HKSAR v. TSE YIM TONG, KINO

DCCC 315/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 315 OF 2010

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REASONS FOR SENTENCE

1.  The Defendant has been convicted after trial on 7 counts of fraud contrary to Section 16A of the Theft Ordinance, Cap. 210, namely charges 2, 4, 6, 8, 10, 12 and 14 on the indictment, and 21 counts of agent using document with intent to deceive his principal, contrary to Section 9(3) of the Prevention of Bribery Ordinance, Cap. 201.

2.  Full particulars of the offences are set out in the verdict that I have delivered. 

3.  Briefly, the facts are that at the material time, the Defendant was employed  as the Senior Operations Manager of the Japan Department by Morning Star Travel Services Ltd. (hereinafter referred to as MSTS).  MSTS operated as a travel agency providing travel services to customers including sightseeing tours to Japan. The Defendant had been employed by MSTS between 1/4/1995 and 31/5/2009.  He was also the in-house land operator. The  Defendant’s duties included but was not limited to the allocation of Japan guided tours to freelance tour guides, the selection of and liaison with service providers in Japan such as restaurants and souvenir suppliers, the preparation and submission of the gross profit analysis reports (hereinafter referred to as the GPA reports) for each Japan tour detailing the expenditure incurred in the tour  to the MSTS accounts department.  Tours to Japan arranged by the Defendant as the in-house land operator of MSTS were led by freelance Hong Kong tour guides. The Defendant was responsible to assign the tours to the freelance tour guides.   The income of the freelance tour guides came from three sources – tips from customers of the tours, profit from the non-specified items of consumption, referred to as options, and gifts from the Japanese shops.  The Defendant asked each of the freelance tour guides to give him a sum ranging from ¥250 to ¥600 per customer attending the tour. These sums were referred to as ‘head tax’.  The amount of the ‘head tax’ was fixed by the Defendant depending on the type of tour and the number of tour members. No receipt was given to the tour guides for the ‘head tax’ paid by them to the Defendant.  Apart from the ‘head tax’, the Defendant also asked the freelance tour guides to pay to him a portion of the profit they made from selling optional items to customers on the tours, which was referred to as ‘options rebates, at the end of each tour.  These rebates ranged from ¥500 to ¥1,000 per item, depending on the type of goods sold. No receipt was given by the Defendant to the tour guides for the ‘option rebates’ he received from the tour guides. When the tour was completed, pursuant to the Defendant’s instructions, the freelance tour guide would put the ‘head tax’ and the ‘options rebates’, usually in cash in Japanese yen, into an envelope and give it to the Defendant.   The freelance tour guides were deceived by the Defendant in that he misrepresented to them that the said ‘head tax’ and ‘options rebates’ paid by them to the Defendant would be given to MSTS and he was receiving these on behalf of MSTS and he had permission so to do, thereby inducing them to give him these monies, but in fact he did not give this money to MSTS but kept the monies for his own use.  The total amount he deceived from the freelance tour guides in respect of the 7 fraud charges was ¥616,950.

4.  Before the commencement of a tour, the designated tour guide was provided with an advance payment of money in travellers cheques from the Accounts Department of MSTS to meet expenses incurred in Japan. Upon return, the tour guide was required to return to the Defendant any surplus money together with an expenses summary sheet, hereinafter referred to as the ESS, a form used by the Japan Department wherein the tour guide listed all the expenses incurred and paid for on the Japan tour and attached all supporting invoices and receipts issued by the service providers in Japan.  The tour guide would check the ESS and any receipts/invoices with the Defendant at his office, and the unused portion of the advance, if any, was returned to the Defendant.  If there was a shortfall, the tour guide would be reimbursed by the Defendant.  After he received the ESS with its supporting receipts/invoices,  the Defendant would prepare the GPA report for the tour which he would then hand to the Accounts Department of MSTS for verification of the expenditure and for accounting purposes.  The Defendant signed on each GPA report, and staff in the Account s Department  would check the GPA report and the corresponding invoices/receipts, and used the information provided to calculate and verify the expenditure on the tour, and the GPA report was kept as an accounting record of MSTS.  In preparing the GPA reports, the Defendant inflated the expenses incurred on the tours.  The Defendant, being an employee of MSTS and thereby an agent of MSTS, did, with intent to deceive his principal, MSTS, use a document, namely the GPA report, a document in which MSTS was interested, and it contained statements which were false, erroneous, or defective in  a material particular, in that the expenses reported had been inflated, and this was intended to deceive MSTS.  The total amount involved  in the 21 charges of agent using a document with intent to deceive his principal was  ¥923,026.

