HKSAR v. EMAM HOSNI GABER IBRAHIM

HCMA 309/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 309 OF 2016

(ON APPEAL FROM ESCC 3679/2015)

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REASONS FOR JUDGMENT

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Background Facts

1.  Third Concept Management Limited (Third Concept) was incorporated in Hong Kong on 8 August 2005 and the appellant (Emam Hosni Gaber Ibrahim) was at all material times its sole director and one of its shareholders.  Third Concept had a current account (current account) and a savings account (savings account) with the Bank of China (Hong Kong) and the only authorized signatories of those accounts were the appellant and his wife (Miss Morris Jennifer Estelle).  Those accounts were opened by the appellant and his wife on 5 March 2010.

2.  On 11 December 2012, US$10,700 was remitted by an US company (Martin Binder Jewelers Incorporated “Martin Binder”) to the savings account and on 14 December 2012, the remitted sum, after deducting the bank charges, of US$10,688 was converted to HK$82,702.68 and transferred to the current account.

3.  On 17 December 2012, HK$82,700 was withdrawn from the current account by means of a cash cheque signed by the appellant and his wife.  The cash cheque was presented for payment by Miss Belgado Sallys on the same day.

4.  The US$10,700 was the proceeds of a fraud committed against “Martin Binder” when it was directed by a fraudulent email purportedly from a client in Hong Kong to deposit the money into the savings account.  There was no suggestion or indication that “Martin Binder” had any dealing with Third Concept nor was there any reason for “Martin Binder” to pay any money to Third Concept.

5.  The appellant was arrested on 8 November 2015 for “fraud” and when interviewed under caution, the appellant admitted that he and his wife were the only shareholders of Third Concept.  The appellant admitted that he was in charge of the business of the company and was in control of its financial situation, but claimed that he had left the financial matters to its account officer, Ms Wong Ying-Wa. 

6.  The appellant claimed not to have any knowledge about the payment from “Martin Binder”. He said he only knew that the cash flow of the company was tight and as his suppliers did not trust his cheques, he was required to pay them in cash or with cash cheques. He appeared to be suggesting that he just accepted what Ms Wong told him and would sign blank cheques at her request to pay the suppliers.

7.  The appellant further claimed that he knew nothing about the accounts of Third Concept as he would never check them or its bank statements. He said his only concern was to keep the company going.

The Charge

8.  In connection with the payment from “Martin Binder”, the appellant was charged with the offence of “money laundering”.  The appellant was originally alleged to have dealt with US$$10,688 in the savings account on 14 December 2012, knowing or having reasonable grounds to believe that the sum, in whole or in part, directly or indirectly represented the proceeds of an indictable offence.

9.  The appellant pleaded not guilty to the charge and appeared before W Leung Esq, a Deputy Magistrate sitting in Eastern Magistracy on 19 April 2016.

10.  The entire prosecution case was admitted by way of Admitted Facts and the appellant elected not to give evidence and he did not call any witness.  However, he relied on the evidence of Ms Wong to the effect that when she found the deposit of US$10,688 in the savings account, she immediately converted it into HK$82,702.68 and transferred it into its current account without consulting the appellant as the current account was in overdraft.  Ms Wong said she could not remember if she had told the appellant about the receipt of the money into savings account or its subsequent transfer to the current account.

11.  Ms Wong’s evidence was not consistent with her statement to the police when she said that she had to report to the appellant daily about deposits into the accounts of Third Concept.  Ms Wong was turned a hostile witness. According to the learned magistrate, Ms Wong’s evidence was also contradicted by the bank records which showed that at the material time, the current account had a balance of over HK$66,000 and was not in overdraft as alleged by Ms Wong.

The Magistrate’s findings

12.  The learned magistrate completely rejected the evidence of Ms Wong.  The learned magistrate found that the appellant’s wife was not involved in the appellant’s business.  The learned magistrate accepted that there was no direct evidence to show that the appellant knew of the deposit of the US$10,688 and that he had dealt with it later, but nevertheless inferred that he was aware of the deposit of the money into the savings account and the transfer of the money to the current account and that he had dealt with it by receiving, keeping and paying it out.

13.  The learned magistrate emphasized that the appellant “had a hand-on management on the financial matters of his companies and must be keen to know all kinds of money coming into the bank accounts of his companies.”  The learned magistrate found that the appellant “knew every detail about the transfer of the US$10,700 from a USA company into the …savings account and immediately dealt with it either by himself or through staff under his direction, like Ms Wong.”

14.  The learned magistrate further pointed out that there was no reason for anyone to use other person’s bank account for legitimate purpose and the appellant, as an experienced businessman, would have been alarmed when someone asked to borrow his account to collect money of an unknown origin.

