ATTORNEY GENERAL v. KI HON AND ANOTHER

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J U D G M E N T

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Cons, V.-P. delivered the judgment of the Court:

1. On the 11th February this year Ki Hon (D1) and Lau Chuen (D2), pleaded guilty before His Honour Judge Corcoran in the District Count to a charge of conspiracy to accept advantages as agents, contrary to Common Law and Section 9(1)(a) of the Prevention of Bribery Ordinance, Cap. 201. The judge sentenced the 1st Defendant to imprisonment for four months, together with a fine of $150,000 and an order for restitution in the sum of $100,000. He sentenced D2 to imprisonment for two months with a fine also of $150,000 and a restitution order of $50,000.

2. Pursuant to leave granted by Yang, V.P., as he then was, on the 29th February the Attorney General applied for a review of those sentences on the ground that both were manifestly inadequate and wrong in principle.

The Agreed Facts

(a)    The Conspiracy

3. According to the "Summary of Facts" which was agreed as correct before the judge below, the conspiracy to which the Defendants admitted being parties found its home in a company by the name of Swire Air Caterers Ltd. (the Company), a private company engaged in the provision of inflight catering services to airlines using the Hong Kong International Airport. The basic operation of the conspiracy was simple, although a few sophisticated touches were added to help conceal its existence. Suppliers to the Company made secret cash payments to persons within the Company, including the two Defendants, who then shared the moneys amongst themselves and the others. In certain instances the payments were regular, substantial and in some cases calculated as a percentage of the monthly purchase orders. In return the suppliers were assured of continued, substantial and lucrative orders, preferential treatment when making deliveries and the occasional acceptance of goods that did not meet the required standard. It was a conspiracy that permeated the whole of the Company, from successive general managers and the deputies at the top, to junior food store staff at the bottom.

(b)    D1's Part

4. There was an Assistant Purchasing Manager (The APM) in the Company. His duties included the supervision of the food store and its staff (including the two Defendants), finding local suppliers of foodstuffs, the preparation of price quotation comparisons and, by reference to one of the Deputy General Managers, the ordering of foodstuff requirements on a daily basis. On account of his being the senior Chinese member of the Company engaged in the purchase of foodstuffs, he was, effectively, the principal point of contact between the Company and the majority of its local suppliers.

5. D1 was responsible for the efficient running of the Company's food store and his duties included the control, supervision and training of staff employed within the store and the inspection of incoming foodstuffs for the purpose of ensuring that purchases conformed the requited standards.

6. The APM had several connections with some of the supplying firms. In particulate both he and D1 were acquaintences of long standing with a Mr. Lui, who held a controlling interest in and was General Manager of a limited company we may shortly refer to as "Goodwell". In 1977 both the APM and Dl were invited to subscribe to the share capital of Goodwell, which they did, but secretly registered their interests in the names of their respective wives. In November 1981 a similar invitation was extended to D2, who registered his shares likewise in the name of his wife. By then the wives of both the APM and D1 had been appointed to the Board of Goodwell.

7. D1 and his wife operated between them, either solely or jointly with each other, twenty-two different bank accounts. Between the 1st January 1978 and the 31st December 1986 a total of $14.4 million was paid into those accounts - we use round figures for convenience - including payments amounting to $800,000 in a two-year period during 1984-6 by way of cheques drawn on the personal account of Mr. Lui. $2.4 million of the deposits was by way of cash. Payments out amounted to $13.2 million, of which $3.5 million was by way of cash. On the 31st December 1986 the overall credit balance was $1.2 million. During the same period payments made to D1 and his wife by way of salary amounted to no more than $0.5 million.

(c)    D2's Position

8. D2 joined the Company in 1971 as an Aircraft Boy. In January 1979, he was promoted to Stores Clerk, working under the supervision of D1, and, on the 1st January 1984, he was further promoted, as D1's deputy, to the position of Assistant Stores supervision. It was then that he became involved in the scheme as a direct recipient of payments, and assisted D1 in the distribution of payments to junior staff. He and his wife operated only three bank accounts. Deposits into those accounts between the 8th June 1983 and the 31st December 1986 were $850,000 (again we are using round figures) - including one personal cheque for $47,000 from Mr. Lui. Deposits of cash in excess of $1,000 amounted to $280,000. Payments out totalled $794,000, with a similar cash figure of $212,000. During the same period the salaries of the 2nd Defendant and his wife amounted to $128,000. A search of their home in May 1986 revealed $30,000 in cash and a further $116,000 were found in a safe deposit box in a Mongkok bank. D2 admitted that most of those moneys had been corruptedly acquired during the course of his employment with the Company.

