HKSAR v. LIU KIT MAN

DCCC 817/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 817 OF 2014

----------------------

----------------------

---------------------

Reasons for Verdict

---------------------

1.  The defendant faces two charges. In short, the 1st charge alleged he had defrauded a company known as Kabushikigaisha Limited (Kabu), which runs various restaurants. The defendant was firstly a director and later chief executive officer of this company.

2.  At the same time, he was also a 30 per cent shareholder in Hong Kong Infix, a design company, and that is from 2008 to 2011.  Hong Kong Infix completed design work on 18 Kabu restaurants pursuant to 13 contracts, 12 of which were signed by the defendant.  The defendant never declared any interest in Hong Kong Infix as was his duty as a director of Kabu.  The prosecution say this was a deceit by which Hong Kong Infix benefitted and the defendant procured these contracts with intent to defraud.

3.  These are the facts and contracts of the defendant’s status in Kabu.  The defendant admits the facts, the contracts and the failure to declare his interest in Hong Kong Infix.  Defendant says he had no intent to defraud and that he was not acting dishonestly.  The issue at trial is whether the defendant was acting dishonestly in relation to contracts between Kabu and Hong Kong Infix.

4.  The 2nd charge alleges the defendant as an agent used a document with intent to deceive his principal.  This is contrary to section 9(3) of the Prevention of Bribery Ordinance.  The charge alleges that the defendant was entitled as CEO of Kabu to obtain payment of a meal bill in a Kabu restaurant if the purpose of the meal was part of his duties at Kabu.  The issue is simply whether the defendant was actually entertaining potential clients as part of Kabu’s business or not.  The prosecution say he was entertaining clients to promote his own business.  The defendant says he was not; that the clients were potential suppliers of Kabu and he was entitled to entertain them.

5.  Kabushikigaisha Limited (Kabu) was incorporated on 4 August 2008 and the majority shares were held by the Lucky House Group. Shares were held by PW1, Simon Wong, through a company called Draconis, and also another witness, Grace Ko, held shares.  The defendant held 10 per cent of the shares through his company, All Global Development Limited (AGDL).

6.  The defendant was a director of Kabu from 12 September 2008 until his resignation on 11 January 2012.  He was chief executive officer from 1 January 2010 at a salary of HK$65,000 per month.

7.  Between 2008 and 2011, Kabu set up 13 subsidiary companies who operate 18 restaurants in Hong Kong.  The defendant was a director of all subsidiary companies.

8.  The restaurants required outfitting and decoration.  In respect of the design work for each of the 18 restaurants, that was performed by Hong Kong Infix under 13 separate contracts, 12 of which the defendant signed on behalf of Kabu.  Hong Kong Infix was set up in August 2008.  The defendant held 30 per cent of the shares in Hong Kong Infix.

9.  Throughout the time the defendant was a director, Kabu held regular board of directors’ meetings.  Each director was then under a statutory duty pursuant to section 162 of the Companies Ordinance, cap 32, to disclose any direct or indirect interest that would be brought to him in all contracts entered into by Kabu and its business counterparts as a result of his position in the corresponding company.

10.  Each director of Kabu was under a duty to disclose any existing or personal conflict with Kabu’s contracts to the board of directors in a declaration of interest (DOI) and a representation regarding director’s emoluments, loan and other transactions (the representations).  The DOI and representations were signed and submitted by the defendant on nine occasions while he was a director.  It is not disputed that the defendant failed to disclose his interest as a shareholder of Hong Kong Infix in any of these documents.

11.  All 13 contracts were performed and payment of a total of $1,709,000-odd was made by Kabu to Hong Kong Infix.

12.  Simon Wong, Grace Ko and Peter Liu represented LHG.  They said they only became aware of the defendant’s interest in Hong Kong Infix during a meeting on 5 March 2012 when the defendant admitted his interest in Hong Kong Infix and that it had not been disclosed in any of the DOIs or representations.

13.  The prosecution case was simply that the defendant intentionally concealed his interest in Hong Kong Infix in order to gain the contracts.  The evidence of Simon Wong (PW1) was that he would have sought outside quotations and would have insisted on a reduced price had they known of the defendant’s interest in Hong Kong Infix.

14.  Most of the prosecution evidence was not in dispute.  The defendant’s interest in Hong Kong Infix was not disputed.  It was not disputed that the DOIs and representations contained no reference to his interest in Hong Kong Infix.  The details of all the contracts with and payments to Hong Kong Infix were agreed as were the banking records relating to the transactions.

