HKSAR v. WONG JOHN

DCCC 694/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 694 OF 2011

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REASONS FOR VERDICT

1.  Overview

The defendant is a 71 years old world renowned, recognised and highly respected surgeon of stellar reputation. He was employed by The University of Hong Kong (HKU) in the Department of Surgery for 34 years from 1975 until his retirement in 2009. He was Professor Chair of Surgery for 30 of those years. For 26 years from 1982 to 2008 he was the Head of the Department of Surgery, HKU.

2.  The defendant is charged with four offences. Two offences of misconduct in public office offences are alleged to have been committed in the course of his employment with HKU (charges 1 and 4) whilst another two are offences of false accounting (charges 2 and 3) which are not related to his duties with HKU.  Those charges range between the dates of January 2002 to December 2008. 

3.  In respect of both misconduct charges the defendant is alleged to have misconducted himself as a public officer, by using funds belonging to HKU to pay a foreign domestic helper cum driver’s salary for about 5 years from 29 January 2002 to 30 January 2007 whom he had employed.  The total sum paid to the driver was in the sum of $731,347.00.  The other charge of misconduct in public office is that the defendant failed to report to HKU that a staff of HKU had stolen not less than $2,672,000 of which he then repaid on her behalf to conceal her theft from HKU and allowed her to resign from HKU without investigation and/or discipline so that she would receive her full superannuation fund.  The purpose the prosecution allege for not reporting the theft was to prevent the examination of bank accounts of which would have shown he had improperly used HKU’s funds to pay his driver.

4.  It was further alleged that he submitted false accounts in two directors reports of a company for the years 2006 and 2007 of which he was the sole director and shareholder, claiming overseas travel expenses were incurred by him when in fact no such travel expenses were incurred.

5.  Background to offences and discovery thereof

In 1995 the defendant applied in his capacity of Professor of Surgery, HKU for a donation from the Hong Kong Jockey Club Charities Trust. The HKJC Charities Trust approved a grant of HK$9,976,000 to HKU for setting up a training centre for the training of post graduate medical students and medical personnel. This centre was established in 1996 and was named The Skills Development Centre (SDC). The SDC’s premises were located at the Queen Mary Hospital (QMH) and were provided rent free by the Hospital Authority (HA). HA also granted a fund of $1.5 million per annum for the operation of the centre. HKU staff were seconded to work at the SDC together with HA staff. The defendant was the person in charge of the SDC. The defendant appointed an employee of HKU, Ms June Chan to manage SDC’s administrative and financial operations.

6.  Upon SDC’s establishment it ran programmes for training all medical personnel in Hong Kong and not just QMH.  One of the programmes was called the Advanced Trauma Life Support (ATLS) programme.  Overseas distinguished doctors would be invited by the defendant to lecture at these programmes.  HKU would pay for the expenditure of these doctors, which included accommodation, airfare and food.   Some courses were provided at no cost, some at nominal cost and some were paid.  The fees generated by some courses were deposited into bank accounts which the defendant had opened as sub accounts of a trust fund’s bank account called the Hong Kong Surgical Forum Trust (the Trust Fund) in the Wing Lung Bank (WLB).  The defendant established the Trust Fund in 1987.  He was the founder and sole trustee of the Trust Fund.  June Chan managed the sub accounts.  The fees were therefore not under the control or management of HKU but were held in commercial bank accounts in the control of the defendant in his personal capacity. 

7.  In the meantime from 2002 to 2007 the defendant paid his driver by funds in the SDC bank account at WLB. In 2006 and 2007 he claimed the false travel expenses in relation to his own company.

8.  All the courses seemingly ran smoothly and the defendant left the running and operations of SDC in the hands of June Chan.  He found her to be diligent, trustworthy and reliable. 

9.  At the end of 2006 the defendant in his capacity of Head of Surgery decided that there should be a rotation of staff in his department.  He wanted a change of post out of SDC for June Chan as he considered that staff should have both academic and skill experience.  However June Chan was reluctant to be transferred.  Ms Venus Chan who was also an employee of HKU then started to deal with the bank accounts of SDC.  Venus Chan found there was something wrong with the accounts.  She found that there were huge monthly payments on the credit cards of SDC.  She reported this to the defendant.  The defendant then asked June about the irregular accounts and she immediately confessed to him that she had stolen funds.  The defendant was shocked that June had misappropriated the funds.  June however said that she would repay what she could of the stolen sums. She was to repay the sums from the sale of her flat and her superannuation upon her resignation. 

10.  It was worked out by Venus that June had stolen about $2.672 million.  In February 2007 June submitted her letter of resignation to the defendant as head of department of surgery HKU with effect from 1 August 2007.  However, later that same month the defendant suggested that June be allowed to stay on and work in another capacity in the department of surgery of HKU.  June was then appointed by Professor William Wei on the defendant’s behalf as a temporary staff for three months.

11.  In the meantime in March 2007 the defendant himself repaid what Venus had calculated was the stolen money of $2.672 million back into the SDC’s accounts. 

12.  Later that same year June received her superannuation upon her resignation from HKU in the sum of about $600,000.  By September 2007 June made repayment as directed by the defendant of $2.1 million into a company called K&O Ltd.  The repayment was made up of the amount she received from her superannuation and the sale of her flat. 

13.  Throughout this period the defendant did not report June’s theft from SDC to the police or HKU. 

14.  From the beginning of the set up of SDC in 1996 it was made known to the defendant that as SDC was receiving annual funding from HA, SDC was requested to submit financial accounts of income and expenditure to the HA. 

15.  SDC financial accounts were submitted for the first few years, however no accounts were submitted from about the year 2000.  Despite no accounts being submitted neither HA nor HKU made any requests for accounts to be submitted until about 2007. 

16.  In all probability, because HA got wind of the theft of funds from the SDC’s accounts by June Chan, in about September 2007 HA out of the blue requested HKU’s Finance Office to supply audited financial statement of accounts of SDC for the missing years.  By April 2008 HA even notified the Director of Internal Audit of HKU.  

17.  As the accounts were not kept within HKU’s Finance Office which manages and controls the funds of the department of surgery, HKU requested the defendant to supply the audited accounts. 

18.  What arose between HKU and HA was now the contentious issue of whether SDC’s accounts and records were properly controlled and authorised and surprisingly how SDC was allowed to operate without financial accounts going through the Finance Office.  Thereafter apart from requesting for the financial accounts HKU wanted the return of all funds in SDC’s bank account to be returned to HKU and to be managed and controlled by HKU. 

19.  Thereafter there were numerous communications between the Director of Finance Mr Philip Lam and the defendant but no financial accounts were forthcoming.  The Director of Finance had in one letter accused the defendant of being reluctant to produce the accounts.  The defendant challenged HKU’s claim to the funds in SDC’s accounts disagreeing that they were entitled to all the remaining funds. 

20.  In a letter dated 14 July 2008 the defendant ultimately agreed to return the accumulated funds in SDC’s accounts of $3.49 million to HKU.  He requested that the sum be used for academic or professional development for the benefit of the community and also for consolidating with other donations for an endowed Chair in Surgery.  He said the audited accounts would soon be finalised and he had trusted that the accounts would satisfy HKU of any lack of clarity in financial control or misuse of funds as was implied by QMH’s Finance Officer. 

21.  Finally in about September 2008, the defendant supplied financial accounts prepared by his personally selected accountants Richard Chan & Co that were not audited and for the years 2003-2007.  As these were unaudited accounts they were unacceptable to the Finance Office. 

22.  In a letter from the defendant to the Director of Internal Audit Mr Ronnie Wong on 23 December 2008, some 2 years after the defendant discovered June’s theft and approximately eight months after a request of the audited accounts for SDC were made to him, he informed the Director of Internal Audit of HKU as part of explanatory notes to non-audited accounts of SDC’s sent by him of June Chan’s misappropriation of SDC’s funds.

23.  The defendant was arrested by the ICAC about two months later on 13 February 2009.

24.  It was the stance of HKU that the defendant was obliged to report June theft’s as soon as it came to his knowledge under HKU’s staff rules and regulation.  Further had HKU known of June’s theft, June would not have been entitled to her full superannuation because she had committed an offence by stealing HKU property. 

25.  It was discovered upon proper investigation of the SDC accounts however the actual amount of money stolen by June was $3.026 million and not $2.672 million. 

26.  Upon investigation of SDC and ATLS’s bank accounts it was revealed that the defendant’s domestic helper cum driver’s salary and loans had been paid for out of SDC and ATLS’s bank account for 5 years from 2002-2007. 

27.  It was also discovered that the defendant in the financial years ended 2006 and 2007 had signed directors reports of a company known as Unisurgical Limited (Unisurgical) falsely claiming that overseas travel expenses when in fact no such travel expenses incurred. Dummy invoices or duplicate invoices from genuine invoices were issued by a travel agent named K&T were used to claim these false overseas expenses as Unisurgical would receive a tax deduction.  The defendant was the sole director and shareholder of Unisurgical.  As a result of the false claim Unisurgical paid less tax then it should have for those two years. 

28.  The defendant’s actions therefore gave rise to the misconduct and false accounting offences proffered against him. 

29.  The prosecution’s case in brief

In brief it is the prosecution case simply that the funds in the sub accounts more particularly SDC’s or ATLS were funds belonging to HKU and not funds which the defendant alleged belonged to the Trust Fund. SDC was acknowledged under the joint banner of Hong Kong Jockey Club, Hospital Authority and HKU (the joint banner). SDC received funds and resources from HKJC, HA and HKU, it was shared by three parties so it was a joint operation. The certificate of attendance giving to attendees at the training course incorporated the names of SDC, the department of surgery and HKU. The receipts for course fees given to the attendees incorporated the names of SDC, HKU, department of surgery and QMH.

30.  SDC had no connection or link at all with The Trust Fund.  The Trust Fund was the defendant's own charitable trust and had no association with the Joint Banner.  The only link SDC had with the Trust Fund was an artificial link created by the defendant by opening sub accounts under the Trust Fund’s bank account.

31.  It was the prosecution case that the defendant was reluctant to provide the accounts of SDC and did not report the theft to HKU as he was obliged to do as head of the department of surgery as he wanted to conceal the theft by June from HKU not only to enable June to get the superannuation fund improperly but also with an added motive of trying to avoid any investigation into his misuse of the SDC’s and ATLS’s funds to pay for his driver Arun’s salary and loans. 

32.  The defendant also cheated the Inland Revenue department by falsely claiming that overseas travel expenses had been incurred by him when they had not and by reason thereof he paid less tax for the years 2006 and 2007. 

33.  The defendant’s case in brief

The defendant vigorously denied all the offences. The defendant did not dispute much of the salient facts in support of the offences.

34.  The misconduct offences

It was not denied that his domestic helper driver’s salary and loans were paid from the SDC and ATLS bank accounts. That June Chan had stolen money from SDC’s accounts and that he did not report her to HKU. That it was not until about 2 years later, the defendant told the Director Of Internal Audit as part of explanatory notes to financial accounts of SDC that there was a misappropriation by a staff member. He himself paid back the money stolen by June Chan into the relevant bank accounts and June Chan later paid him back part of the stolen sums. Lastly that he allowed her to resign from HKU and she received her full superannuation pay.

35.  It was the defendant’s case that the funds in SDC’s accounts do not belong to HKU but to the Trust Fund.  He established the Trust Fund in 1987 and he was the sole trustee.  The Trust Fund and SDC had a connection as the sub accounts were part of the main bank account with the Trust Fund and more significantly the Trust Fund and SDC were doing what the trust fund objectives had listed in its Trust Deed which is primarily the training of post graduate and medical personnel for the benefit of the whole community in Hong Kong.

36.  It was not disputed that as the Head of Surgery HKU he was a public officer however as the person in charge of SDC he was not a public officer as SDC had nothing to do with HKU.  However, even if the court found that as the person in charge of SDC, he was a public officer and the funds did belong to HKU, the defendant had a reasonable excuse or justification for his misconduct as he genuinely believed the money in SDC’s account was that belonging to the Trust Fund’s and not HKU’s. 

37.  As the defendant believed the money in SDC belonged to the Trust Fund, he as sole trustee under the powers of the trust could determine how the money could be used in accordance to the Trust.  

38.  As his driver did not only drive for him and his family but his driving duties included driving for the department of surgery and SDC, his driving duties were shared.  Therefore as there was a sharing of duties between SDC and the defendant, it was his reasonable belief that SDC should pay for half of the driver’s salary and any loans whilst he pay the other half.

39.  As regards the theft by June as the defendant believed the money belonged to the trust fund it was not a theft of HKU property, thus no offence had been committed against HKU.  In those circumstances he was not obliged to report the theft to HKU.  As the theft was committed on trust property that is from the account of SDC, as sole trustee, he had discretion whether to report her to the police or HKU.  He exercised his discretion as trustee not to report her as he felt strong compassion for her and more particularly her orphaned niece whom June was looking after.  The niece was orphaned as a result of a tragic bus accident in 2006 in Egypt in which her parents (the father was June’s brother) and younger brother were killed.  The defendant believed that as June was the sole provider and carer for the niece he did not want to report June to the police as he believed the inevitable sentence would be imprisonment and there would be more tragedy in the family by leaving the niece without a carer and provider. 

40.  The defendant repaid the money stolen by June to SDC’s and related bank accounts as he believed as sole trustee he had a duty to the trust to restore the trust money.  June then repaid $2.1 million to him. 

41.  In respect to the false accounting charges there was no dispute that dummy invoices were used to claim false overseas travel expenses in the directors reports which he had signed.  Those dummy invoices were copy invoices of genuine official business trips he had been on for HKU and which trips were paid for by HKU. 

42.  The defendant’s case is that he did not directly or indirectly request any one from K&T travel to issue dummy or false invoices to claim false overseas travel expenses.  He had no knowledge of any dummy invoices.  When the defendant signed the director’s report he did not know that there was a claim for travel expenses.  There was no dishonesty on his part. 

43.  Issues

The following issues arise in respect to the charges of misconduct in public office:-

i. Was the defendant acting as a public officer in his capacity of the Person-in-Charge of SDC?

ii. Was SDC and ATLS an extension or part of the Department of Surgery of HKU or an arm of The Hong Kong Surgical Forum Trust Fund (The Trust Fund)?

iii. Were the funds in SDC and ATLS’s bank account funds belonging to HKU or to the Trust Fund?

iv. Are the offences alleged by the prosecution an offence of misconduct in public office?

v. Was the defendant’s belief a reasonable excuse or justification for the offences of misconduct in public office?

44.  In respect of the false accounting charges have the prosecution established the necessary mens rea for the offences under charge 2 and 3. 

i. Did the defendant directly or indirectly ask K&T to issue dummy invoices?

ii. Did the defendant know that he was claiming false travel expenses in the director’s report when he signed the reports?

The charges

45.  Misconduct offences Charges 1 and 4

For the misconduct offences the defendant is charged in his capacity of a public officer namely the Head of the Department of Surgery and Person in charge of the Skills Development Centre (SDC). I have stated above the general gist of the charges.

46.  False accounting offences charges 2 and 3

For the false accounting charges the defendant is alleged to have dishonestly claimed overseas travel expenses had been incurred by the company Unisurgical, a company of which he was the sole shareholder and director. The overseas travel expenses were calculated and based on false or “dummy” invoices issued by a travel company K&T. It was alleged that the defendant directly or indirectly requested K&T to issue these dummy invoices. It was not disputed that K&T on instructions issued dummy invoices which were then used to support the false claims.

47.  I set out in full the relevant charges.

48.  1^st Charge:

Misconduct in public office, contrary to Common Law and punishable under section 101I(1) of the Criminal Procedure Ordinance, Cap. 221.

Particulars of Offence

WONG John, being a public officer, namely the Head of Department of Surgery and Person-in-charge of the Skills Development Centre (“SDC”) of the University of Hong Kong, between the 29^th day of January 2012 and the 30^th day of January 2007, both dates inclusive, in Hong Kong, in the course of or in relation to his public officer, without reasonable excuse or justification, wilfully misconducted himself by directly a total sum of $731, 347.00 Hong Kong currency from the 2 bank accounts of respectively the Skills Development Centre and Advanced Trauma and Life Support held with Wing Lung Bank, to be used as payment for the salary and other employment related payments of Arunasalam, Muthu Kalanchiam who was employed by the said WONG John as a domestic helper cum driver.

49.  2^nd Charge:

False accounting, contrary to section 19(1)(a) of the Theft Ordinance, Cap. 210.

Particulars of Offence

WONG John, on or about the 20^th day of November 2006, in Hong Kong, dishonestly and with a view to gain for himself or another or with intent to cause loss to another, falsified a document required for an accounting purpose, namely the Directors’ Report and Account of Unisurgical Limited for the year ended 31^st March 2006, by making or concurred in making an entry therein which was or might have been misleading, false or deceptive in a material particular in that it purported to show that $696,935.00 Hong Kong currency had been incurred as overseas travelling expenses.

50.  3^rd Charge:

The 3^rd Charge is the same as the second charge save that the date of the offence is 14 November 2007 for the year ended is 31 March 2007 and the amount is $74,123.00.

51.  4^th Charge:

Misconduct in a public office, contrary to Common Law and punishable under section 101I(1) of the Criminal Procedure Ordinance, Cap. 221.

