HKSAR v. LIONEL JOHN KRIEGER AND ANOTHER

CAC C 99/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 99 OF 2012

(ON APPEAL FROM DCCC NO. 316 OF 2010)

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Hon Stock VP (giving the judgment of the Court):

Introduction

1.  On 29 February 2012, the applicants were convicted after a trial in the District Court by Judge Geiser of conspiracy to offer advantages to an agent, contrary to section 9 (2) (a) of the Prevention of Bribery Ordinance, Cap. 201 (‘the Ordinance’) and section 159A of the Crimes Ordinance, Cap. 200.  Each was sentenced to 3 years 3 months’ imprisonment.  They now seek leave to appeal conviction.

2.  The particulars of the offence alleged that the applicants:

“ … between the 1^st day of January 2002 and the 6^th day of December 2006, in Hong Kong, conspired together and with Frederico Marques Nolasco da Silva to, without lawful authority or reasonable excuse, offer advantages, namely a total amount of about MOP (Macau currency) 29 million (equivalent to about $28 million Hong Kong currency) to an agent, namely, Ao Man Long, the then Secretary for Transport and Public Works of the Macao SAR Government, as an inducement to or reward for otherwise on account of … Ao … doing acts in relation to his principal’s affairs, namely, assisting Companhia de Sistemas de Residuos Limitada in the award and renewal of public cleansing contracts between the said Companhia de Sistemas de Residuos Limiada and the Macao SAR Government.”

3.  The individuals and corporate bodies in the story are:

(1) Ao Man Long (‘Ao’), throughout the period of the alleged conspiracy the Secretary for Transport and Public Works in Macau.  He was corrupt, seeking and gaining advantages for facilitating the award of public works contracts.  In January 2008 he was convicted in Macau for corruption offences and sentenced to 27 years’ imprisonment.

(2) Frederico Nolasco da Silva (referred to in the court below and therefore here as ‘Nolasco’), a Macau businessman who was a shareholder in a family company there called H Nolasco ET Cia Limitada (‘Nolasco Ltd’).  He was a director of Companhia de Sistemas de Residuos Limitada, the Macau company mentioned in the particulars of offence as the company designated to be the beneficiary of Ao’s favours in response to bribes.  Nolasco is named in the charge as a co-conspirator.  He was the main prosecution witness in the trial of these applicants.  He testified under an immunity.

(3) Swire BFI Waste Services Ltd (‘Swire BFI’) a limited company incorporated in Hong Kong and a subsidiary of the Swire Group of companies.  In 1992, Swire BFI entered upon an agreement with the Macau government for the removal and cleansing of waste in Macau.  This contract was been referred to in the proceedings below as Contract A.

(4) Companhia de Sistemas de Residuos Limitada (‘CSR’) a joint-venture company formed pursuant to a joint-venture agreement dated April 1992 between Swire BFI and Nolasco Ltd; the company in whose favour cleansing contracts were awarded.  Swire BFI held 80% of the shares in CSR; Nolasco Ltd held 20%.

(5) Swire SITA: in 1998 Swire BFI changed its name to Swire SITA Waste Services Limited (‘Swire SITA’), a joint-venture between the French SITA Group and a subsidiary of the Swire Group. 

(6) Lionel Kreiger, the first applicant, was a director of Swire SITA from about January 1988 to about July 2004 and at all material times the President of CSR.

(7) James Tam, the second applicant, joined the board of Swire SITA in September 2002 and was a director of CSR.

(8) Polymile Limited (‘Polymile’), a Hong Kong registered company in which the majority shares were owned by Nolasco’s wife.  Nolasco was a director of and secretary to Polymile.

The contracts

(1) Contract A: removal and cleaning of waste

4.  In July 1992, Swire BFI was awarded a seven-year contract by the Macau Government for the removal and cleaning of waste in Macau.  This contract was worth MOP 505 million.  It has been called Contract A.

5.  Contract A was renewed in March 1999, in favour of CSR, for a further seven years.  The contract sum was MOP 719 million.

6.  Contract A was further renewed in August 2006, again in favour of CSR, for yet a further seven years.  This time, the contract sum was MOP 928 million.

(2) Contract B: hazardous waste

7.  In December 2005, the Macau Government awarded to CSR a hazard waste contract, that is to say, a contract for the construction, operation and maintenance of a station for the treatment of special and dangerous residue.  This contract was worth MOP 96,460,821.  It has been called Contract B.

(3) Contract C: the pilot project

8.  In June 2006, the Macau Government awarded another contract to CSR in the form of a pilot project for automatic solid waste collection in Macau.  This contract was worth MOP 129 million.

Payments by CSR to Nolasco and Polymile

(1) in respect of Contract A

9.  It is common ground that in respect of each of these contracts, including the renewals of Contract A, agreements were made whereby CSR was to pay substantial sums to Nolasco Ltd and, latterly, Polymile; and that, for the most part, the sums were paid.

10.  In August 1992 an agreement was made between Kreiger on behalf of CSR and Nolasco Ltd for the payment by CSR of MOP 7 million in consideration of assistance provided by Nolasco Ltd in securing the waste cleansing contract. The suggestion was that the service of an experienced Macau operator was valuable in terms of its knowledge of local cost structures, tender preparations, documentation and general advice[1]. This payment was made.

11.  By virtue of an agreement dated 3 August 1999, between Kreiger on behalf of CSR and Nolasco Ltd, MOP 7 million was paid for Nolasco Ltd’s services in assisting towards securing the 1999 renewal of Contract A.  It is to be noted that this commission was the same as that agreed for the 1992 assistance, even though the value of the 1999 agreement was greater by about MOP 200 million.

12.  It will be remembered that the third phase of Contract A, the second renewal, came into effect in August 2006.  In respect of this renewal, there was no agreement with or payment by CSR to Nolasco Ltd for MOP 7 million but, instead, an agreement dated 28 January 2006 between CSR and Polymile for a payment by CSR of MOP 20 million plus 5% for administration cost (a total therefore of MOP 21 million), purportedly in consideration of Polymile’s assistance in securing this second renewal.  This contract was signed by Tam on behalf of CSR and by Nolasco’s wife on behalf of Polymile.  The sum of MOP 21 million was payable in three equal yearly instalments of MOP 7 million.

13.  The first instalment of MOP 7 million was paid on 27 February 2007 to Polymile by Swire SITA on behalf of CSR.

14.  An invoice was presented by Polymile for the second instalment but this was sent after Ao’s arrest and was not paid.

15.  The prosecution case was that this agreement was a cover for what was intended to be a bribe to Ao in the sum of MOP 15 million for the renewal of Contract A.

(2) in respect of Contracts B and C 

16.  There was an agreement dated 20 November 2005 whereby:

(i) in respect of the hazardous waste contract, Contract B, CSR was to pay Polymile MOP 9.45 million; payable as to MOP 3 million within 14 days of the award of the contract; the remainder in pro rata instalments within 14 days of the receipt by CSR of interim payments from the Macau Government; and

(ii) in respect of the pilot project agreement, Contract C, CSR was to pay Polymile 5% of the capital works value of that contract, which payment was to be made on a pro rata basis within 14 days of receipt by CSR of interim contract payments.

17.  The equivalent Hong Kong dollar sum of MOP 9.45 million, the sum agreed in respect of Contract B, was paid to Polymile by Swire SITA on behalf of CSR on 20 March 2006.

18.  In relation to the amount due to Polymile in respect of Contract C, Swire SITA, on behalf of CSR, paid Polymile on 8 September 2006 the Hong Kong dollar equivalent of MOP 7.8 million which was about $1 million more than the agreed 5% of the value of the contract works.

19.  The prosecution case in respect of the payments made to Polymile in respect of Contracts B and C was that:

(1) the payment to Polymile of (the equivalent of ) MOP 9.45 million in respect of Contract B was an intended payment of MOP 8 million to Ao as a bribe (less MOP 400,000 to Polymile as agent’s fee); with MOP 1.45 million to Nolasco (as his commission of MOP 1 million and a provision for tax);

(2) the payment to Polymile of (the equivalent of ) MOP 7.8 million in respect of Contract C was an intended payment of MOP 6.45 million to Ao, with MOP 1 million for Nolasco and the balance as a provision for tax.

The contending cases

20.  The prosecution case was that Kreiger and Tam and Nolasco were pressured by Ao to pay him illicit advantages to ensure the renewal of Contract A and the award of Contracts B and C; and that, in response to that pressure, the three named co-conspirators agreed to offer Ao the sums of MOP 15 million (for the renewal of Contract A); MOP 8 million (for the award of Contract B); and MOP 6.45 million (for the award of Contract C) – hence the sum of “about MOP 29 million” asserted in the charge as the total of the advantages agreed to be offered to Ao.

21.  It is right to record that it was not part of the prosecution case, and there was no evidence to suggest, that either Kreiger or Tam benefited or intended to benefit personally from or in connection with bribes offered to Ao. 

22.  It was Nolasco’s evidence that in March 2006 he handed to Ao, in Ao’s office in Macau, five cash cheques bearing dates between 27 March and 10 May 2006, which were drawn upon Polymile’s HSBC account, for a total sum of HK$7.37 million (the equivalent of MOP 7.6 million [MOP 8 million less the MOP 400,000 earlier referred to]); and it was common ground that on 11 May 2006 five cash cheques drawn on Polymile’s HSBC account, dated between 27 March and 10 May, were deposited into a Hong Kong HSBC account in the name of Ao Veng Kong, Ao’s father.

23.  The applicants did not testify but each gave lengthy interviews after arrest.  The essence of their case, as it emerged from these interviews, is that there was no agreement to offer advantages to Ao; that the payments made to Nolasco Ltd and to Polymile were payments intended for those recipients only in consideration of legitimate services rendered by them in providing concrete and helpful advice towards the securing of the contracts, such as one might genuinely seek from those familiar with local factors and requirements.  If and in so far as it had been proved that Nolasco has indeed bribed Ao from monies paid by (or on behalf of) CSR to Nolasco Ltd and Polymile, that was a course upon which he alone had embarked to secure the award or renewals of the contracts in favour of CSR, of which he was a substantial shareholder, so as thereby to enhance his record of success and to benefit his or his family company’s pocket.