Sentencing Policy

9. The courts inevitably take a serious view on corruption. For example in R. v. Wellburn and Nurdin⁽¹⁾ Lawton L.J. said -

"The Courts must do what they can to stop the spread of corruption in public and commercial life. All they can do is to show by the sentences passed that the giving and accepting of bribes will not be tolerated in this realm. This must mean in most cases severe sentences ....."

In 1981 the then Chief Justice, dealing with offences under Section 4 of the Ordinance, suggested⁽²⁾  -

" ... that magistrates should approach the question of penalty to be imposed for such an offence on the basis that the usual minimum imprisonment should be twelve months. This guideline, of course, is not to be construed as interfering with the usual discretion of a magistrate to impose a lesser or greater sentence when the case justifies it."

He then added -

"    The same principles should apply to a person convicted of an offence against sections 5, 6, 7 and 8 of the Prevention of Bribery Ordinance, though I express no view as to appropriate sentences for offences against sections 3 or 9 which involve a far wider range of moral culpability."

The English Court of Appeal took a similar view in R.G. Wilson⁽³⁾ -

"     The trial judge observed that corruption of this kind was insidious. He said it was rotten and that it did great harm to people in commerce and business life who always behaved honestly.

    We do not for one moment disagree with those observations, which were very properly made. This kind of conduct is damaging to commercial life, ......"

10. It is to be noted that in Lai Yuk Kui⁽²⁾ the Chief Justice referred to the usual "minimum" imprisonment, that is to say in respect of corruption on the smallest scale. Not only in the present instance are we concerned with corruption of a more culpable kind, but it cannot possibly be suggested that it was corruption on the smallest scale. Quite the opposite. It was corruption of long standing, which had spread throughout the whole company and must have involved considerable amounts of money.

The Judge's Approach

11. In the "Reasons for Sentence" which the Judge recorded subsequently to his decision, he said of D1 -

"     He was a relatively junior official in the company and on the Summary of Facts it appeared that he was 'small fry'. The 'big fish' were (the General Managers and Deputy General Managers) and I assume for sentencing purposes that they got the bigger shares.

    To some degree, because of his relatively junior status, this Accused would have been under some pressure to take part in the scheme, and I have taken this element into account."

12. It appears from the agreed facts that the managerial staff received substantially higher shares than the junior food store staff, as one might expect, but there is no mention as to the shares received by Dl. Now is it anywhere suggested that he was pressured to take part in the scheme. All that is said is that, following the sudden upsurge of business between 1979 and 1986 -

"..... there evolved a common agreement to derive personal pecuniary gain through the solicitation and accepting of advantages from persons involved in the supply of catering products of (the Company)."

13. Furthermore the Judge acted on the basis that, during the ten years he took part in the conspiracy, Dl received in total no more than $100,000, a sum admitted on behalf of the Defendant by his counsel. The judge observed that in his view that was an extremely low figure, but he was content to accept it because counsel for the Crown "said the Crown were not in a position to produce evidence to prove that he had received more".

14. With respect to the judge that was not a correct approach, the Crown had proved the basic figures which we have already set out. It is for a defendant to substantiate the matters on which he wishes to rely in mitigation, not for counsel for the Crown to disapprove them. It may be that if counsel for the Crown accepts what is put forward as being true, the Court may then more readily be inclined to do the same. But the ultimate responsibility remains that of the judge. It is his task to assess in the public interest what is an appropriate sentence. He cannot discharge that duty responsibly unless he is satisfied for himself that the factors influencing his decision are genuine.

15. In the present instance the Crown did not accept the figures suggested. That is not surprising. Even taking the most favourable approach to the figures given in the Summary of Facts some $1.2 million is not accounted for. If this was derived from some other businesses operated by the 1st Defendant and his wife over the same period - and that is the only innocent explanation that we can envisage - there was no evidence to show it. With every respect to the learned judge, to accept the unsubstantiated submission that Dl received no more than $100,000 was to fly in the face of reality and to lead further to the absurd result that in the whole of the ten years during which he profited from the scheme he received in fact less than did his subordinate in only two or three.

