HKSAR v. CHEUNG LING CHU SALLY AND ANOTHER

DCCC 920/2019

[2021] HKDC 188

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 920 OF 2019

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REASONS FOR VERDICT

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1.  D1 and D2 together face one joint charge of “Conspiracy for an agent to accept advantages”, contrary to sections 9(1)(a) and 12(1) of the Prevention of Bribery Ordinance, Cap 201, and sections 159A and 159C of the Crimes Ordinance, Cap 200.

2.  The particulars of the offence are as follows:-

“CHEUNG Ling-chu Sally and PONG Chui-kwai, between the 15^th day of January, 2015 and the 2^nd day of September, 2016, both dates inclusive, in Hong Kong, conspired together and with LAI Sze-ling and other persons unknown for the said CHEUNG Ling-chu Sally, being an agent, namely an employee of China CITIC Bank International Limited (“CCBIL”), to, without lawful authority or reasonable excuse, accept advantages, namely fees, rewards or commissions consisting of sums of money, as an inducement to or reward for or otherwise on account of the said CHEUNG Ling-chu Sally doing or having done acts in relation to her principal’s affairs or business, namely, referring clients of the said CCBIL to King Chi Trading Company for remitting money from the People’s Republic of China to bank accounts designated by them in the Hong Kong Special Administrative Region.”

OUTLINE OF THE PROSECUTION CASE

D1 - Branch Manager/Agent of China CITIC Bank International Limited

3.  At all material times, Dl was the manager of Leighton Road Branch (“the Branch”) of China CITIC Bank International Limited (“CCBIL”) and was, among other things, responsible for operating the Branch.

4.  CCBIL offered remittance services to its clients at a charge.  CCBIL staff was prohibited from accepting any advantage from remittance agents for referring CCBIL clients to remittance agents for remitting money because this would cause economic loss to CCBIL, would lead to the disclosure of the personal particulars of CCBIL clients and would jeopardize CCBIL's reputation.

D2 & King Chi Trading Company

5.  D2 was the Director and General Manager of King Chi Trading Company (“KC”), which traded in the name of King Chi Money Exchange.  KC was engaged in money exchange and remittance services, which included remitting money from the People’s Republic of China (“PRC”) to Hong Kong Special Administrative Region (“Hong Kong”) for its clients.  D2 was responsible for the daily operations of KC.

Foreign exchange control

6.  Under the Foreign Exchange Control (“FEC”) legislation aimed at maintaining equilibrium in the balance of payments in the PRC, an individual wishing to transfer and exchange currency into and out of the PRC is subject to restrictions that can be lawfully circumvented by using the 'off-set' banking system provided by registered remittance agents.

7.  At all material times it was the practice and understanding of the relevant parties that not more than USD50,000 (or equivalent) per year could be remitted through the banking system from the PRC to Hong Kong.  However, remittance agents, including KC, could assist individuals to avoid the FEC restriction as described above.

8.  The arrangement between the two defendants, who had known each other for many years, was that the exchange rate provided by KC to D1 for CCBIL clients would be adjusted by D1 before being given to those clients, thereby providing a profit margin for Dl.  KC would therefore receive slightly more than it had contracted to receive, and that excess was remitted to Dl as “advantage”.

27 remittance transactions of money from the PRC to HK via service of KC

9.  Between 7 April 2016 and 2 September 2016, D1 had on 27 occasions assisted CCBIL clients to engage KC’s service for remitting a total of RMB83,901,100 from the PRC, resulting in a total of HKD93,343,151 and USD490,000 being deposited into the bank accounts designated by Dl’s CCBIL clients in HK (“the 27 Remittances”).  The surplus, ie the resulting differences in exchange rates quoted by D2 to D1 and that quoted by D1 to CCBIL clients, totaling HKD1,185,173 were remitted to D1 by D2 into bank accounts of D1 or her husband.

10.  The prosecution alleges that between 15 January 2015 and 2 September 2016, D1 and D2 (along with Lai Sze Ling and other persons unknown) conspired together that:-

(i)  there be acceptance of advantage by D1 being an agent of CCBIL;

(ii)  without lawful authority or reasonable excuse;

(iii)  the advantage be as an inducement to, reward for or otherwise on account for D1 conducting herself in relation to her principal’s (ie CCBIL’s) affairs or business, namely by referring clients of CCBIL to KC for remitting money from the PRC to bank accounts designated by them in HK.

PROSECUTION EVIDENCE

The admitted facts (Exh P113 re: D1 & Exh P114 re: D2)

11.  By way of Admitted Facts, both defendants agreed to the details of the 27 Remittances done via KC’s service as incorporated into Annexures A, B and C.  These transactions all concerned RMB being remitted from the PRC to HK.

12.  Annex A sets out details of the 27 Remittances, which took place between 7 April 2016 to 2 September 2016.

13.  Annex B provides the references to locate the relevant exhibits and the details of 131 transfers of money, which are referred to as “T1 to T131” in Annexes B and C.  More importantly, both Annexes A and B refer to the various sums of money paid into either D1 or her husband’s account.

14.  Annex C, by reference to the “T” numbers, lists out the individuals who deposited HKD into designated HK accounts for the 27 Remittances and the respective amounts.  There is no dispute that these people were clients of KC who provided funds as part of KC’s general business model.  As they have not been called as witnesses in the trial, the references to their “PW” numbers are not relevant for the purpose of this Reasons for Verdict.

15.  Given the comprehensiveness of Annexes A-C, a large number of documentary exhibits and also detailed banking transactions are admitted and produced by parties’ agreement.  In addition, the Bankers Affirmations (Exh P106 to Exh P112), which formed the evidential basis of the various recorded transactions in the 3 Annexures, were also produced and marked as exhibits.

Prosecution witnesses

(1) PW1 - Mr Chan Kam Shing Eddo

16.  PW1 joined KC in mid-May 2011 and is now the Operation Manager.  He is responsible for the administrative aspect of KC.  He said the businesses of KC include money exchange and remittance services.  He confirmed that KC had to operate under a licence issued by the Customs and Excise Department (“C&E”) and there were guidelines governing their operation.

17.  Regarding remittance of money between the PRC and HK, PW1 said KC would only provide such service to its registered clients.  A client had to first register with KC by providing his/her identification document and KC would keep a copy of the same as its record.

18.  He gave evidence about the procedure for remitting money from the PRC to HK.  He said that when a client came to one of their shops to remit, say, one million RMB from the PRC to HK, his colleague(s) would quote an exchange rate and, if agreed, the client would arrange for the RMB to be transferred to one of KC’s RMB accounts in the PRC.  KC would verify the transfer online and, once confirmed, the shop would issue a remittance receipt to the office with the client’s instructions, including the amount of RMB, the exchange rate, the equivalent amount of HKD, the receiving bank account number in HK and the account name.  Once the office of KC received the document, they would arrange payment into the designated HK bank account by one of 3 methods, namely, (i) a bank transfer, (ii) a company cheque, or (iii) cash deposit. 

19.  KC made its profit from the differences in the exchange rates. He explained the reason why people would go to KC instead of big banks like CCBIL or Hang Seng Bank was because the Banking Association had set an annual limit of USD50,000 for RMB to be transferred out of the PRC.  However, such limit did not apply to KC as its practice only involved transfer between bank accounts in the Mainland.  He said that remittances could usually be done in a day and that would be faster than doing it through the bank.

20.  PW1 identified D2 as the wife of his boss, Mr Yung Bing (“Yung”).  Yung was the licence holder of KC and he stayed in the PRC most of the time.  He confirmed D2 was the one taking care of KC’s business in HK and he worked with D2 in the same office.

21.  PW1 confirmed the contents of KC’s Organization Chart (Exh P14), which contains details of its personnel and the branch shops.

22.  PW1 also identified the client registration form (Exh P101) in respect of D1.  On the form was D1’s name, phone number and a copy of her identity card.  A bank statement of D1 was also attached as proof of address.  PW1 said he had only met D1 twice.  He remembered it was around 2013 when he first met her and D1 said she worked for Sun Hung Kei Finance.  He confirmed he had not dealt with any transaction involving D1.

23.  In cross-examination by leading counsel for D1, he agreed they had a 4^th way of settling payment into a client’s specified bank account in HK, ie, by asking another client who wanted to remit money to the PRC to directly deposit his money into the specified account.