Particulars of Offence

WONG John, being a public officer, namely the Head of Department of Surgery and Person-in-charge of the Skills Development Centre (“SDC”) of the University of Hong Kong (“HKU”), between late 2006 and the 23^rd day of December 2008, in Hong Kong, in the course of or in relation to his public office, without reasonable excuse or justification, wilfully misconducted himself by:

(a) failing to report to HKU that a staff CHAN Sau-hung, June had in between the 1^st day of January 2004 and the 31^st day of December 2006, both days inclusive, stolen money and/or properties in the total value of not less than $2,672,000.00 Hong Kong currency from the bank accounts and/or related bank accounts of SDC of HKU;

(b)lending $2,672,000.00 Hong Kong currency to the said CHAN Sau-hung, June to pay back money to the bank accounts and/or related bank account of SDC in March 2007 to cover up the lost and/or to conceal the theft offences; and

(c) allowing the said CHAN Sau-hung, June to resign from HKU in August 2007 without being investigated and/or disciplined and to received from HKU the full payments of the Staff Provident Fund in the value of $698,955.21. Hong Kong currency.

52.  The witnesses

The prosecution relied on the evidence of 21 witnesses. 7 witnesses gave oral evidence in court. They were PW3, PW4, PW5, PW6, PW7, PW9 and PW10. The remaining 14 witnesses’ evidence was admitted under s. 65B or S65C of the Criminal Procedure Ordinance cap 221.

53.  The defendant elected to give evidence in his defence.  He called 3 defence witnesses (DW2, DW3 and DW4).  He also relied upon three character witnesses whose references were read in court.

54.  The witnesses were as listed below with their relevant roles listed and sets out whether they gave oral testimony or whose evidence was admitted under s.65B.

List of Prosecution Witnesses

PW	Name	Role	PW’s evidence
1.	F/LAM Yee-fung Yvonne	Head of Human Resource Section (“HRS”), The University of Hong Kong (“HKU”)	By S65B
2.	F/LEUNG Kam-ling Joyce	Cluster General Manager, Human Resources Department / Hospital Authority	By S65B
3.	M/LAM Bing-lun Philip	Director of Finance, HKU	Gave evidence in court
4.	M/WAN Siu-chuen	Finance Manager of Hospital Authority	Gave evidence in court
5.	F/CHAN Sau-hung June	Former Administrative Assistant, Department of Surgery / HKU	Gave evidence in court
6.	F/CHAN Man-kuen Venus	Administrative Assistant, Department of Surgery / HKU	Gave evidence in court
7.	M/ARUNASALAM, Muthu Kalanchiam	Domestic helper of WONG John	Gave evidence in court
8.	F/LO Sau-mui	Associate Director, The Finance and Enterprise Office / HKU	By S65B
9.	F/LEE Lai-ying Christine	Director of K&T Travel Service Ltd	Gave evidence in court
10.	F/YU May-li (Milly)	Travel Consultant of K&T Travel Service Ltd	Gave evidence in court
11.	F/CHUNG Lai-chu Judy	Assistant Registrar (Personnel), HRS / HKU	By S65B
12.	Professor WEI, William	Professor, Department of Surgery / HKU	By S65B
13.	M/NG Tsz-ming	ICAC officer	By S65C
14.	F/NG Ka-yee	ICAC officer	By S65C
15.	M/SO Tak-tim	ICAC officer	By S65C
16.	M/CHAN Chi-kin	ICAC officer	By S65C
17.	M/WONG Ho-kuen	Senior Immigration Officer	By S65B
18.	F/LAW Ka-man Carmen	Senior Immigration Officer	By S65B
19.	M/CHEUNG Kin-keung Kobus	Forensic Accountant	By S65B
20.	M/TANG Wan-pong	Section Head of Account Services Department / HSBC	By S65C (Banker’s Affirmation)
21.	F/LO Kit-wah Esther	Officer / Wing Lung Bank	By S65C (Banker’s Affirmation)

List of Defence Witnesses

1.	M/John WONG	Defendant	Gave evidence in court
2.	M/LEONG Chuen-on	Messenger of Defendant	Gave evidence in court
3.	F/Kaye Brodie	Messenger of Defendant HKU Senior Assistant Registrar	Gave evidence in court
4.	M/WONG Siu-keung	Head of HKU Shenzhen Hospital	Gave evidence in court
5.	Richard J. Finley, MD, FRCSC, FACS	Character Witness Head Division of Thoracic Surgery University of British Columbia	By reference letter
6.	Ara Darzi	Character Witness Imperial College of Science, Technology and Medicine	By reference letter
7.	Carlos A. Pellegrini	Character Witness The Henry No, Harkins Professor and Chair Department of Surgery The University of Washington	By reference letter

55.  Proof

It is for the prosecution to prove beyond all reasonable doubt that the defendant committed the offences as charged. No onus whatsoever falls upon the defendant. The defendant is of clear record and of exemplary character. I have given myself the requisite directions as laid down in the English Court of Appeal decision of R v Vye [1993] 1 WLR 471 and R v Berrada (1990) 91 Cr App R 131 and approved in the Court of Final Appeal decision of HKSAR v Tang Siu Man [1998] 1 HKC 371.

56.  Each charge must be considered separately.  Before drawing any inference from a proven primary fact, adverse to the defendant, I must be satisfied that the inference is a compelling one which no reasonable tribunal could fail to draw. Where more than one inference can reasonably be drawn and at least one is consistent with innocence then the adverse inference must be rejected.

57.  The Evidence

The defence did not strenuously challenge much of the evidence of the prosecution witnesses. Where any evidence is in contention I shall refer to the evidence. For the purposes of this verdict it is not necessary for me to reiterate or give a detailed account of the evidence of each individual witness. Where relevant I shall mention the witness’ evidence when it is applicable to the specific charge or charges.

58.  Factors to be taken into account in analysis of evidence

In analysing the evidence of the defendant foremost in my mind is the fact that the defendant is a man of unblemished character of mature years and a man of exemplary positive good character. I have had regard to what is before me about the defendant’s character from all the witnesses including Prosecution witnesses and the glowing character reference letters. I take into account that he is less likely than otherwise might be the case to commit a crime. I have given considerable weight to his good character as to credibility and that he is more likely than not to be telling the truth. I have all these matters in regard when deciding whether the prosecution has satisfied me of his guilt.

59.  I have warned myself of witnesses with a vested interest or position to protect.  More particularly the evidence of June Chan (PW5) who upon her admission was giving evidence with a view to a reduction of sentence from the Court of Appeal.  The driver Arun (PW7) who if he admitted he drove outside his domestic duties granted by the Immigration Department would have breached his conditions of stay and contract.  Venus Chan (PW6) who provided material to the accountants Richard Chan and Co on behalf of the defendant and handed to the defendant various documents to sign. 

60.  Given the fact that much of the evidence led by the prosecution and defence was not seriously challenged by each other, I have endeavoured to set out disputed evidence in relation to each charge and thereafter come to my decision in regard to the disputed evidence and reliability of the witness or witnesses. 

61.  Background

The defendant held a number of different top positions and posts in his status as surgeon with HKU. Those posts relevant to the material times of the alleged offences were as mentioned, Head of the Department of Surgery HKU. He was Professor: Chair of surgery of HKU. He was the Person-in-charge of the Skills Development Centre (SDC). He was Honorary Chief of Service of Queen Mary Hospital (QMH) of the Hospital Authority (HA). Despite the many different hats, he was all along employed by HKU.

62.  In his personal or private capacity, the defendant was the sole trustee of a registered charitable Trust Fund known as The Hong Kong Surgical Forum Trust Fund (the Trust Fund.) He was the sole shareholder and director of two companies known as Unisurgical Limited (Unisurgical) and Dobus Ltd (Dobus).  The defendant set up a shelf company called K&O Ltd (K&O).  None of these companies had any link or connection to HKU, QMH or HA.  They were set up or established solely by the defendant.

63.  The theft by June Chan from SDC

June’s duties and work from about 1996 onwards was solely connected with SDC. She was however still employed and remunerated by HKU. She was responsible for the administrative work and handled the finance of SDC. June Chan as HKU staff had to report to the defendant as Head of the Department of Surgery. The defendant had a credit card issued in her name and his name under the SDC account for the purposes of facilitating paying expenses related to SDC. Over a period of 10 years from 1996 to 2006 SDC had generated a surplus of $3.5 million.

64.  June Chan confessed to the defendant that she had misappropriated funds of SDC at the end of 2006 or the beginning of 2007 by using the credit cards of SDC issued to her and the defendant.  She had suggested that she resign forthwith and repay as much of the amount stolen by selling her flat and receiving her superannuation after she resigned.  June Chan admitted in her oral testimony that she used the credit cards issued in her and the defendant’s name both in Hong Kong and overseas while she was on SDC trips to make personal purchases of for example electronic goods and designer handbags.  She had abused the SDC credit card in the defendant’s name using his chop without the knowledge of the defendant.  When she confessed to the defendant he did not tell her that he would not report her to the police.  She was ready to face the music if however a report was made.  She herself did not go to the police or tell anyone about the theft. 

65.  In or around July 2008 about 1½ years after her confession to the defendant, he invited her out and warned her that the matter was now out of his hands and it would be likely that her theft would be reported to the police by HKU. 

66.  On 29 December 2009 June Chan appeared in the District court charged with one count of misconduct in public office and 3 other charges of theft.  She was charged inter alia that between 1 Jan 2004 and 31 December 2006 she being the administrative assistance of DOS HKU she used credit cards of SDC of HKU for personal and private purposes.  On 29 December 2009 she pleaded not guilty.  The case was adjourned to 5 May 2010 for a Pre-Trial Review and on that day June pleaded guilty to a charge of misconduct in Public Office.  On 26 May 2010 she was sentenced to 22 months imprisonment.   She appealed against her sentence and is now on bail pending appeal. She was granted bail on 16 February 2011.  She was remanded in custody from 26 May 2010 till 16 February 2011.  No date has been fixed for hearing as it is pending this trial.  June Chan admitted in cross examination that the underlying purpose in giving evidence in this trial is to try and earn as much discount as she can in the hope that the court of appeal would reduce her sentence as much as is possible.  

67.  Admitted facts

I turn now to set out the detailed background facts which are not in dispute. The prosecution and defence admitted a number of facts exhibited as PA1, PA2 and PA3. I also attach a very helpful explanatory picture flow chart annexed to the prosecutions written submissions for a bird’s eye view of the facts. (Flow Chart Attachment 1)

68.  The University of Hong Kong

The University of Hong Kong (“HKU”) was established by virtue of the University of Hong Kong Ordinance, Cap. 1053. The Chief Executive of the Hong Kong Special Administrative Region is the Chancellor. HKU is a public university and receives recurrent funding from the government through the University Grants Committee.

69.  The defendant’s employment history at HKU

The defendant was employed by the Department of Surgery of HKU (“the Department”) as Lecturer on 26 May 1975. He was promoted to Senior Lecturer of the Department on 1 December 1976. He was further promoted to Professor: Chair of Surgery on 1 May 1979 and served as the same until his retirement on 30 June 2009.

70.  Between 1 July 1982 and 30 June 2008, the defendant was the Head of the Department.

71.  Throughout the defendant’s employment at HKU, his salary and remuneration were paid by HKU.

72.  The defendant’s appointment history at the Hospital Authority (“HA”)

Since 1 December 1991, the defendant was appointed as the Honorary Consultant of Queen Mary Hospital (“QMH”) of HA.

73.  Between 31 December 1992 and 27 March 2008, the defendant was appointed as the Honorary Chief of Service of QMH of HA.

74.  Skills Development Centre (“SDC”)

SDC was established with contributions from the Hong Kong Jockey Club Charities Trust (“HKJC Trust”) which provided a grant of HK$9,976,000. The primary functions of SDC were to provide medical training courses to surgical and other specialties, medical students, interns, nurses, ambulance personnel and doctors on a territory-wide basis. The grant from HKJC Trust was used to renovate the ward C3 on 3^rd Floor of the Main Block of the QMH.

75.  The HA allowed ward C3 of QMH to be used as SDC as the training centre for free and waived its utilities and supporting service charges.  

76.  Since 1998, HA also provided SDC with an annual subsidy of up to HK$1.5 million to meet staff and operational costs and the annual subsidy was transferred to one of the accounts of QMH for disbursement.

77.  Some staff members of SDC were employees of HKU and their salaries were sourced from HA as follows: periodically, SDC, through the Finance Office of HKU would send debit notes to the Finance Office of QMH for reimbursement of these staff members’ salaries.  Upon receipt of the said debit notes, the Finance Office of QMH would use the annual subsidy of HK$1.5 million to reimburse HKU via bank transfer.

78.  Among the courses conducted in SDC are those imported by the Hong Kong Chapter of the American College of Surgeons Ltd (“HK Chapter”), which was established by the defendant, inter alia, Advanced Trauma Life Support (“ATLS”) and Advanced Burn Life Support (“ABLS”).

79.  Hong Kong Surgical Forum Trust Fund (“the Trust Fund”)

The Trust Fund is a charitable trust fund established by the defendant in 1987 and he was the sole trustee. In 1992, the defendant opened one current account with Wing Lung Bank (WLB) for the Trust Fund.

80.  SDC, ATLS and ABLS opened as Sub accounts of the Trust Fund

With the bank account of the Trust Fund, the defendant in 1996 opened separate sub-accounts for SDC, ATLS and ABLS (“the Sub-accounts”). These individual sub-accounts had both current and savings accounts. The defendant was the authorized signatory for the Sub-accounts.

81.  The Sub-accounts

The Sub-accounts were used to receive course fees and other income of SDC and to pay out expenses incurred by SDC.

82.  During material times.  Ms. June CHAN Sau-hung (“PW5”), a staff member of the Department, was responsible for the administration and management of the Sub-accounts. 

83.  Under the account of SDC, two corporate credit cards were issued, one in the name of June Chan (PW5), the other in the name of the defendant.

84.  Between 2004 and 2006, June Chan used the two corporate credit cards to purchase personal goods and withdraw cash amounting to HK$3,026,117. Without the defendant’s authorization, June Chan transferred money from the Sub-accounts to settle the amounts due for repayment by falsifying the defendant’s signature on bank transfer slips.

85.  Unisurgical Limited (“Unisurgical”)

On 26 January 2005, the defendant set up Unisurgical. He was the sole shareholder and sole director. Though its income came from donations, it is not a charitable organization and it enjoyed no special tax status. In 2005, the defendant opened bank accounts for Unisurgical encompassing a current account, savings account and foreign currency combinations savings account. The defendant was the sole authorized signatory of the accounts. (“Unisurgical’s account”).

86.  On 16 March, 2007, a cheque dated 15 March 2007 drawn on Unisurgical’s account, in the sum of HK$2.3 million was deposited into the defendant’s personal current account held with HSBC (“the defendant’s current account”).

87.  Four cheques (all dated 20 March 2007) were drawn on the defendant’s current account totaling HK$2,468,000 and were deposited into the Sub-accounts and HK Chapter’s account.  Details of the cheques are set out as follows:-

Cheque no.	Name of sub-accounts	Amount (HKD)
153514	ABLS	$93,000
153515	ATLS	$890,000
153516	SDC	$1,430,000

Cheque no.	Name of account	Amount (HKD)
153518	HK Chapter	$55,000

88.  A cheque dated 28 March 2007 in the amount of HK$740,000 was drawn on Unisurgical’s account and deposited into the defendant’s current account.

89.  On 29 March 2007, 4 cheques were drawn on the Accused’s current account totaling $576,587.30 and deposited into the sub-accounts of SDC and ATLS as follows:-

Cheque no.	Name of sub-accounts	Amount (HKD)
153523	ATLS	$225,761.90
153524	SDC	$146,825.40
153526	SDC	$140,000
153527	ATLS	$64,000

90.  A cheque dated 19 June 2008 was drawn on the defendant’s current account in the sum of HK$225,216.70 and was deposited it into the account of SDC on 20 June 2008.

91.  K&O Ltd (“K&O”)

On 21 March 2007, the defendant set up a company called K&O and opened a bank account (“K&O account”) for it on 4 July 2007. The defendant was the sole authorized signatory of the K&O account.

92.  On 5 July 2007 and 19 September 2007 respectively, PW5 deposited HK$1,500,000 and HK$600,000 into the K&O account.

93.  On 11 January 2008, HK$500,000 was withdrawn from the K&O account to purchase a cashier’s order.  The cashier’s order was then deposited into the defendant’s personal savings account maintained with HSBC (“the defendant’s savings account”) on the same day.  

94.  On 14 January 2008, HK$500,000 was transferred from the defendant’s savings account to the defendant’s current account.  

95.  On the same day a cheque in the amount of HK$500,000 was drawn on the defendant’s current account and was deposited into Unisurgical’s account.

96.  On 18 April 2008, HK$600,000 was withdrawn from the K&O account to purchase a cashier’s order.  On 21 April 2008, the cashier’s order was deposited into the defendant’s current account.  

97.  Employment of Mr. ARUNASALAM the domestic helper cum driver

In 1994, Mr ARUNASALAM, Muthu Kalanchiam (“PW7” Arun) was employed as a domestic helper and the employment contract was signed between PW7 and the defendant’s wife Ms. WONG Lorraine Mei-yuk (“Ms. WONG”). PW7’s employment contract was renewed every two years by Ms. WONG until 2002.

98.  Between April 1999 and September 2001, the defendant paid PW7’s monthly salary by using money from the bank account of Dobus Ltd (“Dobus”), a private company owned by him.  

99.  Since 2002, the employment contract of PW7 was signed by the defendant and since then PW7 took up additional domestic duties pursuant to special permission granted by the Immigration Department i.e. driving duties which were incidental to and arose from the domestic duties such as taking children to school and playgroups and marketing.

