HKSAR v. ECHENE MATHIAS (also known as ECHENE MATHIAS HUBERT MARIE) AND ANOTHER

DCCC 1029/2012

[2021] HKDC 406

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1029 OF 2012

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REASONS FOR VERDICT

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1.  D1 and D2 jointly faced a single Charge of Dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1)  and (3)  of the Organized and Serious Crimes Ordinance, Cap 455 (“the Charge”).

2.  The particulars of offence of the Charge reveal that D1 and D2 between 22 August 2006 and 17 September 2007, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely the total sum of US$4,276,563.65, in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with the said property.

3.  By the decision of His Honour Judge W K Kwok in Chambers made on 20 October 2020, it was ordered that the trial of D2 was to proceed in her absence and to be held at the same time together with the trial of D1.

4.  A qualification to the said order was added by His Honour Judge W K Kwok that the trial judge shall review all the circumstances of the case on the first day of the trial and decided again whether to hold the trial against D2 in her absence or make other appropriate order.

5.  On the first day of trial (23 November 2020), Mr Benson Tsoi and Mr Dexter Leung, instructed by Messrs Boase, Cohen & Collins (“D2’s First Legal Team”)  appeared on behalf of D2.

6.  D2’s First Legal Team, on limited instruction, applied to this court:-

(1)  To refuse the prosecution’s application to try D2 in absentia.

(2)  To adjourn the trial so as to allow D2 to participate in her own trial and be legally represented at her trial by whatever means possible.

(3)  If necessary and if in the interest of justice, sever D2 from D1’s present trial so that D2 is not prejudiced in her trial

7.  This court refused the said application made by D2’s First Legal Team.

8.  This court was of the view that the said decision made by His Honour Judge W K Kwok in ordering the trial of D2 was to proceed in her absence and to be held at the same time together with the trial of D1 was correct.  This court adopted the same reasoning.

9.  This court would further stress that there was a promise made by D2 back in October 2013 that she would return to the jurisdiction in January 2014 to stand for her trial.  That promise was broken and she never returned.

10.  In the said application advanced by D2’s First Legal Team, there was no indication on the part of D2 as to when, in the near future, she was going to return.

11.  This court do not trust that D2 will honour her promise.

12.  On the 9^th day of the trial, Mr Franco Kwan instructed by Messrs Collins (“D2’s Second Legal Team”)  appeared on behalf of D2 on limited instruction.

13.  Similar application were made by D2’s Second Legal Team.  The same was refused by this court.

14.  On 14 December 2020 (day 16 of the trial), Mr James Sherry and Ms Emma Tsang (“D2’s Third Legal Team”)  began to appear for D2.  No application was made by them. 

THE TRIAL

15.  D1 pleaded not guilty to the Charge.

16.  A plea of not guilty was entered into on behalf of D2.

17.  The present case concern with two property projects in Bali, Indonesia, namely the Pantai Lima Project and the Soka Land Project.

18.  At the time of the alleged offence, D1 and D2 were husband and wife.  They were the proprietors of a company known as “Absolutelybali HK Ltd” (“Absolutelybali”).

19.  Absolutelybali maintained a Hong Kong bank account in which D1 and D2 were its authorized signatories (“the Bank Account”).

20.  Various investors were invited to invest in the two projects.  Mr Laurent Lautier (“PW2”), Mr David Cukieman (“PW6”), Mr Charles Joory (“PW7”)  and Mr Randovan V-Tek were the investors in the Pantai Lima Project.  PW7 and Mr V-Nee Yeh (“PW10”)  were the investors in the Soka Land Project.

21.  With regard to the Pantai Lima Project, the prosecution’s case against the defendants as set out in the Prosecution’s Opening are:-

(1)  PW2, PW6, PW7, Mr Randovan V-Tek agreed in 2006 to make payments together with the defendants for acquiring 2 pieces of land in Bali (“the Pantai Lima Land”)  to build 5 villas.

(2)  It was agreed that each of PW2, PW6, PW7 and Mr Randovan V-Tek would contribute one share and the defendants one share (ie 20% each)  to the cost of the project, including the cost of acquisition of land, construction cost and other miscellaneous expenses incidental to the completion of the villas, and in return each investor would own one villa. It was further agreed that only US$50,000 per villa would be paid to the defendants as consultancy fee and no other expenses would be required to be paid by the investors to the defendants.