24.  PW1 also confirmed he had worked with D2 and Yung for some 10 years and agreed they were good employers.  He confirmed it was one of his duties to apply for appropriate licence(s) from the C&E.  A copy of “Licence for Operating Money Service” was produced and marked (Exh D2-1).  PW1 agreed that one of D2’s daily tasks was to set the exchange rate, which would be conveyed to all the shops and be acted upon by the employees with only a small discretion.

25.  In re-examination, PW1 elaborated that after D2 had set the “cost rate”, ie, the exchange rate that included a reasonable profit, there was discretion to adjust it but the authority rested with D2 and Yung.

(2) PW2 - Ms Chan Mei Kei

26.  PW2 started working for D2 and Yung in Ho Tak Investment Limited in March 2015.  The company was engaged in trading of property and rental business.  She was the personal secretary and finance personnel of the couple.  In July 2015, she started working for KC as well and was responsible for financial matters, including checking transactions of the shops and the amounts involved, eg, if a negative profit was reported in any transaction of a shop, she was responsible for checking.

27.  She said she did not create any records of transaction nor was she required to handle them.  Each shop manager would keep (copies of) the remittance receipts that had been given to their clients.  After the transactions were done, ie, after payments were settled, the receipts would be delivered to Ms Chan Wai Ching (PW3) of the Finance Department for handling.

28.  Regarding her daily work, she said at the close of business every day, the shops would generate remittance records in Excel format.  She had to check the amount of cash kept at the shops against the amount on statement.  If there was any error, she would first discuss with the relevant shop manager.  If necessary, she would also inform PW1 or speak to D2 in case PW1 could not handle the matter.

29.  She recalled having met D1 once or twice at the office.  She could only remember that D1 had introduced herself as a bank manager.  She had no dealing with D1’s transactions.  She said it was D2 and a colleague, Mr Lai Sze Ling (PW7), who handled them.  She further said that D2’s clients would always contact D2 directly.

30.  In cross-examination by leading counsel for D1, PW2 clarified that D1 was only formally introduced to her in 2015, though she had met her back in 2013 in a banquet hosted by KC.  PW2 agreed that prior to joining Ho Tak, she had been doing freelance accounting work for D2 since 2012. When questioned about the witness statement she gave in 2016, she clarified that she only started to see the name of D1 from the ledgers of KC when she took over the accounting work in July 2015.  She was not aware of any inward or outward remittances conducted by D1 nor had she ever tried to find out.

31.  In re-examination, PW2 clarified that she learned about the remittance amounts concerning D1 from the daily remittance records prepared by PW3 and those were for transactions done after 2015.

(3) PW3 - Ms Chan Wai Ching

32.  PW3 joined KC in 2012 as a bookkeeper.  She works in the head office with D2.

33.  She gave evidence that every day her colleague(s) would collect HKD and RMB receipts from the shops and deliver them to the office for her to handle.  When she got the RMB receipt(s), she would calculate the HKD equivalent according to the specified exchange rate(s).  She then verified the amount she got with that on the HKD receipt(s).  Thereafter, the two different types of receipt would be put together in the file as one set of documents.

34.  She confirmed the ICAC came to KC in October 2016 and asked for documents including the RMB receipts.  She confirmed the 2 remittance notebooks (Exhs P12 & P13) were prepared by her relying on the receipts she had received.

35.  PW3 was taken through 3 sets of documents (extracted from the exhibits) to demonstrate how the notebook entries were compiled using the information on the receipts. The 1^st set of documents relate to an Entry in Exh.P12 in the name of D1, dated the 7 April [p.408 of P12a (an extract of P12) and P15]. The 2^nd set of documents relate to another Entry in P12 in the name of D1, dated 23 to 25 April [p.410 of P12a and P17].  The 3^rd set of documents related to an Entry in Exh.P13 in the name of D1, dated the 11 May [p.408 of P13a (an extract of P13) and P21].  

(4) PW4 – Mr Lee Chi Wing

36.  He joined KC in around 2012 and became a clerk working in KC’s head office since 4 May 2015.  His witness statement was admitted under s 65B of Criminal Procedure Ordinance, Cap 221 and was marked as Exh P115 (translation/P115a).

37.  In PW4’s witness statement, he set out in some details KC’s procedure in handling clients’ remittances of money from the PRC to HK.  In gist, a client who went to a KC shop to remit money would first have to make payment from a Mainland bank account to one of KC’s Mainland accounts.  The deposit slip would then be given to KC’s staff at the shop.  In return, the client would obtain a money exchange receipt containing information about his name, identity card number, the date, remittance amount, exchange rate, and information of his designated account (with account name and number) to receive the remittance in HKD.  The staff at the shop would fax the receipt and the deposit slip to the office to confirm that payment has been made to KC’s Mainland account(s).

38.  Thereafter, PW4 would be responsible for arranging payment to the client’s designated account in Hong Kong.  He could either effect payment by transferring money from KC’s bank account held with DBS, ask the staff at the shops to make cash deposit, or by a combination of both, depending on instruction given by D2 or Yung.  In cases involving a relatively large sum, D2 or Yung would also give instruction as to where to transfer the money from and make the relevant arrangements, depending on the daily balance of KC’s bank account and the cash flow of the shops on that day.

39.  For all the transfers completed each day, PW4 would make proper records by marking them down on a notebook.  He would use a blue ball pen to mark down the client’s name, payee’s bank’s name, amount and date.  He would staple together the faxed copies of the money exchange receipts, the clients’ pay-in slips, and the pay-in records (including some cash deposit slips) of KC into the clients’ designated accounts.  After that, he would pass the notebook together with the stapled documents to PW3 for verification.

40.  Amongst other things, PW4 also provided the ICAC with documents including the monthly printouts of KC’s DBS accounts and the “Daily Bank Balance” printouts involving other accounts held by D2 and Yung.

(5) PW5 – Mr Tang Jun

41.  He joined KC as a clerk in May 2016 and was transferred to KC’s head office in September 2016.  His witness statement was admitted under s 65B and marked as Exh P116 (translation/P116a).

42.  He was one of the 3 persons working in the Remittance Department at KC.  His supervisor was Mr Lai Sze Ling (PW7).  He and another colleague, Mr Tsang Kin Pong (PW6), were responsible for managing KC’s Mainland bank accounts.  D2 had provided him with the login names and passwords of 5 Mainland accounts for online banking purposes.

43.  PW5 was responsible for operating the Mainland bank accounts online and, based on instructions given by PW7, to check whether clients wishing to remit money to HK had in fact deposited the corresponding RMB sums into KC’s accounts.  Alternatively, for clients wishing to remit money to the PRC, PW5 needed to ensure that the relevant RMB sums have been deposited into these clients’ designated Mainland accounts.

(6) PW6 – Mr Tsang Kin Pong

44.  He joined KC in 2010 and has been working as a clerk in the KC head office since.  His witness statement was admitted under s 65B and marked as Exh P117 (translation/P117a).

45.  At the material time, he had a similar role as PW5 except that he was responsible for operating a total of 12 Mainland accounts.  He was also required to give Ms Chan Wai Ching (PW3) a daily report on the 12 accounts.

(7) PW7 - Mr Lai Sze Ling

46.  He gave evidence under immunity.  The letter of Immunity was produced and marked as Exh P118.

47.  He joined KC in November 2008.  His scope of work around 2014 was to arrange for the remittance of money from the PRC to HK. He worked in the Remittance Department and in the same office as D2.  He said that while both D2 and Yung were his bosses, D2 was mainly responsible for the administration of KC and for setting the exchange rates for remittances.

48.  He was asked of the procedure when a client came to him to remit, say, one million RMB from the PRC to HK.  He said he would first ask D2 for an exchange rate.  Afterwards, the same rate would be quoted to the client for his/her consideration.  Once the client agreed to the designated rate, he would provide him/her with KC’s Mainland bank account(s) for RMB to be deposited.  Once the RMB sums have been deposited, the client would send him the deposit receipt(s) by email, WhatsApp or WeChat for verification.  After confirming that the money had been deposited in KC’s Mainland account(s), he would ask the client to provide details of the bank account(s) in HK in order to receive the corresponding HKD.  Clients can provide more than one HK account depending on instructions of each individual.