100.  Between 29 April 2003 and 30 January 2007, PW5 June Chan prepared bank payment vouchers entitled “Charge for transport service” with cheque copies attached and acknowledgement of receipts of the same for PW7’s signature.  The relevant bank payment vouchers with cheque copies attached and acknowledgement of receipts were seized by Independent Commission Against Corruption (“ICAC”) officers from the office of Richard S.K. Chan & Co, the defendant’s audit firm, at Room 1601, Yu Sung Boon Building, 107 Des Voeux Road, Central, Hong Kong.

101.  Withdrawals from the accounts of ATLS and SDC to pay drivers salary

Between 1 January 2002 and 30 January 2007, PW5 June Chan prepared cheques in Annex A of the admitted facts PA1 for the defendant’s signature and the defendant did sign on them.

102.  Payment of Profits Tax of Unisurgical

Payment of profits tax by Unisurgical for the years of assessment 2005/2006 and 2006/2007 are set out as follows:-

Year of Assessment	Date of Payment of Profits Tax	Amount (HKD)
2005/2006	19 March 2007	$2,140,853.00
2006/2007	23 January 2008	$432,948.00
	2 April 2008	$61,850.00

103.  HKU Staff Provident Fund (“SPF”) received by PW5 June Chan

Upon completion of her employment at HKU on 31 December 2007, PW5 received HK$698,995.21 as SPF.

104.  Facts not in dispute

Upon examination of Unisurgical’s accounts the Forensic Accountant (PW19) concluded that although Unisurgical had not incurred any overseas travel expenses as stipulated in the invoices, such expenses had been included in preparing the directors report for the years 2005-2006 and 2006-2007 which the defendant had signed and used in preparing the tax returns of Unisurgical. As result Unisurgical paid $124,314.05 less tax for two years in total or $121,764 and $2,550 for the year ended 2006 and 2007 respectively.

105.  If June Chan had been dismissed for theft of HKU property she would have received her contribution to the superannuation fund of about $200,000 and not the $600,000 she received.  The difference being about $400,000. 

The evidence

106.  PW3 Mr Philip Lam

PW3 Mr Philip Lam was the Director of Finance of HKU since April 1990 (except a break from 1992 to 1995) and his responsibility was to keep all accounts of HKU and all matters concerning the finance of HKU as determined by the Vice Chancellor.

107.  In or around September 2007 HA requested HKU for financial statements including income and expenditure of SDC from 2000-2007.  No financial statements of SDC including income and expenditure accounts were provided excepted for the first two years of its operations.  The Finance Office of HKU therefore wrote to the defendant on 2 April 2008 informing him that annual financial statements were requested by HA.  The defendant was asked to prepare the statements for the years from 2000 as requested.  PW3 said that as the Finance Office had no project account specifically opened for the SDC operation it was impossible for them to prepare the required statements.  Despite repeated requests the defendant did not supply the accounts. Eventually HA wrote to the Director of Internal Audit of the Audit Committee of HKU to request for financial statements of SDC.  On 2 July 2008 PW3 wrote an e- mail to the defendant saying he was sorry that the defendant was reluctant in releasing the accounts of SDC.  PW3 told the defendant that transparency is the basic element that the Audit Committee expected to see for all University accounts. 

108.  PW3 said the SDC was acknowledged under the joint banner of HKJC, HA and HKU.  SDC received funds and resources from HKJC, HA and HKU therefore it was shared by three parties so it was a joint operation.  HKJC had provided initial HK$10 m for renovation and every year HA would provide funding of $1.5 million and HKU Department of Surgery would provide manpower for SDC.  As regards whether HKU supported SDC.  PW3 said HKU has what is called a “Supplementary Account” under the name of the Department of Surgery, this money is not from the University Grant Committee (UGC) or in other words public funds.  From the supplementary account of the department of surgery it would support SDC’s activities.  He went on to describe how money was generated in the supplementary account. 

109.  The sources of those supplementary accounts were generated from HKU’s clinical professors.  The Professors could do so called private consultations at QMH one day a week.  The income will be received at QMH.  After receiving it QMH would deduct 25% as HA’s share.  The remaining 75% would be given to HKU Department of Surgery supplementary accounts.  Previously this money was to be used for teaching and research.   However in recent several years since 2008 the money received by the outside private clinical practice was too high and during those years Professors from HKU’s medical schools left the medical school to go out to their own private practice.  To keep the Professors of HKU at HKU therefore HKU decided to share part of this money back to the Professors.  The university allowed the money to be taken from supplementary accounts to be given to the doctors and therefore the medical faculty (the department of surgery) and the doctors would share the funds. 

110.  When the HA gave the money to HKU then HKU would place that money in to the Department of Surgery supplemental account.  Head of department decides in consultation with other senior doctors to give not more than 50% of 75% to the doctors. 

111.  In those circumstances the remaining fund in supplementary account in the Department of Surgery available for SDC would be reduced.  PW3 could not recall how much in the supplementary account was given to SDC.  However he stated it was a source of finance for SDC because HKU would not allow the department to use tax payers money (UGC’s money) on non-UGC sub vented activities i.e. SDC’s activities.  As SDC was not responsible for undergraduate teaching and research and is responsible for nurses’ interns including other clinical professions those are not HKU’s direct duty. 

112.  The department of surgery own supplementary account was managed by the finance office of HKU but it did not have a supplementary account in the name of SDC.  The Head of Department (i.e. the defendant for the department of surgery) would decide how to use the money in the supplementary account in consultation with senior colleagues in the department there was no need to consult administration as to the distribution of monies in the supplemental account. 

113.  The resources in the supplementary account are not from the university’s tax payer’s money i.e. from the University Grant Committee the annual block grant.

114.  The money in the supplementary account of the department of surgery PW3 said was however the money of HKU’s.  It was kept in a Ledger account in the financial system in HKU.  It was not a bank account. If the head of department wanted to use the money he would have to a write letter to PW3 or e-mail his office to use that money.  The Finance office if they agree would then distribute the money as requested. 

115.  It would normally issue a cheque or if there are expenses pay from that account.  Normally any money to SDC HKU would be treated as sponsorship to SDC.  Sponsorship PW3 described as follows.  If a programme needed subsidy for academic or research purposes or equipment, the head would tell the finance office what equipment to order then a receipt would be sent to the Finance Department of HKU and they would pay for it.  The department would not give out any cash in hand unless it was petty cash.  The departments at HKU, including the department of surgery were not allowed to open accounts in name of the department or in the name of the university. 

116.  The contribution from department of surgery to SDC was generally of manpower.  It provided for free the time provided by the professors eg the defendant’s own time and employees e.g. June Chan.  PW3 accepted that SDC was however not part of the university as HKU’s focus was on undergraduate education and not post graduate or professional medical personnel for the whole of Hong Kong. 

117.  The Finance office would also open other ledger accounts in its books for the department of surgery.  These were for example when the department received donations.  Two ledger accounts were opened on the defendant’s instructions under the Finance Office in relation to ATLS and ABLS and donations were deposited into these accounts. 

118.  PW3 said that the Finance Office raised a concern with the defendant in 2001 on whether certain forum and conferences held by the department should be booked in the University accounting records, however after consultation with the defendant they were agreeable that provided an annual audit exercise was conducted, his department could continue to handle the income and expenditure of the events. 

119.  However after the request by HA and realising that there were no audited accounts for SDC for many years a request was made to the defendant.  It was then discovered that SDC had its own bank accounts with significant sums.

120.  PW3 said the understanding and view of HKU was that money in SDC’s bank account belonged to HKU and any money therein should be transferred to the supplementary account of the department of surgery. 

121.  Regarding SDC the finance office had discussed with the defendant for a long time that they wanted the money in SDC to be returned to HKU and not be in a bank account outside of HKU.  At no time since April 2008 when there were communications between the defendant and he, did the defendant mention to him that there was any misappropriation of funds by one of the defendant’s staff.  The first time he knew of June Chan’s theft was when he read the documents the Audit Committee supplied to him the defendant’s letter dated 23 December 2008 (exhibit P31 p.104). 

122.  The discussion with the defendant was that HKU was to have SDC accounts to be totally transferred to university books together with any remaining balance back to university.  They were not necessarily concerned with the amount but they wanted total accountability.  They also required this on the basis that they could go back and be transparent to HKJC apart from HA.

123.  PW3 explained that although SDC was not part of HKU they wanted accumulated funds back to HKU, as HKU wanted SDC figures to be transparent and clear because it involves the name under the joint banner of HKJC QMH and HKU.  The HKU name and logos had been used in publications of SDC.  Along with the SDC, the department of surgery and HKU name were used on the Attendance certificates of those attending the courses (see p.168)  The receipt for attendance of the courses (see p.167) had the name of SDC, department of surgery, HKU and also QMH. 

124.  Despite some challenge initially from the defendant, (that he said HKU was only entitled to 3% of the surplus or profit generated by SDC) in a letter dated 14 July 2008 (exhibit P26 p.84) the defendant agreed that the accumulated funds from operations of SDC from its inception would be transferred to the department of surgery of HKU.

125.  PW4 Mr Wan Siu Chuen

PW4 joined HA as Assistant Finance Manager in 1998 and was responsible for finance matters in QMH. Later in 2006, he was promoted as the Finance Manager of HA and was mainly responsible for finance matters in relation to cluster payroll, payment and financial manpower planning of the HK West Cluster.

126.  Background leading to HA’s request for SDC’s financial reports

The background leading to HA (Olive Yu’s) request to PW3 Philip Lam for SDC overall financial information was that in around 1997 -1998, HA had given a funding to SDC, so the headquarters needed SDC to provide income and expenditure statements to support and prove HA’s funding of around $1.5 million. According to PW4’s knowledge, there was no project account concerning SDC opened with the Finance Office of HKU. When Olive Yu made the said request, PW4 assisted by checking HA’s records kept by their General Manager to see whether or not HA had received the expenditure and income statements of SDC and there was none. Files kept by their General Manager were checked because for programs similar to SDC, they would open a file and whenever there were important documents, they would be put in those files. If financial statement of SDC was sent to HA, there would be a record in the Finance Office of HA under the General Manager.

127.  PW5 Ms June Chan

PW5 was a University Graduate. She had been employed with HKU since 1990. Upon the defendant’s appointment was responsible for the administration work of SDC since its inception. She was answerable and reported to the defendant as the person in charge of SDC. The defendant was superior to SDC Director, Dr C Y Lo.

128.  She admitted that she had confessed to the defendant of her stealing when he called her in to see him sometime in late 2006 or early 2007.  She was the one who suggested that she make repayment of the stolen funds.  She had no idea that the defendant had paid back the stolen money. 

129.  It was the department of surgery HKU who contributed to the operations of SDC not only by manpower but also by paying the basic expenditure for inviting guest speakers from overseas.  The expenditure included the speaker’s air-tickets, accommodation and food.  They would also pay an honourarium of $4,000 per guest. 

130.  PW5 agreed it was her duty to account for income and expenses of SDC.  For the $1.5 million from HA and course fees of SDC received she prepared the accounts and showed them to the defendant.  When the accounts audit had to be done the same would be sent to the defendant. 

131.  PW6 Ms Venus Chan

PW6 was an employee of HKU at all material times. She had joined the department of surgery in 1995. In around 1998 she helped out in the defendant’s office. She helped deal with the defendant’s personal matters for a short time in 2003 when the defendant’s secretary Barbara Ng was off work from injury. From the end of 2005 and onwards she dealt with all of the defendant’s personal matters.

132.  The defendant had trusted her. She had access to the defendant’s personal bank accounts.  If there was a need to move money between accounts she would tell the defendant and ask him to sign.  She had even managed to increase his credit card limit because she had access to his personal information. 

133.  Venus was not aware of the arrangement of 50/50 for Arun.  She only became aware that Arun’s salary was to be paid from SDC when she took over the accounts of SDC from June in 2006. 

134.  In late 2006 Venus started to deal with the accounts of SDC.  She discovered that there were huge expenses in the SDC’s accounts and found there were irregularities in the accounts.  She informed the defendant about it.  The defendant had requested her to be at some meetings he had with June Chan about the theft.

135.  In one of the meetings Venus had heard the defendant mention his concern for June’s orphan niece. 

136.  She had dealt with the defendant’s personal matters and his accountants Richard Chan & Co before and after the theft by June.  She had passed on financial documents to the accountants on behalf of the defendant.  Venus said the defendant was increasingly dependent on her to sort out these things as the defendant had little time to get involved with these matters. 

137.  Venus would pass documents to the defendant, she would place post-its on them and tell him where to sign.  When she took documents to him to sign she would tell him what they were and he would sign.

138.  On the instructions of the defendant Venus handled the repayments by the defendant of the stolen sums and for Arun’s salary. That is from Unisurgical to the defendant’s personal account then to the related SDC, ABLS, ATLS and HK Chapter accounts. 

139.  It was mainly herself in consultation with the defendant who dealt with the accountants particularly after the discovery of June’s theft.  She relayed to the defendant their advice on matters but particularly that it was inappropriate to have the driver’s salary under the Trust Fund.  The defendant had told her to listen to the advice of the accountants and to repay the money paid to the driver. 

140.  It was Venus’ evidence that upon the advice of the accountants the defendant should only reimburse SDC under the Trust Fund for the 3 years previously as that was the period that the accountants were preparing the accounts since the last audit in 2003.  She was not told that every cent had to be repaid by the defendant.  Venus had explained to the accountants that they did not want to amend the figures of the previous years before the last audit so that agreement was that repayment should be made regarding the years since the last audit. 

141.  It was Venus Chan’s understanding from the accountant that the accountant did not want there to be any direct relation between June Chan’s repayment and the defendant so for that reason payment was made through a third party.  She was told that the defendant should distance himself from the payments by June and open up a company to receive the money from June.  The defendant agreed and K&O Ltd was established just to receive the money which June repaid. 

142.  Venus said she often dealt with the defendant’s bookings at the travel agent which he used called K&T for both business and personal.  However she had never seen any dummy invoices from K&T Travel.

143.  Venus had gone to a meeting with the defendant at Richard Chan’s office.  When the defendant reported June’s theft to the accountants she said it was their suggestion that the matter should be reported to the police.  On hearing this the defendant said as June had a personal family tragedy not long before he had hoped to find a way that could solve the problem in another way.  She was at another meeting with the defendant at the accountants office where by a lawyer by the name of Mr Yu gave advice to the defendant that the matter should be reported to the police.  However she said even after this advice the defendant still appeared reluctant and wanted to think about it.  The defendant had told Venus that he would discuss the matter with some of his friends in the legal profession and later told her he had discussed the matter with them. 

144.  The defendant’s evidence generally

The defendant testified and the witnesses both for the prosecution and defence supported his evidence that as a result of the many positions held by him and his duties as a surgeon and teacher, he was an extremely busy man. His work day and his related duties at HKU and QMH were usually at least 12 hours long starting early from 7 am to at least 7 pm. As a consequence of his intense work load the defendant relied heavily on his support staff and secretaries provided by HKU. His secretaries’ duties included a wide range of duties from his work related matters to his personal matters. The defendant trusted them and he was wholly reliant on them to deal with the administrative matters concerning the hospitals, QMH, HKU and his personal matters. He considered them as diligent, competent trust worthy staff. As a result of his trust in them he did not need to check what they were giving him to sign. He either relied on what they told him or signed where he was told to sign. He said for June as her standard of English was not so high he would have to check her English otherwise he would put his signature on documents and not did not expect any big trouble.

145.  During his employment he had a number of staff assisting him.  He was allocated his own personal secretary provided by HKU.  He had a number of personal secretaries.  His longest serving was called Barbara Ng whom assisted him for about 27 years from 1975 to 2002 fully, then part time to 2005 when Barbara fully retired.  Between 2002 – 2005 June Chan (PW5) became the defendant’s personal assistant.  However from 2005 Venus Chan (PW6) dealt with all the defendant’s personal matters from then onwards.  He never doubted June’s integrity. 

146.  Venus Chan took over the duties of SDC from June Chan in late 2006.  It was Venus who noticed that something was wrong with the accounts of SDC.  She had discovered there were huge monthly payments of SDC’s credit cards.  Venus Chan then reported the discovery to the defendant.  The defendant was shocked when he found out that June Chan had misappropriated money.  He had never had any staff member misappropriate such large amounts there were only minor petty thefts, however he knew he had a serious problem in his hands. 

147.  The defendant had met with June Chan alone first.  He told her that he understood there was a problem with the SDC accounts after that June Chan confessed to what she had done.  She told him that she had committed unauthorised expenditures using the credit cards.  He had told her “to err is human.”  He had lost credibility with June by this time therefore he did not ask her about the amount stolen.  He had wanted Venus Chan to work out the amount with June Chan.  He had discussed with June the amount she was able to repay.  He never mentioned to her that he was not going to report her to the police or HKU. 

148.  The defendant had come to know about 12 months previously that is in 2006 that June’s older brother, her sister-in-law and young nephew were all killed in a bus accident in Egypt.  Her niece survived them all.  He understood that June Chan became the sole carer of her niece. 

149.  When the defendant came to know of the theft he had two paramount concerns.  One was his role in his capacity as sole trustee.  He had a duty as trustee to ensure that the theft from the trust fund should be restored as quickly as possible and if possible in total.  The second concern was in the role of doctor, which was to show compassion to June, and her niece.

150.  It did occur to the defendant that he might need to report the matter to the police as a theft.  It did not occur to him to report to HKU, HA or QMH, as he considered that she stole from the sub-accounts from a trust fund where he was the sole trustee.  It never occurred to him and it was still his belief and view that she did not steal from HKU, HA or QMH.  It was therefore in the exercise of his discretion as trustee on whether he should report June Chan to the police. 