24.  Thus it was that the judge crystallised the issue of fact as follows:

“Did the two defendants enter into a conspiratorial agreement with Nolasco to bribe Ao in order to secure the three contracts, or had Nolasco himself, acting alone and without the knowledge of the two defendants, come to a dishonest and corrupt agreement with Ao?”[2]

25.  Although that was the central issue of fact which fell to be determined at the end of the trial, another issue of central importance to the present applications had been decided at the end of the prosecution case which was a mixed question of fact and law.

26.  At the close of the prosecution case, leading counsel for each of the applicants advanced a submission of no case to answer upon the contention that taking the prosecution case at its highest at that stage, namely, assuming Nolasco’s testimony to be true, the prosecution evidence showed that there was a design to make an offer in Macau to Ao; and that a conspiracy to commit this offence – the offence created by section 9(2) of the Prevention of Bribery Ordinance – in another jurisdiction was not an offence known to the law of Hong Kong.

27.  The agreement to pay Ao MOP 15 million (for the renewal of Contract A); MOP 8 million (for the award of Contract B); and MOP 6.45 million (5% of the capital works value of Contract C), was said to have been agreed as between Kreiger, Tam and Nolasco in Hong Kong in September 2005; and a draft agreement to this end was sent on 20 September 2005 as an attachment to an e-mail from Tam to Nolasco, who had by then returned to Macau, with a view to its onward transmission by Nolasco to Ao.  The e-mail and its attachment was exhibit P8 which, on the basis of the case presented by the prosecution, became the key document in the case.

28.  The relevant offence creating provision, section 9 (2) of the Ordinance, makes it an offence to offer an advantage to an agent as an inducement to the agent showing favour to any person in relation to the agent’s principal’s affairs or business.  The question engaged by the no case submission was where the contemplated offer of advantages was to be made: in Hong Kong (in which case the offence was one known to Hong Kong law); or in Macau (in which case it was not).

29.  The prosecution case was that the P8 offer was in fact made in Hong Kong, as was intended; and with this the judge agreed.

30.  The judge appeared in the ruling to find, in the alternative, that there was in any event jurisdiction to try the case in Hong Kong since a substantial measure of the activities constituting the crime had taken place in this jurisdiction.

31.  In his Reasons for Verdict, the judge summarised the evidence in some detail and concluded that the evidence of Nolasco was impressive evidence which he believed and which in certain material respects was supported; and, at the same time, he placed no weight upon the exculpatory aspects of the statements made by the applicants in the course of their respective interviews.

The grounds of appeal

32.  The first applicant asserts:

(1) that the judge erred in rejecting the no case submission;

(2) that the evidence of Nolasco was palpably unreliable; that the judge ought not to have accepted it and failed to provide adequate reasons for accepting it in the face of stark indicia of unreliability; and

(3) that the judge wrongly rejected the exculpatory facets of the first applicant’s interview statements.

33.  The grounds of appeal on behalf of the second applicant are, in essence, the same as the first two on behalf of the first applicant.

The evidential background to the ‘offer’ issue

34.  The issue engaged by the first ground of appeal – where the September 2005 offer was to be made and, if not in Hong Kong, whether the offence was committed because a substantial measure of the activities constituting the offence took place in Hong Kong – is fact-sensitive, for which reason some of the evidence requires summary.

35.  On an occasion in 2002 or 2003, according to Nolasco, he received a telephone call from Kreiger.  Krieger told him that he had received a telephone call from Ao who said that he was expecting “something”, meaning that he was expecting a gift, a bribe, in anticipation of the renewal of Contract A in 2006.  Krieger seemed quite worried and Nolasco told him to wait and see; there was nothing to be done.

36.  A few months later Kreiger called Nolasco again saying that he had received a further telephone call from Ao still insisting on “a little something” which he, Ao, was expecting.  Krieger was very worried and said that he was very surprised at Ao talking about such things over the telephone.  Matters were left there; there was still some way to go before the contract fell for renewal.

37.  Payments to CSR by the Macau Government under the current contract were monthly in the region of MOP 7 million to 8 million.  But in 2003 these payments fell into arrears for about 4 to 5 months; wherefore, according to this testimony, Kreiger asked Nolasco to ask Ao why this was happening.  So Nolasco went to see Ao; and Ao said he had not received a ‘gesture’ and wanted to have a meeting with Krieger because Nolasco was only a minority shareholder in CSR.

38.  The result was a meeting in the Mandarin Oriental Hotel in Macau between Ao, Nolasco and Krieger.  Ao asked Kreiger whether he was not aware that presents were given for contracts and Krieger said that there was no reserve for such a purpose.  According to Nolasco, Krieger wanted to stall Ao hoping that he would stop chasing for a bribe.

39.  A few months later, Ao asked for another meeting; and again the three met at the same hotel in Macau and this time Krieger told Ao that it was not possible to agree to his requests.

40.  In 2005 it became clear that CSR was to be awarded the hazard waste contract (Contract B); this because CSR had put in the lowest tender.  At about this time it was decided to propose to the Macau Government an automatic waste collection system as a pilot project; a proposal which was likely to render the bid for renewal of Contract A more attractive.  This was discussed by Kreiger, Tam and Nolasco.

41.  According to Nolasco, the three men had rather hoped that there was truth in a rumour that Ao was to leave his post but when Ao was reappointed, a joint decision was made for Nolasco to see Ao again to “feel out, to see what needed to be done in order for us to continue with the contract.”[3] Nolasco went to see Ao in his office in Macau; told him that CSR wanted to pursue the renewal of Contract A and intended to propose an automatic waste collection system for Macau.  Ao told Nolasco that he wanted to talk about the “little something”.  By the “little something”, he said, he wanted 5% of the value of the refuse collection contract.

42.  Nolasco’s testimony was that he reported this to Krieger and Tam at the Conrad Hotel in Hong Kong.  They calculated that Ao wanted something in the region of MOP 50 million which they considered to be exorbitant and Krieger and Tam said that they needed to consult their bosses which, he said, they did and were told that the amount was too high.  A discussion followed between the three of them about the consequences of losing the contracts and, according to Nolasco’s testimony, Krieger and Tam asked Nolasco to contact Ao again, to tell him that 5% was too much and to see whether Ao would reconsider and accept less.

43.  So, Nolasco went to see Ao again – in his office in Macau – and Ao’s response (to the suggestion that what he had asked for was a very large amount which would have to pass the eyes of various people) was: “Then you make a proposal and see what you can offer.”[4] The proposal was to be made in writing.

44.  So there was a further meeting in Hong Kong between Nolasco, Krieger and Tam.  Nolasco informed them that Ao wanted the transactions to be effected through a company which he, Ao, would appoint.

45.  This led to the drafting of an agreement then sent as an attachment to an e-mail from Tam to Nolasco.  This is P8 to which we have earlier referred[5] and which is said to constitute the offer upon which the prosecution pinned its case.

46.  The e-mail is dated 20 September 2005 and is addressed by Tam to Nolasco, copied to Krieger.  Its subject heading is: “Consultancy Agreement” and it reads as follows:

“Doobee,

A draft agreement for engagement of the business consultant that we discussed. Since this is a ‘result oriented’ engagement, we have decided to be ‘focus’ the deliverables on the results – contract award and payment – and leave all other details and expectations out of the Agreement. They won’t mean much according to the spirit of this engagement anyway. They are rather expensive so we hope that their service (or the effectiveness of their service) is commensurate with their fees!

James”.

47.  The attached draft agreement is undated save for the month September 2005 and is between Party A (identified as CSR) and Party B, the name of which is left blank.  Party B is described as “a consulting firm with expertise in the general affairs of business and government in Macau”; and it is said that Party A “wishes to engage Party B to secure the extension and expansion of its business in Macau on a strictly result oriented basis.”  Three “principal business opportunities” are identified: the first, the design, construction and operation of the Macau hazardous waste treatment plant; the second, the introduction of an automated vacuum collection system for solid waste; and the third, the renewal of CSR’s waste collection and cleansing concession contract.  For securing the hazard waste contract, a lump-sum fee of MOP 8 million is to be paid to Party B; the equivalent of 5% of the capital works value of the pilot project for the solid waste system is to be paid to Party B; and MOP 15 million is proposed for renewal of the existing contract.  These are the sums, according to Nolasco, which were to be paid to Ao.

48.  In Macau, Nolasco took the draft agreement to Ao who agreed with the sums proposed, made some minor alterations to the wording and asked for the agreement to be split into two agreements; one for Contract A; the other for Contracts B and C.

49.  A fresh draft was prepared[6] relating only to Contracts B and C which again Nolasco took to Ao in Macau and which, at Ao’s request, Nolasco signed but Ao did not: the identity of Party B was still left blank.

50.  Then Ao said he would not be nominating a company to be Party B, so, according to Nolasco’s evidence, Krieger and Tam said that Swire SITA had many subcontractors and they would provide a name for Party B.  But they changed their mind about that and asked Nolasco to see whether he could identify a company for the proposed purpose.  Nolasco agreed, and nominated Polymile.

51.  This culminated in an agreement dated 28 November 2005 between CSR and Polymile in respect of Contracts B and C, whereby Polymile was to be paid MOP 9.45 million for Contract B and the 5% for Contract C.  Although the agreement is dated November 2005, the judge found – and there is no issue as to this finding – that it must have been backdated because the identity of Party B was not finalised until March 2006.[7]

52.  As for renewal of Contract A, a separate agreement was drawn – although dated 28 January 2006, it too was signed (by Tam on behalf of CSR and by Nolasco’s wife on behalf of Polymile) some time later – with CSR and Polymile as the contracting parties.  It provided for payment to Polymile of MOP 20 million plus 5% “administration charge”.  This was said by Nolasco to reflect MOP 15 million intended for Ao, 5 million for Nolasco as part of the 7 million due to him, plus a tax element.