5.  The Defendant has a clear record. Mr. Chung, on his behalf, presented extensive mitigation.  He also handed up a bundle of documents, including medical reports and letters from friends and family members of the Defendant.  After hearing mitigation,  I adjourned the matter, calling for a background report and a medical report on the Defendant, remanding the Defendant in custody. When the matter resumed before me on Friday 17^th December, 2010, those reports were before me.  After hearing further submission   from Mr. Chung, I adjourned the matter until this afternoon. Mr. Chung indicated that the Defendant would make full restitution to MSTS, and he has written a letter to the Court, dated 21^st December, 2010, confirming that his instructing solicitors have sent a cheque in the sum of HK$105,818 to MSTS, which is the equivalent of the amount in yen involved in all the charges.

6.  The background report which is before me sets out the background of the Defendant in detail. He is now aged 59 years. He is married with 2 sons.  His wife, who is Japanese, works as an assistant manager at the Japanese Chamber of Commerce & Industry, while his elder son, aged 23 years, is a financial service worker. His younger son, aged 18 years, is in his first year at university in the UK. The Defendant left school after Form 3, and worked at various jobs, and even had his own businesses. In 1982, he joined MSTS initially as a tour guide. He quit his job in May, 2009 because of ill health. At that time, he was the Senior Operations Manager in charge of the Japan Department.  It is of note that although the offences came to light in January, 2008 when the Defendant was arrested by the ICAC, he continued to be employed by MSTS until he himself resigned because of his ill health.  The background report pays testament to his hard work throughout the course of his life and his responsibility to his family.  

7.  The medical report dated 9 December, 2010, from the Senior Medical Officer of the Lai Chi Kok Reception Centre, is not very helpful – I am told by Mr. Chung that in fact it is incorrect where it refers to the Princess Margaret Hospital. In fact, it should be the Queen Mary Hospital. There is in the bundle of documents handed up in mitigation 2 medical reports from Dr. Stephen W.K. Cheng, dated 27 April, 2010 and  17 November, 2010, which sets out his medical history in great detail.  His medical problems include a dissecting thoracic aortic aneurysm, post endografting with endoleak, and partially compromised cerebral circulation from occlusion of a bypass limb, he requires monitoring, and possible surgery in the future.  Clearly, he is not in good health, and I am told that during this remand,  he was admitted in the Queen Elizabeth Hospital.

8.  Mr. Chung produced 15 letters of support and mitigation from various people, including from the Defendant’s wife and 2 sons, his younger sister, and younger brother,  from directors of the Japan National Tourism Organization, from friends and former colleagues and from charitable organizations.  I have read those and taken those into account.

9.  He has also contributed to the community, as reflected in the letters before me, from representatives of such organizations as the Po Leung Kuk, the Yan Oi Tong and the Lions Club. He has also contributed greatly to the development of tourism between Hong Kong and Japan.  The Defendant is not only a man of previous clear record, but a man of positive good character, supporting the less fortunate and needy financially and giving his time and effort in helping them.  This goes to his credit and I have taken this into account.

10.  The Defendant had now made full restitution to MSTS, and did so voluntarily, and I have borne that in too mind when considering sentence. The sums involved are also relatively modest. As the monies have been repaid, MSTS has suffered no loss by what the Defendant did.

11.  In sentencing, I take into account the whole circumstances of the case, including its nature and facts, the background of the Defendant and mitigation put forward on his behalf.