49.  As to the record of transactions, he said that the relevant documents of transactions carried out by the shops and that of the office would all be sent to the Account Department.  PW3 was responsible for collecting the documents and entering the transactions in a journal.  He said he seldom looked at the journal unless he was asked to assist, eg, in case there were miscalculations.

50.  He confirmed D1 was a client of KC.  He had met her in the office but did not have a deep impression of her.  He had WhatsApp communications with her using the company mobile phone (Exh P11) in handling her transactions with KC.  The Extraction Report of the data downloaded from the phone, its certified true copy and certified translation were produced as Exhs P11a, P11b and P11c (Admitted Facts Exhs P113 & P114).  In the course of his evidence, he was taken through various text messages he had with D1 and photo images of documents attached.

51.  While the WhatsApp communications took place between 10 May 2016 and 17 October 2016, he agreed that D1’s transactions with KC had begun earlier.  However, he was unable to recall the precise time which it began.  He said that previously, it was D2 who communicated with D1 while he was merely responsible for providing D2 information of the Mainland account(s) and to make subsequent arrangement for deposit(s) into HK banks account(s) as directed by D2.  With reference to Entries 190-193 (p 108/2850) of Exhs P11a/P11c, he recalled that he had sought approval from D2 before he contacted D1 directly.  He said it did not cross his mind whether the money involved in the transactions belonged to D1 or somebody else.  He knew D1 was a bank manager of CCBIL.

52.  Reference was made to Entries 196 (p 109/2851) and 216 (p  112/2854) where D1 gave instructions for HKD681 and HKD680 to be paid to her personal account with Bank of China respectively, he agreed those were clients’ monies.  He said it did not cross his mind why they were paid to D1’s account.  He said he was merely acting on D1’s instructions.  When he was asked about Entries 321 (p 128/2870) and 348 (p 132/2874), where deposits were made to the account of Ng Hoi Kit Ricky (“Ng”), he said he was acting on D1’s instructions.  When told that Ng was D1’s husband, he said he only knew at the time the ICAC investigated the matter.

53.  As to the Chinese character “水” used in E 348, he said he understood that to mean the “balance” of client’s money.

54.  He was also taken to various entries including Entries 199 (p  109/2851), 213 (p 112/2854), 315 (pp127/2869), 343 (p132/2875), 399 (p 140/2882), 421 (p 144/2886), 441 (p 147/2889), 469 (p 151/2893) and 482 (p 153/2895) where 2 exchange rates were mentioned (one offered by D2 and one offered by D1 to her client).  As to whether he had discussed this with D2, he said he had asked D2 about it but could not remember what she said.  When asked about his understanding of the 2 different exchange rates, he maintained that he would only conduct the transactions according to the rate quoted by D2.

55.  In cross-examination by leading counsel for D2, he agreed that exchange rates fluctuate and, that when setting them, D2 would make reference to the rates set by other operators in the trade.  He also confirmed that exchange rates might even fluctuate within the same day.  He was referred to the different exchange rates recorded on p 417 (2064) of Exh P13 and he agreed that there was a degree of flexibility for the shops.  Regarding the WhatsApp messages with D1, he confirmed that insofar as KC was concerned, there was only one exchange rate, and that was the one offered by D2.

56.  In re-examination, he said D2 would quote a “cost rate” every day for colleagues at the shops and they could adjust either up or down before offering to clients.  He also elaborated that there were guidelines given to them so that they knew the base and how to adjust accordingly.

PW8 (wrongly referred to as PW13 in Annex A) - Mr Fu Wai Kwong & PW9 (wrongly referred to as PW14 in Annex A) – Mr Fu Tsz Wang, Gary

57.  The 2 witnesses are father and son.  The father, Mr Fu Wai Kwong, had a bank account opened at the Branch in 2015.  At that time, the branch manager was surnamed Chan. Later, D1 replaced Chan and became the manager.

58.  Sometime in 2015 or 2016, the son, Mr Fu Tsz Wang, Gary, wanted to sell his property in Shanghai and remit the proceeds back to HK.  As such, the father consulted D1 over the phone regarding the intended remittance.  He also gave D1 his son’s contact number.  Later on, he was asked by D1 to provide 2 HK bank accounts for receiving the remittance.  He therefore gave her 2 bank accounts, one with HSBC and the other with BOC.

59.  He received 4 separate deposits in his HSBC account on 7 April 2016.  They were HK$400,000, $200,000, $220,787 and $158,615 respectively.  There were also 5 deposits in his BOC account on the same day.  They were 4 sums of HK$100,000 and one of $150,000 respectively.  As to a sum of $5,882 deposited into his BOC account 12 days later, he had no idea what it was for.

60.  He did not know any company in the name of KC.  Neither had he heard about a company called “QPF”.  He did not go to other places for the remittance as he only knew D1.  As to why he trusted CCBIL and D1 to look after his son’s money, he said he just wanted to ask her how to do it.  He confirmed that D1 did not tell him that the remittance would concern other company or party.

61.  In cross-examination, leading counsel for D1 pointed out that his CCBIL account was opened in April 2014, he said he could not recall.  He agreed that after getting to know D1 through CCBIL, he and his wife got acquainted with her and had tea together.  When asked if it was his wife who first talked to D1 about the remittance, he said they called D1 first and then they went to the bank together to see her.  He had no idea if D1 had told his wife that the remittance could not be done through the bank.  However, he agreed that D1 had asked him for 2 bank accounts and told him that money would be remitted into those accounts.

62.  In re-examination, he said the account with CCBIL was his personal account, not a joint account with his wife.

63.  The son confirmed it was D1 who contacted him first by WhatsApp and that was the means by which they subsequently communicated.  He said D1 had provided him with more than one Mainland account to deposit his money.  He sent D1 the deposit slips afterwards.  He later received confirmation from his father that the relevant sums in HKD had been received in HK.  Apart from HKD, he also requested for USD as part of the remittance.  Through their communication, he knew D1 was working for CCBIL but did not know if she was working for another party.

64.  He was shown the messages in the Extraction Report (Exh P10a; the certified true copy, Exh P10b and the certified translation, Exh P10c) of data downloaded from D1’s mobile phone (Exh P10).  Among other things, he was asked who “Mrs Yung” (in Entries 15 & 30) was, he said he had no idea.  He neither had any idea why “Chung Sing Motors Ltd” (in E 42) was involved.  To sum up, he merely acted on D1’s instructions and eventually he got his money remitted.

65.  In cross-examination by leading counsel for D1, he agreed that he received his proceeds of sale in 2 instalments, one on 7 April 2016 and the other on 15 April 2016.  It was clarified that the communication he had with D1 was by way of iMessage instead of WhatsApp.

66.  He could not recall if he had had any phone conversation with D1 before their first iMessage.  He could not recall very well if D1 had explained to him who Mrs Yung was.  He equally could not recall if D1 had explained to him the process of remittance or that the remittance was done through a properly licensed and reliable remittance company.

(9) PW10 – Mr Chan Tsz Him

67.  He joined CCBIL in February 2010 and his title was CITICfirst Associate.  In April 2014, he was transferred to the Branch as a Relationship Manager.  His role at that time was to serve clients and to sell products including mortgage, insurance and saving services.  In July 2015, he received Investment Service Training and obtained necessary qualifications to sell investment products such as stocks and equity funds.  He left the bank in July 2016.  He was asked to confirm the names of a number of colleagues whom he had worked with at the Branch, including D1 and Ms Lee Ka Lam Ruby (PW12).

68.  He understood that according to the FEC, one could not remit more that USD50,000 per year out of the PRC.  He received training from CCBIL every year.  He said he was not taught in his training what to do if a client wanted to remit, say, 20 million RMB to HK.  He would tell the client about the FEC, ie, the FEC did not permit CCBIL to transfer the money, and he would leave it to the client to find his own way to do the remittance.  This was because CCBIL was subject to the FEC and there was no way that CCBIL could help remit such large sums.

69.  He remembered that in around May or June 2016, there was a client surnamed “Kang” who wanted to remit money from the PRC to HK.  He said the amount involved was some USD100,000 to USD200,000.  As CCBIL could not assist in the remittance, he reported the matter to D1.  D1 told the client that a rate had to be quoted and if the remittance could be successfully completed, PW10 would be given “something”.  He understood “something” to mean a “reward or commission”.  In reply, he told D1 there was “no need”.  Thereafter, he and D1 communicated with Kang separately through WeChat.  Eventually, the intended remittance did not go through.

