HKSAR v. HO SIU HOI

CACC 336/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 336 OF 2002

(ON APPEAL FROM HCCC 169 & 232 OF 2001)

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J U D G M E N T

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Stuart-Moore, Ag CJHC (giving the judgment of the Court):

Introduction

1. On 5 July 2002, following a trial before Nguyen J in the Court of First Instance, the Applicant was convicted of seven offences of conspiracy, contrary to Common Law for which, on 9 July 2002, he was sentenced to concurrent terms of nine years' imprisonment. The Applicant now seeks leave to appeal against conviction.

2. The seven counts on the indictment related to a two-and-a-half-year period between June 1995 and January 1998. The particulars of each count were, apart from the dates and the conspirators who were alleged to have participated, framed in more or less identical language. Each count alleged that those accused had conspired to defraud Hang Seng Bank Limited ("the bank") by dishonestly:

"	(a)	causing Au Kiang International Company Limited ('the Company') to apply and utilize credit facilities from the Bank in the form of letters of credit;
	(b)	submitting or causing to be submitted false documents to the Bank purportedly evidencing genuine underlying commercial transactions between the Company and (a named beneficiary company);
	(c)	procuring or causing to procure the issue by the Bank of the said letters of credit in favour of the said (beneficiary company); and
	(d)	causing the Bank to release funds to the said (beneficiary company) under the said letters of credit." (Bundle I p. 2)

3. Apart from the Applicant, who (as the first defendant at trial) was convicted on each and every count, Tam Kei-kwong (D2) was jointly charged in Counts 2, 3 and 6 and Leung Chi-por (D3) was jointly charged in Counts 2 and 6. They were each convicted on these Counts and have abandoned their applications for leave to appeal. There was a fourth defendant (D4) who we were told was "discharged" at some stage of the proceedings.

Factual background

4. The three substantive grounds of appeal which were advanced on the Applicant's behalf related to issues which required very little analysis of the evidence given at trial. In these circumstances, we can adopt in large measure the background facts which have been summarised by counsel on the Respondent's behalf.

5. Essentially, as the particulars of the indictment indicate, the case was concerned with conspiracies to defraud in respect of the issue of letters of credit. Amongst those involved, were a number of persons employed by the bank itself.

6. Au Kiang International Limited ("Au Kiang") and Dero Enterprises Limited ("Dero") were property investment companies owned and operated by Ho Chi-chun and his two sons, one of whom is the Applicant.

7. Both companies established extensive lines of credit with the bank. Ho Chi-chun rewarded officers of the bank for these facilities with substantial bribes and they were in receipt of corrupt money from him throughout the currency of each conspiracy. Two of these officials, Wong Tai-wai and Lam Tze-leung, were amongst those named as co-conspirators on the indictment.

8. With the connivance of the corrupt bankers, Au Kiang and Dero used the trade finance facilities which were made available to raise money for property speculation. The two companies caused letters of credit to be issued by the bank to four beneficiary companies with which there had been no underlying trade. The beneficiary companies then caused false documents to be presented to the bank to enable the funds to be realised. These funds were then returned to Au Kiang or Dero within a few days, less a small commission in the region of 0.5%. The money was then used to buy property and to repay earlier letters of credit.

9. The four beneficiary companies involved in this scheme were Pure Guard Industrial Limited, which was under the control of D2 and D3; Sparkco International Limited, which was controlled by D2 and D4; and Sunmex Limited ("Sunmex") and Star Regent Limited ("Star Regent") which were created by accomplices to the fraud for the express purpose of receiving the proceeds of the letters of credit.

10. The Applicant was directed by his father to sign all the documents on behalf of Au Kiang and Dero relating to these letters of credit and he did so. In each case, the documents he signed were the application form for a letter of credit, the trust receipt that accompanied it to the bank and a cargo receipt needed by the beneficiary company to collect the funds from the bank. The cargo receipts purported to show that goods had been delivered to Au Kiang or to Dero when they had not. The beneficiary companies then submitted the cargo receipts, together with false invoices, to the bank in order to collect the money.