53.  It was Nolasco’s evidence that Polymile in fact provided no consultancy services.

54.  It was common ground that Contracts B and C were awarded and that Contract A was renewed.

55.  There are a few additional items of evidence which deserve mention:

(1) In December 2005, Tam reported to the Executive Committee of Swire SITA that Nolasco (Ltd) had indicated a desire for an increased shareholding in CSR, from 20% to 30% but that he had deferred discussion of this until after negotiation on the renewal of the contract had commenced.  This is relevant to the defence suggested, which was that the substantial increase in the commission (to Nolasco through Polymile) for the renewal of Contract A was an alternative to an increase in the share.

(2) On 20 March 2006, Swire SITA transferred HK$ 9,185,400 from its account with HSBC to Polymile’s HSBC account (this was the payment of MOP 9.45 million in respect of services relating to Contract B which had been awarded in December 2005); this was shortly followed by the delivery by Nolasco of the five cash cheques to Ao.  In due course CSR reimbursed Swire SITA.

(3) In September 2006, Swire SITA transferred HK$7,587,344.65 from its HSBC account to Polymile’s account, in respect of Contract C; the contract had been awarded in June 2006.

(4) Contract A was renewed in August 2006.

(5) Ao was arrested in Macau on 6 December 2006.

(6) On 27 February 2007, Swire SITA transferred HK$6,790,000 from its HSBC account to Polymile’s HSBC account in payment of the first tranche June for services relating to renewal of Contract A.

(7) In December 2007, Nolasco sent a Polymile invoice to CSR in the sum of MOP 7 million which was the second instalment due in respect of Contract A.  This invoice was not paid.

The evidence of Edith Yeung

56.  Edith Yeung is a certified public accountant and was at all material times Swire SITA’s finance manager, reporting to Kreiger and Tam.

57.  On 24 August 2006, she received an e-mail from Tam, copied to Kreiger, entitled “Macao Consultancy fees.”  In it, he asked her to ensure payment to Polymile of the sum of $7.826 m (he was not sure whether this was MOP or HKD).  In a reply dated 28 August, she pointed out that “… 5% per the Polymile contract clause” was MOP 6,453,663 which was less than the sum she was requested to pay.  She asked: “Do you have the breakdown of calculation to arrive this amount 7.8 m?  Pl advise. Many thanks.”

58.  It is obvious that this exchange was directed at payments supposedly due in respect of Contract C.

59.  Tam’s reply the following day, 29 August 2006 said as follows: “It is 5% plus lump sum 1m plus 5% of the 5% fee.  No tax yet.  See if it adds up properly.  Consultants are complicated … .”

60.  What the judge found significant[8] was the message by e-mail which Tam sent to Kreiger the following morning.  It read:

“You instructed Edith, specifying the sum. When asked by Edith (in the corridor), I verbally gave her a breakdown and included the MOP 1m.

This is a sensitive matter, for me personally and for the Company.

Edith’s inability to trust or respect people in the Company continues to alienate and to be dysfunctional.

We have known for a long time that she is unlikely to change the solution is becoming overdue….”

61.  She then asked in an e-mail to Tam a few days later whether there was any “any new agreement for the 1 million lump-sum fee?” but to this query she received no reply.

The no case submission

62.  At the close of the prosecution case, counsel for the applicants submitted that by virtue of s 159A of the Crimes Ordinance, Cap. 200, a person was only guilty of an offence of conspiracy if he agreed with another that a course of conduct was to be pursued which, if the agreement was carried out in accordance with the intentions of the conspirators, would necessarily amount to or involve the commission of an offence, meaning an offence triable in Hong Kong.  Yet the conspiracy contemplated by the three alleged co-conspirators, on the prosecution case at its highest, was that the offer or offers of advantages to Ao was an offer or were offers to be made to him in Macau; and that in contrast to the provisions of section 4 of the Ordinance, section 9(2) had no extra-territorial effect.

63.  The essence of the prosecution’s stance in response to the submission was, first, to rely on the definition of “offer” in s 2(2) of the Ordinance which, so it was contended, included but did not require communication of the offer to the agent.  The offer was made, it was submitted, by the conspirators amongst themselves “holding out agreeing or undertaking to make the payment” to Ao.  The proposal annexed to P8 was addressed to Ao and intended for him and “… the offer was communicated via an indirect means – namely the sending by e-mail via [Tam’s] e-mail account the consultancy agreement – Nolasco then took the agreement to Ao.  However the offer had already been made.  The method of communication (namely Nolasco delivering the agreement to Ao) does not place the underlying act outside the jurisdiction.  … The defendants agreed and formulated the proposal and this was done in Hong Kong.  When the three agreed to hold out, agreed to undertake to pay Ao by some indirect method (the consultancy agreement) the offence of conspiracy to offer an advantage was completed.  This arose out of the meeting in Hong Kong and as such the offence was committed in Hong Kong. …  In the present case it is arguable that the offence would have been committed even if Nolasco had not communicated the proposal to Ao.”[9]

64.  The second and alternative argument advanced by the prosecution at the no case stage, was that the evidence showed that a substantial measure of activities constituting the crime took place in Hong Kong and that, for that reason alone, the impugned conduct was indictable in Hong Kong.

The Ruling

65.  The judge’s ruling was delivered on 5 January 2012.  He summarised the submissions made on behalf of prosecuting counsel and then said this :

“16. Mr Mitchell submits that not only was the decision to offer advantages to Ao arrived at in Hong Kong, something which appears to be conceded by the defence[10], but the offer of advantages itself to Ao was made in Hong Kong and not Macau.

17. Section 2(2) of the Prevention of Bribery Ordinance … provides that a person offers an advantage if he, or any other person acting on his behalf, directly or indirectly gives, affords or holds out or agrees, undertakes and promises to give or hold out any advantage to or for the benefit of or in trust for any other person.

18. This definition is extremely wide and Mr Mitchell makes the point that the offer of advantages is the proposal contained in the draft consultancy agreement which was enclosed with the e-mail to Nolasco (exhibit P8) and which was clearly addressed to Ao. The fact that this was delivered and communicated to Ao by Nolasco in Macau is immaterial.

19. I agree with this.

20. Once again, I emphasise, if the evidence of Nolasco is to be believed, the offer of advantages to Ao emanated entirely in Hong Kong.

21. I note the comments of Stuart-Moore J (as he then was) in HKSAR v Chan Shing Kong & Anor, where he states, and I quote

‘there will be jurisdiction to try a case in Hong Kong where “a substantial measure of the activities constituting a crime” have taken place within Hong Kong, even if other activities connected with that same crime have occurred beyond the borders of its jurisdiction”’.

22. Further, in the case of B v ICAC [2010] HKCFAR 1, the Court of Final Appeal held that where an advantage is offered in Hong Kong, section 9(2) of the Prevention of Bribery Ordinance applies, even if the offeree is a public official of a place outside Hong Kong, and the actual forbearance concerned is in relation to his public duties in that place outside Hong Kong.

23. Moreover, it was held that since it is an offence to offer an advantage so described, then an agreement to do so is a conspiracy contrary to section 9(2) of the Prevention of Bribery Ordinance and section 159A of the Crimes ordinance, and is triable in Hong Kong.

24. I reiterate, if the evidence of Nolasco is to be believed, the offer of advantages to Ao was hatched and completed in Hong Kong and incorporated into the draft consultancy agreement, setting out the amounts to be paid with reference to the three contracts.

25. No offer was ever made in Macau; the completed offer was simply delivered to Ao in Macau by Nolasco.

26. I find a case for both defendants to answer on the charge.”

(Emphasis added)

The statutory provisions

66.  Section 159 A of the Crimes Ordinance states that;

“(1) Subject to the following provisions of this Part, if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either-

(a) will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement; or

(b) would do so but for the existence of facts which render the commission of the offence or any of the offences impossible,

he is guilty of conspiracy to commit the offence or offences in question.

(2) …

(3) In this section “offence” (罪行) means any offence triable in Hong Kong and includes murder notwithstanding that the murder in question would not be so triable if committed in accordance with the intentions of the parties to the agreement.”

67.  Section 9(2) of the Prevention of Bribery Ordinance is the specific offence-creating provision with which this case is concerned but a proper construction of it is aided by an examination of section 9 as a whole:

“(1) Any agent who, without lawful authority or reasonable excuse, solicits or accepts any advantage as an inducement to or reward for or otherwise on account of his-

(a) doing or forbearing to do, or having done or forborne to do, any act in relation to his principal's affairs or business; or

(b) showing or forbearing to show, or having shown or forborne to show, favour or disfavour to any person in relation to his principal’s affairs or business,

shall be guilty of an offence.

(2) Any person who, without lawful authority or reasonable excuse, offers any advantage to any agent as an inducement to or reward for or otherwise on account of the agent’s-

(a) doing or forbearing to do, or having done or forborne to do, any act in relation to his principal's affairs or business; or

(b) showing or forbearing to show, or having shown or forborne to show, favour or disfavour to any person in relation to his principal’s affairs or business,

shall be guilty of an offence.

(3) …

(4) If an agent solicits or accepts an advantage with the permission of his principal, being permission which complies with subsection (5), neither he nor the person who offered the advantage shall be guilty of an offence under subsection (1) or (2).

(5) For the purposes of subsection (4) permission shall-

(a) be given before the advantage is offered, solicited or accepted; or

(b) in any case where an advantage has been offered or accepted without prior permission, be applied for and given as soon as reasonably possible after such offer or acceptance,

and for such permission to be effective for the purposes of subsection (4), the principal shall, before giving such permission, have regard to the circumstances in which it is sought.”

68.  Section 2 of the Ordinance is the interpretation provision.  “Advantage” includes a commission consisting of money.  Subsection (2) states that:

“(2) For the purposes of this Ordinance-

(a) a person offers an advantage if he, or any other person acting on his behalf, directly or indirectly gives, affords or holds out, or agrees, undertakes or promises to give, afford or hold out, any advantage to or for the benefit of or in trust for any other person;

(b) a person solicits an advantage if he, or any other person acting on his behalf, directly or indirectly demands, invites, asks for or indicates willingness to receive, any advantage, whether for himself or for any other person; and

(c) a person accepts an advantage if he, or any other person acting on his behalf, directly or indirectly takes, receives or obtains, or agrees to take, receive or obtain any advantage, whether for himself or for any other person.”