70.  According to what D1 said, he reckoned that the remittance (had it happened) was to be done through a “cash changer/money exchange”.  D1 said the matter would be referred to “Mrs Yung” and a rate had to be quoted.  He had this thinking that “Mrs Yung” was the one giving the quote.

71.  Reference was made to 2 photo images (Exh P5a) showing WhatsApp messages (both text and voice) between D1 and him on 15 June 2016.  They had been downloaded from D1’s mobile phone (Exh P10) and stored in a SD card (Exh P5).  Their certified true copy (Exh P5b) and English translation (Exh P5c) were also produced.  A DVD (Exh P6) containing 4 voice messages of D1 was played in court, with transcripts as Exh P6a and certified translation as Exh P6b.  PW10 confirmed the messages concerned the case of Kang.  He agreed that D1 had quoted an exchange rate of 6.68 for RMB to USD and he guessed D1 had got it from “Mrs Yung”.  He confirmed his earlier evidence that Kang’s intended remittance was not the bank’s ordinary business and he only asked D1 on Kang’s behalf.  He was also referred to D1’s voice message (at 4:31 pm) and agreed that D1 had suggested giving him a share of the possible “profit” in the event that Kang’s intended remittance was completed.

72.  In cross-examination by leading counsel for D1, he agreed that when a client came and asked for remittance that exceeded the limit of the FEC, staff at CCBIL would tell him that they could not do it.  He added that he had in fact said the same to his client.  He confirmed D1 had mentioned about a “properly licensed remittance company” operated by her friend.  He agreed that D1 also said the service provided by “Mrs Yung” included legitimate remittance of money from the PRC to HK, though he did not pay much heed to it. 

73.  Regarding colleagues at the Branch, he confirmed there was one Andy Shu, who was an ex-colleague of D1 at Sun Hung Kai Finance Group.  He agreed that Andy Shu had referred high net worth clients to D1 but he does not know anything about remitting money for them.  A number of names were mentioned to him and he could remember a lady called Zhuang Jian Hua and her sister, Zhuang Jian Ling.  He also heard about the name of Lau Kin Fong Josephine, though he did not have much recollection of her.

74.  He was taken through screen captures of WeChat communications he had with Kang between 11:04 am 17 May 2016 and 4:25 pm on 15 June 2016 (marked as Exh D1-1; translation Exh D1-1a) concerning the latter’s intended remittance.  In particular, he was referred to a text message he sent to Kang (at 7:15 pm on 14 June 2016), which read “Because I have asked around in many places, none of which is more reliable than Ms. Cheung (D1)’s place, as they have been working together for a long time”, he said he did not have much recollection as it was some 4 years ago.  Finally, with reference to D1’s voice message about possible profit, he agreed that was the only occasion D1 had said something like that.

75.  In re-examination, he explained that since he did not have many Mainland clients like Kang, he just ignored D1 when she said “Mrs Yung” could arrange legitimate remittance of money.

(11) PW11 - Mr Hui Tik Lun, Dylan

76.  He worked at the Branch around 2015 to 2016 for about a year.  His title was Business Development Executive (“BDE”) and was responsible for opening bank accounts for clients.  D1 was the bank manager.  One of his colleagues was Mr Andy Chui, who was a Finance Planning Manager selling insurance products.  He did not know much about the FEC and he received training from CCBIL only at the time he joined the bank.  He said he was not involved in remittance services provided by the bank.  He resigned in October 2016 and was approached by the ICAC to assist their investigation.  He was asked to recall conversations that he had with his ex-colleagues and, in particular, whether D1 had ever talked about “her own business”.  The witness said he could not remember.

77.  Counsel for the Prosecution applied for the witness to refresh his memory from WhatsApp exchanges he had with Andy Chui.  Counsel for both defendants objected on the grounds that, since neither the witness nor Andy Chui were co-conspirators in the case, conversations they had, which was hearsay evidence to start with are also irrelevant to any of the issues at trial. I agreed with Defence submissions and invited the Prosecution to lay foundation for the witness to refresh his memory from his witness statement first.

78.  In the questioning that followed, the witness agreed he had given a witness statement to the ICAC on 16 August 2019.  He said when he gave the statement, his memory of what happened in 2016 was “so and so”.  He said he was aware of the “Declaration of truth” printed on the statement when he signed on it.  While maintaining that the statement was true, he qualified by saying that he did not actually remember everything at the time. He further confirmed he had read the statement once when he was asked by ICAC officers to do so in December 2020, but it did not help to jog his memory.  His evidence concluded when the prosecution withdrew its application.

(11) PW12 - Ms Lee Ka Lam, Ruby

79.  She joined CCBIL in September 2010 and worked at the Branch as CITICfirst Associate.  Her duty was to provide general banking services including opening of bank accounts and assisting her manager to handle client’s fixed deposit.  D1 joined as the Branch’s manager at the beginning of 2015.  At that time, PW12 had 2 immediate supervisors, namely, Ms Cham Man Yi, Coe (PW14) and Mr Lai Lap Kei, Alfred.  As the Branch was a small one, D1 would sometimes contact her directly for client’s matters.

80.  In 2016, D1 asked her to contact a client, Madam Zhuang Jian Hua (“Zhuang”), to enquire about a few suspicious transactions.  She therefore called Madam Zhuang at her contact number as stated in the bank’s internal record but nobody answered.  Several days later, D1 sent her a WhatsApp message asking her to check Zhuang’s bank transactions within that period of time.  There were subsequent WhatsApp exchanges between them with regards to the matter; both text and voice messages were exchanged.  There were also documents attached to the messages.

81.  The relevant photo images and text messages of their WhatsApp exchanges between 28 April 2016 and 5 July 2016 were retrieved from her mobile phone (Exh P7).  The Extraction Report was produced and marked as Exh P7a, its certified true copy and certified English translation marked as Exh P7b and Exh P7c respectively.  The Prosecution also prepared Schedule I as an “aide memoire” to assist cross-referencing to the relevant images attached.  The relevant voice messages contained in a DVD with their transcripts and certified translation were also produced and marked as Exhs P8, P8a and P8b respectively.

82.  In the questions that followed, PW12 was asked to go through various entries of Exh P7a including 1, 5, 7, 8, 19, 20, 24, 48-51 & 54.  Voice messages with Entry numbers 1, 5, 20, 50, 54 on the transcript (Exh P8a) were played in court.  In gist, the witness confirmed that D1 had asked her to check the record of transactions regarding Murray Investment Fund Co Ltd (“Murray”), which she did.  The record of transactions was sent to D1 as attachment in Entry 48 (p 37/p 2538 translation) and the image at p  51/p  2552 (translation).  (Prosecution pointed out that the 2^nd amount of “HK$961,400.00 on the record corresponded to T13 of the 3^rd remittance set out in Annex B).

83.  She was further asked by D1 in Entry 49 to call Zhuang to make enquiries about the source of funds deposited into Murray’s account.  This time she was able to speak to Zhuang over the phone.  She said Zhuang spoke with a strong Putonghua accent.  However, she recalled Zhuang’s explanation that some of the deposits were wrongly made by her staff and that was in line with the message in Entry 49. 

84.  She gave evidence that Zhuang was a director of Murray.  As Entry 61 made reference to 2 corporate accounts opened by Zhuang, she said it was possible that one of them belonged to Murray.  She could not remember whether Zhuang was a director of any company other than Murray.

85.  In cross-examination by leading counsel for D1, she confirmed that the dialogue she had with Zhuang was recorded by the phone system of CCBIL.  The transcript of the phone dialogue was produced and marked as Exh D1-2 (translation Exh D1-2a).  She confirmed that the transcript was accurate and agreed that there was no reference in the dialogue about Zhuang’s staff making wrong deposits.

86.  She agreed Zhuang had a sister, Ms Zhuang Jian Ling, who was also a director of Murray.  She remembered that Ms Lam Kin Fong, Josephine, was an assistant to one of the sisters.  She could remember that Zhuang had a daughter and a son-in-law but she could not recall their names. She also had recollection of a company called Hong Kong Heilongjiang Green Food Management Co Ltd.

