HKSAR v. CHAN CHI SANG

CACC 512/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 512 OF 2000

(ON APPEAL FROM HCCC 86 OF 2000)

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J U D G M E N T

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

Background

This is an application for leave to appeal against sentence. In 1995, the applicant joined Nikko Securities Company (Asia) Limited ('Nikko') and, at the time of these offences, he was an assistant manager in the Settlements Department. Nikko Securities engaged in a variety of financial services, and the company held an account at the Bank of Tokyo-Mitsubishi Trust Company, New York ("BOTM") which account was used in settling the purchase and sale of US dollar denominated securities in the USA on behalf of Nikko's Hong Kong clients. The company also had an account with the Asahi Bank in New York. This was Nikko's trading account, and was used for payment of funds to client accounts upon the sale of securities.

2 The applicant was the individual in Hong Kong responsible for BOTM securities settlement transactions. Settlement instructions to BOTM were initiated by telex from Nikko to that bank, and a copy of each telex settlement instruction was kept by one of the settlement clerks at Nikko for accounting purposes. The accused was responsible for approving settlement instructions to BOTM, and for monitoring the BOTM account on a daily basis, and was required to report any discrepancies in the operation of the account to his supervisors.

The offences

3 In March 1998, the applicant engaged upon a course of conduct by which he stole a total of US$6,043,000, or approximately HK$47,999,900. A confederate, one Wong Sze Leung, opened a bank account which was named Nikko Investment Ltd. That company had nothing to do with Nikko Securities or any true Nikko associate company. There were six thefts, on each occasion a thing in action in the form of a debt owed by BOTM to Nikko, and they took place between 11 March and 19 March inclusive of that year. What the applicant did was to send a telex to BOTM which purported to authorise the transfer of monies from the Nikko account to a number of bank accounts in Hong Kong held by Nikko Investments. Each telex was sent wholly outside the applicant's authority, and was in gross breach of trust. A telex sent on 11 March caused the transfer of US$8,800 (Count 1); and US$73,000 (Count 2). On 12 March a further telex caused the transfer of $33,800 (Count 3). On 19 March a telex caused the transfer of three separate sums; US$738,000; US$3,283,900; and US$1,826,300 (Counts 4, 5 and 6).

4 Then there were three counts of false accounting (Counts 7, 8 and 9) which reflected the falsification of the telexes addressed to BOTM, which telexes were required for accounting purposes.

5 Counts 10 and 11 were forgery charges which arose as follows. Nikko Securities dealt with Morgan Stanley Asia Ltd, Hong Kong ('Morgan Stanley'), and those dealings included the borrowing of shares against collateral. The accused was the individual at Nikko, in Hong Kong, responsible for USA stock borrowing from Morgan Stanley. When borrowed stock was returned to Morgan Stanley by Nikko, there was a standing instruction to Morgan Stanley to return collateral money to Nikko's account at the Asahi Bank.

6 The borrowing of stock from Morgan Stanley, and the return of collateral by Morgan Stanley, were normally transacted orally between the accused and a Mr Andrew Ng who was at Morgan Stanley. BOTM was never used for stock borrowing settlements and, particularly, was never used to receive return of collateral.

7 On 13 March 1998, the applicant telephoned Mr Ng about a transaction involving the repayment of collateral in the sum of US$2,902,040, and he asked Mr Ng to remit the repayment not to the Asahi Bank, but to BOTM. He told Mr Ng, falsely, that Nikko had a reconciliation problem with their account at Asahi and required the money to be remitted to BOTM. Mr Ng, not surprisingly, asked for written confirmation to change the standing instruction, and the applicant prepared and sent to Morgan Stanley a false instrument, by fax, dated 13 March 1998, purporting to authorise the remittance of the repayment of the collateral in respect of this transaction to BOTM, intending Morgan Stanley to accept it as genuine, and thereby to remit the repayment money to BOTM and not to the Asahi Bank, contrary to the standing instruction.

8 On 13 March the cash transfer of US$2,902,040 was made from Morgan Stanley's New York USD bank account with Chase Manhattan Bank to Nikko's account at BOTM. The fax was a forgery, and it is the subject of Count 10.

9 On 16 March 1998 the applicant telephoned Mr Ng once more concerning another repayment of collateral transaction in the sum of US$6,154,750, and he asked Mr Ng to remit the repayment to BOTM instead of to the Asahi Bank, and he repeated the story about the reconciliation problem. He again prepared and sent to Morgan Stanley a false instrument by fax, dated 16 March, purporting to authorise the remittance of the repayment of the collateral in respect of this transaction, to BOTM.

10 On 16 March 1998, the cash transfer of US$6,154,750 was made from Morgan Stanley's Chase Manhattan Bank, New York, to Nikko's account at BOTM. This fax, too, was a forgery, and it is the subject of Count 11.