69.  Section 4 of the Ordinance is noteworthy for its jurisdictional reach, a reach to be contrasted with that of section 9:

“(1) Any person who, whether in Hong Kong or elsewhere, without lawful authority or reasonable excuse, offers any advantage to a public servant as an inducement to or reward for or otherwise on account of that public servant’s-

(a) performing or abstaining from performing, or having performed or abstained from performing, any act in his capacity as a public servant;

(b) expediting, delaying, hindering or preventing, or having expedited, delayed, hindered or prevented, the performance of an act, whether by that public servant or by any other public servant in his or that other public servant’s capacity as a public servant; or

(c) assisting, favouring, hindering or delaying, or having assisted, favoured, hindered or delayed, any person in the transaction of any business with a public body,

shall be guilty of an offence.

(2) Any public servant who, whether in Hong Kong or elsewhere, without lawful authority or reasonable excuse, solicits or accepts any advantage as an inducement to or reward for or otherwise on account of his-

(a) performing or abstaining from performing, or having performed or abstained from performing, any act in his capacity as a public servant;

(b) expediting, delaying, hindering or preventing, or having expedited, delayed, hindered or prevented, the performance of an act, whether by himself or by any other public servant in his or that other public servant’s capacity as a public servant; or

(c) assisting, favouring, hindering or delaying, or having assisted, favoured, hindered or delayed, any person in the transaction of any business with a public body,

shall be guilty of an offence.”

(Emphasis added)

70.  The public servant to whom section 4 refers is defined by section 2. It suffices for present purposes to say that Ao, a public servant holding office under a government other than that of the Hong Kong Special Administrative Region, was not a public servant for the purpose of the Ordinance.  It is not an offence contrary to section 4 to bribe a foreign public official (see, as a contrasting example, the United Kingdom[11]) although, depending upon the facts, to do so may be an offence contrary to section 9(2).  In the present case Ao was, for the purpose of the indictment and on the case presented by the prosecution, treated as an agent to whom section 9(2) applies.

71.  The Criminal Jurisdiction Ordinance, Cap. 461 enacted in 1996 applies to two groups of offences: Group A applies to various offences under the Theft Ordinance (e.g. theft, fraud, obtaining by deception) and under the Crimes Ordinance (e.g. forgery, possessing a false instrument); and Group B to certain inchoate offences, including conspiracy, to commit Group A offences as well as conspiracy to defraud.  It is a list to which the Chief Executive in Council may add.  No offence under the Prevention of Bribery Ordinance or conspiracy to commit such offence is included in either Group.

72.  Section 3 (3) of Cap. 461 stipulates that :

“a person may be guilty of a Group A offence if any of the events which are relevant events in relation to the offence occurred in Hong Kong.”

73.  A “relevant event” in relation to Group A offences is defined by s 3(1) as:

“… any act or omission or other event (including any result of one or more acts or omissions) proof of which is required for conviction of the offence.”

74.  Section 4 (of Cap. 461) is entitled “Questions immaterial to jurisdiction in the case of certain offences” and provides, by subsection (2), that a person may be guilty of a charge of conspiracy to commit a Group A offence or conspiracy to defraud in Hong Kong whether or not any act or omission or other event in relation to the conspiracy occurred in Hong Kong.

75.  Section 5 stipulates that:

“In relation to a Group A or Group B offence-

(a) there is an obtaining of property in Hong Kong if the property is either despatched from or received in Hong Kong; and

(b) there is a communication in Hong Kong of any information, instruction, request, demand or other matter if it is sent by any means-

(i) from Hong Kong to elsewhere; or

(ii) from elsewhere to Hong Kong.”

76.  Section 6 (1) states that :

“Subject to section 7(1), a person may be guilty of conspiracy to commit any Group A offence, or of conspiracy to defraud, if-

(a) a party to the agreement constituting the conspiracy, or a party’s agent, did anything in Hong Kong in relation to the agreement before its formation; or

(b) a party to it became a party in Hong Kong (by joining it either in person or through an agent); or

(c) a party to it, or a party’s agent, did or omitted anything in Hong Kong in pursuance of it,

and the conspiracy would be triable in Hong Kong but for the offence or fraud which the parties to it had in view not being intended to take place in Hong Kong.”

77.  The point of this reference to the Criminal Jurisdiction Ordinance is to highlight the fact that no offence under the Ordinance or of conspiracy to commit such an offence is included in either Group A or Group B; a point of significance, we will suggest, when we come to examine (1) the question where, in this case, the offer to Ao was to be, and was, made given the absence of a deeming provision in the Ordinance along the lines of section 5 (b) of the Criminal Jurisdiction Ordinance[12]; and (2) the apparent reliance by the respondent upon certain preparatory and subsequent acts in Hong Kong, given the absence of a deeming provision in the Ordinance along the lines of section 6(1)(a) and (c).   

The law

78.  The fundamental principle is not in issue.  As expressed in relation to the law of England and Wales it is that:

“… in construing Acts of Parliament there is a well-established presumption that, in the absence of clear and specific words to the contrary, an ‘ offence creating section’ of an Act of Parliament … was not intended to make conduct taking place outside the territorial jurisdiction of the Crown an offence triable in an English criminal court. As Viscount Simonds put it [in Cox v Army Council [1963] AC 48 at p 67] ‘… apart from those exceptional cases in which specific provision is made in regards to acts committed abroad, the whole body of the criminal law of England deals only with acts committed in England…’ .”[13]

79.  The same common law principle applies in this jurisdiction; and the effect of section 159A of the Crimes Ordinance[14] as applied in the light of this principle is that unless the legislature has otherwise expressly provided in relation to the offence planned by the conspirators, a conspiracy in Hong Kong to commit an offence outside Hong Kong is not a conspiracy contrary to section 159A.

80.  There are instances in which the Hong Kong legislature has made express exceptions, in which regard we have alluded to examples germane to this case, namely, to section 4(1) of the Ordinance and to the Criminal Jurisdiction Ordinance.

81.  The phrase in section 4(1) “whether in Hong Kong or elsewhere” is directed at the place at which the offer is made.  The concomitant absence of that phrase from section 9(2) tells us that the legislature did not intend to criminalise a section 9 offer made other than in Hong Kong.  Conversely, if the offer is made in Hong Kong it matters not, for the purpose of section 9(2), that the offeree agent is a public official of a place outside Hong Kong or that the act or forbearance in respect of which the offer is made concerns duties outside Hong Kong: B v Independent Commission Against Corruption[15], since section 9(2) "is directed against offers made here and targets the offeror only.”[16]

82.  None of these principles is in issue in this case.  It is accepted that the ‘offer’ contemplated by section 9(2) is an offer made in Hong Kong and that no deeming provision is at play.

83.  The fact that what is relevant is the place of the contemplated unlawful act (or unlawful means) agreed upon and not the place of the agreement is further illustrated by a series of decisions touching upon agreements made abroad but aimed at Hong Kong.

84.  In Attorney General v Yeung Sun-shun[17] a conspiracy had been hatched abroad to import into Hong Kong unmanifested cargo.  The cargo was taken into Hong Kong by an innocent agent.  The District Court judge acquitted on the ground that no acts have been done by the respondents themselves in Hong Kong to further the conspiracy with the result that the Hong Kong courts had no jurisdiction.

85.  In his judgment, overturning that decision, Roberts CJ referred to the effect of Board of Trade v Owen[18] as analysed in R v Peter Liu Po-sing[19] that:

“From [Owen] can be derived the general principle that a conspiracy in Hong Kong which has as its object the commission of a crime outside Hong Kong, is not triable within the jurisdiction.”

86.  That however, said the Chief Justice, was quite different from the issue whether, and if so in what circumstances, a conspiracy formed out of the jurisdiction to commit a crime in Hong Kong, is indictable in Hong Kong[20]. In such a case, as was held in DPP v Doot[21], a charge of conspiracy triable in Hong Kong would lie since:

“… in the normal case of a conspiracy carried out, or partly carried out, in this country, the location of the formation of the agreement is irrelevant: the attack upon the laws of this country is identical wherever the conspirators happened to meet… .”[22]

87.  The result as a matter of law was that in such cases Hong Kong should assume jurisdiction because:

“(a) the conspiracy is aimed at Hong Kong and intended to bring about a breach of the peace here; and

(b) since the conspiracy is not directed at the residents of the country where it is entered into, the courts of that country could raise no reasonable objection to this course on the ground of comity.”[23]

88.  Somchai Liangsiriprasert v Government of the United States of America[24] was an extradition case arising from an extradition request by the Government of the USA to the Hong Kong authorities in relation to a conspiracy in Thailand to send drugs to the USA.  In the extradition proceedings in Hong Kong it was incumbent upon the magistrate to assume that the drugs were to be imported into Hong Kong and then determine whether, on that assumption, the evidence established a prima facie case of an offence contrary to Hong Kong law.  The judgment of the Privy Council was delivered by Lord Griffiths who said:

“As a broad general statement it is true to say that English criminal law is local in its effect and that the common law does not concern itself with crimes committed abroad. The reason for this is obvious; the criminal law is developed to protect English society and not that of other nations which must be left to make and enforce such laws as they see fit to protect their own societies. To put the matter bluntly it is no direct concern of English society if a crime is committed in another country. It was for this reason that the law of extradition was introduced between civilised nations so that fugitive offenders might be returned for trial in the country against whose laws they have offended.

… In more recent times the English Parliament has legislated to make certain crimes committed abroad triable in England, particularly those crimes which have been the subject of international conventions. There has as yet been no decision in which it has been held that a conspiracy entered into abroad to commit a crime in England is a common law crime triable in English courts in the absence of any overt act pursuant to the conspiracy taking place in England. There are however a number of dicta in judgments and academic commentaries suggesting that it should be so.”[25]

89.  The commonality of the cases cited thus far is the founding of jurisdiction on the basis that the offences charged were directed against or necessarily involved a breach of the peace in the territory of the proposed trial.  Thus:

“Acts done outside the jurisdiction, but intended to produce and producing detrimental effects within it, justify a state in punishing the cause of the harm as if [the actor] had been present at the effect.”[26]

The narrowness of the case advanced

90.  It is important to note the limitation which in this case the prosecution imposed upon itself; important because the ramifications of this judgment are to be viewed against this limitation.