16. Properly taken into account were the Defendants' clear records and pleas of guilty. These are factors always pertinent to the assessment of a proper sentence. But even so they must not be overvalued. As this Court observed recently in Attorney General v. Shamsudin⁽⁴⁾ -

"Sentences cannot be brought below a level which will afford some deterrent against crime and, where substantial fraud or corruption is concerned, preserve the integrity of Hong Kong's commercial reputation."

In our view the terms of imprisonment imposed in the present instance fell woefully below that level.

The Fines

Referring to D1 the judge said -

"... I considered that the imposition of a substantial fine left it open to me to impose a light sentence;"

and with reference to D2 -

"I considered that the imposition of a substantial fine would allow me to reduce the sentence accordingly ..... The fine of $150,000 allowed me to reduce the prison sentence of this accused."

17. We would respectfully not agree with that line of approach. There is ample authority that offences of corruption merit custodial sentences. If for some reason a judge thinks it appropriate to impose a fine in addition - for example to compensate for the cost and damage which the corruption has inflicted upon society generally - that should not go to reduce what is otherwise an appropriate term of imprisonment. And to reduce the term merely because the offender has ample means at his disposal would only encourage, as counsel for the Crown observed, the view that there is a different law for the rich.

Restitution

18. It is common practice to impose a fine in addition to imprisonment to ensure that the offender does not enjoy the profits of his offence. In the present instance that can be taken care of by virtue of Section 12(1) of the Ordinance, which provides that a person convicted of an offence under Part II of this Ordinance, which includes Section 9, -

"... shall be ordered to pay to such person or public body and in such manner as the court directs, the amount or value of any advantage received by him, or such part thereof as the court may specify."

19. We have already commented upon the figure of $100,000 with regard to D1. As to D2 the judge said -

"The order for restitution was for $50,000. I based this on the Accused's admission through his lawyer. I was still of the view that the $30,000 and $115,900 referred to in the Summary of Facts come from the conspiracy but since the Crown did not go into details I considered I should act only upon the Accused's own admission in setting the amount to be repaid by him by way of restitution."

20. We do not comprehend what kind of details the judge may have had in mind that led him to prefer counsel's admission to that given by the Defendant Personally to the investigating authorities, and which was reinforced by the Defendants acceptance of the correctness of the Summary of Facts presented to the Court. According to the Summary most of the total of $145,900 had been acquired corruptly. In our view that was the proper basis for consideration of an order under Section 12(1).

Conclusion

21. In our judgment the sentences passed below were both wrong in principle and manifestly inadequate. Having regard to the circumstances of the case and the principles we have endeavoured to outline above, proper sentences of imprisonment upon the Defendants would have been respectively four years and eighteen months with fines of $150,000 and $50,000. These would have reflected more appropriately both the nature of the conspiracy and the gravity of the respective parts they played therein. Orders for restitution ought to have been at least in terms of $750,000 as against Dl and $100,000 as against D2.

22. Our attention has been drawn to the course adopted by the Court in R. v. Wellburn and Niurdin^(l) where the Court "as an act of mercy" reduced an otherwise proper sentence because of the Defendant's age (62), and the state of his health. The report gives no indication as to what exactly that was but we can only assume that it was one giving cause for serious concern. The letter from the Commissioner of Correctional Services referring to Dl indicates nothing of that kind and we do not feel it requires us to interfere on similar lines. However, in accordance with the precedents laid down by this Court with regard to this kind of proceeding, we must discount the proper terms of imprisonment.

23. For these reasons we allow the applications, set aside the orders made in the court below and in their stead order in regard to D1, that he be imprisoned for three years with a fine of $150,000 and make restitution in the sum of $750,000; D2 will be imprisoned for one year with a fine of $50,000 and an order for restitution in the sum of $100,000.

⁽¹⁾ 1979 1 Cr.App. (S) 64

⁽²⁾ The Queen v. Lai Yuk Kui [1981] H.K.L.R. 691 at 694

⁽³⁾ (1982) 4 Criminal Appeal Reports (Sentencing)337 at 338

⁽⁴⁾ [1987] H.K.L.R. 826 at 832