15.  What was disputed was the extent of the knowledge possessed by the other directors of the defendant’s interest in Hong Kong Infix that the defendant said had not been concealed, that he had only actually been required to disclose his interest in other food and beverage or restaurant contracts that were in competition with Kabu.

16.  The prosecution called the other shareholders of the company.  Mr Simon Wong (PW1) owned a company called Draconis that held 10 per cent of Kabu.  He evidenced that it was effectively himself, Grace Ko (PW2) and the defendant, who managed Kabu.  They were all directors and the defendant became CEO in 2010.  Prior to this, there had been no such post and he had fulfilled the job description.  The defendant was recruited because of his fame in the restaurant industry, particularly in the area of Japanese food.  He said the defendant recommended a design company in Shanghai for the design of their restaurant.  The boss was Norio Ogawa and Mr Sasaki was also a designer.  The name of the company was Shanghai Infix Design Company Limited.  PW1 said the only relationship the defendant mentioned that he had with Shanghai Infix was that they had worked together before in the Watami brand restaurant.  He did not mention any other relationship with Messrs Ogawa or Sasaki.

17.  The quotation of the first restaurant had been accepted.  There had been a further 13 design contracts for 18 restaurants of Kabu and its subsidiaries.  The contracts show that the contracts to be signed by Hong Kong Infix.  He said Mr Liu had never said he had any relationship with Hong Kong Infix.  All the following contracts followed the pattern of the original negotiation with Shanghai Infix entered into by Mr Liu, although the original amounts differed.

18.  The defendant was the CEO.  He could communicate with the designers in Japanese, so price negotiation was done by Mr Liu. Mr Liu would sign the contract, then it would be sent to Simon Wong’s office to be approved and signed by him.  He trusted Mr Liu, he never discussed prices with Messrs Ogawa or Sasaki.

19.  Mr Wong said that the directors knew they had to disclose third party transactions.  All directors were made aware of this requirement.  This is particularly necessary in Mr Liu’s case because he had his own business contacts and also because Mr Liu worked full-time as CEO. Furthermore, Kabu had taken on the administration of Mr Liu’s other companies and Mr Liu had paid an administration fee for this.

20.  As far as the director’s responsibilities as to third party interests were concerned, when a director knew there was a transaction in which a conflict of interest was caused, then it would be raised in the meeting with the shareholders and directors verbally.  His evidence was the declaration also had to be made on a written form.  The document will be signed in the meeting or on the next day.

21.  Mr Wong was asked what the company’s approach would have been if Mr Liu had declared his 30 per cent interest in Hong Kong Infix.  He said, “Before he became CEO in January 2010, I think we would require quotations from two or three more companies to make reasonable comparison.”  After he became CEO we would require him, with respect to his benefit in the case, for 30 per cent to be given to the company.

22.  Mr Wong said he only became aware of the defendant’s interest in Hong Kong Infix at the beginning of 2012.  In January 2012, they - that is the other directors - had suspected Mr Liu of having outside private businesses.  They had arranged a meeting with the other shareholders.  Mr Liu had attended the meeting to clarify if he had any other private business.  He clearly stated that he had not.  Mr Liu had resigned as CEO with immediate effect.

23.  Mr Wong then said he had to take up Mr Liu’s duties, and in doing so became aware of documents and emails that showed Mr Liu’s interest in Hong Kong Infix.  Mr Liu had subsequently confirmed this in a meeting in March 2012.  These meetings had been covertly recorded and transcripts of the discussions were before the court.

24.  The other shareholders, Miss Grace Ko (PW2), Peter Liu (PW3), Mr Chan (PW6) confirm Mr Wong’s account.  There had also been evidence led from the accounting department of Lucky House Group, Mr Ho (PW4), and the accountant, Mr Chan (PW5), about the way in which third party interests were to be declared.

The 2nd charge

25.  The directors of Kabu were entitled to enjoy free Kabu-related meals at LHG restaurants.  The practice was for the director to sign the bill or invoice, which is forwarded to Kabu for settlement.  On 26 October 2011, the defendant entertained four guests for a meal at The Banqueting House in Tsim Sha Tsui.  This is an LHG restaurant.  The bill was $5,685.  The defendant signed the bill and wrote “Kabushikigaisha Limited” and “treating Japanese suppliers”.  The bill was paid in the belief that the expenses were legitimately incurred.