12.  These are serious offences, involving breach of trust. Mr. Chung referred to HKSAR v. Lee Lai-kit [2009] 6 HKC 265, where the Court of Appeal re-affirmed that for sums of less than $250,000, the starting point is one of less than 2 years. But apart from the amount involved, other factors are also to be considered. In R v. Barrick (1995) 81 Cr. App. R. 78, it was held that the Court should also take into account the following matters :

‘(i) the quality and degree of trust reposed in the offender including his rank;

(ii) the period over which the fraud or the thefts have been perpetrated;

(iii) the use to which the money or property dishonestly taken was put;

(iv) the effect upon the victim;

(v) the impact of the offences on the public and public confidence;

(vi) the effect upon fellow-employees or partners;

(vii) the effect on the offender himself;

(viii) his own history;

(ix) those matters of mitigation special to himself such as illness; being placed under great strain by excessive responsibility or the like; where, as happens, there has been a long delay, say over two years, between his being confronted with his dishonesty by his professional body or the police and the start of his trial; finally, any help given by him to the police.’

These are all matters that I have considered.

13.  The Defendant was held in high regard at MSTS, where he had worked for over 20 years.  He had helped to establish the Japan Department and had contributed greatly to the development of that department.  The offences he has been charged with took place over a period of about 4 months.  There would appear to have been little impact on MSTS – they continued to employ the Defendant even after the offences came to light, and it was the Defendant who resigned himself because of ill health. MSTS has suffered no loss as there has now been full restitution. The impact upon the Defendant as a result of these convictions can be said to be significant – he has lost his previous clear record.  He has lost his good name in the industry, that he has spent years building up. These offences have been hanging over his head for over 2 years. He is also not in good health. 

14.  Mr. Chung emphasized that full restitution would be made to MSTS at the last hearing, which has now been done, and so MSTS has suffered no loss. MSTS continued to employ the Defendant for more than a year after the offences were disclosed, and it was he who resigned himself because of his ill health.  In his vive voce evidence, the Defendant emphasized that the monies he received was used to cover expenses for the Japan Department to entertain representatives from the Japanese service providers in Hong Kong and other such.  All the tour guides in their testimony also said that in the trade, payment of such monies was not unusual. Mr. Chung suggested that a suspended sentence was an option rather than immediate imprisonment.

15.  These are serious offences and warrant custodial sentences.  Having considered all the circumstances and bearing in mind totality, the Defendant is sentenced as follows:

1: On each of the fraud offences, namely counts 2, 4, 6, 8, 10, 12 and 14 on the indictment, I take a starting point of 12 months’ imprisonment, and discount this to 10 months’ imprisonment to reflect the restitution that has been made and the Defendant’s positive good character.

2: On each of the offences of agent using a document with intent to deceive his principal, namely counts 15 to 35 on the indictment, I take as a starting point 9 months’ imprisonment, and discount this to 7 months’ to reflect the restitution made and the Defendant’s positive good character.

16.  These are all separate and distinct offences committed over a period of four months. But I do bear in mind totality.  I shall order that the sentences on the fraud charges be served concurrently, and  that of counts 15 to 35 be served concurrently, but 2 months are to be concurrent with the sentences on the fraud charges, and the rest consecutive,  that would be a total of 15 months’ imprisonment.

17.  I have considered whether there are any exceptional circumstances to warrant my suspending these sentences – serious health problems  ‘are capable of being exceptional circumstances’: R. v. Ullah Khan [1994] 15 Cr App R (S) 320, 322. In R. v. Eileen Stevens [2003] 1 Cr App R (S), 32, 35, McKinnon J said:

“The only question is whether there are present exceptional circumstances, justifying the exercise of the power to suspend the sentence. The learned judge did not expressly consider the question of exceptional circumstances in sentencing the appellant, although he was asked to do so. Whether he did in fact do so or not, it is our clear view that the very serious heart condition of the appellant, with a poor prognosis and the real probability of a custodial sentence causing many problems, as her general practitioner put it, even possibly a further heart attack, do amount to exceptional circumstances.’

18.  The Defendant’s health obviously is not good – he has spent much of the remand so far in the hospital – the medical reports disclose the serious nature of his heart condition, and the prognosis does not appear to be good.  In my view, this does amount to exceptional circumstances warranting suspending the sentence of imprisonment. The Defendant’s sentence shall be suspended for 2 years.