and cases in which there has been a plea of guilty. It has often enough been said that corruption in the public and commercial life of a society is a cancer and that the deterrent element is particularly important. Yet the starting points adopted in this case offer scant deterrence to the would-be offender and would set a poor precedent if they were thought to be within an acceptable range.

20.  Whilst the citation of sentences passed in other cases has in this field of criminality less utility than in others, it is perhaps unfortunate that the judge was not referred to Attorney General v Leung Kin Wai [1996] 4 HKC 588, since that case concerned a similar scheme, although the sums involved were significantly less and the offender was an employee of Mattel, thereby importing a breach of trust element of which the respondent in this case was not himself guilty.

21.  In Leung Kin Wai, there were seven charges: two of soliciting an advantage and five of accepting an advantage. The respondent in that case was a senior manager in the buying division of the Hong Kong branch of Mattel. He was in a key position to influence the sourcing of fabric supplies. He made an approach to the sales director of a Taiwanese manufacturing company for payments to him so that the company could secure favourable treatment in tendering exercises. The same type of approach was made to another business entity. The five instances of accepting advantages ranged in time between September 1991 and February 1995; the total amount paid to the respondent was almost $500,000. The first instance court imposed an overall sentence, after trial, of two years’ imprisonment and a fine of $300,000.

22.  The Court of Appeal remarked that the case involved gross breaches of trust which involved commercial corruption and that there was no remorse on the part of the respondent. The Court stressed the seriousness of commercial corruption and held that the judge had rightly taken a starting point of three years as the proper one for each set of offences (viewing the facts to reveal two such sets: one in relation to each manufacturer). The judge had been in error, however, in allowing a one-year discount for good character, and in ordering the sentences for each set of offences to run wholly concurrently. The Court took the view that the three-year sentence on each set of offences should have been reduced to 2½ years to reflect the respondent’s good character but that the resulting totality of five years would have been excessive. An appropriate totality would have been one of four years’ imprisonment but because that was a very considerable increase on the sentence that was imposed and “in accordance with the decision in Attorney General v Wong Kwok Wai [1991] 1 HKC 258, [1991] 2 HKLR 384 “the Court reduced that by a further six months giving a totality of 3½ years’ imprisonment.”

23.  The present case can be distinguished from Leung Kin Wai in the significantly higher figure of bribes paid, the significantly greater number of occasions on and regularity with which they were paid, and the time which the corruption lasted. There is absent the aggravating feature of a breach of trust by an employee; that said, such a breach of trust can never see the light of day without the co-operation of a person in the respondent’s position. We have been referred as well to HKSAR v Lui Kin Hong Jerry (above) where the court said, in relation to a much greater sum and a gross breach of trust, that not less than 6 years’ imprisonment was appropriate which, on the facts of that case, might be thought to be generous: we have taken it into account.

24.  There is a certain artificiality in this particular case in viewing the course of conduct as one that constitutes four separate offences, although we fully understand why, given that there were two agents bribed, and a change of company identity, four charges were brought. In light of the scale of the bribery, its length of time, and the amount of business it attracted, the course of conduct as a whole was one which, in our opinion, merited, absent mitigating factors, an overall sentence of 5½ years’ imprisonment. The starting points adopted by the judge for the individual offences were dramatically too low and the overall result entirely out of line with the criminality revealed, even with the mitigating factors.

25.  We have already referred to the mitigating factors, namely, the fact that prior to this conviction the respondent had reached the age of 71 years with a clear record. That age is not of itself one that in the circumstances attracts a reduction in sentence but the fact that a person has reached that age without previously offending is a material mitigating factor. As against that, however, lies the fact that the respondent started committing these offences when he was aged 60 years and given the extended period over which he regularly committed them thereafter, it is difficult for him to suggest that this was anything like a momentary lapse. When a person of previous good character, even one in the respondent’s position who brings to the court below as well as to this court letters from co-industrialists praising work he has done for his industry and for charity, commits a corruption offence so frequently and over such a long period of time, it becomes unrealistic to treat him as a person who has acted out of character.