151.  However he did seek legal opinion upon his views.  His accountants Richard Chan recommended a lawyer by the name of a Mr Yu.  Mr Yu recommended and an unequivocal yes that the matter should be reported to the police.  The defendant said he absorbed what he said thanked Mr Yu and left the meeting. 

152.  The defendant said he knew the easy way out was to report the matter to the police but he also thought about the consequence to June and her niece.  The defendant believed it was pretty certain that after due process if he reported June that she would go to jail. The defendant's concern was to who was going to look after this 14-year-old orphan girl. This weighed heavily in his mind. He considered that June was a well- educated lady in her late 30s who had for practical purposes thrown her life away.  It was a temporary mental aberration of an inability to control the purchases and spending.

153.  It was the defendant's testimony that he was not trying to find a way out from reporting June but he needed to have collaborative legal opinion.  He did not want to talk to a lot of people that he did not have confidence in. He therefore spoke to 5 legal senior people in the profession.  The advice he obtained was that the money was stolen from the trust, the trust was the victim, he was the sole trustee, as the sole trustee it was in his discretion whether he wished to report the matter to the police or not. Therefore in his compassion to June and more importantly her orphan niece he made the conscious decision not to report June Chan to the police, HKU, HA or QMH. 

154.  He as sole trustee repaid the sum which Venus Chan had worked out at $2.67 million of which June Chan had stolen back to the Trust Fund.  He did not tell June Chan he had repaid the sum as he did not want her to become complacent on repaying the money stolen. He repaid the money stolen in his capacity and duty as trustee.

155.  The defendant left all the remaining consequential matters arising from the theft by June for Venus Chan to deal with including dealing with his accountants Richard Chan & Co. Venus had informed him of the opinions and recommendations of the accountants. He had some meetings with them in Venus’ presence, he had also left some meetings to be continued in his absence by Venus with the accountants.  He followed whatever advice was given accordingly.  On the advice of his accountants Richard Chan & Co he established K&O for June’s repayment of the stolen funds.  He did not establish K&O for distancing himself from the payments of June.   He was advised that it was inappropriate to have the driver’s salary under the Trust Fund and therefore he agreed to repay all of his salary paid from the Trust Fund. 

156.  He believed he had repaid the whole sum towards his driver’s salary for the past 5 years.  He was annoyed as he later found out that Venus Chan did not do as he instructed her and had only paid back 3 years. 

157.  In June 2008 he invited June Chan to lunch to let her know that the matter of reporting the theft was no longer within his discretionary power.  HKU through the Audit Committee had access to the fact that there was a theft perpetrated by her and HKU had decided it should have been reported.  He had felt sad that her niece would be deprived of family attention.  He was not aware until this trial that June Chan had an elder sister who would be charged to look after the niece.  It was the defendant’s impression all along that June was the only person who looked after the niece.

158.  As to the request for the financial documents from HKU and HA he was never reluctant to supply the accounts.  They took time to compile as they were for a few years.  He had throughout the correspondence been co-operative with HKU’s finance office.  He was always willing to provide accounts.  There was nothing to hide as all could be seen in the accounts.  

159.  The defendant had paid the driver’s salary from SDC’s accounts as it was easier to pay from one account however his arrangement that he was to pay back 50% of the drivers salary never occurred for some unknown reason as his secretaries, Barbara, June or Venus failed to do as they were instructed to do.

160.  Background as to the defendant’s repayments of funds towards stolen money and domestic helper driver’s salary

Once the defendant had come to know of June Chan’s theft he took it upon himself to repay the money stolen by June Chan by depositing money directly back into the sub-accounts. He believed that as sole trustee of the Trust Fund he had a fiduciary duty to look after the fund and as funds were stolen he had a duty to reimburse the fund. Venus Chan as his secretary did all the administrative work for him and he just signed the cheques. The repayment was made by withdrawals of funds of $3,040,000 from Unisurgical’s bank accounts then depositing the sums into his own personal Hong Kong Shanghai Bank (HSBC) bank accounts then writing cheques from his HSBC bank accounts to deposit into the relevant sub-accounts on diver’s dates.

161.  As the defendant did not at that time have enough personal cash in Hong Kong, he advanced the cash from Unisurgical’s account, until he repatriated assets from Australia. Unisurgical accounts were used to satisfy the deadline and used almost like a bridging loan. 

162.  Re-payments totalling $2,672,000 were all made between 20 March and 29 March 2007 by 5 cheques into the sub-accounts of SDC, ATLS and ABLS. 

163.  The defendant said he was advised by his accountants Richard Chan & Co to set up a new company just for the repayments by June Chan for the money stolen.  In the circumstances he purchased a shelf company in the name of K&O for the sole purposes of receiving funds from June Chan.  The company did not carry on any business.  The defendant had set up a company called K&O Ltd purposely for the repayment by June Chan of the stolen funds.  He was not sure of the reason why the company had to be set up but he just followed their advice.

164.  Venus Chan the defendant’s assistant at the material time was liaising with the accountants and she passed on their advice to him which he followed.   Another company was made director of K&O Ltd and not the defendant.  The defendant was however the sole authorised signatory of its bank account. 

165.  In the meantime the defendant also deposited sums as repayment into the sub accounts for payments previously made to the driver as salary or related to his employment in the accounts of SDC and ATLS in the amount of $523,804 by 3 cheques between 29 March 2007 and 20 June 2008. 

166.  The defendant’s evidence was that he had wanted the whole sum of $731,347 repaid but Venus Chan who had dealt with the repayments for him had not abided by his instructions and only paid part of it. 

167.  It was of no concern to him that Venus Chan’s evidence was she did what she had been instructed to do by the accountants.  She had defied his instructions.  Venus had only arranged repayment for the past 3 years and not 5 years therefore for that reason the $523,804 was paid.  The amounts were paid for that period as they were for the unfinished accounts to be prepared. 

168.  The defendant’s testimony was that all these payments were made before the end of the financial year of March 2007 on the advice of his accountants Richard Chan & Co so that the accounts would be in proper order for the financial year ending 2007.

169.  The payments made to SDC for the drivers salary was made upon the advice of the accountants as the accountants advised him it was not appropriate to have the driver’s salary paid by the Trust Fund or SDC. He did not talk to the accountants further about this. 

170.  A few months later June Chan kept to her promise and repaid as much as the monies stolen as she could.  By 2 cheques dated 5 July and 19 September 2007 June Chan paid $2,100,000 into K&O’s Ltd bank account as repayment of the stolen sums. 

171.  The defendant was a man of considerable means.  He had assets to the value of about HK$150 million.  He did not improperly use funds from SDC to pay his driver.  There was never any intention or need to cheat the Inland Revenue department of taxes properly due to it.

172.  The Law and fact in relation to the offence of misconduct in public office, the subject matter of the 1 and 4 charges

The Hong Kong Court of Final Appeal in Sin Kam-wah v. HKSAR (2005) 8 HKCFAR 192 set out the elements of the offence of misconduct in public office at 210 I – 211 B as follows:-

“The offence is committed where:

(1) a public official;

(2) in the course of or in relation to his public office;

(3) wilfully misconducts himself; by act or omission, for example, by wilfully neglecting or failing to perform his duty;

(4) without reasonable excuse or justification; and

(5) where such misconduct is serious, not trivial, having regard to the responsibilities of the office and the officeholder, the importance of the public objects which they serve and the nature and extent of the departure from those responsibilities.

173.  The misconduct must be deliberate rather than accidental in the sense that the official either knew that his conduct was unlawful or wilfully disregarded the risk that his conduct was unlawful.  Wilful misconduct which is without reasonable excuse or justification is culpable.”

174.  Examination of the issues, law and evidence

I turn now to examine the issues, the law and the evidence.

175.  Was the defendant a public official

It was not disputed that the defendant was a public officer in his capacity of Head of the Department of Surgery of HKU (a public authority).

176.  Was the defendant acting as a public officer in his capacity as the person in charge of SDC

The issue here is whether the defendant as the person in charge of SDC was a public official.

177.  The core of this element of being a public official is the nature of the defendant’s duties. 

178.  The prosecution case is that the defendant as the person in charge of SDC is a public official.  The defence case is that the defendant was not. 

179.  The defence case as to the nature of the duties can be simply put.  The defence conceded that at first glance the functions of the SDC might suggest it was performing public duties as set out in the admitted facts PA1 :-

“the primary functions of SDC were to provide medical training courses to surgical and other specialties, medical students, interns, nurses, ambulance personnel and doctors on a territory-wide basis.”

180.  It was admitted that SDC was to provide training to medical personnel and it thus had objectives aimed at serving the public in that context.  However it was submitted a private organization cannot be made “public” simply because it seeks to provide similar objectives.  Therefore on closer analysis of the SDC it would not necessarily lead to that conclusion that it is performing a public duty. 

181.  Mr Graham Harris SC and Mr John Reading SC leading Mr Kevin Li for the defence further submitted that SDC could not be regarded as an extension of HKU.  The powers delegated to the defendant in the SDC were given to him, not by HKU but by the Chief Executive of QMH, Dr Vivian Wong.  It was argued SDC was the brain child of the defendant’s.  From the trust deed of the Trust Fund established 10 years earlier it was something that the defendant had been endeavouring to establish for many years. 

182.  The prosecution submissions are clear the defendant is a public official by nature of his duties.  SDC is an extension or part and parcel of HKU.  The prosecution relied on a number of cases to support its submissions. 

183.  The prosecution referred to a very old case of R v Whitaker (1914) 3 KB 1283 where it was stated that the court is focusing on the nature of the accused’s duties and not on the fact that he was remunerated from public funds. 

184.  In Whitaker the accused was a military officer who was convicted of conspiring to accept bribes from caterers to his regimental canteen.  As to who was a public officer the court said that it was an officer:

“…who discharges any duty in the discharge of which the public are interested, more clearly so if he is paid out of a fund provided by the public. If taxes go to supply his payment and the public have an interest in the duties he discharges, he is a public officer.”

185.  Even though a person was not paid or were not paid from public funds a person occupied public officer if he performed public duties.  In Stewart V R (1960) 2 WIR 450 the Court of Appeal said at page 453B that:

“…the true guide to be followed is that when a person has to discharge a duty in which the public is interested, he is performing a public duty and therefore is the holder of a public office.”

186.  In R v. Boston (1923) 33 CLR 386, the High Court of Australia accepted the definition from Whitaker and identified as the key element the obligation to discharge a public duty in which the public is interested.  The nature of the office is immaterial as long as it is for the public good.

187.  The House of Lords in Griffiths v. Smith (1941) AC 170 at 205-206 indicated that if an entity that is created to perform public duties operates on commercial lines and generates profits which it either pays to the Government or retains in order to fund its public duties, then that would not be incompatible with the entity being a public authority.

188.  The learned author Ian McWalters ( now a Judge of the Court of First Instance) in his book “Bribery and Corruption Law in Hong Kong” 2^nd Edition at pages 700 – 701 lists out a number of relevant factors in deciding whether a person is a public official:-

“If the approach is taken of firstly examining the nature of the duty being discharged by the non-governmental body and secondly examining the nature of the body discharging the duty, then it is possible to draw from the civil law a number of different factors which have been used in different contexts for the purpose of determining whether a duty was public and whether a body performing a public duty was a public authority. These can be summarised as follows:

The nature of the duty

This issue looks to whether the duty being discharged by the organisation can be broadly characterised as being a public one. In determining this issue, regard should be had to:

(i) whether the duty is of a type that enables it to be characterised as being one traditionally regarded as public in its nature;

(ii) whether the duty can be said to be one in the performance of which the public is interested; and

(iii) whether the performance of the duty is one that can be said to be for the public good in that it is for the benefit of the whole community rather than only for a small section of the community.

189. The nature of the body discharging the duty

This issue looks to see whether the body performing the public duty is so structured that it and its employees cannot be regarded as part of the public sector.

(i) whether the body discharging the duty is founded with or operates with the benefit of public funds;

(ii) whether it acts under some kind of government grant or authority;

(iii) whether it has any coercive powers to assist it in the performance of its functions;

(iv) whether the function it is given is exclusive to it;

(v) whether the entity is wholly owned by the Government and if not the extent of the Government’s ownership;

(vi) whether or not the entity operates as a profit-making enterprise along commercial lines;

(vii) whether the Government has any control over the entity, especially in respect of the appointment of its head and appointments to its board;

(viii) whether the entity is accountable in any way to the Government for the performance of its functions; and

(ix) whether the entity has a statutory constitution.”

190.  The question whether the defendant was holding public office and whether SDC was part of HKU is a question of law.  It matters not that the opinions of PW3 Philip Wan the Director of Finance HKU was that SDC was not part of HKU whilst PW4 Wan Siu Chuen Finance Manager of HA understood it was.  The question must be decided on the evidence before me. 

191.  I accept Mr MK Wong SC counsel on fiat leading Ms Claudia Ng Public Prosecutor for the prosecution submissions that the defendant was in his capacity as the person in charge of SDC acting as a public official and SDC was part of HKU.  I reject the submissions of the defence. 

192.  The defendant as a public officer as person in charge of SDC and SDC was an extension or part of HKU department of surgery

Based on the above principles and analysis, the defendant as Head of the Department of Surgery of the University of Hong Kong (“HKU”) and the person in charge of the SDC was clearly a public official for the following reasons:-

(i) SDC was for training in all surgical specialities, and open for all medical students, interns, nurses, and doctors on a territory-wide basis (see Exh. Bundle page 159 and admitted facts PA1). This is a type of duty traditionally regarded as public in nature and the public is clearly interested in it. It is for the benefit of the whole community.

(ii) Performing a public duty as medical personnel is clearly a servant of the public.

(iii) SDC was funded from public money of the HKJC donation of $10M to HKU, around $1.5M annual subsidy from the HA (a public authority), subsidies from the Departmental Supplementary account of the Department of Surgery of HKU, and other donations.

(iv) SDC was managed by the Department of Surgery of HKU, which is a public authority. Staff of HKU worked at SDC. The Defendant became the officer in charge of SDC either because he was the Head of the Department of Surgery of HKU or because he was appointed by the Chief Executive of HA, another public authority. He was not appointed and nor was there any suggestion or evidence that he was the person in charge of SDC because of the establishment of the Trust Fund.

(v) Although some courses of SDC generated a profit, it was retained to be either returned to HKU or for SDC’s own further operation.

(vi) Since SDC was managed by the Department of Surgery of HKU, SDC was clearly accountable to HKU. It can be seen that the audit committee of HKU demanded for SDC’s account and an investigation into the operation of SDC, which the defendant as the person in charge of SDC subsequently complied with. SDC was also accountable to the HA for its accounts. HA is clearly a public authority. According to the authorities quoted above, HKU is also a public authority. As a result, SDC and the defendant as its person in charge were accountable to two public authorities.

(vii) The Defendant’s salary was paid by HKU, and his honorarium was paid by HA.

(viii) For the aforesaid reasons, the Defendant as the person in charge of SDC was a public official.

193.  Element (2) In the course of or in relation to his public office

What this element of the offence looks to is whether there is a link between the misconduct and the public office. This might be because the misconduct occurred:

(1) in the course of the performance of his official duties; or

(2) from the exercise of powers or discretion associated with his office; or

(3) from the misuse of his title, status, position or capacity.

194.  In the Sin Kam-wah case, the Court of Final Appeal said at page 211DE that:

“...wilful misconduct which has a relevant relationship with the defendant’s public office is enough. Thus, misconduct otherwise than in the performance of the defendant’s public duties may nevertheless have such a relationship with his public office as to bring that office into disrepute, in circumstances where the misconduct is both culpable and serious and not trivial.”

195.  Charge 1

As the Head of the Department of Surgery of HKU and person in charge of SDC, the Defendant has a clear duty to protect the SDC fund and not to misuse it. The ATLS course was conducted by and in SDC and was clearly related to SDC. Moreover, previously when the defendant received donations from Oriental Press Charitable Fund Association the defendant handed to the Finance office of HKU the donated money and the Finance office put the money into a ledger account under the name of ATLS (PW3 and the defendant’s evidence).

196.  The Defendant had a duty to protect SDC and its other funds i.e. ATLS and ABLS and not to misuse it.

197.  In authorising the funds of SDC and ATLS to be used to pay for the driver Arun (PW7’s) loans and salary as his personal employment with the defendant’s family, it was clearly done in the course of or in relation to his public office.

198.  Charge 4

SDC funds were funds belonging to HKU. The HKJC had donated the sum to HKU. HKU had contributed the donation from HKJC Charities Trust in the sum of $10M to the setting up of SDC and from time to time paid from the supplementary account of the Department of Surgery for the visiting lecturers’ expenses (June Chan’s evidence).

199.  The Defendant has always agreed that HKU was entitled to claim at least part of the money in SDC (see Exh. Bundle pages 69, 72-73, 77-78, 197).  After the theft by June Chan, HKU had asked for the return of all the funds in the SDC bank account to be put under the HKU account (see Exh. Bundle page 84 of Exh. P26).  PW3 in his re-examination said that HKU had suffered financial loss because of PW5’s theft before the repayment by the defendant was made.  PW5 also agreed that she had stolen from the Department of Surgery.

200.  Thus PW5’s theft from SDC’s account had resulted in a pecuniary loss to HKU and therefore the Defendant, as Head of the Department and the person in charge of SDC was under a duty to report to HKU about PW5’s theft.  

