HKSAR v. LAM YIU CHUNG

CACC 307/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 307 OF 2004

(ON APPEAL FROM HCCC No. 69 of 2003)

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J U D G M E N T

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Hon Lugar-Mawson J (giving the judgment of the Court)

Background

1.  On 30 June 2004, Lam Yiu Chung, the Applicant (who was the first defendant out of five defendants at trial), was convicted after trial before Deputy High Court Judge Longley and a jury of one count of an agent accepting an advantage, contrary to sections 9(1)(b) and 12(1) of the Prevention of Bribery Ordinance, Cap.201 (4^th count).  The Jury acquitted him of one count of conspiracy to deal with property knowing or believing it to represent proceeds of an indictable offence (1^st Count) and another count of an agent accepting an advantage (3^rd count).  In the course of the trial the Judge had ruled that the Applicant had no case to answer on a count of conspiracy to use documents by agents with intent to deceive their principal (2^nd count) and the jury, on the Judge’s direction, had acquitted him on this count.

2.  On 2 July 2004, the Judge sentenced the Applicant to 12 months’ imprisonment on the 4^th count and ordered him to pay $10,000 compensation to the Bank of China with which the Po Sang Bank had merged.

3.  The Applicant now seeks leave to renew his application for leave to appeal against his conviction, leave having been refused by the single judge on 17 November 2004

Prosecution case

4.  The case involved the laundering of vast sums of cash both in foreign currency and Hong Kong dollars which had been smuggled to Hong Kong from the Mainland.  In Hong Kong the money was handed over to a local firm of moneychangers known as Guardecade Ltd (Guardecade).  The staff at Guardecade converted the foreign currency into Hong Kong dollars via various financial institutions and then paid the Hong Kong dollars into a current account held in Guardecade’s name at the Tsim Sha Tsui Branch of the Po Sang Bank where the Applicant was the Senior Manager.  That account was then used to transfer the money to a multitude of other accounts from which further payments were made.

5.  The amounts involved are staggering.  In 2001, the foreign currency coming in from the Mainland averaged in excess of $92 million a day over a 35-day period.  No receipts were given for it and it had been brought to Hong Kong, unguarded, in private cars bundled up either in garbage bags or in large plastic shopping bags. 

6.  The money was paid into Guardecarde’s Po Sang Bank account using the bank’s internal suspense account.  This meant that the deposits were shown in the bank’s records as “Transfers” rather than “Cash”, and thus avoided detection by the bank’s internal money laundering surveillance systems.

7.  It was the prosecution’s case that the Applicant was the man at the Po Sang Bank who assisted the currency smugglers in laundering the money.  He was paid for his services in the form of loans from Chan Chun Ming (the 2^nd defendant at trial) who was a director and the brains behind Guardecade.

8.  The particulars of the 4^th count on which the Applicant was convicted related to a payment of US$10,000 that Chan had made to the Applicant on an unknown day in 2001.  At trial, there was no dispute that the Applicant had received US$10,000 from Chan.  He admitted this in his evidence.  He told the jury that he had obtained the money as a loan from Chan because he was short of cash.  He went on to say that he had lied to Chan in order to obtain it by telling Chan that a Mainland customer of the Bank needed the money to fund an overseas trip.

9.  The prosecution asked the jury to infer that Chan had offered this and another loan (the one charged in the 3rd count on which the Applicant was acquitted) to the Applicant as an inducement to or reward for the Applicant showing favours to Guardecade in his capacity as the Senior Manager of the Po Sang Bank’s Tsim Sha Tsui branch.  There was no direct evidence of this matter.  The Judge warned the jury that they could only draw inferences of guilt, or inferences adverse to the Applicant’s interest, if they were satisfied that those were the only reasonable inferences they could draw.

10.  At trial, there was no issue over the fact that the Applicant was an agent of the Po Sang Bank, or that he accepted an advantages from Chan by way of two loans of US$10,000.  The first loan (the subject of the 3^rd count) had been repaid, but the second loan (the subject of the 4^th count) had not been repaid by the time the Applicant was arrested on 11 September 2001.  Neither was there any claim that the Applicant had a lawful authority or a reasonable excuse for accepting these loans.

11.  The Judge directed the jury on the issue of the capacity in which the Applicant accepted the loans in these terms, at page 188B-O of the transcript of the summing up:

“The third matter or element of which you must be satisfied, if you are satisfied that the defendant received the loans alleged by the prosecution, is that he did so as an inducement to or reward for or otherwise on account of the 1^st defendant showing or having shown favour to Guardecade relation to the Po Sang Bank’s affairs or business, namely the business dealings between Po Sang Bank and Guardecade.

So the prosecution must prove not only that the 1^st defendant accepted the loans as an inducement to or reward for or otherwise on account of his showing or having shown favour to Guardecade, but also that the favour was related to the Po Sang Bank’s affairs or business, in particular the business dealings between Guardecade and the Po Sang Bank.