(3)  The Pantai Lima Land were purchased on 11 & 14 August 2006 at an aggregate price of IDR 19.355 billion (approximately US$2.12 million). Based on the actual cost for the purchase of the Pantai Lima Land, each investor should contribute US$424,000 only towards the acquisition of the Pantai Lima Land.

(4)  Despite the defendants’ knowledge that the actual cost for the acquisition of the Pantai Lima Land, the defendants falsely and dishonestly represented to the investors in a fund request by way of an email dated 16 August 2006 [Exhibit P4] that the costs of the Pantai Lima Land was US$570,000 per share (or US$2.85 million in total)  and each investor had to pay US$570,000.

(5)  A total of US$3,329,602.51 were paid by the investors into the Bank Account for the purpose of acquiring the Pantai Lima Land and as well as for other expenses.

(6)  PW2, PW6, PW7, Mr Randovan V-Tek would not have made such payments had they realized that the defendants had deceived them on the costs of acquisition of the Pantai Lima Land.

22.  With regard to the Soka Land Project, the prosecution's case against the Defendants as set out in the Prosecution's Opening are:-

(1)  PW7 and PW10 were invited to jointly invest with the defendants in acquiring a piece of land named Soka, in Bali (“the Soka Land”).

(2)  It was agreed that each party (ie PW7, PW10 and the defendants)  shared one-third of the overall investment. Each investor had to pay US$473,500 as investment.

(3)  On 22 November 2006, D1 sent an email to PW7, which was later forwarded to PW10, requested for the transfer of US$473,500 into the Bank Account from each of PW7 and PW10 as the acquisition costs per investor for the Soka Land. On 24 November 2006, PW7 and PW10 each deposited US$473,500 into the Bank Account.

(4)  On 7 December 2006, the Soka Land was acquired by the defendants for the Soka Land Project at the price of IDR 4,534 million (approximately US$470,000).

(5)  PW10 subsequently located the agreement relating to the purchase of the Soka Land and discovered the actual cost of acquiring the same.

(6)  PW7 and PW10 would not have made payment into the Bank Account had they realised that the land price provided by the defendants had been dishonestly inflated when compared to its actual cost.

PROSECUTION WITNESSES

23.  The prosecution called 12 witnesses.

24.  Mr Rafael Joory (“PW1”)  and PW7 testified in relation to matters concerning both the Pantai Lima Project as well as the Soka Land Project.

25.  PW2, Ms Ma Siu Wan (“PW3”), PW6, Mr Terry Kusuma (“PW8”), Mr Ives Champommier (“PW11”)  and Mr Gede Witama (“PW12”)  testified in relation to matters concerning the Pantai Lima Project.

26.  Mr Chan Yat Chor (“PW9”)  and PW10 testified in relation to matters concerning the Soka Land Project.

27.  Mr Mak Tak Ho (“PW4”)  and PC8407 Kwong Kwok Leung (“PW5”)  testified in relation to the course of arrest of D1 and D2 respectively. 

PW1

28.  PW1 is the son of PW7.

29.  PW1 came to know D1 in the year 1996 when they were both working at the Union Bank of Switzerland in London.  It was PW1 who introduced D1 to PW7.

30.  PW1 was not an investor in neither the Pantai Lima Project nor the Soka Land Project.

31.  Back in the years 2006-2007, PW7 did not have a personal email account.  PW1 was therefore acting as a medium between PW7 and D1 insofar as emails communications of the 2 projects are concerned.

32.  PW1 was responsible for arranging payments for PW7 regarding the latter's investment in the Pantai Lima Project.

33.  With regard to D2, PW1 understood that she and D1 got married in the year 2006.

34.  In respect of the role played by D2 in the 2 projects, PW1 said that according to what he understood and observed, she was responsible for the construction and the design of the houses.

35.  During cross-examination, PW1 was shown by the defence a series of email messages [Exhibit D1].

36.  PW1 confirmed that there were, inter alia, the following email messages between D1 and himself contained in Exhibit D1 which concerned with the Soka Land Project:-

Email message sent from D1 to PW1 at 8:26 pm 16.11.2006:-

“CJ asked me to send you again the detail of our second investment project in Bali: the Soka project….