(12) PW13 - Mr Li Kam Wai, Joemund

87.  He joined CCBIL in October 2012.  He assisted the ICAC’s investigations in August 2019 and he was CCBIL’s then Deputy General Manager and Head of Kowloon Region.

88.  He produced a copy of the Code of Conduct of CCB/Human Resources Policy (Exh  P103) and General Compliance Manual for CCBIL (Exh P104), both of which were applicable for the years 2015 and 2016.  He also produced an Acknowledge of Receipt (Exh P102) signed by D1.

89.  He testified that any employee who wanted to have business outside the bank had to apply for approval from the senior level. He has checked all of D1’s employment records and confirmed there was no record of consent or any matter of interest within the contents of the said documents.

(13) PW14 - Ms Cham Man Yi, Coe

90.  She joined the Branch in August 2014.  In 2015, her post was CITICfirst Senior Relationship Manager.  Her duty was to take care of CITICfirst clients, ie, those with assets of HKD1 million or equivalent, and was responsible for selling insurance and investment products.

91.  She said that D1, as the Branch manager, was immediately above her in terms of rank.  Other colleagues included Finance Planning Manager, Mr Chui Yuk Lam, Andy, Relationship Manager PW10 and one Ms Wong Li Ling, Becky.

92.  She told the court that CCBIL was not the first bank she had worked for and she had been working in the industry since 2008.  She testified that she received internal training at CCBIL from time to time.  She was aware of the “FEC”.

93.  She was given an example of a CITICfirst client who wanted to remit RMB 3 million from Shanghai to HK and was asked if she was able to deal with it.  Her reply was “this could not be done through our bank”. When asked what she would do in the normal course of event, she said “I would explain to that client that because of the FEC, it would be impossible for him to transfer 3 million dollars to HK in one go”.  She further said that if the client really wanted to do it, she would tell him that “it could only be transferred here (to HK) a few times”.  By this she meant that since one could only remit no more than USD50,000 per year or its equivalent out of the PRC, some of the clients might ask their family members to do it on their behalf and hence there would be a 2^nd time, a 3^rd time, etc.

94.  She was also asked if she would give her client advice as to how to properly and lawfully circumvent the FEC, she replied that “both the bank and I were not allowed to do it” and she would have to explain the measures in relation to the FEC to the client. In the event that a client insisted that that his family members could help and split up the money into small amounts, she said she still had to explain to him that the bank could still decline the transactions if there were too many of them, if they were too frequent, or if CCBIL finds the transactions suspicious.

95.  According to her evidence, even if the amount was under USD50,000, it was not for the Branch, but for different departments of the CCBIL (including the Remittance Department, the Anti-Money Laundering Department and the Compliance Department) to decide whether to do it.  When she was given another example of remitting USD10,000, her reply remained that “it was not necessarily the case that it could be done or it could not be done”.  It was finally suggested to her (of which she agreed) that such a transaction was nevertheless possible, subject to all those internal restrictions and decisions of the various departments.

96.  She confirmed that sometime in June 2016, a Mainland couple had wanted to open an account with CCBIL.  The couple first came to Becky and was then introduced to her.  She explained that in order to open an account, a Mainlander had to produce his Mainland identity card, 2-way permit and also provide reasonable ground(s) for opening the account, together with relevant proof such as a letter from the Immigration Department for investment immigrant, proof of work or proof of purchase of property, etc.  She had no recollection if the couple eventually succeeded in opening an account.

97.  She gave evidence that after the couple was introduced to her, she asked Andy Chui to be responsible for their future inquiries and to provide them with information.  She recalled that the couple wanted to remit 1.6 million dollars to the US, though she could not remember the currency of the said sum.

98.  She confirmed that she attended a meeting sometime afterwards where D1, the couple and Andy Chui were all present.  She made an audio recording of the meeting using her mobile phone.  An SD card and a DVD containing the audio file were produced and marked as Exh P4 and Exh P4a respectively.  The transcript and translation were produced and marked Exh P4b and Exh P4c respectively.  The audio recording was played in court of which she confirmed was the recording of the meeting.  She also identified the different voices of the attendees at the meeting.

99.  In cross-examination by leading counsel for D1, she confirmed that there was restriction on the amount of money that could be remitted out of the PRC under the FEC.  Amongst other things, she agreed that (a) in 2015 to 2016, the remitting bank account in Mainland and the receiving bank account in HK had to be in the same name; hence, even if the money was split up into smaller amounts, a client’s friend was still unable to remit money from his Mainland account to the client’s HK account, and (b) splitting up the money into smaller amounts and asking family or friends to help remitting was not a suggestion that she would normally give to her clients.

100.  She confirmed that it was USD1.6 million that the Mainland couple wanted to remit to the US.  She agreed the couple had mentioned about the intended remittance before D1 joined the meeting and Andy Hui already told them there and then that, due to the FEC, the bank could not deal with their remittance.

Prosecution’s application to recall PW13

101.  After all live witnesses had given their evidence and some of the video-recorded interviews of D2 had been played in court, the Prosecution applied to recall PW13.  There were 2 limbs to the application, namely, (i) to highlight the relevant provisions in the Code of Conduct (Exh P103) and General Compliance Manual (Exh P104), and (ii) to deal with certain point that had arisen out of the evidence of other bank witnesses, in particular, PW14.

102.  I ruled against the 2^nd limb of the application but allowed PW13 to be recalled for the purpose of elaborating on P103 and P104.  The Ruling is attached as Annex I to this Reasons for Verdict.

103.  PW13 was recalled and he confirmed his earlier testimony that any employee of CCBIL who wished to have outside “business relationship(s)” had to apply to the senior level for approval.  He also highlighted various paragraphs in Exh P103 and Exh P104 that were relevant to the issue.

5 video recorded interviews (VRIs) of D2

104.  D2 was arrested by the ICAC on 19 October 2016 for the offence of “offering advantage” to D1 for referring CCBIL clients to using KC’s service (s 9 offence) and “conspiring with D1 to commit money laundering”.  She was interviewed under caution on 5 occasions for a total of some 10 hours and the VRIs/transcripts/translations were produced as part of Admitted Facts (Exh P114) and marked as follows:-

(i)  P95 - 1^st VRI (between 1116 hrs and 1303 hrs on 19.10.2016); P95a/transcript & P95b/translation;

(ii)  P96 - 2^nd VRI (between 1222 hrs and 1408 hrs on 20.10.2016); P96a/transcript & P96b/translation;

(iii)  P97 - 3^rd VRI (between 1529 hrs and 1819 hrs on 20.10.2016); P97a/transcript & P97b/translation;

(iv)  P98 - 4^th VRI (between 1525 hrs and 1810 hrs on 2.6.2017); P98a/transcript & P98b/translation;

(v)  P99 - 5^th VRI (between 1827 hrs and 2007 hrs on 2.6.2017); P99a/transcript & P99b/translation.

105.  Upon agreement of the Prosecution and the Defence, selected parts of each interview were played in court.

106.  The prosecution closed its case after the playing of the VRIs and there was no Half-time Submission from the Defence.  I ruled there was a Case to Answer for both defendants on the Charge.  Neither of the defendants elected to give evidence or call any witness.

DIRECTIONS

107.  I remind myself that the Prosecution is required to prove each and every ingredient of the offence against each defendant beyond reasonable doubt.  The defendants have nothing to prove.  No adverse inference could be drawn against the defendants for electing to remain silent.

108.  The clear records of both defendants are relevant to the issues of propensity and credibility.

109.  I reminded myself that I had to separately consider the evidence for and against each defendant.  In particular, what D2 said in her VRIs cannot be used against D1.

110.  Also, where the Prosecution seeks to rely on circumstantial evidence, I can only draw an adverse inference from facts proved beyond reasonable doubt and such an inference must be the only inference that can be reasonably drawn from such facts, it must be an irresistible one.

ISSUES IN THE CASE

111.  The prosecution relies on the 27 Remittances as overt acts of the conspiracy.  Details of the transactions are not in dispute.

112.  An important feature in this case is the FEC control of the PRC that was in place at all the material times.  However, there has been no expert evidence called to explain the issue of foreign law and the Prosecution was content with proceeding on the basis of the “practice and understanding of the relevant parties” as set out in the Admitted Facts concerning D1 (para 4 of P113), which D2 did not take issue with either.