91.  The prosecution concentrated its case, certainly at the ‘no case’ submission stage, on P8 as the offer which the conspirators agreed to make.  The prosecution case was not then advanced, and the judge did not decide against the applicants, upon any other basis, save (possibly) for the “substantial connection” basis which we later address.  It did not advance its case, and the judge did not find criminal liability, on the footing:

(1) that Nolasco was acting as Ao’s agent, so that proof that the September 2005 proposal was put by the applicants to Nolasco in Hong Kong was proof of an offer to Ao; or

(2) that the payments by Swire SITA, on behalf of CSR, to Polymile in Hong Kong themselves constituted the impugned contemplated offer or to Ao; an argument that would have run along the lines that by virtue of section 2 (2) the giving of an advantage is itself an offer and that Polymile was not merely a conduit for payment to Ao but was Ao’s designated nominee; or

(3) that the funds paid to Polymile in Hong Kong were held by Polymile in trust for Ao, relevant because an offer, as defined by section 2(2), includes the giving of an advantage in trust for the proposed recipient.

92.  Thus it is that we see in the written submission opposing the no case submission, that Mr Mitchell for the prosecution put it this way :

“59. The submission made by the defence is predicated on the assumption that for the offence to be committed to the offer had to be communicated to Ao.

60. It is submitted however that the holding out agreeing or undertaking to make the payment is sufficient. … The communication to Ao was not of itself significant. The offer was directed and intended for Ao.

61. In fact the offer was communicated via an indirect means - namely the sending by e-mail via D2’s e-mail account the consultancy agreement – Nolasco then took the agreement to Ao. However the offer had already been made. …

…

63. When the three agreed to hold out, agreed to undertake to pay Ao by some indirect method (the consultancy agreement) the offence of conspiracy to offer an advantage was completed. This agreement arose out of the meeting in Hong Kong and as such the offence was committed in Hong Kong.

64. … In the present case it is arguable that the offence would have been committed even if Nolasco had not communicated the proposal to Ao.

…

66. What was agreed in … Hong Kong was a course of conduct – namely the formulation of a proposal amounting to offering an advantage – this was done in Hong Kong and hence amounted to an agreement to commit an offence under section 9(2)(a)PBO.”

93.  It is evident from the impugned ruling that those submissions found favour with the judge.

94.  In his submissions to this Court, Mr Bell SC, for the respondent, said that the agreement relied upon was an agreement to make an offer in Hong Kong constituted by the drafting of the consultancy agreement and by the dispatch of the draft from Hong Kong to Nolasco in Macau for onward transmission to Ao.  He abjured the proposition that for proof of an offence under section 9(2) there was any need to establish communication of the offer to the agent; and he relied also on the word “indirectly” in section 2(2) (“directly or indirectly … agrees… to give”) for, if we understood him correctly, he contended that there was here a indirect communication with Ao.

Analysis

95.  We do not agree with these arguments and, more relevantly, we do not agree with the judge’s reasoning which endorsed Mr Mitchell’s argument.

96.  This is a case in which no distinction was drawn, in the case as presented by the prosecution, between what was agreed to be done and what was in fact done.  If it is agreed to commit an offence contrary to the law of Hong Kong, that suffices to warrant a conviction for that conspiracy even if what is agreed is not put into effect.  Similarly, if accused persons are proved to have concluded an agreement to commit a specific offence, the fact that the agreement is followed by the commission of a different offence is of no consequence to the validity of a conviction for conspiracy to commit the offence originally contemplated.  In a conspiracy case, it is the agreement that matters, although acts which follow the agreement are often cogent – perhaps the sole – evidence of what the original agreement was.  We make this point because in this case, what the prosecution concentrated upon, despite the width of the charge, was the agreement made in September 2005 as evidenced by P8.  It is therefore the agreement that resulted in P8 which should have been the point of proper concentration.  That that agreement was concluded in Hong Kong does not render the conspiracy indictable in Hong Kong; what matters is what was contemplated to be done, most specifically where the contemplated primary offence was to take place.  As we have seen, the submissions and ruling treated the making of the agreement and the actual offer (said to be P8) as virtually coterminous, as made in the same place (Hong Kong) and the substantive offence which was in fact committed (the P8 offer) reflecting exactly that which was contemplated by the conspirators.

97.  It is not clear from the argument presented to us by the respondent whether the suggestion is:

(a) that the conclusion of the agreement amongst the conspirators themselves was, without more, an offer as defined, since the definition of “offer” includes an agreement to give an advantage; or

(b) that P8 was in itself an offer (“the offer … is the proposal contained in the draft …agreement”[27]) and that nothing further was required to complete the contemplated offence; or

(c) that communication to Nolasco completed the contemplated offence.

98.  The first of these three suggestions is that the phrase in section 2(2)(a) “agrees, undertakes or promises to give, afford or hold out any advantage” means that if two persons, who desire the benefit of a potential favour from an agent, agree amongst themselves that they will pay him for that favour, that agreement, without more, constitutes not merely a conspiracy, but the substantive offence of offering an advantage. In other words, since they have agreed (albeit amongst themselves only) to give an advantage, they have offered the advantage, for “offer” as defined includes an agreement to give it.

99.  The flaw in such reasoning is that it treats the section 2 definition as the offence-creating, rather than as the interpretation, provision.  The reasoning:

(1) detracts from the terms (and theme) of section 9 which is directed at the making and/or acceptance of an offer to and by an agent; and

(2) ignores the context in which the word “agrees” falls within section 2(2), for its true sense is to be derived eiusdem generis with ‘undertakes or promises’; which clearly connotes an undertaking to the agent that at some date in the future or in a certain eventuality, a gift or a loan or a payment or a service or a favour will be provided.

100.  We respectfully agree with the judgment of Hooper J in R v Wong Seck-hung that an agreement to give contemplated by section 2(2) “means an agreement with the person to whom the offer is made”[28]; and with the commentary by McWalters in Bribery and Corruption Law in Hong Kong[29] that : “The consequence of this interpretation is that because the definition of offer does not itself encompass a conspiratorial agreement by two or more persons to offer an advantage to an agent, two persons entering such an agreement could not be charged with the substantive offering offence but would nevertheless be guilty of conspiracy to offer an advantage.”

101.  The second of the three suggestions or propositions, that P8 was in itself an offer, ignores the difference between, on the one hand, a loose description of a document as an offer and, on the other, the making of the offer.  The conveyancing analogy which we posed in the course of the hearing is, we think, apt as an illustration of the error: a document is drawn by P’s solicitor, which contains the terms of an offer which P instructs the solicitor to make to V’s solicitor for the purchase of V’s property.  It can hardly be said, if P’s solicitor sat on the document and did not communicate it to V or V’s solicitor, that the offer had been made to V.  The document contains no more than the terms of an offer to be made.  And that, precisely, was the position in this case, that P8 contained the terms of an offer of an advantage.  But upon completion of the offer document, the offer had not been made.  It was only made to the agent, Ao, when communicated to him; and it was only communicated to him – as was intended by the conspirators – in Macau.  This is the point which we next develop.   

102.  It is the making of the offer that is the act prohibited by section 9.  If a person, who has in mind the accrual of a benefit, drafts or conjures in his mind a proposal which he intends to communicate to an agent, improperly to secure that benefit, no offence is committed contrary to section 9(2). So much seems obvious.  The substantive offence is committed only once the proposed terms thus formulated are communicated to the agent (or to someone acting on his behalf); although criminality may be engaged notwithstanding non-communication of the offer if the conduct of the putative offeror goes beyond mere contemplation and reaches the stage of an attempt, a procurement, or an agreement with another to make the offer.  But there exists no crime of conspiracy per se.  Conspiracy is only a crime if it is an agreement to perform acts which, if performed, constitute or involve the commission of a substantive offence.  It follows that since the substantive or primary offence under section 9(2) is the making of an offer within Hong Kong, a conspiracy to make an offer elsewhere is not a crime in Hong Kong.

103.  As for the third proposition or suggestion, we find it difficult to see by what route one might logically conclude – as the judge by his endorsement of Mr Mitchell’s submissions concluded[30] – that the proposal in P8 was made to Ao, or was contemplated to be made to Ao, in Hong Kong.  The fact that the offer ‘emanated entirely in Hong Kong’[31] is irrelevant to the question where the offer was made.  Section 9, mentioned but not analysed in the Ruling, creates a condition precedent to criminal liability that there be an offer made to the agent.  It is impossible to see the basis upon which it can sensibly be suggested that criminal liability was intended to arise by the mere formulation of an offer; and it is the mere formulation of P8 which the judge has deemed sufficient.  Such a postulation offends the plain language of section 9(2) as well as the dictates of sound policy, for the postulation punishes an idea alone and does not discourage the sole putative offender from resiling before communication of the offer.  It also renders unworkable subsection (5)(b) of section 9 whereby the acceptance of an offer is permissible if the agent seeks and receives the principal’s permission “as soon as reasonably possible after such offer…”.  How, one may ask, if the judge’s interpretation be correct, is the agent to seek permission for acceptance of an offer not communicated to him?

104.  What the judge may have done is to concentrate upon section 2(2) to the exclusion of section 9(2), whereas “offer” described in section 2(2) is merely a definition for the purpose of section 9(2); the judge possibly forgetting, perhaps because of prosecuting counsel’s concentration on section 2(2), that section 9(2) requires more than the drafting or formulation of that which may in common parlance be described as an offer.  Hence his conclusion that : “ … the offer of advantages to Ao was hatched and completed in Hong Kong and incorporated into the draft consultancy agreement, setting out the amounts to be paid with reference to the three contracts.  No offer was ever made in Macau; the completed offer was simply delivered to Ao in Macau by Nolasco.”[32]

105.  We are, with respect, not attracted by the suggestion from Mr Bell that the phrase “directly or indirectly” in the definition of “offer” in section 2(2) embraces that which was contemplated by the conspirators.  His argument is that there was an indirect communication of the offer.  On the facts, unless Nolasco was acting as Ao’s agent – which, as we say, has been disavowed by the respondent as the basis of the case – it is difficult to see what communication of the offer took place or was contemplated to take place in Hong Kong.  As to the law, the phrase “directly or indirectly” in section 2(2) attaches to the advantage and not to the mode of communication of the offer; although, of course, an offer may be communicated to an offeree through a third party.