We flew above it yesterday and CJ is interested but wants you to give your greenlight. I am looking for an investor for 30% of it, ie. USD 500,000.00, bearing in mind that I personally take 30%. It will be held by a special purpose HK company where each investor has a percentage ownership of the whole lot, there will be no effective split of the land.

I have the option to buy until December 1…”

Email message sent from PW1 to D1 at 2:15 pm 17.11.2006:-

“So are you putting US$500,000 in yourself? Who is putting the remaining 40%?”

Email message sent from D1 to PW1 at 2:43 am 17.11.2006:-

“I have lined up 4 investors from HK, London and Paris. What do you think about it?”

Email message sent from PW1 to D1 at 10:07 pm 17.11.2006:-

“So you are putting in $500,000 yourself and have 4 investors for the rest of the money?”

Email message sent from D1 to PW1 at 11:00 am 17.11.2006:-

“Full purchase price: 30,000 sqm at US51 per sqm: USD 1,530,000. This includes transfer tax and notary fee”

Email message sent from D1 to PW1 at 9:27 pm 17.11.2006:-

“Lastly, you probably remember I spoke to you about this land at the beginning of September, right after I bought the option to buy it”

Email message sent from PW1 to D1 at 3:16 pm on 18.11.2006:-

“Mathias – good answers. What did you pay for the option?”

Email message sent from D1 to PW1 at 2:36 am 18.11.2006:-

“USD 12,000. The option is valid until December 1^st, but I have an automatic extension up to December 14 with USD250 daily penalty”

37.  In respect of the various drawdowns in the Pantai Lima Project requested by D1 by way of email messages, PW1 confirmed that he came across those email messages , namely [Exhibits P61- P66].

38.  PW1 further confirmed that there were further communications between himself and D1 regarding matters concerning the progress of the Pantai Lima Project, namely [Exhibits P68-P70].

PW2

39.  PW2 was one of the investors in the Pantai Lima Project.

40.  PW2 told this court that it was his agreement with D1 that the 5 investors in the Pantai Lima Project were to share equally the costs of acquisition of the Pantai Lima Land as the 5 lots would more or less be equal in size.

41.  PW2 confirmed that his share for the purchase of the Pantai Lima Land was US$570,000.  That was his understanding all along and what he was told by D1.

42.  PW2 also confirmed that had he known that D1 had deceived him of the actual costs for the acquisition of the Pantai Lima Land, he would not have paid the US$570,000, nor the subsequent installments asked of him by D1 in respect of the development costs.

43.  During cross-examination, PW2 confirmed that D2's role in the Pantai Lima Project was on the furnishing, furniture and construction discussion.  When it comes to the getting of the land, it was D1.

44.  With regard to the reference of “unofficial payments” stated in Exhibit P4, PW2 said that he disagreed with such practice but he paid for it in the end and made no complaint about it as he thought it was not important.

45.  PW2 also confirmed that he came across Exhibits P37-40.

46.  PW2 was cross-examined extensively on matters related to the way in which various parties acted at the time when the investors in the Pantai Lima Project decided to relieve D1’s duty in managing the estate and subsequent events.  Suffice to recall from this line of cross-examination is the confirmation from PW2 that he did not know the building permit of his villa was only a 10-years-permit.  He only discovered the same in the year 2016 when he was informed by PW6.  Further, PW2 was subsequently told by his agent in Indonesia that the said 10-years-permit was fake.

PW3

47.  PW3 was, at the material time, an employee of PW7.

48.  PW3 confirmed Exhibit P74 was an email message (dated 23 November 2006)  which PW7 told her to send the same to PW10.

PW4

49.  PW4, a former police constable, testified that on 2 June 2012, he arrested D1 at the Arrival Hall of the Hong Kong International Airport.

PW5

50.  PW5 testified that on 2 June 2012, he arrested D2 at the Arrival Hall of the Hong Kong International Airport.

PW6

51.  PW6 told this court that he and his wife were invited by D1 and D2 to co-invest in the Pantai Lima Project.

52.  PW6 said that the agreement was to share the costs for the land and development equally as each partner would have one out of the five villas.

53.  PW6 said that his share for the purchase of the land was US$570,000.

54.  PW6 confirmed that had he known the real price of the land was not what D1 represented (ie US$570,000 for his share), he would never have paid, nor made the subsequent payments D1 asked for.

55.  PW6 also recalled that at the stage of the original proposal of the Pantai Lima Project, both D1 and D2 attended at his home.