113.  The defendants admitted that a total of HKD425,691 in 12 (out of the 27) Remittances and HKD754,203 in 14 (out of the 27) Remittances were deposited respectively into D1 and her husband’s bank accounts [Exhs  P12-40; Exh P111] during the period in question.  The Prosecution says the monies represent “advantages” received by D1 as a result of the conspiracy. 

114.  In addition, there was no dispute that D1 was an employee/agent of CCBIL at all material times while D2 was the person in charge of KC’s daily operations.  Further, D1 did not dispute that she had not sought approval from CCBIL for permission to conduct outside business and was in breach of different clauses in CCBIL’s Code of Conduct/Human Resources Policy (Exh P103) and General Compliance Manual (Exh  P104).

115.  There was some dispute as to whether the people D1 referred to KC were “clients of CCBIL”.  In this regard, I agree with the Prosecution that D1 had no right to treat any client as her own simply because the connection may have been made prior to her employment.  More importantly, D1 knew that they became clients of CCBIL.  For people like PW8 & PW9, I agree they should be considered as “clients” of CCBIL as well since they sought the advice or assistance of D1 in her capacity as bank manager of CCBIL.

116.  The remaining issues are:-

(i)  Whether there was a conspiracy between D1, D2, PW7 and persons unknown for D1 to accept advantages for “referring clients of CCBIL to KC” for remitting money from the PRC to bank accounts designated by them in the HK;

(ii)  Whether the said “referral” is an act “in relation to CCBIL’s affairs or business”.

EVALUATION OF EVIDENCE

Were the 27 remittances part of CCBIL’s business?

117.  The prosecution says in its Opening (para 2) that CCBIL offered remittance services to its clients at a charge.  However, there was little evidence called as to their nature and operations.

118.  As to the “off-set banking system” employed by KC to remit money for client, the prosecution submits in its Closing Submissions that:-

“1.9  The Foreign Exchange Control, ‘FEC’, are PRC laws governing and regulating part of its central banking system and balance of payments. It is a gross over simplification to submit that the evidence before the court has provided chapter and verse on the PRC law in this regard. However, it is admitted fact and supplemented by the viva voce evidence of the Citic (CCBIL) staff of the level of belief in regard to how the FEC impacted on the day-to-day operations and discharge of bank officers’ duties. See paragraph 4 in the ‘Opening’ dated 7^th December 2020 as amended and signed by fiat Counsel. The Admitted Facts (D1 paragraphs 2 to 6 and D2 paragraphs 3 to 4) together with the unchallenged evidence of various witnesses (notably PWs 10 and 14).

1.10  The restriction of the remittance of RMB currency out of PRC is an important part of the case. The undisputed fact is that the business of King Chi as a remittance agency is regulated under the auspices of the Hong Kong Custom and Excise. It is a lawful business provided it carries out its business pursuant to its licence and the laws of Hong Kong…... It is a system of offset banking such that no money flows out of or into PRC. Debt obligation is swopped by those counterparties who wish to move out of RMB currency with those who wish to move into RMB currency. The system depends on the trusted intermediary, in this case King Chi (KC), the remittance agent. The amounts of money are seemingly without limit provided that King Chi (KC) can balance its transactions and books as between the various counterparties and thereby fulfil its commercial obligations to deliver agreed amounts of currency pursuant to contract and at agreed exchange rates into designated bank accounts.”

119.  The prosecution also acknowledges in the Admitted Facts with D1 (para 5 of Exh P113) that the remittances conducted by KC at all material times for its clients were “outside the banking system”.

120.  PW14, who had been working in the banking industry since 2008, said in her evidence that for money to be transferred from the PRC to HK, a request had to be first made by the remitting party to the PRC bank (where the RMB is located) in order to effect the remittance.  It follows that the remittance had to be initiated on the PRC side and CCBIL, as a bank in HK, could only play the role of a receiving bank.

121.  PW10, who had received training from CCBIL every year, also gave evidence that CCBIL was subjected to the FEC and could not effect any remittances beyond the limit.

122.  On the available evidence, I find that CCBIL could not have executed the 27 Remittances and such remittance services fell outside the ordinary businesses of CCBIL.

No referral of CCBIL clients

123.  “Referral of CCBIL clients” to KC for remitting money from the PRC to HK was described in the Particulars of the Charge as an “act done by D1” in the alleged conspiracy.

124.  Leading counsel for D1 contends that there had never been any referral of clients to KC and hence no agreement/conspiracy to refer.  The following points are advanced in support:-

(i)  D1 herself was using KC’s off-set banking service to assist her own clients to achieve the economic equivalent of remitting money from the PRC to HK. No client was ever “referred” to KC.

(ii)  PW7’s evidence was clear that at all material times, KC treated D1 as its client, and did not pay attention to, nor care about the identity of D1’s clients. This was corroborated by evidence of PW2 and PW3.

(iii)  It was PW3 and PW7’s evidence that KC required a remitting party to be a registered client of KC in compliance with its licensing conditions. In this case, the registered client had all along been D1, who had been a registered client of KC since 3 September 2013 [Exhs P101/P101a (certified true copy)/P101b (translation)]. This is also consistent with KC’s own business records, in particular, Exh P12.

(iv)  There is no evidence whatsoever that the “clients” as alleged by the prosecution had had any contact with any staff of KC at all. PW7’s evidence was that he had only been in contact with D1 in relation to the remittances handled by him, which was also apparent from the WhatsApp conversations between PW7 and D1 [Exhs P11a (Extraction Report)/P11b (certified true copy)/P11c (translation)].

(v)  It was common sense that D1 would not have referred any clients to D2/KC; otherwise, D1 would no longer be able to earn handling fees from the differences between the quoted exchange rates. D1 was making money from the difference in exchange rates - in exactly the same way KC conducted its own business. She would not be able to markup the exchange rate quoted by KC to her if she did in fact refer her clients to KC.

125.  Leading counsel for D2 also supports the argument and adds that the relationship between D1 and D2 could be analogous to that between KC and a fellow money exchanger.  There could be a business relationship between the two, but there would be no referral of clients by the fellow money exchanger to KC.  KC would have no control over what exchange rates the fellow money exchanger gives to its clients.  On that basis, it could not be said that clients were referred to D2/KC since all along KC’s client was only D1.

126.  While I agree that there was no “referral of clients” in the sense of putting them in direct contact with D2/KC, I take the view that the Particulars of the Charge merely serve to provide a brief description of the “acts” of D2 in the alleged conspiracy.  Indeed, the Prosecution has already set out in detail the role allegedly played by D1 in the remittance transactions (para 6 of its Opening), which was obviously not just about physical “referral of clients” to KC but D1 was an active integral part of making the transactions happen.  As such, I do not think the mere choice of words in the Particulars of the Charge should affect the Prosecution’s case as a whole.

Issue of side business/moonlighting

127.  However, on the available evidence, it was clear that D1 was doing a lot more than simply referring clients/businesses to D2.  What she did included (i) selling KC’s remittance service to clients; (ii) liaising and acting as intermediate between clients and D2 or PW7; (iii) setting her own profit margin by adjusting the exchange rate quoted by D2 and (iv) following up to make sure that clients receive their monies, etc.

128.  I find the evidence clearly support D1’s submissions that D1 was in fact running a “side business” of providing remittance services to her clients.  I have considered the Prosecution’s Closing Submissions (in particular, the paragraphs under the heading of “Evidence relating to Basic Facts”) and I do not find any of the points raised there to be inconsistent with the fact that D1 was conducting her own side business.  Indeed, some of the Prosecution’s points actually highlight the hands-on approach adopted by D1 in running this side business and support the finding.

129.  Despite my finding of the “side business/moonlighting”, that does not preclude the existence of a conspiracy between the defendants whereby D1 was to accept “advantage” in the form of her own business profits.  Take the example of a salesperson working for a motor parts retail shop - if he enters into an agreement with his employer’s supplier in order to run his own business as a distributor of the supplier’s motor parts, while the money he received from the supplier may well be “profit” of his side business, it does not mean that such could not be the “advantage” of a conspiracy at the same time.

130.  Ultimately, the issue remains whether “D1’s referral of CCBIL clients to KC” amounts to act(s) “in relation to CCBIL’s affairs or business”.