201.  This duty to report is stated in paragraph 10 of PW11’s S.65B statement and also in the S.65B statement of PW11.

202.  PW11 is the Assistant Registrar (Personnel) of the Human Resource Section (HR) of HKU.  Her evidence which was admitted was that June Chan was employed by HKU and she joined the HKU’s retirement scheme. “The University Hong Kong Staff Provident Fund (SPF).”  June Chan was bound by the regulations and guidelines in the “Staff Manual for Terms and Service I and Terms of Service I (Clinical Medical Staff) (staff manual).  The Staff Manual was made available to staff of members of HKU on the intranet for approximately six years.  The latest version is now renamed as the Staff Handbook. Throughout all material times when June Chan worked at the Department the defendant was the Head of the department. 

203.  PW11 referred to The Procedure for termination of appointment of an appointee for “an offence” under the Staff Handbook which states:

“6) The provision of this section apply to such offences as …… stealing, fraud, damage to the University property.

7) The procedures are as follows:-

(a) When the Head of the Human Resource Section is informed by the Head of a Department or by any other authoritative person that an appointee has committed or is believed to have committed an offence meriting dismissal, he will immediately suspend the appointee from duty, on full pay, for a period of seven days. The Head of the Department or other person concerned will be required to make a written report on the incident to the Head of the Human Resource Section within the seven days’ suspension period, (my own emphasis) and the appointee will be invited to give his own written account of the events in question, if he so wishes.”

204.  PW1 Ms LAM Yee-fung Yvonne Head of Human Resource (HR) Section of the Registry of HKU. Stated at paragraph 7 of her witness statement :-

As stipulated in the “Duties of and Guidelines for Heads of Teaching Departments within Faculties” (HR/12 –H/R13), one of the duties as Head of Department is:

1(d) The management of the academic and non-academic staff of the department, including their deployment, the allocation of resources to them and personnel matters relating to them.

205.  And at paragraph 8 of her statement:-

If a staff member in the department has committed or is believed to have committed an act of misconduct or an offence meriting dismissal, the department head concerned would normally consult the Dean of the Faculty concerned, or the Vice-Chancellor, or an appropriate administrative department, such as HR, to consider if any appropriate action should be taken on that staff member.

206.  The defendant’s failure to report to HKU about June Chan’s was in breach of HKU’s regulations.  Arranging repayment to the related bank accounts to conceal the theft and allowing PW5 to resign to receive the superannuation fund from HKU were also contrary to the regulations.  All of these acts were related to his public office and was in the course of his public office.

207.  PW11 went on to state if a member of the SPF scheme (June Chan was a member) is dismissed due to a dishonest act the member would only be entitled to receive the value of the member’s contribution and not the whole balance. 

208.  In paragraph 8 of PW11’s S.65B statement (Exh. P352), it is stated that:-

“In according with Schedule Rules 5(d) of the SPF Policy (page 69), when a member of the SPF scheme:

(I) Shall be dismissed from employment and the Trustees shall be satisfied that the dismissal was due to a fraudulent or dishonest act of the Member in circumstances which have resulted in an Employer suffering pecuniary loss or damage, or

(II) leaves his employment to avoid being dismissed in accordance with (I) above,

such Member shall not, subject to paragraph 3 of the MPF Appendix (page 82), be entitled to receive any benefit made or payment from the Scheme other than such amount as is equal to the value of his Member’s Balance calculated as at the Appropriate Valuation Date.”

209.  From the above it can be deduced that June Chan was a member of the SPF.  June Chan had committed a dishonest act by stealing HKU funds.  The defendant as Head of the Department of Surgery was under a duty to report her theft.  As a result of her theft she would have been dismissed.  Upon her dismissal she would not have been entitled to her full Staff Provident Fund. 

210.  Element (3): Wilfully misconduct himself

This element was explained by the Court of Final Appeal in the Sin Kam-wah case at page 211B:-

“The misconduct must be deliberate rather than accidental in the sense that the official either knew that his conduct was unlawful or wilfully disregarded the risk that his conduct was unlawful. Wilful misconduct which is without reasonable excuse or justification is culpable.”

211.  Proof that the public officer misconducted himself with the requisite mens rea will usually be by showing that his conduct was prompted by an improper motive or that it was committed dishonestly. Whether the defendant has an improper motive or was dishonest must be looked at in relation to whether he did so without reasonable excuse or justification, element 4 below,

212.  Thrust of defence case

The thrust of the defence case is that if the court concludes that the defendant held public office by reason of being the person in charge of SDC then it is necessary to consider if the defendant’s conduct amounted to misconduct, and then to consider whether or not the defendant appreciated the serious nature of such misconduct. Furthermore, if the court were to conclude that deliberate misconduct was established, then the court should consider whether there existed any reasonable excuse or justification for such misconduct.

213.  Determination on whether the acts amounted to misconduct

From the above in respect of charge 1 the use by the defendant as a public officer to pay his personal domestic helper cum driver’s salary from SDC’s funds amounted to misconduct. Public funds and/or HKU’s funds should not be used to pay personal or private employees.

214.  In respect of charge 4.  The defendant as a public officer had a duty to report June Chan’s theft. It is not disputed by the defendant that he failed to report her theft.  Theft was an offence to which an employee could be dismissed and as a result the employee would not receive his or her full amount of staff provident fund.  The defendant in concealing the theft and allowing June Chan to resign and not be dismissed by HKU so as to enable her to receive her full payment was conduct which amounted to misconduct. 

215.  Consequential upon my above finding I turn to consider whether the defendant had a reasonable excuse or justification for such misconduct. 

216.  Element (4): Without reasonable excuse or justification

The absence of reasonable excuse or justification will usually be established by proving the presence of an improper motive. This improper motive will usually be inferred from the evidence of the accused pursuing private goals at the expense of the public good. In Commonwealth v Steinberg (1976) 362 A 2d 379 at 386, the Superior Court of Pennsylvania explained it in this way:

“When an individual has been placed in a position of public trust and taken on the responsibility of acting for the people, the intentional choice not to act in the public interest but to advance his own or some other private purpose, disregarding the good of the many, can be evidence of a corrupt motive. ‘If this motive… was to obtain gain for himself or his political party, or to bestow a gratuity upon a relative or a friend or a political ally at the expense of the Commonwealth, his motive would be corrupt and he would be guilty of the offence charged. The Commonwealth need not present detailed testimony to establish the motive, but evidence must be produced which discloses facts from which a corrupt motive can be inferred.”

Charge 1

217.  The defence case and evidence in respect of charge 1

It was not disputed that the accounts of SDC and ATLS were used to pay the driver Arun’s salaries between 29 January 2002 and the 30January 2007. However, it is the Defence case that it is immaterial whether or not the staff members were driven when the defendant was in the car with them. It was submitted that the court was only required to determine the defendant’s state of mind when he made the decision to have the 50/50 salary arrangement and it was submitted that there was no reason not to believe the defendant’s evidence on the arrangement:

(1) The defendant genuinely believed it was appropriate to have funds paid out of SDC and ATLS for Arun’s salary since Arun was performing official driving duties for the Department and for SDC/ATLS related activities in addition to his domestic duties;

(2) The defendant genuinely believed it was reasonable for half of Arun’s salary to come from the funds. More so as the defendant was in charge of financial distributions in SDC, ATLS and ABLS.

(3) The defendant testified that when one of his staff, possibly his secretary, Barbara, or someone else, suggested that as an increasing part of Arun’s duties was connected with the Department and SDC, part of his salary should be paid from the Trust Fund. He thought it was a good idea, and the suggestion was duly implemented. He further stated that he intended to reimburse the Trust Fund 50% of the amount paid to Arun, periodically, and this was conveyed to one of his staff, although it is not clear if it was Barbara or someone else. Although PW5 and PW6 said they had no knowledge of this part of the arrangement, it may well have been the situation that that part did not filter through to them;

(4) Consequently, the defendant implemented the 50/50 arrangement, by which Arun's salary would be equally divided between himself and the Trust Fund, in order to allow his pay to be reflected by the duties he was carrying out;

(5) However when the defendant was informed via Venus Chan (PW6),that the accountants thought that it may be inappropriate to pay the driver from the Trust Fund, the defendant gave immediate instructions to repay all that the driver had been paid from the Trust Fund. The defendant was following the advice of his accountants.

(6) There was never any indication or intention on the part of the defendant to act inappropriately or deliberately to misuse the funds from SDC and ATLS accounts regarding Arun’s salary as upon being told by his accountants Richard Chan and Co in 2007 through Venus Chan, that they thought it was inappropriate for Trust Fund money to be used this way, the defendant gave firm instructions to have the full amount repaid. He did not conceal the evidence of misconduct, because he trusted and had no reason to doubt the advice of his long time accountant.

(7) However the evidence from PW6 was that only the amount for the current tax period for a Charitable Trust (3 years) was repaid as per the instructions of the Accountant.

(8) It was the defendant’s case that he had in fact told PW6 to repay the whole sum. PW6 appeared to accept in her evidence, that Professor Wong’s instruction concerned repayment of all sums paid to Arun. In 2011, when Professor Wong discovered that the full amount had not been repaid as he had instructed, he sent PW6 a rather curt email, which is Exhibit D17. It was the defendant’s evidence that the outstanding balance was paid thereafter. However this is incorrect and remains outstanding as stated by PW6.

(9) The defendant had no intention to do any wrong as he sought to rectify the situation immediately by erring on the side of caution in returning the total amount paid out by the Trust Fund.

(10) It never occurred to the defendant that in allowing Arun to drive for the Department of Surgery and/or SDC the defendant may have been breaching the law.

218.  Convenience

The defendant’s evidence was that it was convenient in the circumstances for Arun to perform official duties and therefore highly likely that he in fact performed those duties even though Arun himself disputed he had carried out those duties.

219.  The defendant gave evidence regarding why Arun was asked to perform official driving duties.  This included the fact that Arun was based at QMH and that Arun could converse in English with English-speaking visitors.  The defendant gave evidence that apart from driving the defendant around in the course of his official duties Arun drove other people around. 

220.  The defendant said this

A:	Our department received between 80-100 visitors a year. And they came from a whole spectrum of activities including SDC, ATLS, and as visiting professors to give special lectures, teach, research, often there are medical student examiners, professional qualification examiners, and so we do have a need to transport them from various activities.  And so often Arun would be available and it was actually very convenient because he’s on call at QMH, whereas if we tried to book a University car, we have to specify very much time, place, destination, in addition to many phone calls, paperwork, and so it is from a utilitarian point of view very efficient.
Q:	Most of these visitors would communicate in what language?
A:	They’re nearly all English speaking
Q:	Were there ever occasions where Arun would drive other visitors when you yourself were not in the car?
A:	Very often, for example taking them back to the hotel, taking them to the airport, this is nothing unusual.

221.  It was the defendant’s case that Arun’s English ability appealed to the defendant.  It was Philip Lam (PW3)’s evidence that the standard of English of the HKU drivers was “below average”.

222.  The defence also referred to other witnesses’ evidence which supported the defendant’s evidence that Arun drove staff members of the Department around.  June Chan (PW5), Venus Chan (PW6) and Defence Witness Leung Chuen On (DW2) all confirmed in their evidence that they had been driven by Arun in carrying out their official duties, and also that Arun had driven visitors of the department. Their oral testimonies are extracted below for the Court’s reference:

223.  The oral testimonies of the witnesses have been extracted below.

224.  June Chan (PW5) – Cross-examination

Q:	I think the car was purchased by the University for the use of the department.
A:	I think I should put it in this way. Actually I was not sure the car which Arun was driving belonged to whom. And as to whether visitors have ridden in the car driven by Arun, they did. But very seldom. It was when I failed to book any of the HKU cars, then I would ask Prof Wong saying that there’s no car, can we ask Arun to give him/her a ride, or to hail a taxi.
Q:	And the Prof would invariably agree that Arun could be the driver?
A:	On those several occasions, yes.
Q:	And I suggest, there came a time, perhaps around 2004 when Arun was routinely driving for the department, driving various VIPs and senior people around?
A:	I don’t agree
Q:	Is it you don’t agree or you don’t know?
A:	I should put it in this way. For those guests which I have provided service, Arun have given them a drive for less than 5 times. I’m not sure about other visitors in the department.

225. PW6 Venus Chan – Examination in Chief

Q:	Who were the person or persons that Arun was responsible for driving for?
A:	Prof Wong, Mrs. Wong, his son, and sometimes he would drive our visitors or drive us to meetings.

226. PW6 Venus Chan - Cross-examination

Q:	Sometimes he would drive the Prof to a meeting?
A:	Yes
Q:	Sometimes he would either drive senior members of the department to meetings if it was necessary?
A:	Sometimes
Q:	Sometimes he would even drive you or some of your colleagues around if it was necessary?
A:	Mostly together with Prof Wong or when we’re going to see him
Q:	You’ve ridden in a car driven by Arun a number of times over the past years, is that right?
A:	Yes
Q:	Sometimes it would be the departmental car, the “DW” car, sometimes it might be Prof Wong’s own car?
A:	Yes
Q:	Arun also drove, did he not, when there were visiting VIPs, coming to the department, either as part of the SDC courses, or otherwise, particularly if there were people who only spoke English
A:	I knew that he had driven them.
Q:	If he was available, he would be driver of choice to drive these people to various meetings and various other business activities?
A:	Sometimes

227. DW2 Leung Chuen On – Examination in Chief

Q:

Were there occasions where you were driven by Arun?

A:

Yes during my work, yes

Q:

And again between 2002-2007?

A:

Yes

Q:

On those occasions you were driven by Arun, did you travel with anyone else?

A:

No, because I was carrying lots of things, lots of heavy documents

228. PW7 Arun the drivers testimony

PW7 was employed as a foreign domestic helper from India. The defendant’s wife between 1994 and 2002 had employed him initially. The defendant from 2002 to 2008 then employed him.

229. Arun’s evidence and the defendant’s contradicted each other as to the driving duties. Arun’s testimony was that he did not drive any HKU employees or visiting teachers other than when they were in the company of the defendant. It was his evidence that he drove for the defendant’s family that is for the defendant, his wife and son. Arun said that the main part of his duties was for taking the son to school or other extra-curricular activities after school or taking the maid to the market. He referred to a reference letter dated 22 February 2008 written by the defendant upon his resigning from the defendant’s employment which supported his account exhibit P128 p. 380.

230. The defendant stated in the letter inter alia that Arun was employed by him as the driver of himself and his family members. His main duties include taking his son to school or other extra-curricular activities after school and the maid to the markets, etc.

231. When Arun finished his duties at the defendant’s home and his son’s school, he went to QMH when the defendant called him to do so, and this happened almost everyday.

232. Arun did not remember driving for any visitors, employees of HKU or the hospital in particular although he drove a lot for the defendant. He recalled that he never drove without the defendant. He drove other people only when the defendant was present too.

233. Arun knew who was messenger Ah On (DW2), who usually went to pick up documents for the defendant from K&T by bus. He would have dropped Ah On off on the way from office to home on occasion but otherwise he would not drive Ah On for his appointments.

234. Whenever the defendant wanted to go somewhere, he would ask Arun to drive DW 2515. Arun did not know that this vehicle belonged to the Department of Surgery of HKU as he was just obeying the instructions of the defendant.

235. Arun was aware that if he drove outside the terms of his contracts, that would be a breach of his contract, that was why he did not.

236. He had no idea about the logbook for the vehicle belonging to HKU. The defendant used to ask him to fill it in and signed thereon hence he did so accordingly. Arun did that because he was asked by the defendant to do so, not because the vehicle he was driving was a HKU vehicle.

237. Arun denied that he had driven staff members of the defendant like Venus Chan, Barbara or Susanna in the defendant’s absence. He also denied that he had driven a doctor CK Lam to the airport to pick up Professor Wei, and he did not remember who was CK Lam. He also did not remember driving Professor Paul Tam, a staff of the hospital, in 2004 to Ritz Carlton hotel where he picked up Professor Morris first then drove them to the Faculty of Medicine of HKU.

238. Arun’s salary payment arrangement

Arun got his salary payment at the defendant’s office at Professorial Block at QMH. A staff member of the defendant would prepare documents regarding his salary payment and every time when Arun went to Professorial Block of QMH to get his payment, he met an employee of the defendant. That employee would present documents like the Acknowledgment of Receipts (p.282 of Exhibit P93) for him to sign, and then he would get a cheque of Wing Lung Bank for his payment. Whereas for his salary payment under contracts with Mrs. Wong (the defendant’s wife), cheques were of Bangkok Bank drawn from the account of Dobus Ltd.

239. Loans to Arun

For the cheque of $25,000 dated 8 January 2004 he said it was a loan he borrowed from the defendant as his wife and children were travelling to Hong Kong from India and he had to arrange accommodation for them. He had repaid the defendant that loan. For the cheque of $50,000 dated 3 April 2006 that represented another loan from the defendant. When he received his long service payment from the defendant he set it off to repay the loan.

240. Long service payment to Arun

The two Wing Lung Bank cheques from the account of ATLS ($29,682 & $40,000) at Banker’s Affirmation A364 and A365 were cheques of Arun long service payment from 1994 to 2002. Barbara the defendant’s secretary at the time gave them to PW7 at Professorial Block of QMH. However, Arun did not know why cheques were drawn from Wing Lung Bank account but not that from Bangkok Bank (Dobus).

241. Further evidence in respect of charge 1

It is of relevance to set out the employment of the defendant’s secretaries. Barbara Ng was the defendant’s personal secretary for many many years from 1975 until Barbara retired in around 2002. In 2002 she volunteered to come back one session a week usually on a Tuesday morning. Barbara left completely in 2005.

242. Upon Barbara’s retirement PW5 June Chan was asked to become the personal assistant of the defendant.

243. It was the secretaries and personal assistants evidence including DW3 Ms Kaye Brodie that the defendant was a very busy man that did not have time to deal with his personal and financial matters and left that to his secretaries.