If for instance you thought it possible that the 1^st defendant’s acceptance of these loans, if you found they took place, had no connection with the business dealings between Guardecade and the Po Sang Bank or any past or future favour shown by the 1^st defendant to Guardecade, then you could not find this element proved.

The prosecution case is that these loans were made by the 2^nd defendant and accepted by the 1^st defendant to quote Mr. Callaghan, “So that the branch manager, the first accused, would make sure that everything went smoothly for Guardecade in terms of the business that they were conducting at the bank”.

12.  We can find no fault with that direction.

13.  In dealing with the Applicant’s defence the Judge said this to the jury, at pages 189J to 190Q of the transcript:

“Both when interviewed by the ICAC and in evidence in court, he has said that he received US$10, 000 on two occasions following a request to the 2^nd defendant.

When he gave evidence-in-chief before you, he repeatedly referred to them as loans, although he said that he was asking the 2^nd defendant to extend the loan directly to the fictitious mainlander through him. In cross-examination, he agreed with Mr Mayne (Chan’s counsel) that the arrangement was the alleged customary practice of money changers to advance money to particular travellers, and I told you as a matter of law that would amount to a loan…

The second loan, which is the subject of Charge 4, was he said made sometime in 2001 and had not been repaid by the time he was arrested on 11 September 2001.

I should first draw you attention, members of the jury, that it was only in his second interview with the ICAC that he admitted these loans.  In his first interview… although the 1st defendant admitted that in the course of his business relationship with Guardecade he had given them a lot of conveniences  - and if you look at 570 of that first interview you will see the references to conveniences - like waiving cash handling charges and handling their transfers very quickly - he refers to that at 572 - he insisted that he had never received any money from them.  And if you look at 594 and also at 1068, he expressly denied ever having received any money from them - at 594 and 1068.

I ask you now to turn to the second interview…  At the start of that interview, the 1^st defendant was asked about his debt problems…he was asked whether he had received some money from those persons at Guardecade, including Chan Chung-ming “that assisted you in resolving these debt problems ‘ and he said “No “.  At…the next passage, it was suggested to him that he had received $10, 000 from the 2^nd defendant in 1997 and… he says, “If my memory serves me right, it should be for settlement in respect of shares “.

What he then said in his second interview…and has told you in court, is that although he referred to them as loans when talking to the 2^nd defendant, he had pretended that they were not loans to him but to a fictitious mainlander customer who was going to the United States and needed US dollars.  He told you that the reason he had used the excuse of the mainlander customer was because he did not want the 2^nd defendant to know about his financial difficulties.  He did not want the 2^nd defendant to do him a favour to avoid the need of doing him a favour in return.  In reality he had used the money for his own purposes.  In such circumstances, members of the jury, whether or not you find the 2^nd defendant was taken in by the pretence, you might have little difficulty in concluding that the 1^st defendant accepted each sum of US$10,000 as a loan thereby satisfying the second element.”

14.  And at pages 191D to 192K of the transcript:

“It is the third element that the false story that the 1^st defendant said he gave to the 2^nd defendant is likely to be relevant if you accept it.  As I have said, he said that one of the reasons he told the 2^nd defendant the story of the mainlander customer was to avoid having to give favour to the2nd defendant in return, in other words to avoid any element of corruption.

Bear in mind that in his second interview with the ICAC…it was suggested to him that the money was connected to the fact that he was the senior manager of the Tsim Sha Tsui branch and had granted some convenience to the 2^nd defendant’s company.  And… the 1^st defendant said, “I don‘t know whether he lent the money to me because he thought that way “, but, as I have already drawn to your attention, he did admit in his first interview...that he had given a lot of conveniences to Guardecade, such as handling their transfers quickly and receiving quite a large sum of cash from them.

So you will have to consider what the 1^st defendant’s state of mind was in accepting the loans on each occasion.  You should ask yourself whether the 1^st defendant believed that he was accepting the loans as reward for the help he had given Guardecade in relation to its past banking activities at the Po Sang Bank or as an inducement to continue to help out Guardecade in its banking activities.

If for instance you thought the 1^st defendant’s acceptance of the loan was possibly totally unrelated with any past or future help on his part to Guardecade in its banking business with Po Sang Bank, then you would not be satisfied of this element.  That would be the case if you thought that the 1^st defendant’s evidence, that the purpose of telling the lie about the mainland customer was to avoid having to give any favour to the 2^nd defendant in return, might be true.

It might assist you, members of the jury, in determining this question toconsider whether, having received the sum of US$10,000 on each occasion from the 2^nd defendant, the 1^st defendant would have considered himself under any obligation to assist Guardecade in relation to its banking activities thereafter. Would he have felt free for instance thereafter to start charging Guardecade a handling fee for its cash deposits or would he have said to himself “Look, I can‘t possibly do that, they have just given me US$10,000”?

If that is the case, you will have to consider whether you are satisfied it would have been obvious to the 1^st defendant when he accepted the money, regardless of whether the 2”” defendant thought it was for the 1^st defendant himself or a mainland customer, that it was a reward for past favours or an inducement to give Guardecade favours in the future in its banking business with the Po Sang Bank. Remember you must consider Counts 3 and 4 separately.”