106.  In his ruling, the judge seems to have relied upon or drawn comfort from the decision of the Court of Final Appeal in B v ICAC[33] but the decision in B took the essential question which the judge had to decide in the present case, namely, where was it contemplated that the offer was to be made, nowhere.  B was a case in which an offer was made in Hong Kong and everything flowed from that agreed fact.  The Court said that the offence was complete “on the offeror’s making of the offer” which took place in Hong Kong – that is the actus reus of the offence under section 9(2) – and the fact that the favour in return was to be performed abroad mattered not.  The ratio of the decision is that: “ … where an advantage is offered in Hong Kong, s 9(2) of the POBO applies even if the offeree is a public official of a place outside Hong Kong and the act or forbearance concerned is in relation to his public duties in that place outside Hong Kong.”[34] (Emphasis added).  In the present case what is said to have been contemplated by the conspirators (and what is said in fact to have happened) was the making of an offer outside Hong Kong; to an agent outside Hong Kong; in respect of a principal outside Hong Kong; and where the only payment that was given directly to that agent – the five cash cheques – was given outside Hong Kong.  The decision in B does not assist the judge’s reasoning.

107.  Finally, Mr Bell relies on Treacy v Director of Public Prosecutions[35], in which it was held by a majority of the House of Lords in the context of a charge of making an unwarranted demand with menaces (the offence of blackmail) that when the appellant posted in the Isle of Wight a letter (containing the demand and threat) addressed to Mrs X in Germany, the demand was made when he had written and posted the letter.

108.  Lord Diplock in the majority put the matter thus:

“… the question which has to be answered is: Would a man say in ordinary conversation: “I have made a demand” when he had written a letter containing the demand and posted it to the person to whom the demand was addressed?  Or would he not use those words until the letter had been received and read by the addressee?

My answer to that question is that it would be natural for him to say “I have made a demand” as soon as he had posted the letter, for he would have done all that was in his power to make the demand.  He might add, if it were the fact: “but it has not reached X yet,” or: “I made a demand but it got lost in the post.”  What, at any rate, he would not say is: I shall make a demand when X receives my letter, unless he contemplated making some further demand after the letter had been received.”[36]

109.  We do not think that this reasoning assists the respondent.  The facts are different.  In Treacy there was nothing left for the appellant to do; whereas in this case P8 never left the custody of the co-conspirators until Nolasco delivered it to Ao in Macau.  There was no room in Treacy for the appellant to give effect to a change of heart by retrieving the letter whereas in this case, the conspirators could have agreed even after the e-mail was sent to Nolasco to proceed no further; and, that being so, the man in ordinary conversation to whom Lord Diplock referred was not likely to say that when the e-mail was sent, the offer had been made to the agent Ao.

110.  In any event, we respectfully venture to prefer the analyses in this regard of the minority, Lords Reid and Morris of Borth-y-Gest.

111.  Lord Reid said:

“This [the offence of blackmail] is not an offence where there are two elements, e.g. making a false pretence and then obtaining the money. There is only one element in this offence – making a demand with menaces. But by employing the services of the Post Office the accused chose to arrange matters so that he personally did not make the demand; he only had to do the acts preparatory to committing the offence – writing and posting the letter. If I take the law as it is the argument must be that, on a proper construction of the Theft Act 1968, doing the preparatory acts in England can be held to be equivalent to making the demand in England. This seems to me to be a novel and unsound construction. No doubt there ought to be an offence. And I think that there would have been an offence under the law as it was before the Theft Act was passed. Those who prepared that Act tried to simplify the law. But very often the result of simplifying the law is that per incuriam some unusual cases are no longer caught by the simplified provisions. In such cases it is, in my view, wrong to try to remedy this by giving a strained meaning to the new provisions: the proper remedy is new legislation.”[37]

112.  So it is with the offence with which we are concerned.  On the basis of the case advanced by the prosecution, the contemplated substantive or primary or principal offence is a single element offence: the making of the offer; whereas the acts of writing and handing the letter to the emissary, Nolasco, were acts preparatory to the making of the offer.  They were evidence of the conspiracy; yet the offer was to be made and was made in Macau.  If that construction of the statutory provisions leaves a perceived lacuna in the law, that does not warrant a strained construction.

113.  Lord Morris reiterated the general rule of construction that unless a contrary intention in clear and express terms is evident from a statute, the statute creating criminal liability for certain conduct must be taken to apply only, in the context of his setting, to the United Kingdom[38]. In disagreeing with the “last irrevocable step” approach of the majority, he said:

“How, then, does a person make a demand? He does so by communicating a request. He may do this by speaking to someone. He may do it in other ways. But the notion of making an unwarranted demand with menaces involves that the demand is made to or of someone who could comply with it and who could be influenced by the menaces which accompany the demand. The act of making the demand is not, in my view, committed until it is communicated to the person who is being unjustifiably menaced. There must be contact between the demand and the victim. … The making of a demand is one act which takes place at one time…

…

If a person went on to a remote and deserted shore and spoke words involving an unwarranted demand with menaces it would be fanciful to suggest that he had committed an offence under section 21. …

…

If the appellant had decided to go to Germany and there to confront Mrs. X and require her to pay him money, he would not have made his demand until he confronted Mrs. X. If he had decided to send a friend to present to Mrs. X on his behalf his requirement, he would not have made his demand until his friend had completed his mission. … If he had entrusted [a letter containing the demand] to a friend to take it to Mrs. X in Germany and if the friend had accepted the mission and set out on the journey in such a manner as precluded his being recalled I would think it strange indeed to say that the appellant had made a demand with menaces when he said farewell to his friend. Nor do I think that anyone so placed would ever think that he had made a demand. His menaces would not have begun to operate. They would only do so when the demand was made. If the friend died on the journey some new plan would have had to be made – for then there would have been no demand.”[39]

114.  If one were to pose in this instance the question suggested by Lord Diplock to be a sensible aid to construction, namely, what would a man in ordinary conversation say if he were asked whether when P8 was e-mailed an offer in its terms had been made to Ao, we think it obvious that the answer would be No.

115.  Accordingly, we are satisfied that the learned trial judge erred in his construction of the statutory provision and in holding that the offer contained in P8 was made or was intended to be made in Hong Kong or that the agreement itself, made in Hong Kong, that an advantage would be proposed to Ao, was an offer as defined.

116.  It follows that, subject to the “substantial connection” issue to which we next turn, the judge erred, on the basis upon which the case was put, in ruling that there was a case to answer.

Substantial Activities Constituting the Offence

117.  We have found more difficult the question posed by the alternative basis upon which the judge seemed to rule that there was a case to answer, namely, that “a substantial measure of the activities constituting the crime” took place in Hong Kong.  

118.  We say “seemed to rule” because all he said in the ruling about it was:

“I note the comments of Stuart – Moore J (as he then was) in HKSAR v Chan Shing Kong and anor, where he states, and I quote,

‘there will be jurisdiction to try a case in Hong Kong where ‘a substantial measure of the activities constituting a crime’ have taken place within Hong Kong, even if other activities connected with the same crime have occurred beyond the borders of its jurisdiction.’”[40]

119.  There is no express finding by the judge in that ruling that a substantial measure of the activities constituting the crime asserted had taken place within Hong Kong; but we proceed on the basis that such a finding is implicit.  The omission to state upon what activities he relied in reaching his apparent conclusion is, with respect, an unhelpful omission given that the case which he cites is, as we have already explained, distinguishable from the present case.

120.  It is also noteworthy that in the Reasons for Verdict the judge does not explain whether he relied on this alternative basis for convicting the applicants.  The Reasons for Verdict do not revisit the jurisdiction issue but merely conclude on the basis of the evidence, primarily that of Nolasco, that he, the judge, has “no doubt whatsoever as to the existence of a conspiratorial agreement between D1, D2 and Nolasco to offer bribes to Ao Man-long in order to secure the granting of these three contracts.”[41]

121.  In the absence of reasoned findings on this alternative basis, we hesitate to search for that basis.  However since the alternative basis was put to the judge by counsel for the prosecution and has been put to us by counsel for the respondent, we shall address it.

122.  The phrase “substantial measure of the activities constituting a crime” has its genesis in a judgment cited in R v Smith (Wallace Duncan)(No 4)[42]to which Stuart-Moore J referred in Chan.  Smith was a case in which a substantial part of the deception took place within the jurisdiction of the proposed trial.  Lord Woolf CJ referred to Libman v The Queen[43] in which it was said that:

“The English courts have decisively begun to move away from definitional obsessions and technical formulations aimed at finding a single situs of a crime by locating where the gist of the crime occurred and where it was completed. Rather, they now appear to seek by an examination of relevant policies to apply the English criminal law where a substantial measure of the activities constituting a crime take place in England, and restrict its application in such circumstances solely in cases where it can seriously be argued on a reasonable view that these activities should, on the basis of international comity, be dealt with by another country.” (Emphasis added)

123.  The question of the locality or – more accurately where the crime is constituted by several elements – localities of a crime with transnational features is a difficult question, as acknowledged by Kirby J in his dissenting judgment in Lipohar v R[44]:

“Even in England and in Scotland the inadequacies and uncertainties of the present law have been recognised. Lord Reid described the state of the law as ‘far from satisfactory’. The English Law Commission criticised the ‘erratic effect’ of the current rules. In Canada the judicial techniques for characterising locality in the case of offences have been castigated as falling ‘far short of analytical clarity’- a result ascribed to ‘doctrinal confusion’”.[45]

124.  And in Libman v La Reine[46], La Forest J said that:

“Transnational offences of the kind in question here[47] have been dealt with in a rather confusing fashion, probably because they are not of a type individual courts are called upon to deal with frequently.”[48];

adding that:

“ … the courts have taken different stances at different times and the general result, as several writers have stated, is one of doctrinal confusion, a confusion compounded by the fact that the discussion often focuses on the specific offence charged, a discussion made more complicated by the further fact that some offences are aimed at the act committed and others at the result of that act.”[49]

125.  In the written submissions before the court below that there was no case to answer, a copy of which was handed to us during the hearing and which we have since studied, we see that Mr Mitchell referred, by way of introduction, to the facts that the majority shareholding in CSR (a Macau company) was a Hong Kong registered company, namely Swire SITA; that Polymile is a Hong Kong registered company; that Swire SITA made payments in Hong Kong to Polymile and that Ao had asked Nolasco that payments not be made to him in Macau.