Whether D1’s “referral of CCBIL clients to KC” amounts to act(s) “in relation to CCBIL’s affairs or business”

131.  Section 9(1)(a) of the Prevention of Bribery Ordinance (“POBO”) stipulates that an agent’s conducts must be “in relation to the principal’s affairs or business”.

132.  In Commissioner of the Independent Commission Against Corruption v Ch’ng Poh [1997] HKLRD 652, the phrase was analyzed by the Privy Council and Lord Lloyd made it clear (at p 657A-D) that the agent’s action or forbearance must be aimed at the principal:-

“But as Keith J pointed in in R v Ng Man Ho [1993] 1 HKC 632 at p.638 the alternative words serve much the same purpose. They are clearly intended to be restrictive. It is not enough that the recipient of the bribe should be an agent in fact. Otherwise any partner in a firm of solicitors, accepting an advantage without authority or reasonable excuse, would be caught by the section. This would be much too wide …. for the section to apply, the person offering the bribe, must have intended the act or forbearance of the agent to influence or affect the principal’s affairs…. Thus it is an essential ingredient of the offence under s.9 that the action or forbearance of the agent should be aimed at the principal.” (emphasis added)

133.  In Secretary for Justice v Chan Chi Wan Stephen (2017) 20 HKCFAR 98, Ribeiro PJ stated (at paragraph 32):-

“32. With respect, the proposition that Chan was General Manager (Broadcasting) and “therefore” his acts “were certainly related to TVB’s business” is hard to follow. Chan’s appearance on the talk show had nothing to do with his being General Manager (Broadcasting). Whether his hosting of the show did or did not qualify as an act “in relation to his principal’s affairs or business” required examination of the relationship between that act and the principal’s affairs or business. It was not determined simply by pointing to his managerial position in TVB.” (emphasis added)

134.  His Lordship went on (at paragraphs 68 to 70) that:-

“68.  The reference in section 9 to the agent’s act or forbearance being “in relation to his principal's affairs or business” is properly construed to mean that the agent’s act or forbearance must be aimed at and intended to influence or affect the principal’s affairs or business in a manner that undermines the integrity of the agency relationship by injuring the bond of trust and loyalty between principal and agent.

69.  In offering cases, the Prosecution must prove that the offeror intended that the advantage would be accepted as an inducement or reward for or otherwise on account of the agent’s act or forbearance which is aimed at and intended to influence or affect the principal’s affairs or business.

70.  In soliciting or accepting cases, the Prosecution must prove that the accused agent knew or believed that the advantage was provided as an inducement or reward or otherwise on account of his actual or contemplated act or forbearance as conduct aimed at or intended to influence or affect the principal’s affairs or business.” (emphasis added)

135.  It is worthy noting that, in delivering the minority Judgment in the case, Tang PJ also expressed agreement with Ch’ng Poh and stated (at paragraph 109) that:-

“109.  Commissioner of the Independent Commission Against Corruption v Ch’ng Poh is authority that for an act or forbearance to relate to the principal’s affairs or business it must have been intended to “influence or affect the principal’s affairs.” And it would not so relate if the agent “should act on his own without involving his principal”. With respect, I agree. Thus, a moonlighting employee would not fall foul of s. 9 even if moonlighting was strictly forbidden by his contract of employment. But Lord Lloyd went on to say:

Thus it is an essential ingredient of the offence under s. 9 that the action or forbearance of the agent should be aimed at the principal.” (emphasis added)

136.  As discussed above, I find the 27 Remittances fell outside the ordinary businesses of CCBIL.

137.  In PW14’s covert recording (Exhs P4/P4a/P4b/P4c) of the meeting between D1, Chui Yuk Lam, Andy, PW14 and a Mainland couple, D1 made it clear to the couple that the remittance service was to be conducted through an underground money exchange operated by “Mrs Yung”, and that it was unrelated to the bank (Exh P4c, Entry 1).

138.  In fact, the Prosecution also referred to the same part of the recording (paragraph 3.1.2 of its submission) and made the point that “D1 in the office hours and premises of her employer admits to her agreement with D2 …….  D1 sets out the fact that the arrangement with D2 has been long standing over many years……” .

139.  In the messages between PW10 and Mr Kang (Exhs D1-1, D1-1a), there was no mention of CCBIL being involved in any of the remittance transactions.  PW10 made it clear to Mr Kang that he had asked around ie, outside the bank, and found that the remittance service provided through D1’s contact was more reliable.  PW10 also confirmed in his evidence that when he asked D1 for the exchange rate, he was doing it on behalf of the client, and it was not the bank’s ordinary business.

140.  Further, it can be seen from the text messages between D1 and PW7 (Exh P11a, Entries 466 to 800) that D1 carried on providing remittance services (ie continued operating her side business) in the same manner as she had done even after her dismissal by CCBIL on 2 September 2016.  D1’s “side business” continued to operate until she was arrested by the ICAC on 19 October 2016.  This is clear evidence that the existence and operations of D1’s “side business” was separate and distinct from the bank; whether she was an employee/agent of CCBIL was irrelevant to its operations. In other words, she was acting on her own “without involving his principal”.

141.  In the case of Gary Fu (PW9), the son who sold a property in Shanghai, despite the fact that he appeared to be coy about the conversations he had with D1 and he kept saying that he could not remember what was said very well, it was clear from his iMessage exchanges with D1 (Exh P10a) that the name “Mrs Yung” was referred to during their discussions of the relevant remittance arrangements.  I am sure “Mrs Yung” was not mentioned out of the blue - no doubt D1 had told him beforehand that the remittance was to be done through a third party, namely, “Mrs Yung”/KC, and that it had nothing to do with CCBIL. 

142.  The Prosecution submits in paragraph 2.5 of its Closing Submissions that: “In the event that PW8-9 had not received the money, they would have looked to CCBIL for redress.  The “reputational damage” in that event to CCBIL would be huge”.  As I have already found that D1 had made it clear to her clients that the remittances were done through a third party, other than CCBIL (in fact, there is evidence that even D1’s colleagues were fully aware of that), any possible complaint about the services of the third party should not and would not be attributed to the fault of CCBIL.  Even if something unfortunate occurs and the intended remittance transactions did not proceed successfully, CCBIL can easily disclaim liability as those services could not have been provided by the bank due to the FEC and must have been provided by a third party unrelated to the bank’s operations.  In any event, any client can lodge a complaint to CCBIL against its employees, but whether it does concern CCBIL is another matter.  If a client complains about D1 selling sub-standard dried seafood as her side business, it is clear that CCBIL would not and could not have been held accountable.  The point remains that if an act has nothing to do with CCBIL’s normal operations and the involved clients knew full well that was the case, CCBIL could not be prone to “reputational damage” in the event the act fails.  Indeed, there has been no evidence from any of CCBIL’s clients that they were misled into thinking that they were using CCBIL’s service in remitting the large sums from the PRC to HK.

143.  The Prosecution also suggests that D1 was divulging “proprietary information” or confidential information of CCBIL’s clients and hence compromising the integrity of the principal and agent relationship to the detriment of CCBIL.  I do not find that D1 had shared any such information with KC beyond what was required to facilitate the remittances.  It was fundamental to those wishing to effect the transactions that they would, and by virtue of their involvement in effecting the transaction, had in fact consented to the disclosure of necessary information to facilitate the transactions.  In any event, there is no evidence in this case that there was any absence of such consent or prejudice to CCBIL as suggested by the Prosecution.

144.  Given my finding that the remittances carried out by KC was outside of the scope of CCBIL’s business operations, it follows that the bank suffered no economic loss as a result.

145.  All in all, I do not agree that D1’s conduct had subverted the integrity of the agency relationship between her and CCBIL. 

146.  Taking into account all circumstances of the case, I do not find that in referring clients to KC, D1 intended to “influence or affect” the business of her employer, CCBIL nor was her conduct “aimed” at CCBIL or “intended to influence and affect” its affairs and business, and hence it was not act done “in relation to CCBIL’s affairs or business”.

147.  I entirely agree with the Prosecution’s criticism that D1 had been in breach of various terms in the ‘Human Resources Policy’ (Exh 103) and the ‘General Compliance Manual’ (Exh 104).  It is certainly apposite for the prosecution (para 1.11 of its Closing Submissions) to say that D1 was in “blatant and flagrant breach of her responsibilities and her conduct was demonstrably lacking in, if not devoid of, integrity and honesty ……  D1 had brazenly treated her principal and her fiduciary duties and responsibilities with contempt.”.