26.  The prosecution say this meal was not related to Kabu’s business and in fact related to the defendant forming a partnership with some Japanese businessmen.  They referred to certain email correspondence and diary entries of the defendant to support this proposition.  And that at a later meeting the defendant had offered to repay the bill and had in fact repaid it in February 2012.

27.  The defence say the prosecution approach never becomes more than speculative and that the defendant in fact said the meeting was with potential suppliers of Kabu.

The defence case

28.  The defendant gave evidence.  He has a clear record.  After finishing education in Hong Kong he went to Japan where he studied Japanese language and graphic design.  Following this, he worked in fashion and then catering.  He worked for Watami, a restaurant brand in Japan. In 2001, he entered a joint venture to open the Watami brand in Hong Kong and in the Mainland.  Altogether, 13 restaurants were opened.  He resigned from Hong Kong Watami in 2006.  After this, he ran his own restaurant.

29.  In 2008, he was approached by Albert Li on behalf of the Lucky House Group to help them introduce innovatory restaurants to Hong Kong.  The defendant ran his restaurant under the All Global Development Limited.  It was arranged that the defendant would join a new venture, Kabu, as a 10 per cent shareholder with the LHG owning 70 per cent.  All directors would continue with their own business interests and the cooperation was a joint venture.

30.  In 2010, the defendant became CEO of Kabu at a payment of HK$65,000 per month.  It was also arranged that Kabu would manage all his restaurants for a monthly fee of three to four per cent of their turnover.  This resulted in a payment of around HK$100,000 to HK$150,000 per month to Kabu.  Thereafter, All Global and Kabu’s managements were merged.  The defendant signed an exclusive service contract, Exhibit P2, whereby he was to ask permission to accept any work outside of Kabu.  The defendant said this was nominal and the arrangement in the past whereby everybody carried on with their other businesses still applied.

31.  The defendant had met Mr Ogawa when he was in Shanghai in 2003.  Mr Ogawa was in charge of Shanghai Infix, a designer of Japanese restaurants.  The defendant opened a Watami in Shanghai in 2007.  Mr Ogawa was involved in the design.  The defendant was asked to introduce Mr Ogawa to the Hong Kong Watami Group.  There was difficulty in opening a Mainland company in Hong Kong, so it was agreed to set up a company in Hong Kong.  The defendant decided to hold 30 per cent of the shares of the Hong Kong company; Mr Ogawa held the rest, 70 per cent, and Hong Kong Infix was established in August 2008.

32.  Hong Kong Infix did the design work for the defendant’s XMG restaurant in Diamond Hill.  Simon Wong and Albert Li wanted to use Mr Ogawa and Hong Kong Infix for the design of an XMG restaurant to be run by Kabu.  The defendant says he told Albert Li that he did not need to use Hong Kong Infix and that he had shares in the company.  LHG decided to use Hong Kong Infix because their design was superior.  Although it was noted Japanese designers were more expensive, they were aware of that.  The price was fair. Hong Kong Infix was used.  Thereafter, there were never any complaints as to price or the quality of the work.

33.  Mr Liu said the declarations of interest prepared by LHG, he never read them carefully.  He asked Simon Wong and Peter Liu which interest he had to declare.  He was clearly told to declare all the restaurant related business in competition with Kabu.  He had to provide a list of restaurants in competition with Kabu.

34.  In 2012, the defendant decided that he wished to quit Kabu.  In December, he took long leave in Japan.  On his return, there was an emergency shareholder meeting.  He was accused of having a private restaurant outside.  He was very surprised as it was not true.

35.  As for the meal, the subject that forms the substance of Charge 2, he said he was entertaining potential suppliers of Japanese food products for the Kabu restaurants, although no actual business arose from out of that dinner.

36.  The defence case called people who had worked for the defendant.  A Japanese chef who was aware of Mr Liu’s interest in Hong Kong Infix.  A person called Yuen Wan, a senior human resources officer at All Global Group, said Mr Liu’s interest in Hong Kong Infix was well-known by her, although she did not know the precise nature of that interest.

37.  Miss Cecilia So, who was DW4, said that Simon Wong and Grace Ko should have been aware of Mr Liu’s interest in Hong Kong Infix.  She worked for All Global, she knew Mr Liu was a shareholder of Hong Kong Infix along with Mr Ogawa.  Hong Kong Infix had operated out of the same office as All Global in Mongkok, but it did not transfer to Kowloon Bay when Mr Liu’s F&B business moved there.  Miss So was involved in the actual decoration works.  She said that at Kowloon Bay the senior staff would have weekly meetings; Simon Wong and Grace Ko would attend. At one meeting, Simon Wong asked whether the boss of design company, Hong Kong Infix, was known.  Miss So said she said, yes, Mr Liu had a share.  In cross-examination, she said it was not her, but an area manager who had answered Mr Wong’s question.  She also said there was another occasion when Mr Wong asked why she was so familiar with Mr Sasaki.  She told Mr Wong it was because he was a staff member of her boss, that is, Mr Liu.