244. The Defendant’s defence is that the arrangement of SDC paying for half of Arun’s salary came from one his secretaries. This must have come from Barbara or June. This arrangement according to the defendant naturally must have come into effect sometime after the defendant became Arun’s employer on 1 January 2002. This clearly was after the driver ceased being an employee of the defendant’s wife.

245. The defendant’s testimony was that as HKU did not have a full time driver he made enquiries if Arun could be employed by HKU. The categorical answer was no. The defendant said in 2002 he could not recall the details of the discussion but either Barbara or June might have suggested that because Arun had spent so much of his time driving for the department and or SDC why not have his salary come from the trust fund. His reaction was that this was reasonable, as his pay should reflect his duties. The defendant suggested a 50/50 arrangement. The defendant then instructed Barbara or June to go ahead and pay Arun from the sub account. The payment was to be 100% from the sub account. He had not expressly discussed in detail with Barbara and June how his 50% contribution was going to be made but he thought that Barbara or June would follow up on how to do this. His plan was that his 50% would be repaid in a six months or yearly basis. That was his plan as to how the 50/50 arrangement would be carried out. He said that he had expected his half share to have been paid and Barbara or June should have caused the funds to be paid back automatically therefore he never asked if the arrangements had been carried out.

246. At that time it did not occur to the defendant that driving for the hospital would be a breach of the law. The defendant did not think about the contractual side. The defendant said he only became aware of it in about 2007-2008 when Venus told him of the accountants advise that salary payment from the trust fund may be inappropriate.

247. The defendant said the payment of Arun’s salary was all made from the one account as it was easier for the driver to cash one cheque rather than two even though if it was split 50/50. It was the defendant’s evidence that he relied on his secretary to make payment to Arun by writing out the cheques and presenting it to him for payment. They would be accompanied by a yellow post it sticker explaining the payment or would be a request for him to sign. When June presented the payment to him he was aware that payment was described as “transport service.” He was aware that sum of the payments to Arun were loans.

248. Previously when Arun was employed by his wife the defendant’s company Dobus Ltd paid for the defendant’s salary. However after the 50/50 arrangement either Barbara or June made the new arrangement for the salary to be paid from the Trust Fund account.

249. The defendant evidence as to why it was only in 2007 that the accountants had said payment of Arun’s salary may not be appropriate was that auditing of the Trust Fund took place every 3 years. So it may be that for that reason payment to Arun may not have surfaced for 3 years.

250. Analysis of the evidence

The only evidence before me is the defendant’s oral evidence that there was a 50/50 arrangement. According to the defendant this arrangement was allegedly proposed by Barbara or June. Neither Venus nor June knew anything about this arrangement. There was no evidence from Barbara as she was not a witness in this trial. It was June’s evidence that before 2002 Barbara or Elaine was responsible for arranging Arun’s salary payment. In 2002, June recalled receiving a phone call from Barbara asking her to issue a cheque from the account of SDC or ATLS to pay Arun’s salary.

251. Does the evidence reflect a 50/50 arrangement?

Bank vouchers and salary receipts

Between 2003-2005 June Chan prepared the bank payment vouchers entitled “charge for transportation” with the cheque copies and acknowledgement of receipt by Arun. (exhibit P78-120) These were seized from the accountants firm Richard Chan & Co by the ICAC.

252. There was no reference to a 50/50 arrangement in the bank vouchers or acknowledgement of receipts. There was no evidence on the bank vouchers documents that the payment was salary. If such arrangement was open why did the vouchers not indicate explicitly this was for salary and instead screen the payments as transportation service?

253. Non-payment of 50% share by the defendant

It is clear from the evidence that a 50% repayment was never made to the Trust Fund by the defendant during the years 2002-2007. Payment was wholly remade for 3 previous years in 2007 only when the defendant followed his accountants’ advice.

254. I can well understand and accept that the defendant was a busy man and relied on his secretaries to deal with all his personal matters, however if such an arrangement was true why was no payment ever made at all?

255. Was it the fault of his secretaries and not the defendant’s? The arrangement whereby SDC paid 100% of Arun’s salary continued for a period of about 5 years. Not a single cent of the 50% arrangement was made. It is perhaps tolerable to overlook some time say one year but to overlook 5 continuous years does not reflect any such arrangement.

256. There was no dispute that the defendant’s secretaries followed the defendant’s instructions to a tee and when they did not follow his instructions properly because of the perfectionist that he is, he would be annoyed and lose his temper. It follows then that the defendant should have lost his temper with them for not following his instructions to repay SDC. He however did not, why because he said he never knew his instructions were not followed. Is this plausible that the defendant did not know he never paid the defendant’s salary?

257. Five years of non-payment of one side of the arrangement is a very long time. It is beyond belief that the defendant did not know that he had not repaid any part of his 50% of Arun’s salary within any part of the 5 years. He was paying the bills, cheques were being signed by him he knew that Arun was paid by SDC or ATLS. I do not believe that for 5 years he did not know that no payment was made by him. Contrarily I believe he did know.

258. June said expressly that Barbara had passed on to her instructions as to the payment of Arun however there was no mention of any repayment by the defendant. June had asked Barbara why the cheques were drawn from the sub accounts for Arun’s salary but Barbara told her not to be bothered by it. June did not take the initiative to ask the defendant. She had also asked Elaine Chan the administration manager of the department and her reply was that June should do whatever was asked by Barbara.

259. It is apparent on the evidence it was only Barbara who knew of the 50/50 arrangement and the defendant’s instruction to repay the Trust Fund periodically. Plainly if the defendant’s evidence is correct Barbara did not follow the repayment instructions nor did she pass on instructions to June. If the arrangement was true it is extraordinary that Barbara who was the defendant’s trusted loyal and excellent serving secretary would not have followed the defendant’s instruction to the tee all to the detriment of her boss?

260. It is beyond belief that the secretaries, or Barbara would implement one half of the agreement and omit the other half. If there was a 50/50 arrangement to repay SDC by the defendant I did not believe and I found that it was inherently improbable that Barbara his trusted secretary or June or Venus would effectively flout the defendant’s instructions and not implement his 50% of the arrangement.

261. Surprisingly despite this arrangement being widely known and not a secret neither June nor Venus had ever heard about the 50/50 arrangement. As I have stated during the 5 years I was satisfied that the defendant would have known it was not paid, why did he not bring this to the attention of his secretaries? Why did he not lose his temper as his instructions were not carried out? He did not because there was never such an arrangement.

262. Bearing in mind that June Chan is a witness with a purpose to serve I nevertheless believed June Chan’s evidence. I accept June’s evidence that when she presented the cheques to the defendant to sign she would brief him for what purpose the cheque was issued. If she did not present them in person the cheques would be accompanied by “post-it” stickers with an explanation. She observed that the defendant would not sign cheques or documents straight away but take a look at the documents. Whilst it was true she said that the defendant relied heavily on her regarding administration whenever it related to money matters everything would have to be checked by the defendant. On this basis the defendant was a man who had read documents particularly when it concerned money matters, I found it difficult to accept that the defendant did not known for 5 years that he had not paid Arun from his own funds.

263. In any event I reject the defendant’s case that the blame of not implementing any 50% repayment by him lay with his assistants.

264. I believe June Chan evidence that she was not aware of the 50/50 arrangement for the salary to be paid from the Trust Fund or that she knew of any arrangement that the defendant would periodically top up those sub accounts in order to reflect his 50% share of Arun’s salary payment. She did not therefore suggest nor did she know of any arrangement whereby the 50% was to reflect the amount of work Arun did. If there was an arrangement whereby the defendant was to repay 50% I do not believe that June would not have implemented it.

265. June confirmed that visiting lecturers were driven in the defendant’s vehicle but very seldom as it was only when she failed to book a vehicle from HKU. She would ask the defendant if the visitors could use the defendant’s car. June said that she was not even aware that Arun was the defendant’s domestic helper although she knew that the defendant employed him as a driver.

266. Why the 50/50 arrangement was not true

All along for 7 years previously (1994-2001) whilst Arun was employed by the defendant’s wife the defendant paid his salary from Dobus Ltd. Since Arun became employed officially by the defendant his salary was no longer paid by Dobus. However on the defendant’s case he still bore half of the liability of paying for Arun’s salary.

267. If there was a change of arrangement from Dobus to SDC and to 50/50 as the defendant alleged it is hard to believe that repayment of the defendant’s 50% would not be discussed more explicitly. The repayment terms were left ambiguous and vague as to the defendant’s account either periodically in 6 month or annual trenches.

268. This was a key change of payment terms and conditions I was unconvinced that given the change of terms that the defendant’s repayment terms of 50% would be in such vague terms such as every 6 months or a year. If there was a genuine 50% arrangement it is inherently probable that a man of the defendant’s perfection would be more specific on repayment terms to implemented and such arrangement of 50% would have come from the defendant rather than on the suggestion of his sub-ordinate secretaries. It is beyond belief that there would be such hazy repayment terms.

269. The defendant was the employer of Arun not SDC. Why not continue to pay Arun from Dobus? That was the arrangement all along for the past 7 years. If there was a 50/50 arrangement there would be more of a ring of truth if Arun’s salary would be continued to be paid by the defendant’s company Dobus and to be reimbursed by SDC or ATLS. I found it difficult to believe that the defendant would agree to a suggestion by Barbara as to moving payment from the defendant’s company he had solely owned and to who had being paying salary all along to some other with such ambiguous terms.

270. If Arun’s salary were paid by Dobus the defendant would still be paying Arun’s salary and the onus was therefore on SDC or ATLS to repay him rather than the reverse. That would be an easy way to continue the present long standing arrangements rather than to make such a significant change.

271. Arun’s long service payment upon Arun’s termination of employment with the defendant’s wife was paid by SDCand not by Dobus

The defendant said the 50/50 arrangement came into effect after 2002 when the defendant became his employee.

272. It is clear that Arun’s long service payment upon termination of his employment with the defendant’s wife were paid from the ATLS’s accounts. When the defendant was cross-examined by Mr Wong SC he was asked if the 50/50 arrangement should apply to the long service payment. The defendant explained from the time of the defendant’s employment of Arun his salary started to be paid from one account and that is why the long service payment was paid from ATLS. It was suggested to him that at that time of the long service payment there was no 50/50 arrangement. The defendant admitted that was correct. Therefore it was put to the defendant that the 50/50 arrangement should not apply to the long service payment. The defendant’s answer was “I can’t explain except to say from the 1^st payment from SDC and ATLS all his payment would come from the same source – eventually it would be sorted it out. It should have been (sorted out) I don’t know why it came about.”

273. Mr Wong then put to the defendant and the defendant’s incensed answer was as follows:-

Q. you were abusing ATLS for your own liability

A. I don’t need to steal any money from any body

274. The payment of Arun’s long service payment from ATLS demonstrates the arrangement of the 50/50 to be incredible. There is no reason why Arun’s long service payment for the years before 2002 (during his employment with the defendant’s wife) should be paid from the ATLS accounts because even according to the defendant’s version the 50/50 arrangement had not even come about. Further Arun’s employment with the defendant’s wife had nothing to do with the Trust Fund or SDC.

275. The repayment of Arun’s previous 3 years salary by the defendant in 2007

The defendant said he was advised by the accountants that it was inappropriate to have Arun’s salary paid from the Trust Fund account only in 2007. When being told about this the defendant testified that he did not talk to the accountants about his 50/50 arrangement but immediately upon being told by Venus he arranged for the funds to be fully repaid.

276. If this 50/50 arrangement were true it is inconceivable that the defendant given his belief in the 50/50 arrangement and his intelligence would not speak or at least question (as he did of the lawyers in the case of June Chan see charge 4) the accountants about his liability to only repay 50% and further tell them of his 50/50 arrangement and at least seek their advice. After all on the defendant’s case SDC should have paid half of Arun’s salary according to the defendant’s belief and case. Naturally he would have told them according to the arrangement he should only pay back half. Instead he immediately repaid the amount in full. This was not consistent with any 50/50 arrangement and dissolves the reliability of any such alleged arrangement.

277. If the 50/50 arrangement were true, the defendant would I was satisfied have consulted Richard Chan of the accountants first as to whether he should reimburse the accounts for 1/2 of the payment instead of immediately arranging a full reimbursement.

278. Additionally the accountants Richard Chan & Co were the defendant’s accountants all along, at least ever since the Trust Fund was founded in the 1980’s and at least when SDC and ATLS were set up since 1996. They were responsible for the financial accounts of SDC and the Trust Fund when the defendant commenced paying Arun’s salary from January 2002. There was no evidence before the court that at any time during the five years 2002- 2007 when the salary was paid from the Trust Fund account or SDC or ATLS did the accountants ever advise the defendant that payment of his driver from the Trust Fund was inappropriate. Why suddenly does the advice from the accountants come abruptly in 2007? I was satisfied that upon realising that the SDC and ATLS accounts may be investigated by the authorities because of June Chan’s theft, the defendant caused the SDC and ATLS accounts to be fully reimbursed in relation to payments to Arun.

279. I was satisfied that the defendant got angry with Venus Chan for her failure to reimburse the SDC and ATLS accounts prior to 2003 audit because he knew that there was a risk that the accounts might be investigated as a result of PW5’s theft.

280. Arun’s driving time for the defendant and family and SDC or the department

I accept that Arun did not only drive for the defendant’s family and the defendant. On the evidence before me however I cannot be satisfied that Arun drove for such time as warranted 50% of his salary to be paid for by SDC.

281. I am fully aware that the defendant is not charged for any offence in relation to a breach of Arun’s conditions of stay or contract however I was however astonished to hear the defendant’s evidence that it never occurred to him that in allowing his driver to drive for the department of surgery and/or SDC Arun may have been breaching the law and he may have been aiding and abetting Arun.

282. Arun is a foreign domestic helper. In 2002 the Immigration Department tightened the conditions of employment of foreign domestic helpers. The defendant had to make a special application to the Immigration Department for Arun’s duties as a domestic helper to include driving otherwise Arun would not be permitted to drive at all. Arun was therefore clearly only to be permitted to drive under the conditions the Immigration Department granted and only for the defendant. The defendant in his application to the Immigration Department had to specify the purpose of Arun’s driving. In exhibit P125 the Immigration Department granted the defendant’s application “the Addendum to the Schedule of Accommodation and Domestic Duties dated 4 February 2002 stated that Arun could drive to “take children to school and playgroups and marketing.” The defendant evidence is that Arun had all along since Arun’s employment in 1991 been driving for him and the department and it did not occur to him that Arun’s continuation of his driving duties in the same manner was in breach of his conditions of stay or not permissible under his contract. It beggars belief that the defendant was not aware that in driving for the department or SDC that Arun was not driving in accordance with his driving conditions granted by the Immigration Department and would be in breach of the law. Fresh in the defendant’s mind was the application for permission to drive in 2002 when this alleged 50/50 arrangement took place. I do not believe that the defendant did not know of this.

283. Loans paid to Arun from SDC or ATLS

Some of the payments which are not disputed were loans to Arun and not only salary. It was put to the defendant that the loans to Arun were made by the defendant as his employer and were not loans from SDC or ATLS. The defendant disagreed he had made personal loans to Arun. The defendant gave a vague rationale that the loan did not specify if it was from the defendant personally. He excused that it was simpler to have one source (SDC) make payments to Arun and that source could then be repaid.

284. Neither SDC nor ATLS were Arun’s employer. The defendant was Arun’s employer, the defendant’s account that it was not him making the loans to Arun are wholly tenuous. It flies in the face of logic that the defendant did not consider that the loan to Arun was from him personally. The defendant as Arun’s employer was the person making the loan to him. Further Arun considered his loan to be from the defendant his employer. Repayment was made by Arun to the defendant his employer. I was satisfied that the defendant knew full well that any loan to the driver were from him personally as Arun’s employer. Loans should not have come from SDC. There was no justification to say that all Arun’s payment should come from one source when that source could have easily have come from another source other than SDC such as Dobus or the defendant personally.

285. The defendant’s efforts to cover the clear fact that these loans should have not have been advanced from SDC or ATLS was because he knew that he was abusing the funds from SDC or ATLS by doing so.

286. Payment to Arun over and above his domestic duties

Arun was contracted to work for the defendant as his domestic helper cum driver. Any work outside these duties, if legal, was extra to his contract. Driving for HKU employees were extra to his contract. Therefore, if legal, Arun should have been paid a sum on top of his contractual sum in the contract. This was not the arrangement. There was no reason or rationale for the defendant to think that his domestic helper salary should be shared 50/50.

287. Conclusion

In the circumstances, it is clear that the defendant’s account of the 50/50 arrangement was disingenuous. The defendant’s directing the funds of SDC and ATLS to pay for Arun’s employment and loans were clearly done for the personal gain of the defendant and thus it was for an improper motive and underhand. I was satisfied that the defendant wilfully misconducted himself without reasonable excuse or justification.

288. I was satisfied (for reasons explained in this verdict as to the defendant’s belief) that the defendant knew the funds belonged to HKU and not to the Trust Fund. I was satisfied that there was no link between the Trust Fund and SDC and ATLS, although the defendant had artificially put SDC and ATLS bank accounts as sub-accounts of the Trust Fund.

289. At the time the defendant paid Arun from SDC funds the defendant knew that HKU refused to employ Arun as a driver. I was satisfied that in defiance of HKU’s stance the defendant nevertheless had HKU employ Arun indirectly by paying Arun out of SDC’s fund.