The arrest

11 On 23 March 1998, the applicant went on holiday, or purportedly so, to Macau and, whilst he was away from the office, the crime was detected. When he returned to Hong Kong on 8 April, he was arrested and he had on him a sum a little in excess of HK$100,000 which was kept by the police. Wong has not been found, and the applicant says that he does not know where Wong is. Indeed, he told the sentencing judge that he has not received a cent from the crime, and that Wong has made off with such funds as have been withdrawn. A total of HK$24,538,000 was withdrawn between 14 March and 23 March 1998; and HK$23,461,900 was left in the account before it could be withdrawn, and has been returned to Nikko. The judge did not believe that the applicant did not receive any of the proceeds. We have studied the papers and the dates of withdrawal and also the dates when the applicant and Wong were in Macau together whilst and after these steps took place. We do not believe the applicant either.

The sentences imposed

12 The judge sentenced him as follows. He sentenced him on each of the theft charges to a term of six years' imprisonment. He took a global starting point of 10 years' imprisonment, and then reduced that by one-third for the applicant's plea of guilty; gave further credit for the applicant's previous good character, as well as for the suggested fact that the applicant had offered restitution in the sum of $112,000 and also for the fact that the applicant had said that he was prepared to assist the prosecution if and when Wong was caught. For these various factors the judge gave, in other words, a discount of 40%.

13 As for Counts 7, 8 and 9, the judge took a starting point of three years' imprisonment and imposed terms of 18 months on each count, to run concurrently with each other and with the sentences imposed in relation to Counts 1 to 6. So the discounts here were 50% discounts.

14 On Counts 10 and 11, the judge took a starting point of 18 months' imprisonment, and sentenced the applicant to a term of one year's imprisonment on each of those counts, to run concurrently with each other, but consecutively to the sentences imposed on Counts 1 to 9. So the total was seven years' imprisonment.

The judge's approach

15 There are, we regret to say, a number of errors in the approach which was adopted by the sentencing judge:

(1) The discounts given were excessive. This was a late plea, coming as it did on the second day of trial. The judge said that he would treat the applicant as having offered a plea at the outset. But the applicant had not offered the plea at the outset. One of the reasons why a full discount is given for an early plea is the public time and expense saved by the plea. Here the plea was offered after a jury had been empanelled, and after counsel for the prosecution had completed opening the case. The applicant's bail was revoked, and the next morning, after a discussion between counsel for the applicant and the applicant's family and the applicant himself, the applicant changed his plea. Secondly, a discount is a recognition of remorse. Where the court has found that a defendant has not told the truth about the proceeds of the crime, the suggested remorse which is said to be reflected by the plea of guilty rings somewhat hollow, so that one is then forced to the conclusion that what has driven the plea of guilty is the applicant's self-interest, which stems from a recognition of the strength of the case against him, and which evidences his wish to serve as little time as possible. Some discount was due, but not the full one-third. In our opinion, a discount of 20% was warranted in this case. Nothing that has happened since sentence by the trial judge alters our view. The applicant has still made no attempt to refund monies, or to say where the monies are, or otherwise to assist the authorities.

This is an appropriate point at which to say that it appears from the transcript that, before plea, the judge had seen counsel in chambers. The court file confirmed that that had happened. This court was therefore anxious to learn what might have been said in chambers which might impinge on the view we take of the discount given in this case. We understand that what was said was not recorded, either on tape or by shorthand. We have therefore caused inquiries to be made of the judge and, through counsel for the respondent on this appeal, from counsel who appeared at trial. Apparently, counsel for the prosecution and defence have no particular recollection of the subject matter, but the judge recalls that counsel for the defence merely used the opportunity to inform him that the applicant intended to plead guilty, and asked that the applicant be re-arraigned. There was then a discussion about the timetable for preparation of the summary of facts, and the mitigation.

We would like to stress that the circumstances in which it is appropriate for counsel to see the judge in chambers are rare, and that this circumstance was not one of them. Counsel could as easily have informed the judge in court, in the absence of the jury, what was proposed. Secondly, even in those rare circumstances in which there is an absolute need to see the judge in chambers about any aspect of the case, a record must always be kept of what transpires. That should be a taped record, failing which a record by a stenographer. Here there was neither. We are satisfied, however, from the information we have, that nothing was said that affects our view as to the correct discount which ought in this case to have been given.

(2) No credit whatsoever should have been given for the applicant's "preparedness to assist the prosecution even when [Wong] was apprehended". To do so was contrary to established principle. No assistance of any kind had in fact been given by this applicant. On the contrary, the judge himself found that the applicant was not telling the court the truth about his share of the theft.