56.  As for the role of D1 and D2, PW6 said that: they were exactly the same, as husband and wife, there is no difference.  You can speak to one or the other.

57.  During cross-examination, although PW6 disagreed with the defence’s suggestion that only D1 was seriously engaged in the discussion of the Pantai Lima Project, it was clear from his subsequent answers that insofar as the purchase of the Pantai Lima Land was concerned, PW6 only mentioned D1.  There was no mention of D2 in any shape or form.

58.  With regard to paying money in accordance with the various drawdown request messages sent by D1 to the investors, PW6 described  that he just kept “sending money”, without paying attention to the minute details as stated in those messages.

59.  PW6’s attention was also drawn to Exhibit P36, and in particular the term of “unofficial payments” stated therein.  PW6 told this court that D1 had explained to him that such payments were for the local villagers, the temple, so that you will be welcomed in the village.  As to exactly what those unofficial payments represent, PW6 said D1 did not specify the same to him.

PW7

60.  PW7’s trust towards D1 at the material time of the offence was total.  Time and again throughout his testimony PW7 said that he was regarding D1 as his “surrogate son”.

61.  As a result of which, when it comes to payments, be it for the Pantai Lima Project or the Soka Land Project, he demonstrated complete trust towards D1.  According to his own description: “whenever I was asked to pay, I paid.”

62.  PW7 was referred to Exhibit P4 of which he responded: “I did not pay much attention to it.  I just concerned my house.  I thought of buying the house and the land”.

63.  PW7 told this court that insofar as the Pantai Lima Project was concerned, D1 was charging each and every investors a fee of US$50,000 for managing the project.  As to the costs of the Pantai Lima Land, it would be shared amongst the investors equally.

64.  With regard to the Soka Land Project, PW7 described that he was invited by D1 to invest in another piece of land in Bali after the commencement of the Pantai Lima Project.

65.  PW7 said that the costs of the land was US$1.5million.

66.  PW7 further described that D1 could not afford to buy the land on his own, and thus D1 would like to invite partners to join in.

67.  PW7 subsequently contacted PW10 to join in the Soka Land Project, which the latter eventually did.

68.  PW7's understanding was that the costs of the Soka Land would be shared equally amongst the three of them.

69.  PW7 was not aware  that D1 had already became owner of the Soka Land at the time when he made the payment of US$473,500 into the Bank Account.

70.  PW7 was also not aware that he and PW10 were buying the Soka Land from D1.

71.  With regard to D2, PW7 described to this court that he and D2 did not talk much.  PW7 said that: “I did not know what her role was in the financial part of it.  She had nothing to do with the money, with me”.

72.  PW7 confirmed that he does not recall D2 being involved in the Soka Land Project.

PW8

73.  PW8 was working in an Indonesian company with the name Bali Villa World Wide (“BVW”)  at the material time of the offence.  His superior was PW11.

74.  On behalf of BVW, PW8 arranged and assisted D1 in purchasing the Pantai Lima Land as well as the Soka Land.

75.  PW8 confirmed that Exhibits P106 & 106A and P107 & 107A were the relevant land documents related to the Pantai Lima Land whilst Exhibits P92 & 92A.

76.  P94 & 94A and P95 & 95A were the relevant land documents related to the Soka Land.

77.  PW8 confirmed that in around 2006 he was instructed by PW11 to apply for a building permit for the Pantai Lima Land and he proceeded with the same.

78.  Such application was not successful as there was an intervening party who took over the building permit application matter.

79.  PW8 described that whilst he was still working on the said building permit application, money was given to him by PW11 for the purpose of paying to the elders of the nearby village of the Pantai Lima Land.

80.  PW8 confirmed that there was a telephone conversation between him and D1 during which it was discussed that as the land purpose of the Pantai Lima Land required to be changed from farming to tourism, the government need to be approached, and special arrangements need to be made.

81.  PW8 plainly agreed that such special arrangements represents bribes.

PW9

82.  PW9 was working for PW10.

83.  In the year 2012, PW9 was tasked by PW10 to make enquiries from D1 in respect of the Soka Land Project.  Such enquiries focus on two main issues, namely (i)  the price in which D1 purchased the Soka Land and (ii)  the absence of the names of PW7 and PW10 in the land documents of the Soka Land.