11. The Applicant kept a record of the money outstanding on the letters of credit and checked the funds returning from the beneficiary companies against each letter of credit. In the case of Sunmex and Star Regent, the paperwork was done by employees of Au Kiang and, when they drew up cheques returning the funds to Au Kiang or Dero, the Applicant checked that the amounts were correct. Of these employees, Yin Hueh-lan, Lee Shuk-yee, Poon Kit-wan and Cheung King-yim were named in the indictment as co-conspirators and were called by the prosecution as accomplice witnesses.

12. The admitted facts showed that between 20 July 1995 and 25 March 1998, Au Kiang and Dero were involved with a total of 258 letters of credit. The four beneficiary companies received proceeds to the value of $932,827,156.40. The Applicant signed all the documents on behalf of Au Kiang and Dero for these transactions.

13. On 16 April 1998, Yin Huen-lan told the bank about the fraud being perpetrated upon them and said that the company could no longer make repayment on the letters of credit which were outstanding. Only then did the bank stop issuing credit.

14. On 24 June 1998, a debt to the bank of $130,196,695 was transferred to a fixed loan account and has remained largely unpaid. Ho Chi-chun made off with some of the proceeds of the fraud and further losses were incurred by the fall in value of the properties against which the loans were secured.

15. The issues in the case against the Applicant were principally concerned with whether he realised the fraudulent nature of the transactions to which he had lent his name and whether, in acting as he did, he had been dishonest. The Applicant did not give evidence.

Grounds of appeal

(1) Immunized witnesses

16. In the first ground of appeal advanced by Mr Lawrence Lok, SC, on the Applicant's behalf, it was submitted, in a case where it is accepted on both sides that much depended on the credibility of the immunized witnesses who had given evidence against the Applicant, that the judge had erred when directing the jury that:

".... the fact that they have all been immunized and not prosecuted for any offences, the fact that they have been allowed to keep their ill-gotten gains, should not in any way influence you as regards your assessment of their evidence."

17. Shortly, we shall put this passage into the wider context in which it was set. However, the point being made by Mr Lok was that despite other directions which the judge gave, which may have reduced the prejudicial effect of the passage we have just cited, the judge had effectively withdrawn from the jury any consideration of the credibility of the immunized witnesses based upon their admitted dishonesty in participating in the scheme. In such circumstances, Mr Lok submitted that the judge, by giving the jury a direction that they should not be influenced by the fact that the immunized witnesses had committed dishonourable acts, had usurped the function of the jury by deciding, in effect, that such past behaviour should not affect the credibility of those witnesses.

18. In his written reply, Mr John Reading, SC, for the Respondent, argued that while in isolation the relevant passage may appear, superficially at least, to have offended in the way suggested by Mr Lok, this was because it had been taken out of context. In full context, Mr Reading submitted that it plainly amounted to an exhortation to the jury to view the evidence "dispassionately and rationally" and not to be influenced either by feelings of repugnance at the conduct of the accomplices or by the prosecution's subsequent treatment of those witnesses when deciding not to prosecute them and by allowing them to keep their ill-gotten gains.

19. Mr Reading emphasised two passages in particular, one before the allegedly erroneous direction to the jury and one which immediately followed it, in order to demonstrate the strength of his argument. For ease of reference we shall include (in italics) the passage which Mr Lok criticized. In full context the judge directed the jury as follows:

"If you have any feelings about people who submit documents to a bank which are not completely true documents and as a result of that they are able to obtain loans or money from the bank, then please do not allow any feelings that you may have about these matters to blur your thinking of what the real issues in this case are, and as I said to you at the outset, the real issues are whether a particular defendant was a party to any agreement to defraud the Hang Seng Bank and that he was acting dishonestly.