148.  While I find the conduct of D1 abhorring and deserves to be condemned, as observed by Lord Lloyd in Ch’ng Poh (at p 656B),

“Section 9(1)(a) criminalises corrupt transactions with agents: not dishonest acts by agents.”

Consideration of D2’s case/Agreement with D2

149.  While D2’s VRIs cannot be used against D1, they are relevant to D2’s case.  They are mixed statements and I have to consider both the inculpatory and exculpatory parts to decide where the truth lies.

150.  It is often said that an exculpatory out-of-court statement, without being tested in court by cross-examination, may well carry less evidential weight.  However, the situation is somewhat different here as we have D2, who voluntarily attended 5 interviews with the ICAC and was questioned for more than 10 hours without any legal representation.  I also note that she even went back to the ICAC for more interviews some 8 months after her arrest. 

151.  I have the opportunity to watch all 5 VRIs and observed the demeanour of D2 in all of them.  I do not intend to analyze the VRIs entry by entry.  Suffice it to say I find D2 a straightforward witness, who was trying her very best to explain and, of course, to defend herself in the course of the interviews.  She categorically denied the allegation of “offering advantage” to D1 for referral of CCBIL clients and maintained her innocence throughout.

152.  The admissions she was said to have made are all related to her knowledge of “money going into D1’s bank account” and that “2 different exchange rates” were involved in some of the 27 Remittances (as per WhatsApp communication between D1 and PW7).  Indeed, she was even cautioned by the interviewing officer for conspiring with D1 to commit “s.16A fraud” on clients (Entries 621A/3^rd VRI) and the same allegation was also repeated in subsequent interviews (Entry 445A/4^th VRI & Entry 801A/5^th VRI).

153.  While D2’s explanations may well have brought suspicion upon herself, her case remains that she did not approve of money going into D1’s account as reward/profit, whether by adjusting the exchange rate or otherwise (Entries 300C, 315C, 332C/3^nd VRI; Entry 1074C/4^th VRI). She also said she had confronted and queried D1 and that (I quote from paragraph 32 of D2’s Closing Submissions)

“(9) …… D1 denied that she was making a profit, and gave different explanations: (i) the customers did not have own bank accounts so money would have to be deposited into D1’s bank account first [1^st VRI, E469-479] (ii) customers/companies needed cash for personal use [2^nd VRI, E1070-1074] (iii) those were “tea money” for the person who referred the customers to D1 [3rd VRI, E586-654] and (iv) D1 had personally incurred expenses eg for making telephone calls [4^th VRI, E301-326].

(10) D2 had reservations as to the explanations given by D1 [3^rd VRI, E328-350; 662]. However, D2 thought that there was no way D1 could have made those profits because the customers are not stupid [3^rd VRI, E328-350]. D2 also thought that it was not easy for D1 to become a bank manager, a person in D1’s position would not do anything unlawful [3^rd VRI, E328-350; 662]. Eventually, D2 believed in D1’s explanation that the money was paid to D1 upon the customers’ requests/consent [1^st VRI, E821-835].”

154.  It is also worth noting that starting from the 9^th Remittance (Annex A) onward, the account of D1’s husband, Ng Hoi Kit, Ricky, was used to receive money from the transactions instead.  There was no evidence that either D2 or PW7 knew Ng was her husband.  In fact, they both denied knowledge of that (PW7’s evidence and Entries 811A-824C/2^nd VRI).  The change of accounts is consistent with what D2 said in her interview (Entries 1040-104/2^nd VRI) and supports D2’s version that she had queried and reprimanded D1 for allowing clients’ money to go into her own bank account.

155.  Having considered the contents of all the interviews, I do not find it unreasonable for D2 to have believed in D1’s explanations.  I cannot rule out that D2 was telling the truth when she denied knowledge of D1 making profit out of the remittance transactions.  I am not satisfied that she knew D1 was running her own side business and had made profits out of referring CCBIL clients to D2/KC.

156.  As to the position of PW7, he was the only other co-conspirator named in the case.  PW7 never admitted to any conspiracy in his evidence.  He was, after all, an employee following the standard procedure of KC and acting on the instructions of client (D1).  I do not find him a part of any conspiracy.

157.  The Prosecution in its Closing Submissions invites the court to consider the application of the “Co-conspirator rule” to Exhs P4, P8, P10 and P11.  I have considered these exhibits and none of them makes me doubt my findings in respect of D2.

CONCLUSION

158.  Given my finding that D1’s conduct was not act done “in relation to CCBIL’s affairs or business”, I acquit both defendants of the Sole Charge.

159.  In any event, I am not satisfied that there was any agreement between the defendants for D1 to profit from any of the remittance transactions.  On that alone, both defendants are entitled to be acquitted.

Annex I

Ruling on Prosecution’s application to recall PW13

1.  Mr Delaney for the prosecution applied to recall PW13 (Mr Li Kam Wai Joemund):-

2.  There are 2 limbs to his application:-

(i)  to ask the witness to give further evidence in relation to the Code of Conduct (Exh P103) and the General Compliance Manual (Exh P104) of the bank;

(ii)  to deal with evidence that had emerged after the evidence arising out of PW14’s evidence.

3.  Regarding (i), it all started off with a matter that I raised with Mr Delaney on Tuesday 22 December 2020.  At that time, I was given to understand that the prosecution would be closing its case soon. In order to tie up loose ends, in particular, I wanted to make sure that documents that needed to be produced had been produced, I therefore made enquiry with Mr Delaney. And while I had been given tens of pages of documents, namely, Exhs P103 & P104, I also took the opportunity to enquire whether I had to go through each and every page of them as there was little said about them in PW14’s evidence.  At that juncture, Mr Delaney informed me that there was only a short part of Exh P103 that needed to be addressed and he would able to deal with that in his Closing submissions.  He even assured me by saying that “don’t look at it, there’ll be no surprise” at the end of the day. Nothing was said about the evidence of the bank staff at that point of time.

4.  I fully appreciate the efforts of Mr Delaney and, as prosecuting counsel, no doubt, he was doing his best to discharge his duty and made the application.

5.  If Mr Delaney now, having reconsidered his position, thinks that he would not be able deal with Exhs P103 and P104 in his closing submissions and would need to recall the witness, I will allow it.

6.  As to (ii), Mr Delaney said if he had called PW14 before PW13, there would be no need for the present application. In my view, the position would not be any different, the reason being that if the witness were to be asked about things outside his witness statements, I am sure the defence would be objecting and inevitably I would be asked to make a ruling.

7.  Mr Delaney indicated that he was minded to ask PW13 questions like what the bank staff would have been told in their training if a customer approached the bank for remittance service.  Clearly, this is not something coming out of the blue nor is it something outside the Prosecution’s contemplation.

8.  The 2 defendants were arrested in October 2016.  We are now in December 2020 and there has been a lapse of more than 4 years.  The application was made on the 13th day of this 20-day trial.  The late application is undesirable and it raises the issue of finality of the proceedings.

9.  In this case, a number of bank staff, including PWs 10, 12 & 13, have given evidence. PW13 had given 2 witness statements before and nothing was said about remittance service.  Mr Delaney now wants a 3rd witness statement to see if it would bring home his point. I take the view that it is too late for the prosecution to explore at this stage.  Moreover, what about the evidence of PWs 10, 12 & 13 in that regard?  These witnesses already told us they had received relevant trainings from the bank.  They also gave their evidence accordingly.  If PW13 were to give evidence touching upon the trainings received by those witnesses (and in conflict with the evidence given), there would be a real likelihood that the Defence would be asking for the witnesses to be recalled for further cross-examination, and that would necessarily prolong the trial.

10.  Mr Delaney said the Defence would have the opportunity to cross-examine PW13 and any prejudice could be dealt with by way of an adjournment.  If that is the case, then when will this trial end?  Also, what if the Defence come back and say, given the lapse of more than 4 years, “where are we going to find our witnesses to counter PW13’s additional evidence?”

11.  I am of the view that it is not fair to ask the defence to deal with this when it is almost the end of the prosecution case.  Having taken into account all matters raised, I refuse the 2nd limb of the application.