290. Charge 4 element of “without reasonable excuse or justification”

The evidence revealed the paramount reason for the defendant not to report June Chan's theft to the Police was the compassion that he had towards her and her niece, arising out of the bus accident in Egypt, in particular that he believed all along she was the sole provider and remaining family member for the girl. The bus accident made the niece an orphan. It was confirmed by June Chan and Venus Chan that this issue was brought up during their meeting with the defendant, with Venus attesting that June burst into tears when the matter of her niece was raised by the defendant.

291. Defence submissions

The defence submissions are as follows:-

Initially the defendant was unclear whether he was obliged to report the theft to HKU, particularly as he believed the stolen funds did not belong to HKU but to the Trust Fund. The defendant therefore sought advice from a number of lawyers, including two retired judges and a prosecutor, Mr John Reading SC who was in fact one is his counsel representing him in this trial. Apart from the initial advice from the solicitor Mr. Yu whom the defendant met at the accountant’s Richard Chan’s office to report the matter to the police, the other lawyers all advised the defendant that he had a discretion whether or not to report June Chan’s theft to the police on the basis that the defendant told them he was the sole trustee of a trust fund and that June Chan had stolen from the trust fund. It was the defendant’s case that based on the advice he received, and on his belief that the funds were those of the Trust Fund, he had no reason to appreciate that not reporting June Chan's theft might amount to misconduct. The defendant also sought clarification from Mr. Henry Wai (the HKU Registrar) regarding the Procedures for Termination of Appointment of Non-Academic Staff (Exhibit D18). The letter from Mr. Wai supports the plain reading of the relevant Clause 6 (see above PW11) in that the Procedures applied to offences that were committed within or relating to the University. As the defendant believed that SDC was a separate entity from HKU, there was no reason for June Chan's theft to be reported to the University.

292. As for the other two particulars, the defence submissions were that the objective evidence is to the effect that he neither loaned June the money to repay her debts nor did he try to conceal June's theft from the University. PW6 Venus Chan gave evidence that the defendant was urged to repay the funds before the end of the Financial Year, i.e. 31 March 2007 by the accountants. The defendant specifically told Venus Chan not to inform June Chan that he had repaid the money. His motive for not telling June Chan was because he wanted her to make an effort to repay the money. In the event, he remained out of pocket to a significant extent.

293. It was also the case that June Chan gave evidence to the effect that she never knew that the shortfalls were initially repaid by the defendant, and that the idea of resigning to obtain the Superannuation Provident Fund (SPF) was solely her own.

294. It was submitted that the defendant did not report June Chan’s theft to the University because he did not consider it to be theft of University funds. It was not so that June would avoid disciplinary action and thereby receive maximum benefit from her superannuation fund upon her resignation. Exhibit P204 is the email exchange between June Chan and the defendant on the question of repaying the funds she stole. It clearly shows that it was June Chan who suggested resigning in order to receive the $610,000 from her SPF, and this was further confirmed in her oral testimony. It was submitted that there was never a question of what HKU's contribution would be, but rather the circumstances in which she would receive $710,000 instead of $610,000. The explanation June gave to the defendant was that she had contributed to the fund for less than ten years, and was thus entitled to only 80% of the projected fund and not the full amount.

295. Furthermore, the Staff Provident Fund booklet, Exhibit P206, stated "dismissal...due to a fraudulent or dishonest act...in circumstances which have resulted in an Employer suffering pecuniary loss or damage...shall not...be entitled to receive any benefit made or payment from the Scheme other than such amount as is equal to the value of his Member's Balance calculated as at the Appropriate Valuation Date," (emphasis added). It was submitted by the defence that there was in any event, there was no pecuniary loss to the University, as confirmed by PW3 Philip Lam in his oral testimony.

296. The defendant’s actions after discovery of the misappropriation by June

It was the defence case that on discovering the theft from the Trust the defendant’s overriding duty was to the Trust. If he had breached the Trust and so caused the loss to the Trust he would have been under an overriding duty to reconstitute or compensate the trust fund. The trustee is liable to effect restitution of trust property which is passed away in breach of trust. As it was the actions of another which had caused the Trust to suffer loss the defendant was under a duty to attempt to recover the loss from the wrongdoer.

297. If a trustee does not attempt to recover a loss for the trust he may be liable himself for ‘wilful neglect or default’. Wilful default involves a deliberate default with a particular consciousness, knowledge and state of mind. For a trustee this means that he must have known he had a duty to act for the trust and has not done so.

298. A trustee’s paramount duty is to act in the best interests of the present and future beneficiaries and this is usually in their best financial interests. In fact Vice Chancellor Megarry said that ‘Trustees may even have to act dishonourably (though not illegally) if the interests of their beneficiaries require it.’

299. On discovering the theft the defendant had a duty to act in the best interests of the Trust. This was a duty to ensure The Fund was reconstituted. The defendant was not entitled to consider his own moral position. In deciding not to take action against June Chan, the defendant’s decision was consistent with a line of authority from Speight -v- Gaunt. If the trustee discovers a breach of trust by an agent then he must consider what the best action for the trust is.

300. The defendant was therefore placed in an unenviable position after discovering the breach. Considering the comments of Vice-Chancellor Megarry in Cowan -v- Scargill he was not entitled to consider his own moral position. All Professor Wong could consider was the best interests of the Trust, and here this would be just the best financial interest of the Trust. If he had reported the theft he might have been in breach of trust, this might have been considered a wilful default. It is submitted, therefore, that from a trust perspective, and thus, as a matter of law, the defendant had a paramount duty to ensure the missing funds were recovered. This was fulfilling his duty to the trust by not breaching it.

301. Questions

The question here is did the defendant have a reasonable excuse or justification for not reporting the theft to HKU? Principally, the defendant’s reasonable excuse or justification was that the defendant was unclear whether he was obliged to report the theft to HKU as he believed the stolen funds did not belong to HKU but to the Trust Fund and he had an obligation to reconstitute the Trust Fund as sole trustee.

302. Was the defendant’s belief that the funds belonged to the Trust Fund and not HKU reasonable? In answering this question one has to look at the history and set up of SDC and other donations. Part of the facts have already been mentioned in reference to whether the defendant was a public official. However it is perhaps worthy if further details are set out here.

303. Set up of SDC

As can be from the above SDC was established with contributions from the Hong Kong Jockey Club Charities Trust (“HKJC Trust”) which provided a grant of HK$9,976,000. How was the donation by HKJC made to SDC?

304. The SDC was the brain child of the defendant. It was the defendant’s evidence that the idea came from his visit to Aberdeen Nine Wells Hospital where an innovative surgeon started to pioneer concepts where lots of errors in surgical procedures could be reduced if not totally avoided by technical skills training in a laboratory setting. The idea was that if errors or technical problems could any way be reduced then he should develop a facility to train young surgeons before they commence to operate on patients, also to train established surgeons with new technology, for example key hole surgery. And for the junior end, have medical students trained in skills laboratory before they go to the ward. There were unfortunate stories of students trying out on patients and he hoped training in a laboratory setting would reduce unnecessary accidents during part of their clerkship in the ward. With these matters in mind and trying to achieve the best for Hong Kong, the defendant approached a number of people. It was his view that in the 1990’s and from past experience that HKU would laugh at them and say if he were to ask for $10 million to do a ward in QMH for this purpose. He was sure the HA with its remit of patient care would not immediately do this. Therefore he wrote to HKJC correspondence went over at least a year to seek their support. Having answered all HKJC queries finally he had their approval with many conditions attached. HKJC agreed to provide $10 million for the purposes of setting up the centre. HA agreed to provide $1.5 million for staffing supports. HA allow SDC to use the 3 floor of QMH at no cost. He said that he was the person in charge of SDC. As the person in charge of SDC he felt as he was appointed by the then Chief Executive Dr Vivian Wong he was answerable to her. He did not feel he was answerable to anyone in HKU. The defendant said that the only programme that HKU had was ATLS and ABLS as they were funded by Oriental Press Charities and the funds were placed in the University. They were one off funds and when depleted the accounts were closed. He had opened sub accounts of SDC, ATLS, ABLS and HK Chapter all under the Trust Fund bank account at Wing Lung Bank.

305. It was clear that the defendant himself had applied to the HKJC Trust for funding. The defendant applied in his capacity of Professor of HKU and the defendant used HKU letterhead.

306. Originally the intention of the HKJC donation was to be given to the HKU, however the defendant told the HKJC since the renovation was going to be done in QMH and there was a need to employ a contractor used by QMH and to get the approval from the Architectural Services Department it was easier therefore that money was directly paid to QMH. HKU agreed to that arrangement because HKJC had agreed, otherwise the donation would have been given to HKU.

307. The letter dated 6 June 1995 exhibit P33 at p.159 giving approval of the grant from the HKJC was addressed to Professor John Wong Professor of Surgery Department of Surgery, The University of Hong Kong Queen Mary Hospital. Some of the conditions of the grant were:-

(a) that the Centre will be named after the Jockey Club

(b) the defendant had obtained confirmation of funding of the Centre’s operating costs by the Hospital Authority or the HKU.

308. The defendant’s reply to the HKJC dated 11 March 1996 in his letter stated “as you know, the request for funding of the Centre came from me as Head of Department of Surgery, The University of Hong Kong. Because the venue of the centre is in the B-Block of QMH… Although the Hong Kong Jockey Club grant is technically to The University of Hong Kong, it would be much more convenient for the renovation work to be paid direct from the Jockey Club to QMH…I hope this arrangement is acceptable to the Jockey Club as this will decrease the number of administrative steps otherwise necessary if channelled through The University of Hong Kong”

Analysis of the evidence

309. The reason why the sub accounts were opened under the Trust Fund’s account

The defendant testified “HKU and QMH had very tight financial controls to the point that that was the reason for setting up the sub accounts under the Trust Fund account.

310. The defendant complained of the restriction of using the funds from HKU even if there were from supplementary accounts were next to impossible to run a congress efficiently. For example they would not accept credit card receipts as expenditure entertainment. If it was a meal they would want a proper receipt in some cases they even asked for a menu. That was one of the reasons why he had applied for credit cards to be issued under SDC for the smooth operation of SDC.

311. From the above account that was one of the reasons why the defendant plainly did not want HKU to manage or have control of the funds. The defendant evidently wanted to be in charge of the financial arrangement of the funds generated from the courses run by SDC and not HKU therefore he deliberately placed the sub accounts under the Trust Fund and under his control.

312. No mention of the Trust Fund in any documents in relation to SDC

Nowhere in any of the documents from HKJC is the donation made to the defendant personally or is there any mention of the Trust Fund. Contrarily it is specifically made to HKU. No mention at all is even made of the Trust Fund by the defendant in any of the documents either to HKJC, HA or HKU in relation to the setting up of SDC or the defendant’s appointment as the person in charge at the material time or at all.

313. If the Trust Fund had anything at all to do with the donation from the HKJC it is astonishing that no mention was ever made of it by the defendant at all to anyone.

314. SDC not named after Hong Kong Jockey Club as it should have been

As it was, the SDC was set up in breach of the condition of the donation it was granted. It was not named after the Hong Kong Jockey Club. The only reference to Jockey Club SDC were in the receipts given to Arun of his salary or loans. If the SDC was correctly named The Hong Kong Jockey Club SDC it would not have been so straightforward, in my view, to argue that it was connected to the Trust Fund. The name of HKJC SDC would have undoubtedly on the face of it have segregated it from any connection to the Trust Fund.

315. Set up and operations of SDC connected to HKU, HA and HKJC

The defendant knew the employees of SDC were from HKU and HA. There was a grant by the HA to SDC of $1.5 million. He knew SDC was accountable to at least HA and HKJC for its accounts. The Trust Fund never came into the equation at all. SDC was clearly connected with HKU and/or HA.

316. The defendant evidence was that in his capacity as Head of Surgery of HKU he never handled any funds or even gifts from patients. These were all passed on to HKU. Any money given to him in appreciation of his or his departments services he handed back to HKU. All donations received were given to HKU of which would be put in a supplementary account.

317. The defendant gave as an example in 1995 his letter he sent to the Director of Finance requesting the Director to open a departmental supplementary account for two donations of $1,170,000 and $850,000 from Oriental Press Charitable Fund Association for the support of the importation of ATLS into Hong Kong. This was a clear acknowledgment by the defendant that funds donated or raised were that of the departments of HKU.

318. The defendant knew that HKU had provided funding for SDC, it had paid for overseas doctors to give lectures. He had said in his testimony that a small part of SDC’s income would be from renting out the premises at QMH where SDC was located. These premises belonged to HA. They were provided to SDC for free. How could the defendant have possibly deduced that the rent derived from the premises belonged to the Trust Fund? It is unfathomable to believe that the defendant believed that those funds were that of the Trust Funds and not even HA’s.

319. Attendees Certificates and Receipts printed with names of HKU, Department of Surgery and QMH

On the SDC’s attendees Certificates (p.168) were the names SDC, Department of Surgery, HKU, and signed Professor John Wong Head, Department of Surgery. The receipts for course fees (p.167) was headed SDC, Department of Surgery, HKU, QMH. There was no mention of the Trust Fund on the certificates or receipts.

320. The defendant’s evidence was that he personally put pen to paper on each certificate as he knew the attendees cherished their certificates and he did not like to affix an electronic or chopped signature. He knew what was printed on the certificates.

321. Rejection of the defendant’s belief that the funds were the Trust Funds

From all the evidence before me I was satisfied given the knowledge of the defendant as to the set up of SDC that he knew full well that the sub accounts were only related to the Trust Fund artificially as he had put them as sub accounts and there was no other connection.

322. It is inconceivable with all the credentials and classifications on the certificates and receipts that the defendant did not think that SDC was part of HKU.

323. It is beyond comprehension and belief that the defendant believed the funds stolen by June Chan did not belong to HKU but to the Trust Fund. The fact that the Trust Fund and the objectives of SDC were similar mattered not. Even though the SDC was his brain child there was no connection at all with the defendant’s Trust Fund he had falsely adorned SDC as part of the Trust Fund.

324. This was an audacious attempt by the defendant to twist the lucid facts that the SDC had no association to the Trust Fund. He has failed in his painstaking attempt to twist the plain and clear facts.

325. I rejected the defendant’s evidence that he believed that the money from SDC was that of the Trust Fund and not HKU. I was satisfied that the defendant knew that the only connection was an artificial connection by the defendant’s deliberate opening of its bank account under the Trust Fund and the defendant had full knowledge of that.

326. I was satisfied that the defendant knew they were funds of the trust funds sub accounts by name only. The defendant had consciously put the SDC, ATLS and ABLS accounts under the Trust Fund to remove them from the control and management of HKU and disguised them as trust funds.

327. Lest there is any doubt, my reasons given for the rejection of the defendant’s knowledge that the funds belonged to the Trust Fund’s applies to both misconduct charges 1 and 4.

328. The defendant knew that the money stolen by June Chan from the SDC and ATLS accounts were not the Trust Fund’s money. It was money belonging to HKU. Further there was no ambiguity that June Chan committed the theft in her capacity as a HKU employee, in furtherance of her duties as an employee of HKU seconded by the defendant himself to SDC to manage its operations.

329. By not reporting to HKU and by reimbursing the accounts, the defendant was concealing her theft from HKU and thus enabling June Chan to get her superannuation fund by resigning. I found incredulous the defendant’s account that as Head of the Department of Surgery and at that post for a lengthy term of 24 years, that he, at the material time did not know that if June Chan had committed a theft against HKU property she would not be entitled to her full superannuation fund.

330. I was satisfied that the defendant’s purposes in not reporting June Chan, reimbursing the accounts and concealing it from HKU and enabling June Chan to get her superannuation fund by resigning were twofold. One was to avoid any investigation into the accounts because the defendant was worried that any such investigation would reveal the fact that he had misused the SDC and ATLS funds to pay his driver Arun. Two, the defendant intended June Chan to resign and get the superannuation fund so she could help to reimburse the SDC and ATLS accounts. This was an improper way to benefit June Chan, and both motives are improper and underhand.

331. The defendant’s sympathy to June Chan’s family tragedy and legal advice as reasonable excuses or justifications

I turn now to deal with the defendant’s defence of sympathy towards June Chan’s family tragedy and legal advice as reasonable excuses or justifications.

332. The defendant may have had some sympathy towards June Chan’s family tragedy but that paled into insignificance in the face of the two aforesaid improper motives and the fact that HKU would not have paid the employer’s balance of the superannuation fund to June Chan had it known about June Chan’s theft.

333. The so-called legal advice defence was totally irrelevant for the following reasons:-

(i) The advice sought by the defendant was on whether the matter should be reported to the police or other authorities and not whether it should be reported to HKU.

(ii) The defendant did not show HKU’s Schedule Rule of the SPF Policy and Staff Handbook on termination of appointment to the advisers. In fact no document at all was shown to the advisers.

(iii) The defendant did not tell the advisers that SDC and ATLS funds may at least partly belong to HKU.

(iv) The defendant told the advisers that the stolen funds were from the Trust Fund and the advisers accepted that.

(v) The defendant did not tell the advisers of June Chan’s intention to resign and get the superannuation fund was contrary to the HKU regulations.

(vi) The defendant did not tell the advisers that if HKU knew about June Chan’s theft, June Chan would not be entitled to get the employer’s balance of the superannuation fund.

(vii) The defendant did not engage any of the advisers on a professional basis to give him legal advice.

(viii) The advice that the defendant sought was informal friendly advice from lawyers or judges whom were friends.

334. In the circumstances, the defendant did not get any legal advice on the subject-matter in charge 4 and therefore the advice that he received could not possibly constitute a reasonable excuse for his misconduct.