Any feelings that you may have, for instance, about Karen Yin and her colleagues, about how they were, with open eyes and with true voluntariness, taking part in these activities to submit documents which were not true documents to the Hang Seng Bank, should not in any way influence your decision on whether you accept their evidence and whether you accept them as witnesses of truth. The fact that they have all been immunized and not prosecuted for any offences, the fact that they have been allowed to keep their ill-gotten gains, should not in any way influence you as regards your assessment of their evidence.

It is, of course, a matter which, as counsel has pointed out to you, a matter which you should consider when considering whether or not a particular witness, an immunized witness is telling you the truth, the fact that she has not been prosecuted, the fact that she has been allowed to keep all the money that she made on the side by taking part in these activities.

So what I am really saying in that statement, members of the jury, is to ask you to look at the evidence free from any feelings that you may have about a particular matter, or free from any feelings that you may have about a particular person, or the type of person which the witness is." (Appeal bundle p. 11)

20. Having considered these passages together, whilst accepting that the judge's directions could have been more clearly expressed, we are satisfied that the jury were not left with the impression that the admitted dishonesty of the immunized witnesses was something which could not be used by them as a factor in determining whether those witnesses had been telling the truth. Personal feelings had to be put to one side about the witnesses and about the conduct of the prosecution towards them. Rather, the jury should concentrate on the real issue in the case, namely, whether a particular defendant was a party to the conspiracies alleged in the indictment.

21. It is perhaps worth adding that there was one further passage on which Mr Reading placed some emphasis. This came later in the summing up where the judge, in the context of directing the jury about the cautious approach they should take towards the evidence of the accomplices before accepting what they had said, again touched upon the question of the credibility of these witnesses. Mr Lok, it is only fair to him to say, very properly conceded in his written submission that this "took away some of the prejudicial effect" of the passage about which he had complained. The further direction reads:

".... The fact that each of those witnesses was given an immunity must make it clear that there is evidence upon which you can find that each of them was a party to the crimes which have been charged against these defendants, or they were a party to other activities which were not lawful activities, but please bear in mind that there may be all sorts of reasons for these witnesses to tell lies to implicate the defendants as well as other people, and one of the reasons why they (may) want to implicate the defendant is that they can escape legal liability for what they themselves did.

.... and I would ask you, members of the jury, when considering the evidence of these witnesses to exercise extreme care and caution before accepting their evidence." (Appeal bundle pp. 19-20)

22. This direction would, in our view, have left the jury in no doubt that the credibility of the witnesses had to be gauged in the light of their admitted criminality and dishonesty.

23. This ground, therefore, fails.

(2) Prosecuting counsel's comment on the Applicant's failure to give evidence

24. We turn next to the second ground of appeal which raised the complaint that prosecuting counsel at trial commented in her final speech to the jury on the Applicant's failure to give evidence. Mr Lok submitted that this was a material irregularity which was "not adequately corrected" by the judge in the summing up.

25. This ground arose from the terms of section 54(1)(b) of the Criminal Procedure Ordinance, Cap. 221, which provides that the failure of a person who is charged with an offence to give evidence "shall not be made the subject of any comment by the prosecution".

26. The offending words (in italics) during the prosecutor's final address, which it is accepted on the Respondent's behalf were technically in breach of the statutory prohibition contained in section 54(1)(b), were as follows:

"'.... If he knew, when he signed, he agreed with his father. If he didn't know, then that's the end of it for him. But if he agreed with his father and knew what was going on then the next question is, was he dishonest in what he was doing? Do you think he was dishonest, and applying that standard, do you think he did? You don't have the benefit of hearing his explanation either in an interview to the ICAC or in evidence, but you mustn't hold that against him, that's his right. But it does mean that the fact that he signed these false documents is unexplained."

Soon afterwards, counsel continued by saying:

'But there is evidence that he knew what was going on, and without explanation you may think that the irresistible inference is that in signing the documents, so many documents, documents which on the face of them were dishonest, that he was dishonest and he was dishonest. Dishonest by your standards and that he knew it.'" (Appeal bundle pp. 3151-2)

27. It was submitted by Mr Lok that these comments could only have led the jury to conclude that they were being invited to draw the inference that the Applicant had acted dishonestly because he had provided no explanation for his actions.