The Legal Considerations

38.  The prosecution must prove their case on each charge beyond reasonable doubt.  The burden to do so remains on them at all times.  The evidence for each charge is to be considered separately.  The defendant is a man of clear record.  This is relevant to the consideration of his propensity to commit an offence of this nature and also the credibility of the evidence that he has given.

39.  The offence of fraud, contrary to section 16A of the Theft Ordinance, cap 212, requires the prosecution to prove a deceit practised by the defendant, whether by deliberate words or conduct with intent to defraud which induced another person to do or not do something resulting in benefit to someone other than that another person or prejudice to someone other than the defendant.

40.  A deceit incorporates the element of dishonesty and the prosecution must prove that the defendant had been dishonest throughout.  A concealment of facts can be transferred into a false representation through omission.  The precondition being that the concealing party be under a duty to make the disclosure.  For an intention to defraud, a person is treated as having an intention to defraud if he intends that by practising the deceit he would induce another to do or not do an act resulting in benefit or prejudice to another.  The prosecution must show that the defendant appreciated that the course of action that he intended to take and did take would potentially injure the interest of the victim.

41.  The prosecution allege in the 1st charge the defendant used a deceit by concealing from and failing to disclose to Kabu his interest in Hong Kong Infix while he was director and CEO of Kabu, and with intent to defraud, induce Kabu to engage Hong Kong Infix to provide design work on the 18 restaurants which resulted in benefit to Hong Kong Infix, or in a prejudice or substantial risk of prejudice to Kabu.  The defendant denies that he used deceit in that he was not dishonest.  He also said that he did not possess an intent to defraud.

42.  The mechanics of the alleged fraud are uncontested.  The contracts are admitted.  The defendant’s role and status in Kabu and his shareholding in Hong Kong Infix is uncontested.

43.  The existence of a duty to disclose by him to Kabu is acknowledged, but the defendant claims that he was told this did not extend to his interest in business outside the food and beverage area.  The defendant does not say he disclosed his interest in Hong Kong Infix to Kabu directly, but he does say the directors, Simon Wong, Grace Ko and Albert Li were all aware of this by other means.

44.  I now turn to the resolution of the charges.  I will start with Charge 1.

The issue

45.  The defence succinctly set out the issue as follows:  have the prosecution proved beyond reasonable doubt that the defendant, by deceit and with intent to defraud, failed to disclose his 30 per cent interest in Hong Kong Infix which carried out the design work in conjunction with Shanghai Infix on the 18 Kabu restaurants pursuant to the 13 relevant contracts.  If the court finds itself in the position that it cannot be sure of this issue then the defendant must get the benefit of that doubt.

46.  The defendant’s reasons for the failure to disclose his interest were that firstly, they - that is the other directors/shareholders - knew about it.  Second, that he was told he only needed to disclose his interest in the food and beverage interests.  It is said that the prosecution’s evidence, especially that of PW1 which countered these claims is unreliable and should be ignored.  And that besides the evidence of the defendant there was the evidence of DW4, Cecilia So, that PW1 had been informed by an area manager that Sasaki worked for the defendant, who was the boss of the design company.

47.  The defence appear to concede that the defendant was required to disclose his interest in Hong Kong Infix under section 162 of cap 32, this being a summary offence.  However, this offence as charged, requires this to be done by deceit with intent to defraud.  The deceit, which is the lack of disclosure, becomes a false representation if done dishonestly. Dishonesty, being defined by what is called the Ghosh test is, is it dishonest by the standards of reasonable members of the community and if so did the defendant realise this?

48.  The defence submission in this case appears to be that given the fact that PW1 knew of the defendant’s interest in Hong Kong Infix and given that he had been told not to bother disclosing this kind of interest, then a right thinking or reasonable and honest member of the community would not consider his nondisclosure to be dishonest.  And if the court considered as a reasonable honest man in the community would think this was dishonest it would be clear from the defendant’s evidence and his actions that he subjectively did not consider himself to be acting dishonestly and he would therefore be entitled to be acquitted.