335. Element (5): The misconduct is serious

The Court of Final Appeal in Shum Kwok-sher v. HKSAR (2002) 5 HKCFAR 381 at 409 J – 410 A at [86] gave some guidelines on how to determine whether misconduct could properly be said to be serious. It said it was necessary to consider:-

“(1) the responsibilities of the public office;

(2) the responsibilities of the holder of that public office;

(3) the importance of the public objects which they serve; and

(4) the nature and extent of the departure from those responsibilities.”

336. On this issue, further assistance can be gleaned from Attorney General’s Reference (No 3 of 2003)[2004] 2 Cr App R 23. In this case, the English Court of Appeal examined the elements of the offence of misconduct in public office. In the course of so doing, it considered our Court of Final Appeal’s decision in Shum Kwok-sher and essentially came to the same conclusion as to what elements constituted the offence. In respect of the element of seriousness, Pill LJ, in giving the judgment of the court, said at page 380 at [46]:

“Having considered the authorities, we agree that the misconduct complained of must be serious misconduct. Whether it is of a sufficiently serious nature will depend on the factors stated by Sir Anthony Mason along with the seriousness of the consequences which may flow from the act or omission.”

337. More recently in HKSAR v Wong Kwong-shun Paul [2009] 4 HKLRD 840, the Court of Appeal was dealing with a Landscape Architect in the Housing Department who had exercised the powers of his office to recommend the use in government projects of products sold by a company owned by a close personal friend without revealing his relationship with this person. It was never the prosecution case that the product the applicant recommended was substandard or unsuitable for the projects in respect of which he had recommend its use. However, the court’s perception of the seriousness of his failure to reveal his close relationship with the supplier may have been influenced by the fact that the applicant had previously sought approval to invest in the development of the product whose later purchase he was recommending but that his request had been refused specifically because it might give rise to a potential conflict of interest with his public office. The Court of Appeal applied the comments of the Court of Final Appeal in Shum Kwok-sher in how to assess seriousness and concluded that the applicant occupied an important post and the Housing Department reposed great trust in him. It concluded at page 849 [45] and [47] of its judgment:

“45…It was the applicant’s duty to uphold the integrity of a civil service in which the public had confidence. The decisions he made in the course of his public office should not have been influenced by his own interests or the interests of his relatives and friends.”

“47…What the applicant did was not only misconduct in the form of a serious breach of his duties, but it also deviated from the public objects which he was required to serve… the applicant had failed to perform the duties imposed on him by his office and had misused the discretion conferred upon him by his office.”

338. In reaching this conclusion, the court expressed its view of what would be culpable misconduct in conflict of interest situations. At page 848 [40] it said:

“In order that Hong Kong can continue to be a corruption-free, fair and just community, any public officer in the execution of his public duties must not only be impartial and avoid doing anything in conflict with his personal interests, but must also ensure that his conduct will not lead to any reasonable criticism, cause any suspicion or administration and social stability and harmony will be perturbed. In performing his public duties, a public officer must never harbour any selfish motive and must not intentionally benefit himself or his friends and relatives in any way, for instance, by providing any assistance to them so that they would enjoy an unfair advantage. Any conduct of a public officer which contravenes the above principles is serious misconduct.”

339. Charge 1

The defendant as the Head of the Department of Surgery of HKU and the person in charge of SDC was the highest in command in the operation and protection of the SDC and ATLS fund. He misused $731,347 of the fund for his own private personal purpose. The fund was for the promotion of surgical standards and general medical personnel medical education for the benefit of the whole of Hong Kong and is a very important objective. The nature and extent of the departure from those responsibilities is by any standard serious.

340. Charge 4

As Head of the Department of Surgery of HKU, the defendant had a duty to report June Chan’s theft against HKU property to HKU and to prevent June Chan from getting the superannuation fund improperly. He concealed it from HKU not only to enable June Chan to get the superannuation fund improperly but also with an added motive of trying to avoid any investigation into his misuse of the SDC’s and ATLS’s funds to pay for his driver Arun. As the person in charge of SDC, he has the responsibility to make sure that SDC and ATLS got refunded by properly obtained funds and not from June Chan’s improperly obtained superannuation fund so as to maintain the integrity of the SDC. Moreover, it is a betrayal to SDC to let June Chan who has committed a serious theft case of over $2M in breach of trust to SDC to escape unpunished. For the aforesaid reasons, the misconduct in charge 4 is serious.

341. Conclusion

I was satisfied that the prosecution had proved beyond all reasonable doubt that the defendant had committed the offences of misconduct as charged. The defendant is convicted of charges 1 and 4.

342. Charges 2 and 3

I turn now to deal with charges 2 and 3 the false accounting charges.

343. The Law

Pursuant to s.19 (1)(a) of the Theft Ordinance, Cap. 210 and as stated in the Charge Sheet, the prosecution must prove that the defendant falsified the Director’s Reports, namely that he made or concurred in making of the overseas travelling expenses entry. Furthermore, he must have done so both (a) dishonestly and (b) with a view to gain for himself or another or with intent to cause loss to another.

344. The majority of the facts in relation to this charge were not in dispute. The only issue was whether the prosecution had proven the defendant had the requisite mens rea.

345. The facts which were not disputed were as follows:-

The prosecution relied on the following facts:-

(i) the defendant signed on Unisurgical’s Directors Report and Accounts for the year ended 31 March 2006, and for the year ended 31 March 2007.

(ii) The amount claimed for airfares expenses in the year ended 2006 was $695,792 and the year ended 2007 was $74,123 (para. 12 table 1 of PW19’s Report).

(iii) The dummy invoices (Exhibits 181 – 195 pages 505 – 519) were used as supporting documents for the claim for the year ended 2006 (i.e. 2^nd charge);

(iv) One dummy invoice exhibit P200 was used as supporting document for the claim for year ended 2007 (i.e. 3^rd charge).

- All the dummy invoices were in Annex B of the admitted facts (paras 13 -14 of PW19’s Report).

(iv) The total value of 15 dummy invoices for charge 2 was in the sum of $695,792.00 (para. 14 of PW19’s Report).

(v) The total value of one dummy invoice for charge 2 (exhibit 200 = $14,574.00 (para. 14 of PW19’s Report).

(vi) On review of the ledger accounts of Unisurgical, it was found that there was no actual payment made from any of the bank accounts of Unisurgical to settle the invoices 16 dummy invoices (Para 18 – 21 of PW19’s Report).

(vii) On a review of Unisurgical’s current account with the defendant, it was found that the airfares in the 16 dummy invoices were treated by Unisurgical as incurred and borne by the defendant for Unisurgical i.e. that these expenditures were treated by Unisurgical as its liabilities owed to the Defendant (paras 22 – 25 of PW19’s Report).

(viii) In Unisurgical’s account, the aforesaid expenditures were subsequently net off against the debts that the defendant owed to Unisurgical. By doing so, Unisurgical had recognized the 16 dummy invoices as its own expenses and the corresponding liabilities as debts owed to the defendant (para. 26 of PW19’s Report).

(ix) It was found that 16 dummy invoices could be matched to the 16 HKU invoices exhibits P136 – P151 (Annex C of Exh. PA-1), and the voided invoices Exh. P152 – P167. The details of the comparison of the 3 sets of invoices can be found in paras 27 – 35 and Appendix III of PW19’s Report.

(x) The aforesaid 3 sets of invoices (dummy, genuine and void) were for the same 16 official trips taken by the defendant for which HKU had paid K&T and Unisurgical had not paid K&T, therefore the airfares in relation to the 16 dummy invoices could not have been incurred by the defendant for Unisurgical and hence the related airfare cost of HK$695,792.00 and HK$14,574.00should not have been recorded in the accounts of Unisurgical for the period ended 2006 and the year ended 2007 respectively (paras 39 – 42 of PW19’s Report).

(xi) As a result of the false claims of airfare expense, Unisurgical had paid less tax of $121,764 for the year 2005/2006, and $2,550 for the year 2006/2007.

346. The evidence in relation to Charge 2 and 3

PW9 Ms Lo the Director of K&T said that K&T was paid for the genuine Annex C invoices by HKU and the Annex B invoices were not paid by anyone. The chop of “Received” on exh.P200 was put there just because exh.P151 had been paid by HKU, and not because Exh. P200 had been paid for.

347. PW10 Ms Milly Yu a travel consultant at K&T said in her evidence in chief that it was either the defendant or his secretary who asked her to prepare a set of dummy invoices for the defendant’s business trip. However in cross-examination she agreed that the instruction to issue dummy invoices was not given to her directly by the defendant but was given to her by somebody else. PW10 also said that the practice of issuing dummy invoices stopped because she received an instruction that it was no longer necessary and that it was not the defendant who instructed her to stop but someone else. However she understood both instructions to have originated from the defendant. PW10 said that since there was only one transaction for every set of invoices, after the dummy invoices (Annex B) invoices were created, they would be voided.

348. The defendant’s evidence

The defendant denied he had instructed anyone to ask K&T to issue dummy invoices nor had he himself instructed K&T to issue dummy invoices. He in fact knew nothing of the dummy invoices. He was not aware of the overseas travelling expenses entry in the directors’ reports and did not know that the dummy invoices were used to form the basis of the calculations when he signed the reports. When he signed the reports he did not scrutinise the documents to be passed on to the accountants.

349. Defence submissions

The defence submissions are that the prosecution have not proved that:-

(a) the defendant instructed K&T to issue dummy invoices either directly or indirectly.

(b)The defendant instructed those invoices to be forwarded to the Accountant for accounting purposes

(c) The defendant was aware of the overseas travelling expenses entry in the directors’ reports and knew that the dummy invoices were used to form the basis of those calculations when he signed the report.

350. Further the defence submits that it is inherently unlikely that a person of the defendant’s station in life and substantial personal wealth of about HK150 million would put so much at risk for so little benefit. There was simply no need for him to do so. The tax expenses that could be avoided were simply negligible.

351. In respect of Charge 3 the defence submits that the dummy invoice P200 had been paid for. There was a K&T chop on the invoice suggesting that the invoice had been paid for. Although PW9 the director of K&T denied that payment was received for that invoice. It is the defence submissions if there is a doubt on the evidence then that doubt should be given to the defendant and that would be the end of charge 3.

352. Analysis of the PW9’s evidence on charge 3

I turn to charge 3 first. PW9 was the director of K&T she knew what invoices were paid and what were not. PW9 said that HKU paid for all of the defendant’s official trips with HKU. As P200 was a business trip it was stamped with a chop paid even though it was on a dummy invoice with the defendant’s name. I accept PW9’s evidence that the invoice P200 was paid for by HKU. I was satisfied that there was clear evidence that P200 was a dummy invoice.

353. The defendant’s evidence

Unisurgical

In 2005 the defendant set up a company called Unisurgical. By then he had been head of the department for a good 20 years. He felt that the department both academically and clinically had made a lot of achievement through collective effort so he thought it was time to turn his attention to help the more needy staff in the department. It was his feeling that the lifestyle of academic clinical staff compared to minor support staff showed a big discrepancy. The minor staff when confronted with a difficult situation would have little resource to draw on therefore he established a fund that would help those staff in need. Hence the genesis of the surgical department and university of what became the role of Unisurgical.

354. It did not enjoy charitable status like the Trust Fund. The funds from donations used in Unisurgical were to assist staff when for example if they or their family could not afford an operation in the hospital or they needed assistance for the education of their child.

355. Official trips for HKU

In connection to his post as Head of Surgery it was necessary for defendant to travel overseas for official duties. Some were purely official trips for the university, some were purely personal trips and some were mixed business and personal trips.

356. The defendant’s time was as usual demanding. He was involved with was different activities, he become engaged with more international activities and this took up his attention. His focus all along since the 1990’s was to build up the academic department and clinical department of excellence. He had meetings with obligations to go overseas.

357. HKU paid for his official trips. He only would use the travel firm K&T Travel. He had used that firm for a very long time.

358. Bookings for his trips were made by his secretaries either Barbara or Venus. The majority of the communications with K&T were through his secretaries. If there was a need, the defendant himself spoke mostly to PW9 the director of K&T he rarely spoke to PW10 Milly.

359. Defendant’s work schedule

The defendant’s work day in Hong Kong was very demanding. He typically had a 12 hour day. His desk had many pieces of paper there was an end-less flow of documents. There was a lot of signing to do. There were cheques to sign though not a huge amount. Over the years he became to know and rely heavily on his support staff and had no reason to doubt their integrity or competence. Anything Venus Chan put before him he did not have to look at for a second time.

360. Richard Chan & Co the accountants

In relation to Richard Chan they had been his accountants for good part of 30 years for all of his companies so far as he was aware there had not been any problems with what he had prepared therefore what Richard Chan produced he would sign. Therefore with the combination of trust in Richard Chan or Venus he would sign documents straight away.

361. In 2005 and after it was mostly Venus who gave him papers to sign for tax accounts. He testified that any material that came from Venus would be automatically signed. Copies of his expenses were sent to his accountants Richard Chan & Co by Barbara or Venus. He did not scrutinize the papers placed before him. He had not opened the directors’ report to look at it, he did not see the claim for overseas travel expenses. He affixed his signature on a separate page. It would have been his practice just to sign at the allocated place and not scrutinize the papers.

362. No knowledge of dummy invoices or claim in directors reports

The defendant had no idea about the dummy invoices, he did not want to guess or speculate why K&T was asked to issue these dummy invoices. He did not know that there was a claim for overseas expenses in the directors’ report and he just signed them without looking. He never had an intention to cheat.

363. Analysis of the evidence

The dummy invoices were seized in the accountant’s Richard Chan’s offices by ICAC officers. It was apparent from the documents seized from the Accountant’s office that Venus Chan had supplied certain materials to the Accountant consistent with her duties.

364. The following questions arise:-

a) The defendant and Venus Chan’s evidence is that they had no knowledge of the dummy invoices. So who then requested for the dummy invoices?

b) The dummy invoices were found at the accountant’s Richard Chan’s offices. K&T sent them to the defendant’s office at HKU, so who sent them on to K&T?

365. Delivery of documents from the defendant’s office at the professorial block at QMH and K&T

DW2 nicknamed ‘Ah On’ was the laboratory assistant employed by HKU. His duties were also that as the messenger for the department of surgery. He testified that he delivered to K&T documents from the defendant and retrieved from K&T documents for the defendant. He did not know the contents of the documents. He had on occasions received documents from K&T and handed them directly to the defendant on the instructions of K&T. Otherwise he would usually hand all documents to Venus Chan. DW2’s evidence supports Venus Chan’s evidence that not all envelopes from K&T were delivered to her but some envelopes personally addressed to the defendant which were handed directly to him.

366. In respect of the invoices Venus Chan’s evidence was that it was possible that she had dealt with the genuine invoices i.e. the defendant’s official trips with HKU (Annex C invoices) but said she had not seen the dummy invoices. However the first time she saw the dummy invoices was when she was in the offices of ICAC when giving her witness statement in this case. I did not doubt the credibility of Venus’ evidence.

367. Did the defendant directly or indirectly request K&T to issue the dummy invoices or did someone else?

The vital questions here are:- if the defendant knew nothing about the dummy invoices who instructed K&T? Whether the person who instructed K&T to issue dummy invoices did so on their own initiative without the defendant’s knowledge and/or instruction?

368. It is apparent that from 2005 it was Venus who dealt with the defendant’s personal matters. Venus was dealing with the accountants Richard Chan & Co by 2005. Even though Venus had never seen the dummy invoices would she or someone else have instructed K&T to issue the invoices without the defendant’s instructions or knowledge?

369. The defendant was the sole director and shareholder of Unisurgical. It makes no sense and is an affront to reason to suggest that anyone unconnected to Unisurgical would give instructions to K&T to issue dummy invoices without the direction of the defendant. What benefit or advantage is it to anyone unrelated to Unisurgical? Would it be as Mr Harris SC submitted that someone was by their own initiative just trying to be nice and benefit the defendant to help him reduce the tax payable without informing him? That scenario is neither compelling nor realistic.

370. How and why would the dummy invoices be seized from Richard Chan’s office?

On top of someone unrelated to Unisurgical instructing K&T to issue dummy invoices someone would then have to receive the dummy invoices at the defendant’s office at HKU from K&T and then actively send them to the accountant’s Richard Chan’s office without the defendant’s knowledge. This would be in all inherent probability be same person that requested the dummy invoices.

371. PW10 Milly’s evidence from K&T said that any documents which were the defendant’s personal documents would be sent to the defendant at his office at QMH. Ah On DW2 said that he would give documents from K&T which were personal documents sealed in an envelope direct to the defendant and not to his secretaries.

372. I was satisfied that the only reasonable inference to draw on the evidence before me was that the defendant indirectly or directly instructed K&T to issue the dummy invoices. The defendant was the only shareholder and director of Unisurgical; he was the only person to gain. The defendant stood to gain by having his liabilities to Unisurgical being net off against the aforesaid false claims of airfares.

373. I was satisfied that Venus who had not seen the dummy invoices before did not send the dummy invoices to the offices of Richard Chan & Co. If follows that the irresistible inference is that the defendant received the dummy invoices and he forwarded the invoices to the accountants.

374. I was satisfied that he had signed the directors’ reports with full the knowledge that there was a false and dishonest claim for travel expenses.

375. In these circumstances, I was satisfied that the prosecution had proved beyond a reasonable doubt that the defendant was guilty of Charges 2 and 3.

376. Conclusion

I found that the prosecution witnesses’ were honest and reliable witnesses. I was satisfied on all the evidence before me that the prosecution had proved beyond all reasonable doubt, in respect of each charge, that the defendant had committed the offences of misconduct in public office and false accounting as charged.

377. The defendant is convicted of charges 1, 2, 3 and 4.

Index for Reasons for Verdict

of DCCC 694/2011