15.  The learned magistrate emphasized that the appellant had made use of the savings account which was for multi-currency and the current account which could be used in Hong Kong dollars.  Based on the fact that the US$10,688 was directed specifically to be paid firstly into the multi-currency savings account and then the money was transferred to the current account for payment out, the magistrate concluded that they must have been done according to the appellant’s instructions.

16.  The learned magistrate then made certain specific findings and based on those findings concluded that the appellant knew about the fraud against “Martin Binder” and had dealt with the money after receiving it.  The learned magistrate further concluded that in any event the appellant had reasonable grounds to believe that the money, in whole or in part, directly or indirectly represented the proceeds of an indictable offence.

Grounds of Appeal

17.  Despite the many grounds raised in the Amended Perfected Grounds of Appeal against Conviction, Mr John Hemmings, counsel for the appellant takes no real issue with the magistrate’s findings relating to the evidence of Ms Wong, but suggests that there was no evidence to show that the appellant had dealt with “money” on 13 December 2012. 

18.  Mr Hemmings emphasizes that the only occurrence on 13 December 2012 was the receipt of the money into the savings account by telegraphic transfer and on that day there was no act of dealing with the money by anyone except the bank staff.

19.  Mr Hemmings submits that the prosecution must prove the act of dealing specifically alleged and cannot rely on some other act of dealing which was not part of their case.  Mr Hemmings relied on HKSAR v Salim Majed and another (unreported CACC 184/2013) to support his contention.

20.  Mr Hemmings complains that the learned magistrate appeared to have overlooked the fact that the charge had been amended at the end of the prosecution case to allege that the appellant had dealt with the money on 13 December 2012 instead of the 14 December 2012 as originally alleged when he had made no mention of the amendment at all and had only dealt with the acts of dealing on 14 to 17 of December 2012 which he suggested were not relied on by the prosecution to support the charge.

21.  In the circumstances, Mr Hemmings suggests that the conviction against the appellant was unsafe and unsatisfactory.

Discussion

22.  There was no dispute that the appellant was in charge of Third Concept’s business and had control of its savings and current accounts. It was also accepted that the US$10,688 was the proceeds of a fraud against “Martin Binder”.  This may not be too important as in a “money laundering” case, there is no need to establish the property actually represents the proceeds of an indictable offence. (See Oei Henky Wiryo v HKSAR (No 2) (2007) 10 HKCFAR 98 as confirmed in HKSAR v Yeung Ka Sing, Carson FACC 5 & 6 of 2015)

23.  The issues that needed to be addressed were whether the appellant had dealt with the US$10,688 and if he did, whether he knew or had reasonable grounds to believe that they were the proceeds of an indictable offence.

24.  Mr Hemmings cannot rely on the evidence of Ms Wong as her evidence had been rejected by the learned magistrate in its entirety.  Quite apart from the fact that Ms Wong had been turned a hostile witness, her evidence, if so far as it might be favourable to the appellant was, according to the learned magistrate, contradicted by the bank records. The learned magistrate was right not to rely on Ms Wong’s evidence at all.

25.  Mr Hemmings then argues that there was no evidence to show that the appellant had dealt with the money on 13 December 2012 as the only occurrence on that day was the receipt of the money into the savings account. I do not agree with his submission.

26.  Under s 2(1) of the Organized and Serious Crimes Ordinance (OSCO), “dealing” includes “receiving and acquiring”.  The US$10,688 was paid into an account under the control of the appellant.  The money was then transferred to another account also under the appellant’s control and paid out in full within a short time.  The appellant was in charge of the accounts and in the absence of any acceptable evidence to the contrary, the only reasonable and irresistible inference must be that the appellant knew the transactions in the accounts and had dealt with the monies in the accounts.

“As the holders of the accounts in question and in the absence of any acceptable evidence to the contrary, the only reasonable and irresistible inference must be that the applicants knew the transactions in their accounts and had dealt with the monies in those account.” (HKSAR v Lau Sui Hing & Another CACC 111/2008 para 64)

27.  Mr Hemmings appears to be suggesting that the Court of Appeal in Salim (supra) had declined to follow Lau Sui Hing (supra).  With respect that was not the case at all. The decision of the Court of Appeal in Salim was based on the special factual situation of that case as demonstrated in para 98 of the judgment:

“However, this was not the factual situation in the present case. In respect of these applicants it was actually the prosecution case that there was in fact a lending of the accounts to persons in Hong Kong and that the applicants were out of the jurisdiction and back in the United Kingdom when the money laundering dealings involving these accounts took place. Thus, from the very start, the prosecution case was based on a flawed understanding of the law relating to the actus reus of the offence.”