84.  PW9 confirmed that Exhibits P77-79; P81-88 and P119-120 were the email messages communicated between him and D1 for the purpose of the said enquiries.

PW10

85.  In November 2006, PW7 presented an investment opportunity to him and as result of which PW7 became one of the investors of the Soka Land Project.

86.  It is PW10’s understanding that he was one of the three co-investors in the Soka Land Project, which involved the purchasing of the Soka Land with each investor contributing one-third.

87.  PW10 confirmed that he did not have time to do the due diligence and thus he relied completely on the judgment of PW7.

88.  PW10 confirmed that Exhibits P74-79 were the relevant communications and correspondences between him and D1 regarding the Soka Land Project.

89.  PW10 also confirmed that Exhibit 141 were the communication between him and D1.  As to the CD mentioned by D1 which D1 was preparing to send to PW10, PW10 said that he did not recall receiving such CD.

90.  PW10’s attention was also drawn to Exhibit P90 in which he said he had not seen such letter.  Further, when asked by the prosecution as to whether he had received a CD from D1 in around May 2007, PW10 said: “I do not recall ever receiving any CD.  Usually I have a habit of signing if I read.  There is a likelihood that I didn't read the letter”.

91.  When the prosecution shown to PW10 Exhibits P91-105, he confirmed that he had not seen such documents.

92.  During cross-examination, PW10 was referred to 2 passages in his witness statement given to the police dated 15 December 2020 ( ie 1 day prior to him testifying in court)  which stated:-

“I received that CD in late-March or early-April 2012 inside the CD there was a letter attached previously exhibited as DNY-04(114)  which dated 14-5-2007. In my previous statement I have already stated that I received the CD in late-March or early-April 2012 instead of 14^th May 2007.

In this email, Mathias clearly told me that “V-Nee DHL with CD containing all documents on the way to your office tomorrow morning”. That proves that the CD was sent to me in April 2012 instead of 2007. And that was already the first time I received document from Mathias”

93.  When the defence put to PW10 that he should have received the said CD in May 2007, PW 10 disagreed.

94.  When the defence went on to show the DHL shipment record dated 14 May 2007 (Exhibit D26)  to PW10, PW10 replied that he received no such package of document.

PW11

95.  PW11 was the company manager of BVW back in the year 2006.

96.  It was in the same year that he met D1 and D2 as clients.

97.  PW11 confirmed that BVW was tasked to arrange and assist D1 in the purchase of the Pantai Lima Land and subsequently the Soka Land in 2006.

98.  PW11 also confirmed that he was requested by D1 to apply for the building permit for the Pantai Lima Land.  The process eventually fell through as D1 decided to substitute PW11 with PW12.

99.  In cross-examination, PW11 agreed that he had received a sum of US$5,000 from D1 as part of the unofficial payments for the purpose of applying the said building permit (Exhibit D30).

100.  He also confirmed that he subsequently withdrew a sum of IDR 200 million from the joint account of him and D1 for the purpose of making further unofficial payments, evidenced by Exhibits D29; D31 & 31B; D32 and 32B.

PW12

101.  PW12 was a contractor in construction at the material time.

102.  PW12’s company was successful in its bid for the construction work of the Pantai Lima Project. 

103.  With regard to his encounters with the D2, PW12 said that she played the role of an interior designer of the project.

104.  PW12 also confirmed that upon the request of D1, he lent his assistance in helping D1 with the application of a building permit for the Pantai Lima Land.

105.  PW12 agreed that there was an incident in May 2017 of D1 making payment to the DPK party member, a Member of Parliament, Ketut Seryasa, of IDR 500 million (around US$54,717), for the purpose of obtaining the building permit for the Pantai Lima Land (see Exhibit D33 & D33B).

106.  PW12 further agreed to the contents of Exhibits D34 which consists of 9 payments paid by D1 to PW12 for the purpose of obtaining the said building permit.  The aggregate total of these 9 payments is IDR2,295,000 (around US$247,582)  [Exhibit D34].

107.  The building permit eventually obtained by PW12, on D1’s behalf, was one with a duration of 10 years (Exhibits D13 & D13B).

108.  When asked by the defence as to whether or not D1 knew about the 10-years limitation at the time of the issuance of the said building permit, PW12 initially said that “when I opened the document, at the time I explained in detail that the validity was 10 years and also it was explained by the government official”.