(3) The court ought to have given no credit for the restitution allegedly made by the applicant. The restitution made in this case was no sign of remorse whatsoever. The money was taken off the applicant on his arrest; and, furthermore, the court expressly found that the applicant was lying when he said he derived no proceeds, or further proceeds, of the crime. In other words, there was no evidence at all that this applicant had made any effort to restore monies to, or even to trace funds for the benefit of, their rightful owner.

(4) As for good character that, in an offence like the present, involving, as it did, considerable planning and a breach of trust to make off with a truly massive amount of money, was a matter to which scant weight should have been attached.

(5) The sentences passed in relation to Counts 7 to 11 inclusive were wholly inadequate. The maximum sentence for forgery is 14 years' imprisonment, and here was a defendant who was forging documents to enable him to defraud, or to cover the tracks of a fraud practised on, his employer to the tune of over $47 million. The forgeries themselves effected transfers in the sum of US$9,056,790, which is about HK$70,642,000. A starting point of 18 months' imprisonment is hardly adequate for that kind of crime.

(6) The maximum sentence for false accounting is 10 years' imprisonment and we have some difficulty in following why the judge chose to sentence this applicant to a term of 18 months' imprisonment on each of those offences, nor why he chose to make a 50% reduction from the point which he took as the proper starting point.

The applicant's complaints

16 The applicant's first complaint is directed at the fact of the consecutive sentence for Counts 10 and 11. He says that the judge wrongly said that those offences were designed to cover up the thefts already committed; whereas, the applicant says, they were committed to enable the thefts to be carried out.

17 It falls ill, in our judgment, for the applicant to make this point since he expressly admitted as a fact before the court below that he arranged the transfer of the Morgan Stanley funds "to cover up the theft of the money from his employer the subject of Counts 1 to 6". It may well be that the offence which is the subject of Count 11 was indeed committed to provide funds for the offences to be committed on 19th. But in the event this matters not in the context of the overall sentence to which we shall shortly turn.

18 The applicant then complains that the judge ought not to have adopted the maximum starting point permitted by law for theft, namely, 10 years' imprisonment. The premise upon which this complaint is made is inaccurate. The maximum starting point for each theft offence was one of 10 years' imprisonment. The judge said in terms that he was not taking the view that each offence on its own merited a starting point of 10 years' imprisonment; he took the view that the correct global starting point was 10 years. Offences which are committed in the course of a single transaction merit, as a matter of principle, concurrent sentences. The six theft offences were not committed in the course of a single transaction. There were in fact three separate transactions evidenced by Counts 1 and 2; Count 3; and then Counts 4 to 6, the last group involving by far the largest amount of money. So the judge could well have imposed slightly lesser sentences on each count, taken the view that, in principle, they should, in the groups to which we have referred, run consecutively, but then decided that a term of seven years after plea reflected what was, in his view, the correct totality. There is nothing in this ground.

19 Finally, the applicant complains about the stress he suffered because of the prolonged period between his first arrest and the time when he was charged. This is an impertinent complaint because we today discover why there was such a delay. It was because this applicant had so engaged upon a destruction of documentation within Nikko's offices that the investigation was impeded.

The correct sentences

20 We have explained that we consider that the judge's approach to sentencing was in this case, in several material regards, in error. We consider, for reasons we have provided, that the applicant should be sentenced differently for the offences for which he was sentenced in the court below, and in the exercise of the powers conferred on us by section 83I(3) of the Criminal Procedure Ordinance, Cap 221, we will quash all the sentences which are the subject of this appeal, and substitute sentences that we think are appropriate. The sentences we impose are as follows, and we indicate in each case the starting point we have taken:

Counts 1 and 2: from a starting point of five years, we impose a sentence of four years' imprisonment on each count to run concurrently.

Count 3: from a starting point of four years, we impose a sentence of three years and two months' imprisonment.

Counts 4 to 6: from a starting point of eight years' imprisonment, we impose a sentence of six years and four months' imprisonment on each count, to run concurrently with each other.

Counts 7, 8 and 9: from a starting point of four years' imprisonment, we impose in relation to each count a sentence of three years and two months' imprisonment, to run concurrently with each other.

Counts 10 and 11: from a starting point of eight years' imprisonment, we impose a sentence on each count of six years and four months' imprisonment, to run concurrently with each other.

21 That brings us to the question of totality. In our judgment, the appropriate totality in this case is one of eight years' imprisonment. That would also accord with an overall starting point of 10 years with a 20% reduction. To achieve that totality, we shall order that the sentences on Counts 1 to 9 inclusive shall all run concurrently one with the other, but that in relation to Counts 10 and 11, one year and eight months is to run consecutively to the other sentences, the remainder to run concurrently, making a total of eight years' imprisonment.

Result

22 It follows that the application for leave to appeal is dismissed, and that the overall sentence is increased under section 83I of the Criminal Procedure Ordinance to a term of eight years' imprisonment.