Grounds of appeal

15.  The Applicant in a letter to this Court, dated 21 November 2004, acknowledges that when he was the Senior Manager of the Tsim Sha Tsui branch of the Po Sang Bank he gave preferential treatment to Guardecade.  He says that he had made it clear in his ICAC statements that he did this because Guardecade had also given“quite some convenience” to his bank.  He maintains, as he did at trial, that the loans he obtained from Chan had nothing to do with the favours that he provided to Guardecade.

16.  The Applicant complains that at page 190 of the transcript of the summing-up, the Judge by referring the jury to the entry in the transcript of his first video recorded interview (it was entry 570) in which he admitted that he had given a lot of favours to Guardecade, invited the jury to take that answer out of context.  He says that he had made it clear in his subsequent answers that when he gave favours to Guardecade the relationship between the bank and the client was taken into account.

17.  The Applicant also complains that at page 192 of the transcript the Judge was wrong in supposing that when the Applicant decided not to charge Guardecade bank handling fees for the counting of banknotes, he would have said to himself “Look!  I can‘t possibly do that. They have just given me US$10,000 “.  The passage complained of has already been quoted in full.  The point the Applicant is seeking to make here is that the Judge’s conjecture was unfair because the Po Sang Bank had never charged Guardecade handling fees for the counting of banknotes from the very start of their banking relationship in 1995.

18.  The Applicant claims that he gave an incomplete answer at entry 158 in his second video recorded interview when asked why he had obtained the first loan from Chan in 1997 (this formed the subject of the 3^rd count not the 4^th), because the interviewing officer had interrupted him and had diverted his attention to something else.  Had he been given the opportunity, he would have gone on to say “…but it was not because that the company had lent me money that I gave it preferential treatment”.

Discussion

19.  There is nothing in these points. 

20.  At the very beginning of the summing up, the Judge instructed the jury that both video recorded interviews as well as their written transcripts were part of the evidence in this case.  He also directed them that they had to consider:

“…all the evidence in the case, not only the evidence from prosecution witnesses, but also the evidence of the defendants. Defence evidence sometimes casts a doubt on the prosecution case.”

21.  At the impugned passage of the summing-up at page 190, which we have quoted in full, the Judge referred to the undisputed fact that that in the course of Po Seng Bank’s business relationship with Guardecade, the Applicant as the Bank’s Senior Manager extended many conveniences to Guardecade.  It was in this context that the judge referred to entry 570 in the Applicant’s first video-recorded interview.  He never invited the jury to consider that entry in isolation from the rest of the evidence. 

22.  In the impugned passage at page 192 of the summing up, the Judge was endeavouring to assist the jury determine the real issue in the case.  He invited the jury to consider whether, having received the loan from Chan, the Applicant would have considered himself under an obligation to assist Guardecade in relation to its banking activities at the Po Seng Bank after that.  He then gave them a homely illustration of what he was speaking about and went on to invite the jury to consider whether in their view it would have been obvious to the Applicant that when he accepted the money from Chan it was paid to him as a reward for past favours or as an inducement for him to give Guardecade favours in respect of its banking business with that Bank in the future.  The judge never suggested that the loan made 2001 was paid as a reward for what the Applicant had been doing since 1996.

23.  If the Applicant had wanted to say more at entry 158 of his second interview then he should have told the jury this - it would appear that he chose not to do so.  His defence at trial was both very clear and very simple: the loans he obtained from Chan had nothing to do with him giving preferential treatment as the Senior Manager of the Po Sang Bank’s Tsim Sha Tsui branch to Guardecarde.  The jury could have been in no doubt what his defence was and they, as was their right, they disbelieved him in respect of the 4^th count.  That they took their duty seriously is evidenced by the fact that they acquitted him on the very similar 3^rd count, in respect of which they must have entertained a doubt about his guilt.

24.  Before us this morning, the Applicant complains that the jury acquitted Chan on the 6^th count on the indictment, which related to Chan’s payment to him of US$10,000.  That is true, but it must be remembered that in the 6^th count the prosecution had to prove what Chan’s intention was in making the payment, whereas in the 4^th count, on which the Applicant was convicted, the prosecution had to prove why it was that he accepted that sum of money.  The jury obviously entertained a doubt in relation to Chan’s guilt on the 6^th count, but did not entertain a similar doubt in relation to the Applicant’s guilt on the 4^th count.  As they were directed correctly in relation to the case for and against the Applicant on the 4^th count, and were also directed, again entirely correctly, that they had to consider the cases of each defendant separately, as well as the case against each defendant on each count he faced separately, there is no basis on which we can question the jury’s verdict.

Decision

25.  The Judge’s summing-up throughout was thorough, fair and balanced.  The issue for the jury on the 4^th count was a straightforward one, and the matters than ran both in the Applicant’s favour and against him were put to the jury in an even handed way.  There is no reason for us to question the jury’s verdict and the Applicant’s application for leave to appeal against conviction is dismissed.