49.  It is first necessary to resolve any dispute on the facts.  In issue between the parties were the factual issues whether the defendant was ever told that he needed to disclose his non-F&B interests. Or, put more correctly, was the defendant ever told that he only needed to disclose his F&B interests?  That he told LHG CEO, Albert Li, about his Hong Kong Infix connection and that the other directors/shareholders were aware of this interest.

50.  There was also the evidence of DW4 that PW1 knew Mr Liu was the boss of Hong Kong Infix and that Mr Sasaki worked for Mr Liu. PW1’s evidence, which was challenged, was that all the directors were aware of their requirement to disclose their interest and each director had a specific responsibility with regard to their own declaration.  PW1 said he was only aware of the defendant’s interest in Hong Kong Infix at the beginning of 2012 when the defendant confirmed his 30 per cent interest in the last three covertly recorded meetings.

51.  The defence say that PW1’s evidence on the matter, and generally, should be rejected.  They say that PW1 was evasive, particularly in his refusal to answer questions about whether he sat as a member of the Liquor Licensing Board and headed an application relating to a business in which his father had an interest and had failed to disclose a conflict of interest.  And also whether he proposed to Grace Ko that members of that board should be treated to a meal.  It was also said that PW1 must have been aware of the fact that Hong Kong Infix’s address was the same as the defendant’s Mongkok office and that PW1 had in fact visited that premises.

52.  It was said that the declarations that had been signed by directors were supplied by Kabu’s accountants and staff and were full of errors.  In one case, the defendant had been described as “Liu Kit-man, Grace”, which the defendant says bore out the defendant’s evidence that he trusted those preparing the documents and never read them himself; that he simply signed the documents because it was a requirement of the company.

53.  As the defence submitted, in these areas the issue of credibility lies between PW1 and the defendant, and also with Grace Ko. And Cecilia So, also been involved to a lesser extent on the issue of the state of PW1’s knowledge of the defendant’s business interests.

54.  The defence pointed to the defendant’s clear record; submitted this was an important factor.  They also referred to his record as a businessman, his obvious commercial ability, his undisputed intelligence, his ability to master the language and culture of Japan.  They said the court should have regard to his general demeanour in court, his clear answers and lack of subterfuge.  They contrasted this with Simon Wong’s attitude that they said was pre-emptory, his reluctance to answer questions that bore on his own credibility.  They also point to the fact that in this area of Japanese restaurants, that LHG would need Mr Liu more than he needed them.  He was clearly the expert on Japanese food, design of restaurants and use of language; that they would clearly defer to him in these areas.

55.  Mr Liu was an established businessman and he would clearly require that his existing businesses be allowed to continue. Furthermore, Hong Kong Infix was not actually in competition with LHG.  It was simply another kind of supplier and it was possible that Mr Liu thought it need not be disclosed.

56.  Having considered all the evidence I found there was a clear and unambiguous duty upon the defendant to declare his interest in Hong Kong Infix.  In both the declaration of interest made pursuant to section 162, cap 32, and also the letter of representations regarding director’s emoluments, loans and other transactions as required.

57.  It is not disputed that the defendant never made any such declaration in respect of Hong Kong Infix.  I found that if PW1 did not know of the defendant’s interest in Hong Kong Infix until early December 2012, neither he nor Grace Ko was made aware of his interest in the amount of evidence by DW4, whose evidence on this I reject.

58.  I also reject the defendant’s evidence that he was told or believed that he only had to declare his interest in F&B interests in the relevant declaration.  I also reject the defendant’s evidence that he was unaware of what was the obvious conflict of interest in the 13 contracts between Kabu and Hong Kong Infix.  My reasons are as follows: there was clear evidence from PW1 as to the requirement to make a declaration as to their interests and in respect of any related transactions.  Furthermore, he specifically denied he knew of the defendant’s Hong Kong Infix connection.

59.  The transcripts of the meetings in January, February, March, also clearly show PW1 was unaware of the defendant’s position in Hong Kong Infix until then.  On 11 January 2012, PW1 specifically asked the defendant if he has any private business; the defendant only refers to Love & Love and All Global.  In a meeting of 5 March 2012, the defendant admits holding 30 per cent of the shares in Hong Kong Infix.  PW1 says he never heard of the defendant’s shareholdings, as does PW2.  I find this to be a genuine reaction and genuinely states their position and is consistent with PW1 and PW2’s evidence in court.