126.  He submitted the “events were essentially being engineered from Hong Kong to corrupt a government agent in Macau” and that “what [the applicants] agreed with Nolasco was a course of conduct which would amount to or involve the commission of an offence in Hong Kong”.[50]  He accepted that “… what Ao did with the money after it was paid is not significant to this point since the offence is complete once the offer has been made.”[51]

127.  The “substantial and significant measure of activities” which he put forward in the submissions were “the two meetings [in Hong Kong], the formulation of the ‘proposal’, the drafting of the agreement … and its dispatch to [Ao] via [Tam’s] e-mail account followed by the subsequent payments by Swire SITA from one bank account in Hong Kong to another bank account in Hong Kong. … For all intents and purposes payment in the present case was made when authorisation was given by [Tam] to the staff of Swire SITA in Hong Kong … to transfer by way of the accident system the money to the Polymile account.”[52]

128.  It seems to us that the majority of the facts upon which counsel for the respondent relied (and still relies) under this limb of the argument are facts which show no more than the place at which the conspiracy was hatched or which constitute no more than preparatory acts and are submissions which blur the distinction between, on the one hand, activities which constitute the crime alleged and, on the other, activities which merely relate to the conspiracy or to the crime contemplated by it.

129.  Pointing to the fact that the majority shareholding in CSR was a Hong Kong registered company as is Polymile points to an alleged connection with or interest in the conspiracy and not to activities constituting the crime. Pointing to meetings in Hong Kong to formulate the proposal and to the drafting in Hong Kong of the proposal, is to do no more than point to the locus of the conspiracy, which of itself does not, as we have already illustrated, and absent provisions such as section 6(1) of the Criminal Jurisdiction Ordinance[53], render the offence indictable in Hong Kong.

130.  It is as well at this stage to remind ourselves that by virtue of section 6(1) of the Criminal Justice Ordinance, a person may be guilty of conspiracy to commit a Group A offence or a conspiracy to defraud if a party to the agreement constituting the conspiracy did anything in Hong Kong in relation to the agreement before its formation; or became a party to it in Hong Kong or did or omitted to do anything in Hong Kong in pursuance of it even though the offence or fraud which the conspirators had in view was not intended to take place in Hong Kong.

131.  It is that provision which highlights:

(1) the need in conspiracy cases, absent that (or other express) provision, to prove either that the contemplated crime was intended to take place in Hong Kong or that the conspirators contemplated that a substantial measure of the activities constituting the crime which the conspirators had in view would take place in Hong Kong; and

(2) that the acts upon which the prosecution relied for the second limb of the argument were acts of the kind referred to in section 6(1) of the Criminal Jurisdiction Ordinance, which does not apply to section 9 (2) of the Ordinance, namely the fact that the conspirators “did [something] in Hong Kong in relation to the agreement before its formation” (subsection (1)(a)); that they became a party to the agreement in Hong Kong (sub-section (1)(b)); and that they “did [something] in Hong Kong in pursuance of” the agreement (subsection (1)(c)). (Emphasis added).

132.  In our judgment, doing something in relation to the agreement or in pursuance of it is a concept which is wider than the concept of an activity which constitutes, in whole or in part, the crime.  The latter concept is not difficult to grasp where the contemplated crime has more than one element or in the case of a continuing conspiracy, where the conspirators contemplate the commission of a crime abroad as well as within the jurisdiction or where, as for example in the case of conspiracy to defraud or a conspiracy to obtain by deception, it is planned that one element of the contemplated crime will be executed in this jurisdiction.

133.  In so far as the respondent relied and relies on the payments in Hong Kong to Polymile, what is in reality suggested thereby is that the payment to Polymile was the corrupt payment in Hong Kong to Ao.  If that contention be correct then those payments constituted the substantive offence of offering an advantage and doing so in Hong Kong.

134.  There are several problems with that contention.  First, if we understood him correctly, Mr Bell accepted during the course of the hearing that this was not the offer upon which the prosecution relied in the court below.  But even so – and we see it was relied upon in support of the substantial measure of activities limb – the payments in Hong Kong were payments to Polymile which was Nolasco’s company, and it was intended that Nolasco take his fee from those payments and use the funds in his account to pay Ao.  Where Ao was to be paid is unclear although the only payment of which we are aware (the five cheques) was made in Macau.  The fact that the cheques were cashed by Ao in Hong Kong is irrelevant: see R v Governor of Brixton Prison Ex p Rush[54].

135.  There is, in this regard, an error in the further written submissions by the respondent dated 25 October 2013.  In the context of a submission as to whether public harm was effected in Hong Kong and, if so, whether the acts resulting in that harm rendered the acts indictable in Hong Kong, it was put that: “While the recipient account of Polymile was not determined until a later stage, it was contemplated that the corrupt payment should originate from Swire SITA in Hong Kong in the guise of payment of a ‘consultancy fee’ to [Nolasco].  Accordingly there was, and was contemplated that there would be, a public mischief in Hong Kong.”[55]  That is not correct, certainly as far as concerns the original contemplation of the alleged conspirators.  Nolasco’s testimony was that he was surprised to learn that Swire SITA had made the payment, for he thought that the Macau company, CSR, had sufficient funds; he expected the payment to come from Macau; and before the payment was made by Swire SITA to Polymile’s bank account in Hong Kong, he had no idea that that was going to happen[56].  No doubt, if that testimony be correct, Krieger and Tam knew before the payment was made in Hong Kong that it was to be made but the point still remains, in our judgment, that the contemplated payments in Hong Kong which had to be proved were payments in Hong Kong to the agent. 

Naini

136.  The delay in delivery of this judgment was partly occasioned by our post-hearing research which uncovered a judgment of Lord Bingham CJ in Jamshid Hashemi Naini[57].  The judgment merits study, we respectfully suggest, for its distillation of the main authorities relating to territorial jurisdiction, to some which this judgment has referred.  But what attracted our attention was a more specific matter.

137.  The appeal was from a decision of Collins J who, in finding against the defendant on an indictment charging conspiracy to defraud, concluded that at least on a prima facie case “it was part and parcel of the agreement that the whole of the deprivation might well take place within the jurisdiction.” (emphasis added)[58]

138.  Lord Bingham referred to Cox (Peter)[59] and the comments by Winn LJ in that case:

(1) that:

“… the distinction between those hypothetical cases and this one is that there is nothing in the wording of the indictment in the instant case alleging that it was any part of the intention of the conspirators to commit inside this country any criminal offence. The scope of the conspiracy is determined by the agreement of the conspirators. It is quite right that if the terms of their agreement are such as to comprise the possibility that the crime they agreed to commit may be committed inside the United Kingdom, then that conspiracy will be indictable in this country.”[60] (Emphasis added)

(2) and that:

“[Lord Goddard in Board of Trade v Owen had said that] it is clear that even if certain evidence had not been tendered, the alleged object of the conspiracy might have been carried out in this country, for example, by personal delivery of the forged documents to various persons who might be in London. In such circumstances it was clear from Kohn’s case[61] that the appellants could properly be indicted in this country.”[62]

139.  Lord Bingham concluded as follows:

“It seems to us that, in the light of all this authority, certain principles emerge. First, in determining issues of jurisdiction, the distinction is to be drawn between charges of substantive offences on charges of conspiracy. That we regard as supported by the decisions in Liangsiriprasert v government of the United States and Manning. Secondly it is clear that the courts of England and Wales had no jurisdiction to try a defendant on account of conspiracy if the conspiracy, although made here, was to do something in a foreign country, or which could only be done in a foreign country. That proposition is supported by Board of Trade v Owen, Cox and Attorney General’s Reference (No 1 of 1982). Thirdly, in our view the authorities established that the courts of England and Wales do have such jurisdiction if the conspiracy wherever made is to do something here or to do something which may be done here, whether wholly or in part, even if no overt act pursuant to the conspiracy is done in England and Wales. The residents of the party suffers the loss does not determine where the crime of defrauding takes place. …

Applying those principles we conclude that the court did have jurisdiction to try the appellant on counts 3, 4 and 5 - most obviously on counts 4 and 5, but also on count 3 because it was within the contemplation of the conspirators that the unlawful acts which they agreed to do in this count might well be done here.”[63] (Emphasis added)

140.  Our concern ran along these lines: that the charge in this case was not of a bare conspiracy in the sense of a conspiracy to commit a single act abroad.  The indictment – as opposed to the manner in which the case was put at trial – alleged an ongoing conspiracy to secure the renewal of a series of contracts in respect of each of which an advantage would be offered; indeed, the indictment alleged the contemplated offering not of a single advantage but of “advantages”.  Employing the test whether it was shown to have been within the contemplation of conspirators that they agreed upon unlawful acts which “might well” be done here, it seemed to us arguable that it was unrealistic to suggest that the payment to Ao in Hong Kong of some or all of the advantages was outwith the contemplation of the conspirators.  It was in respect of this possible argument that we invited further submissions.

141.  In the event, we are persuaded that Naini does not assist.  Naini concerned a number of common law conspiracies to defraud.  The counts upon the indictment were each in a similar vein; for example, count 3 alleged that the defendants in a two-year period “conspired together and with … others to defraud such corporations, companies or persons as might dishonestly be induced to enter into business with ...” a company owned by one of the defendants, “by (a) causing or permitting the said corporations, companies or persons to enter into contracts with [Naini’s company] which included the requirement for the posting of… performance bonds; (b) falsely representing that the said [company] had related contracts with customers in Iran… ; (c) misappropriating the monies represented by the said bonds … ; (d) concealing from the world the true nature of the said transactions; and (e) concealing from the world the true background and financial situation of … Naini and the companies controlled by him – pursuant to which conspiracy [Naini’s company] entered into contracts with [the complainant companies]”.