28. After the prosecution's closing speech, the judge was addressed by counsel, in the jury's absence, about the situation which had arisen. Mr Lok, who also represented the Applicant at trial, sensibly and perfectly properly in the circumstances, announced (having had the opportunity to speak to the Applicant) that he was not seeking a retrial. He did, however, request the judge to "correct" the position. In doing so, he offered no suggestions as to the form of words the judge should use.

29. Later on in the discussion, the judge informed leading counsel as to the directions he proposed to give to the jury. These followed the lines of the direction usually given when a defendant at trial has chosen not to give evidence. At first, Mr Lok's reaction was that this might "compound and aggravate" what had already been said by prosecuting counsel. However, he did not pursue this when the judge stated that he would direct the jury in the usual way. In due course, the judge gave a more or less standard direction in these terms:

".... Now, in relation to the 1st accused, members of the jury, as I mentioned to you yesterday, he chose not to give evidence and he chose not to call any witnesses and that is perfectly within his legal rights. He does not have to give evidence and he is entitled to sit in the dock and require the prosecution to prove its case.

You must not assume that he is guilty because he has not given evidence. The fact that he has not given evidence proves nothing one way or the other; it does nothing to establish his guilt. On the other hand, it means that there is no evidence from the defendant to undermine, contradict or explain the evidence put before you by the prosecution." (Appeal bundle p. 63)

30. It was Mr Lok's submission that the judge did nothing to neutralize what he termed the "adverse effects" of the remarks made by prosecuting counsel. By that stage, it is not without significance that seven days had elapsed since counsel had addressed the jury when she had, he contended, put forward the "highly prejudicial proposition" that the absence of an explanation from the Applicant for his conduct, would enable the jury to draw the irresistible inference that he had been dishonest.

31. This submission highlights the difficulty in which Mr Lok found himself on this ground. What trial counsel for the prosecution had done, plainly intending no unfairness to the Applicant, was to pre-empt what the jury was, in any event, bound to be told by the judge about the Applicant's right to remain silent. In the passage from the summing up to which we have already referred, they were in fact duly told this.

32. Furthermore, in these proceedings, when Mr Lok was invited to say what additional words the judge might have used to ameliorate the position, he suggested that the judge should have informed the jury that it was not proper for prosecuting counsel to comment on the absence of an explanation from the Applicant. The judge should then, Mr Lok suggested, have departed from the standard directions, which cover the failure of a defendant to testify, by confining himself to informing the jury that the defendant was entitled to "sit back to see whether the prosecution could prove its case against him".

33. A similar situation to that which has arisen in this case occurred in R. v. Riley & Anor [1990] 91 Cr.App.R.208 where it was held that although the prosecutor should not have commented on the failure of the defendant to give evidence, whether favourably or not, the prosecutor's words would not have done any harm. In a reference to R. v. Naudeer [1985] 80 Cr.App.R.9 the court went on (at p. 213) to say:

".... That case makes clear that this Court is concerned to see whether the breach has been put right by the summing-up. We respectfully accept that approach and it is perfectly apparent to us in the present case that it was put right. In actual fact we do not think that the comment in the terms made by Mr. Bingham would have done any harm to Riley's case, but in so far as any harm might have been done we think the assistant recorder took the right course in not mentioning what prosecution counsel had done, not criticising him for having done it to the jury; that would not have assisted Riley's case. The words he used were, it seems to us, entirely appropriate and made good any damage which might have been done. ......"

34. In our opinion, the same considerations applied in the present case. Nowhere in the comments of the prosecutor was it suggested that an inference of guilt might arise from the Applicant's decision not to give evidence. Equally, nothing was said by her which contradicted any of the judge's later directions in the course of the summing up. There was, therefore, nothing which required correction and there was no purpose to be served by castigating the prosecutor for what is accepted was her inadvertent breaching of the terms of section 54(1)(b). All that such a course could have achieved would have been to highlight the very passages in the prosecutor's speech a week earlier to which Mr Lok now takes such strong exception. The prosecutor's speech had lasted over an hour and the impugned passages, which we have set out already, were very brief.