26.  We have a number of up-to-date medical reports which show that the respondent has a number of ailments. They are relatively common for one of his age, and require management and treatment. Whilst the court does not belittle these ailments, they are each of a kind susceptible to adequate treatment in custody and do not present extraordinary circumstances that would warrant a reduction in sentence.

27.  We will accord credit for the fact that until relatively late in life, this respondent was a hard-working family man who had committed no criminal offences and had made some positive contribution to society. That, we think, is a fact that warrants a reduction of 6 months from the starting point of 5½ years which we have indicated would properly reflect the single-course-of-conduct criminality in this case. That would result in an overall sentence of 5 years’ imprisonment.

28.  Where an accused is serving a term of imprisonment the court on review, where it allows the application for review, generally should impose the sentence which the judge at first instance ought to have imposed. It is however recognized that there are circumstances in which a discount ought properly to be accorded on account of the fact and consequences of the review process itself. They include the situations where the sentence to be substituted is substantially in excess of that imposed below and/or where the respondent is close to the end of his sentence. See Cross & Cheung ‘Sentencing in Hong Kong’ 5th ed., at p. 484.

29.  The sentence which the judge ought to have imposed is greatly in excess of that which has been imposed. It has correctly been said that “courts do no favours to defendants by imposing unduly lenient sentences upon them. In the end it usually works to the offender’s disadvantage”: Attorney General’s Reference No. 44 of 1994 (Steven Middleton) [1996] 1 Cr App R (S) 256, 291; and that “the imposition of an inappropriate sentence is ‘more cruel to the offender than if the proper sentence had been passed’”: Attorney General’s Reference No. 10 of 1994 (Kenneth Welch) (1995) 16 Cr App R (S) 185, 190 cited in Cross & Cheung above at p. 471. This is not to say that in order to avoid such unfairness, judges must lean towards heavy sentences and it is not for a moment to discourage a judge from leniency or mercy where that is due. It is merely to say that a sentence so out of line with one that could reasonably be considered appropriate is a sentence which does a defendant no favour.

30.  This case well illustrates those sentiments. In a case of the present kind, where the review court is faced with a first instance sentence which is dramatically over-lenient, the review court’s duty must be to state what the proper sentence should have been; otherwise it would set an inappropriate sentencing precedent for future cases. What it can do however is to accord an appropriate discount from the sentence, so as to reflect the punitive element of the anxiety occasioned the respondent pending the review, and of the shock or disappointment occasioned by a substantial increase in sentence and the dashed hope of pending release.

31.  In the present case, the sentence called for by the facts of the case is one that, even after mitigation, grossly exceeds that imposed. Furthermore, the current estimated date of the respondent’s discharge from prison, assuming the normal discount for good behaviour, is 22 April 2010, a mere four months away. For these reasons, we will effect a reduction of a further 12 months, which will give a result of 4 years’ imprisonment. That is a larger reduction than is usually given, but the proportionate increase is itself unusual indeed, almost three times that imposed in the court below.

32.  As to the sentences in relation to each charge, the appropriate starting point, in our opinion, in relation to each of Charges 1 and 3 was one of 3½ years’ imprisonment; and in relation to each of Charges 2 and 4, one of 4½ years’ imprisonment. After discount for the mitigating character factor which we have mentioned, sentences of 3 years and 4 years respectively were warranted.

Conclusion

33.  Accordingly, we grant the application, quash the sentences imposed in the District Court and substitute therefor the following sentences:

(1)  Charges 1 and 3, a sentence on each of 3 years’ imprisonment;

(2)  Charges 2 and 4, a sentence on each of 4 years’ imprisonment.

34.  To give effect to the totality of 4 years’ imprisonment which, for reasons we have provided, we consider to be appropriate upon this review – rather than the 5 years that was appropriate but for the review – we order all sentences to run concurrently, making a total of 4 years’ imprisonment.