142.  It seems sufficiently clear from a study of the indictment itself that it was within the scope of the alleged agreement that the fraud would be carried out upon whomsoever – whether in the territorial jurisdiction of England and Wales or otherwise – might be induced to enter upon contracts with Naini’s company upon the impugned representations.  It is in that context that the phrase “which may be done here” (in the passage “ … the courts of England and Wales do have such jurisdiction if the conspiracy wherever made is to do something here or to do something which may be done here”) is to be read.  The question is always what it is that was contemplated by the conspirators; so, generally, if the agreement is to carry out the unlawful act (or the unlawful means) abroad, an indictment is not properly laid in this jurisdiction; whereas if the agreement is to execute the unlawful act (or the unlawful means) wheresoever the opportunity presents itself, including this jurisdiction, then an indictment in this jurisdiction does lie.  On the basis of that analysis, the question in the present case would be whether the conspirators agreed to make the offer in Macau, as opposed to here or possibly here, and if the case as presented restricted itself to the former (which we have found was the case), then the phrase in Naini which attracted our attention does not bite.

143.  That analysis apart, it is suggested by counsel for the applicants that this case is to be distinguished since:

(a) at its centre is an allegation of a statutory conspiracy and section 159A renders it a crime to conspire “to commit the offence or offences in question” only where the agreement is to pursue a course of conduct which if the agreement is carried out in accordance with the intention of the conspirators “will necessarily amount to or involve the commission” of the offence; and

(b) “offence” means any offence triable in Hong Kong[64].

144.  Therefore, so runs the argument, a conspiracy to offer an advantage where the conspirators merely contemplate the possibility that the offer will be made in Hong Kong is not an agreement upon a course of conduct that will necessarily involve the commission of an offence triable in Hong Kong.  The argument appears to us to be sound.  Where, however, that possibility solidifies into an actual offer in Hong Kong, to which act the conspirators are party, the point will not avail the conspirators for the act will have been preceded by a change in the agreement to one falling within the ambit of section 159A and in any event will constitute the substantive offence contrary to section 9(2). 

145.  Counsel for the respondent argues that the “something” in the judgment of Lord Bingham (“to do something which may be done here”) is not limited to the unlawful act or unlawful means which is the contemplated crime but “is capable of including any act performed in pursuance of the conspiracy with a view to obtaining the ultimate object.”  We do not agree.  In context “something” can only be a reference, as Mr Perry QC suggests, to the unlawful object of the conspiracy (including the unlawful result and the use of unlawful means to achieve an otherwise lawful result).

Conclusion

146.  On the basis of the case which was advanced by the prosecution, we have concluded that the judge erred in his ruling.  It follows that the applications for leave to appeal must be granted and the appeals themselves must be allowed.

The interviews ground

147.  Conscious of the potential ramifications of our judgment and the possibility that it may fall for further consideration, we think it appropriate to address the remaining grounds of appeal.

148.  Towards the end of his Reasons for Verdict, the judge said:

“I have closely scrutinised the contents of all the video interviews conducted on both defendants. I do not find it necessary to repeat the contents of those interviews here, save to say that insofar as the statements of each defendant made to the ICAC seek to exculpate themselves, I place no reliance on them, and I am satisfied they do not represent the truth. I say this notwithstanding the fact that both defendants not only have clear criminal records but are both men of exemplary characters.”[65]

149.  The argument on appeal is that the judge impermissibly rejected the exculpatory evidence of the interviews solely for the reason that the evidence was exculpatory.

150.  We can deal with this briefly.  It seems obvious to us that the judge did not reject the exculpatory statements merely because they were exculpatory. He certainly said no such thing and we fail to see whence that can be implied. He rejected the exculpatory exclamations because, as he said, “I am satisfied they do not represent the truth,” a conclusion at which he arrived having analysed the force of the evidence against them.  Moreover, had he misled himself into believing that no weight was to be placed on exculpatory parts of the statement merely because they were exculpatory, he would hardly have gone to the trouble of closely scrutinising the contents.

The reliance on Nolasco’s evidence

151.  It is said that the judge erred in relying on the evidence of Nolasco, evidence which the judge described as impressive and compelling, certainly in relation to the major issues; and that he failed to provide adequate reasons for accepting Nolasco’s testimony.

152.  We were taken to a series of indicia suggestive of Nolasco’s unreliability; for example, the fact that his evidence was that of an accomplice; that he had been disbelieved when he gave evidence at his own trial in Macau; that he was disbelieved or doubted by the trial judge in this case when he claimed that he was unable to recall asking the ICAC for immunity for his wife; and that he had made demands for money allegedly due to him from companies for which Tam and Kreiger worked saying that there would be trouble if he was not paid.

153.  We are satisfied that this ground is not made out.

154.  The judge had the advantage of observing and hearing Nolasco for several days of testimony.  That of itself does not provide the answer to the complaint but it is a factor to bear in mind.

155.  The judge recognised that Nolasco’s credibility was critical to the case[66]; that he testified under an immunity[67]; that he had been convicted of bribery and money-laundering charges in respect of payments to Ao[68]; and that his testimony was to be approached with considerable caution[69]. Again, mere recognition of these dangers is not in itself an answer to the complaint but the fact that they were recognised is, again, a matter to bear in mind.

156.  Yet it is evident that the judge found support – and that there was support – for Nolsaco’s testimony which incriminated the applicants.

157.  He said in terms that:

“Although it is possible for any court to convict on the uncorroborated evidence of an accomplice, there is, I find, considerable support for the evidence of the Nolasco in some of the e-mails that I have referred to in the course of this ruling, not the least of which is exhibit P8 … and the evidence of … Edith Yeung.”[70]

158.  We feel bound to say that the terms or tone of P8 as well as of Tams’ s e-mail to Kreiger of 30 August 2006 provide clear support for the contention that the contracts with Polymile were not normal consultancy agreements.  P8 is redolent of strange implication; and, in relation to the reaction to Ms Yeung’s perfectly proper questions, it is difficult to know why a straightforward and legitimate agreement should be described as “a sensitive matter for me personally and for the Company.”

159.  So too the judge recognised as significant a huge difference between the previous standard payments of MOP 7 million to Nolasco (in 1992 and 1999) and the figures that emerged, ostensibly as commission agreed for him or his company, in 2005 and 2006.  He might have added that the very fact that Polymile was replaced for Nolasco Ltd, fitted the account given by Nolasco.

Result

160.  For the reasons provided, we grant the applicants leave to appeal their convictions, treat the hearing of the applications as the appeals, allow the appeals and set aside the convictions.

161.  The respondent reserved its position as to whether it would, in the event of a successful appeal, seek a retrial.  If such an application is to be made (as to which decision we shall set a time limit) we shall give directions for submissions.  We shall in any event give directions for submissions as to costs.

[1] Kreiger’s interview 10 June 2009, counter 109

[2] Reasons for Verdict para 17.

[3] Transcript, appeal bundle p 705.

[4] ibid p 709.

[5] para 27 above.

[6] Exhibit P10.

[7] Reasons for Verdict para 40.

[8] Reasons for Verdict para 62.

[9] Submissions paras 60 – 64.

[10] This is not accurate, in that the defence never conceded that there was any decision to offer advantages to Ao.  No doubt the judge meant that the defence submissions were based upon Ao’s testimony as to what had happened in Hong Kong.

[11] Bribery Act 2010, section 6.

[12] See also Criminal Law Act 1977 (UK) s 1A (11).

[13] Air India v Wiggins (1980) 71 Cr App R 213 at 217.  See also Board of Trade v Owen [1957] AC 602; R v Atakpu [1994] QB 69.

[14] See para 66 above.

[15] (2010) 13 HKCFAR 1.

[16] ibid p 12

[17] [1987] HKLR 987.

[18] [1957] AC 602.

[19] [1986] HKLR 198.

[20] Yeung Sun-shum at 993 E-F.

[21] [1973] AC 807.

[22] Doot at 818.

[23] Yeung at 998 B.

[24] [1991] 1 AC 225.

[25] at 244.

[26] Strassheim v Daily 221 US 280 at 285 cited in Lipohar v R (1999) 168 ALR 8 at para 65.

[27] Ruling, para 18.

[28] [1989] HKCU 41, at p 9.

[29] 2^nd ed., p 246.

[30] Ruling para 16.

[31] ibid para 20.  Emphasis added.

[32] ibid paras 24 and 25.

[33] ibid para 22; and para 65 above.

[34] at p 12, paras 21 and 22.

[35] [1971] AC 537.

[36] at 565.

[37] at 552 B – E.

[38] At 552 F – G.

[39] At 555 C – 556 D.

[40] Ruling para 21.

[41] para 107.

[42] [2004] QB 1418.

[43] (1985) 21 DLR (4^th) 174 at 221.

[44] [1999] 168 ALR 8 at para 133.  See also paras [134], [176] and [194].

[45] ibid para 133.  See also paras [134], [176] and [194].

[46] [1985] 2 RCS 178.

[47] Conspiracy to commit fraud.

[48] at 183.

[49] at 186.

[50] Written submissions to the District Court paras 14 and 18.

[51] ibid para 20.

[52] ibid paras 41 and 43.

[53] para 76 above.

[54] [1969] 1WLR 165 at 172G.

[55] Further Submissions para 19.

[56] Transcript pp 750-751.

[57] [1999] 2 Cr App R 398.

[58] ibid at 407.

[59] (1968) 52 Cr App R 106, [1968] 1 WLR 88.

[60] ibid p 411.

[61] (1864) 4 F & F 68.

[62] Naini p 411.

[63] ibid at 416-417.

[64] Section 159A(3).

[65] Reasons para 98.

[66] Reasons para 17.

[67] ibid para 18.

[68] ibid para 48.

[69] ibid para 83.

[70] ibid para 90.