35. We have not, of course, overlooked the particular emphasis placed by Mr Lok on the prosecutor's use of the phrase: "without explanation, you may think that the irresistible inference is .... that (the Applicant) was dishonest ....". Standing alone, we consider that this took the argument little further forward. Prosecuting counsel had made a perfectly valid point that nowhere, in the evidence produced during a trial which extended over about 50 days, had any explanation been forthcoming from any source which might have provided an honest reason for the Applicant's actions.

36. The fact that the Applicant had chosen not to give evidence was, of course, known to the jury and for the prosecutor to state it, albeit contrary to the provisions of section 54(1)(b), was to state the obvious. However, in our view, there was nothing said by the prosecutor about the Applicant's failure to testify which might have damaged the defence case and there was, therefore, nothing which the judge could or should have said, either immediately after the speech for the prosecution or later in his summing up, which might have been beneficial to the Applicant on the point.

37. The correct course, in our opinion, was that which the judge adopted, namely, by providing the standard direction given to juries in cases where the defendant has chosen not to testify. In a separate direction, the judge dealt with the approach to be adopted towards inferences which might have arisen from the evidence. Neither of these directions in themselves was the subject of any real criticism.

38. This ground fails.

(3) Separate consideration of the counts

39. The last ground of appeal, on which Mr Lok rightly placed very little emphasis, amounted to a complaint that the judge had erred when directing the jury that they might consider that the seven counts against the Applicant stood or fell together. This, it was submitted, unacceptably diluted the principle that each count should be separately considered.

40. We do not need to dwell at length on this ground. The judge's directions on this aspect of the law were as follows:

"You will be required to return a verdict in respect of each count on the indictment separately, and it is therefore important that you consider the case against and for each defendant separately in relation to each count. First examine the evidence which is relevant to your determination of that count. Once you have reached a decision on that count, only then should you go on to consider the next count, and so on, until you reach the last count in the indictment.

If you were to find a particular defendant guilty of a count, it does not necessarily follow that he is guilty of the other counts. But in this case, members of the jury, it is a matter for you, you may think that the counts against a particular defendant stand or fall together because each count alleges that he was a party to a conspiracy, a party to an agreement to defraud the Hang Seng Bank. If you find that he was a party in relation to the 1st count, you may think that he was also a party to the 2nd count, etc. And vice versa. If you find that he was not a party to any agreement in relation to the 1st count, you may also find, it is a matter for you, that he was not a party to the conspiracy or to the agreement in the 2nd count.

So what I suggest, members of the jury, that in this particular case theoretically it is possible for you to return different verdicts against each defendant. I suggest that it may be in this particular case your verdicts in respect of each defendant will be probably the same, either guilty or not guilty." (Appeal bundle pp. 5-6)

41. Mr Reading described these directions as being tantamount to stating the obvious. As he pointed out, the Applicant was alleged to have conspired with others in circumstances where the detailed procedures designed to defraud the bank were, for all practical purposes, the same. Specifically, without going into any detail, the Applicant had acted on behalf of two sister companies, Au Kiang and Dero, of which he was a director and minor shareholder, in causing fraudulent letters of credit to be issued by the bank. These, in turn, were issued to a number of beneficiary companies, four in all, which, having taken their commission, would return the proceeds either to Au Kiang or to Dero. The pattern, as Mr Lok accepted, was precisely the same throughout.

42. The direction given by the judge in such circumstances, where nothing materially distinguished one count from another was, in our opinion, a proper one.

43. This ground, therefore, fails.

Conclusion

44. We are satisfied that the conviction of the Applicant on each count of the indictment was neither unsafe nor unsatisfactory.

45. Accordingly, this application is dismissed.