109.  The building permit was dated 31 October 2007.

110.  PW12 was asked as to when did the said government official explain to D1 about the 10-years-validity of the building permit.  To that PW12 said the that “in early-October 2007, before the issuance of the permit, I and the government official explained to Mathias about the 10-years-validity.

NO CASE TO ANSWER

111.  After the prosecution closed its case, a submission of no case to answer was made on behalf of D2.

112.  In support of their application, Mr Sherry and Ms Tsang submitted on behalf of D2, inter alia, the following:-

(1)  None of the prosecution witnesses said that D2 had actually made representations to them in respect of the land purchases.

(2)  None of them had discussions with D2 about the terms of the acquisition of the Pantai Lima Land or that D2 was either present or somehow involved in such discussions.

(3)  There is no evidence to suggest that D2 knew about the terms of the agreement that D1 had struck with the investors and the costs involved.

(4)  There is no evidence to show that D2 was involved, directly or indirectly, in relation to the acquisition of the 2 set of lands.

(5)  PW1 and PW7 explicitly testified to the effect that D2 had nothing to do with the money and that D2’s role was only in relation to construction.

(6)  All the emails discussing the costs of the acquisition of land were between D1 and the investors. D2 was not a party, nor was she copied in on these emails.

(7)  In respect of the financial involvement, this court’s attention was drawn to the banker’s affirmation of the Bank Account [Exhibit P124]. It was submitted that the only evidence which indicated D2 had operated the Bank Account was in 11 August 2006, by way of a single transaction, via telegraphic transfer, to Bank Mandiri Kuta Branch in the sum of US$150,000. The defence contended that such transfer activity took place prior to the drafting of Exhibit P4 (16 August 2006)  as well as falling outside the period as stipulated in Charge.

(8)  There is no evidence to show that D2 had any involvement whatsoever in the financial side of the project, particularly in the purchase of the land.

(9)  But for knowledge of the fraud, there is otherwise no other factors which would have put D2 on notice about the money being criminal proceeds.

(10)  There is no evidence to show that D2 had reasonable grounds to believe the sums deposited into the Bank Account represented proceeds of an indictable offence.

113.  After considering all the available evidence presented by the prosecution, this court accepted the defence submission.

114.  This court found that, on the available evidence and putting the prosecution’s case to its highest, a jury properly directed could not convict.

115.  This court therefore ruled that there was no case to answer of the Charge for D2.

CASE TO ANSWER

116.  This court found that there was a case to answer for D1.

THE DEFENCE CASE

117.  D1 elected to testify and called one expert witness, Mr Cosimo Borrelli (“DW2”).

D1

118.  In respect of the Pantai Lima Project, D1 told this court that when the purchase price of US$570,000 was stated in Exhibit P4, it was meant to be an estimate.

119.  Further, it was clearly stated at section (4)  of Exhibit P4 that the price for each piece of the land included not only the price for the bare land but also consists of other miscellaneous items such as building permit, set-back, Notary etc.

120.  By way of Exhibit D43, D1 told this court that the best estimate with regard to these miscellaneous items that he was able to reach at the time when Exhibit P4 was issued amounted to about US$120,000 for each individual investor, with the break down as follow:-

Notary:  US$20,000

Rental Licence:  US$20,000

Set-Back:  US$30,000

Building Permit:  US$50,000

121.  Further, D1 also said that as the size of his parcel of the land (namely 1,582 square meter)  was about 28% smaller than the other investors (which can be seen at Exhibit D4), his eventual share with regard to the price of the land which he was responsible to pay would ultimately have to be adjusted.  Such factor, according to D1, was also taken into account by him in arriving at the said estimated price of US$570,000 stipulated in Exhibit P4.

122.  Further still, from the information gathered by him since he started to have dealings in land-related-matters in Bali, it was all along D1’s anticipation that the obtaining of a building permit has a crucial role to play in a particular piece of land’s development.  Moreover, he was also acutely aware that the obtaining of a building permit would invariably involve various types of “unofficial payments”.

123.  For these reason, his fellow investors were reminded time and again as to the importance as well as the progress insofar as the obtaining of the building permit was concerned.  The defence drew the attention of this court to the following email exchanges between D1 and the other investors in the Pantai Lima Project:-

In Exhibit P36 (an email dated 8 September 2006 sent from D1 to Partners)

“1)  the Land

We are in the process of getting the official building permit. Meetings and payments, both official and unofficial, will take place regularly, and we expect to get the official documents in October.”