28.  The appellant did not lend the accounts in questions to other.  He was at all material time in control of the accounts and in the absence of any acceptable evidence to the contrary, the only reasonable and irresistible inference must be that the appellant was aware of the transactions in the savings account, including the receipt of the US$10,688 on 13 December 2012.

29.  It is incorrect to suggest that the learned magistrate had overlooked that the amended charge referred to 13 December 2012.  In fact the learned magistrate had expressly found that “On 13 December 2012, D received US$ 10,688 in his savings account and continued to deal with it.”

30.  It is true that the learned magistrate had dealt with events from 14 to 17 of December 2012, but he was clearly right to do so as such references were highly relevant to two aspects of the case.  Firstly, they indicated that the appellant was aware of the payment of US$10,688 into the savings account on 13 December 2012, otherwise he would not have further dealt with the money subsequently.  Secondly, they were relevant to the mens rea of the offence, namely “whether the appellant knew or had reasonable grounds to believe that the monies were proceeds of an indictable offence”.

31.  As the learned magistrate had emphasized, the US$10,688 was deposited into the savings account on 13 December 2012, a Thursday. It was converted into HK$82,702.68 on Friday, 14 December 2012 and transferred to the current account. Almost the entire sum (less HK$2.68) was withdrawn by means of a cash cheque on the next working day, namely Monday, 17 December 2012.  These are the hallmarks of “money laundering” activities.

32.  The learned magistrate was right to have emphasized the fact that the appellant had allowed someone else to use his company’s account to collect money from an unknown origin and I wish to echo what was said by the Court of Appeal in HKSAR v Wong Chor Wo & Another (unreported, CACC 314/2006):

“108. In the normal course of events, if a man allows another person to use his bank accounts to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.

109. The judge was quite right to rely upon this proposition…..

110. That the account is used to conceal the transactions is an inference which inevitably arises from the fact that a person uses another’s bank account to undertake transactions without any explanation to the holder of the bank account.

111. From the fact that the transactions are concealed, in the absence of evidence to the contrary, the inference inevitably arises that some offence has been committed in relation to the transactions that requires to be concealed. When the funds are of the magnitude…, the inference is that that offence will be an indictable offence.”

33.  The appellant did not give evidence and the evidence of Ms Wong, in so far as her evidence might be favourable to the appellant, had been rightly rejected in its entirety.  In Yeung Ka Sing, Carson (supra), the Court of Final Appeal provides the following guidance in deciding the question of mens rea in a “money laundering case” when a defendant calls no evidence or when his evidence is rejected completely:

“116. If he provides no evidence at all of his beliefs and perceptions, etc, the Court is left to draw whatever inferences may be proper based on the prosecution’s evidence. Such evidence will no doubt be intended by the prosecution to be inculpatory as establishing the indicia of money laundering. But such evidence may also of course be exculpatory, casting doubt on whether the defendant had the necessary reasonable ground to believe.

117. If the defendant does testify or call evidence as to his state of mind but is entirely disbelieved, the court finds itself essentially in the position described in the preceding paragraph. Rejecting the defendant’s evidence does not automatically mean that he must be convicted. It remains necessary for the court to be satisfied that the case against him has been proved beyond reasonable doubt.”

34.  The prosecution evidence against the appellant was all inculpatory.  The appellant used an account under his control to receive over US$10,000, being proceeds of a fraud against a USA company.  The money was converted to HK dollars and, on the next day, transferred to another account also under his control. The money was withdrawn again in the next working day by means of a cash cheque issued by the appellant.

35.  On such evidence and in the absence of any acceptable evidence to the contrary, the conclusions that the appellant was aware of the receipt of the money into the savings account; that he had dealt with the money and that he knew or at least had reasonable grounds to believe that the money was the proceeds of an indictable offence were inescapable.

36.  The conviction against the appellant is safe and satisfactory and his appeal against conviction is dismissed.

Sentence

37.  Mr Hemmings argues that the 18 months’ imprisonment is manifestly excessive because the amount involved was less than HK$85,000.  Again I disagree.

38.  “Money laundering” is a serious offence as it assists fraudsters to dispose of ill-gotten gains. Without the assistance of “money launderers”, fraudsters will have less incentive to perpetrate their crimes and will certainly find it less convenient to carry them out.

39.  “Email fraud” such as the one perpetrated against “Martin Binder” is very prevalent worldwide and “money launderers”, such as the appellant, play a very important role to aid and assist in the commission of those crimes.  “Money Laundering” must be deterred and successful deterrence against “money laundering” is an effective way to discourage email and similar fraud.

40.  In my view, the 18 months’ sentence imposed on the appellant is not a day too long.  The appeal against sentence is also dismissed.