60.  PW1’s evidence that the requirement for the disclosures was supported by other evidence in court, namely, the documentation and the evidence of those who prepared that documentation.  I did note PW1’s reluctance to answer questions in respect of the matters of the Liquor Licensing Board, but I consider that peripheral to his evidence against the defendant.  Overall, I find PW1 to be truthful and reliable as to his dealings with the defendant.

61.  I note that the prosecution did not call Mr Albert Li, who allegedly told the defendant he need not disclose interests of a non-F&B nature.  However, I find the defendant’s evidence on this not to be credible, to be improbable and not worthy of belief.  I find there was clear evidence to reject the defendant’s statements and evidence that he believed, for whatever reason, that he need not make the declaration regarding Hong Kong Infix.

62.  The first matter of significance is Hong Kong Infix was incorporated on 19 August 2008, shortly after Kabu was incorporated on 4 August 2008.  It would appear that Hong Kong Infix was incorporated to meet likely demand from Kabu.  Secondly, that although the defendant does not dispute that he never declared his interest to Kabu, he did however make the necessary related party disclosure in the accounts of Hong Kong Infix.  We can see that in P109.  The transaction between Kabu and Hong Kong Infix is disclosed as a sale to a related company.

63.  The defendant’s explanation that he made the declaration for Hong Kong Infix because he worked with the accountant for Hong Kong Infix for many years, but was unfamiliar with Kabu’s accountant is not worthy of belief.  The defendant was obviously clearly aware of the need to declare such transactions.  His evidence to the contrary is incredible and not worthy of belief.  It is clear the defendant has been untruthful on this issue.  I reject his evidence that anyone every told him he only had to declare restaurant-related business.  The defendant was clearly aware of his requirement to disclose.  His evidence of relying upon what he was allegedly told by others as to disclosure is false.

64.  I also noted DW4’s evidence.  She was employed by the defendant and had been so employed since 2003.  She clearly wished to assist the defendant and her evidence had the nature of being contrived.  I noted PW1 and PW2’s denial of these events and their observation they would not have asked such questions of a person such as DW4.  Such inquiries would no doubt be properly directed to the defendant.  I perceive DW4 to be unreliable, I found no reliance could be placed on what she said.

65.  I found the defendant was under a duty to disclose to Kabu his interest in Hong Kong Infix.  He was particularly at that time under a statutory duty to make disclosure.  I found the defendant was at the time well aware of these requirements.  The defendant’s concealment of his interest in these circumstances is therefore a false representation.  The deceit of a false representation must be done dishonestly.  Was the defendant’s conduct in these circumstances dishonest by the standard of reasonable and honest people?  The answer to this must be in the affirmative.

66.  The defendant will be taking a reward from both ends of the transaction in respect of any payments to him from Kabu and Hong Kong Infix.  The failure to disclose where there is a duty to disclose in such circumstances must be dishonest by those standards.  Did the defendant, himself, realise he was dishonest by these standards?  Again, the answer to this question must be in the affirmative.

67.  The concealment was not due to inadvertence, negligence or misunderstanding.  The defendant stood to make undeclared moneys off the contracts.  He understood it was dishonest and sought to hide his position in Hong Kong Infix.  Was this done with an intent to defraud?  The failure to disclose meant that the design work obviously went to Hong Kong Infix to the exclusion of the assessment of other companies.  Thus, Kabu was prejudiced in any attempt it might make to secure a more advantageous bid was also a clear financial benefit to Hong Kong Infix.

68.  The persistence of the defendant’s failure to disclose in these circumstances leads to the inevitable conclusion that he was acting dishonestly and was aware of that.  I find for those reasons that the prosecution has proved the 1st charge beyond reasonable doubt.  The defendant is convicted on that charge.

69.  I turn to the 2nd charge.  The prosecution case is that the bill signed and annotated by the defendant is false to a material degree.  That meal had nothing to do with Kabu’s business in that the possible business relationship with Eat Walk as they were, never developed.  They say the defendant’s repayment of the money shows this is a false document.  The prosecution point to the fact the defendant later developed a business relationship with Eat Walk after he left Kabu’s employment.  Regardless of what the defendant said about this, nevertheless the prosecution case still requires an inference to be drawn that the document contains a false statement.  Given that the CEO of Kabu was required to entertain potential suppliers, the fact that a meal did not later lead to a contract even where there may be later business dealings by the defendant with those people does not in my view provide sufficient evidence to prove to a criminal standard the document was false.  This must happen frequently.

70.  This charge will be dismissed for want of proof as a false document cannot be the only irresistible inference to be drawn from the primary facts.  The charge is dismissed.