In Exhibit P37 (an email dated 9 December 2006 sent from D1 to Partners)

“1)  the Land

We are still in the process of getting the official building permit letters ...”

In Exhibit P38 (an email dated 26 January 2007 sent from D1 to Partners)

“1)  The Building Permit

We still have not got the official building permit …”

In Exhibit P39 (an email dated 18 April 2007 sent from D1 to Partners)

“Para 1

We are now out of a 4 month period of struggle for the building permit”

“Para 3

The Building Permit

Due to endless and unexplained delays by the initial team in charge, we decided mid-March to appoint the head of EKA Paradise, Mr. Gede Witama, as the new person in charge of getting the building permit”.

124.  As a result of the changing of personnel in applying the building permit coupled with the direction given by PW12 as to the amount and destinations of various unofficial payments needed to be paid, a total of around US$349,611 was ended up being paid by D1.

125.  Insofar as the Soka Land Project was concerned, D1 told this court that as early as 16 August 2006, when he paid the option of US$10,000 to the then Owner of the Soka Land, he regarded himself as the equitable owner of it, and thus was entitled to sell the land to any would be investor should he decided to do so.

126.  In early-September 2006, he mentioned to PW1 about the Soka Land Project.

127.  On 15 November 2006, he took PW7 for a helicopter ride over the Soka Land.

128.  It was during this helicopter ride that D1 invited PW7 to become one of the investors in the Soka Land Project.  D1 said that he told PW7: “that the price of the Soka Land was 5 times cheaper”.  D1 described that PW7 interrupted him there and then by repeating it was 5 times cheaper than the Pantai Lima Land.

129.  D1 said that he told PW7 that he paid upfront, meaning the deposit and not the full price of the land.

130.  D1 also said that USD 51 was the only price being discussed during the ride and the feedback from PW7 was that “it was very cheap”.

131.  D1 said that PW7 expressed his interest in investing in the Soka Land Project after the said helicopter ride.  It was through PW7 that PW10 joined in subsequently as another investor.

132.  D1 stated that there was a verbal agreement between PW7 and D1 that the Soka Land was to be held under D1’s name, and not in the joint names of the three of them.  As far as D1 understood at the time, PW7 was expressing the wish of PW10 as well on this topic.  D1 therefore complied with such request and thus the names of PW7 and PW10 were not to be seen in the relevant land documents of the Soka Land.

133.  D1 further said that there was an agreement between him and PW7 and PW10 that as soon as the land documents were ready, D1 would send the same to them to show their ownership.

134.  The completion of these documents took several months and were not ready until the beginning of May 2007 (such documents included that of Exhibit P92).

135.  When D1 eventually obtained these documents from the Notary, he sent one set by way of documents stored in a CD together with an accompanying letter dated 14 May 2007 (Exhibit P90), via DHL, to PW10.

136.  Hard copy of the said documents were given to PW7 by D1 himself shortly after.

DW2

137.  DW2 was testifying as an expert witness in forensic accounting.

138.  DW2 prepared 2 expert reports related to the expenditures in the Pantai Lima Project, namely Exhibit D7, and its updated version enclosed in of Exhibit D7C.

139.  Among the vast amount of information concerning the expenditure related to the Pantai Lima Project illustrated in Exhibit D7C, this court noted, inter alia, the following:-

(a)  The aggregate total of the relevant payments on building permit, setback fees, rental licence fees etc reached US$506,715, out of which US$307,557 was supported by bank statements and other bank documents.

(b)  The aggregate total of Notary and Nominee fees etc (namely items 5-13)  amounted to US$91,197.

(c)  The aggregate total of Building Permit to PW11 (items 16)  amounted to US$47,312.

(d)  The aggregate total of payment to PW12 (item 19)  amounted to US$247,582.

(e)  Lobbying payment paid to Mr Ketut (item 20)  amounted to US$54,747.

(f)  Operating Licence (item 21)  amounted to US$23,516.

ANALYSIS

140.  The essence of the prosecution's case against D1 was that he had allegedly inflated the price of the land in relation to both the Pantai Lima Land as well as the Soka Land when he made representations to the respective investors in these two projects. The indictable offence as pleaded in the Charge was one of fraud.

141.  I will first deal with the Pantai Lima Project.

142.  This court has no doubt that all the investor witnesses in the Pantai Lima Project, namely PW2, 6 and 7, are all honest witnesses.  They were all trying their very best to relate to this court events that occurred some 14 years ago.

143.  There was a common theme running through all these witnesses trust.

144.  A number of these witnesses demonstrated tremendous trust towards D1, none more so than PW7.

145.  There was, however, another common feature which was shared by all these witnesses: namely that they were not very meticulous about the minute details in relation to the respective project which they had entered into.

146.  It is not difficult to detect from the collective evidence from PW2, PW6 and PW7 that at the material time, none of them paid particular attention to the purchase price of the Pantai Lima Land.  They were more concerned about the ultimate package they were getting at the end of the day rather than calculating each and every item which D1 had spent or was going to spend.

147.  They were happy to leave the nitty-gritty's to their paid project manager, D1.

148.  As such it would not be fair to any one of these witnesses to demand from them information which was of not much importance to them at the time.

149.  A fairer approach would be: to assess their respective evidence together with other available evidence.

150.  For the purpose of the Charge, the crucial piece of document insofar as the Pantai Lima Project is concerned is Exhibit P4.  With regard to the price of the land paragraph 4 of Exhibit P4 reads as follow:-

“4)  the price for each piece of land

On top of the purchase price of the land itself, the following items have now been precisely priced:

- the cost of getting the building permit and 50 m setback from the beach (this involves several “unofficial” payments)

- the cost of the Notary

- the stamp duty and other taxes

- the FX hedging from USD to IDR

- the cost of issuing the new certificates (titles)  after subdivision

Consequently, the total price for each piece of land has now been precisely defined and amounts to USD 570,000.00 net, which is slightly below forecast.”

151.  Exhibit P4 was written by D1 on 16 August 2006.

152.  It is D1’s assertion that the said price of US$570,000 was meant to be an estimate.

153.  This court accepts such assertion by D1 for the following reasons.

154.  Firstly, Exhibit P4 was only the 2^nd drawdown of the Pantai Lima Project.  It is only natural to expect that there will be a number of subsequent drawdowns to follow.

155.  Secondly, common sense dictates that a figure of an amount of US$570,000 is, in all likelihood , a rounded up figure, rather than being a “precisely priced/defined” sum in the real sense.

156.  Thirdly, as of 16 August 2006, most of the items listed under the said paragraph 4 had not been paid, or not even been revealed to D1 by the relevant bodies.

157.  Fourthly, according to the expert report prepared by DW2 (Exhibit D7C), as of 16 August 2006,

(i)  almost all of the payments for Notary service had not been paid;

(ii)  all of the nominee fee were yet to be paid;

(iii)  Most of the official payment for the building permit were yet to be paid;

(iv)  None of the “unofficial payment” was paid;

(v)  the cost of issuing the new certificates (titles)  after subdivision was yet to be paid.

158.  Further, there was clear evidence from PW11 and PW12 that an aggregate total of US$329,188 of “unofficial payments” were paid to them or via their liaison to others after Exhibit P4 came into existence [see: Exhibits D 33, D34 and D7C (items 16(a), 19 & 20)].

159.  Further still, this court do not think that D1 was acting unreasonably in taking into account the fact that his plot of land was substantially smaller in size than the rest of his neighbours when he was calculating how much he should ask from his fellow investors for drawdown.

160.  For these reasons, this court cannot rule out, in relation to the Pantai Lima Project, what D1 asserted was true or may be true.

161.  This court therefore cannot be satisfied beyond doubt that in demanding from and/or representing to the investors of the Pantai Lima Project the sum of US$570,000 as the price of the Pantai Lima Land, D1 was doing so fraudulently and/or with deceit.

162.  The prosecution therefore fails to prove beyond doubt that money received and dealt with by D1 under the Pantai Lima Project represented proceeds of an indictable offence.

163.  I now deal with the Soka Land Project.

164.  Similar to the Pantai Lima Project, close to unreserved trust was demonstrated by PW7 towards D1, and likewise by PW10 towards PW7.

165.  Such trust, however, had contributed to the fact that neither PW7 nor PW10 was too concern about the purchase price of the Soka Land at the material time.

166.  In assessing the testimonies of PW7, PW10 and that of D1, again this court would look at the entirety of the evidence in order to make a fair assessment.

167.  The prosecution relied heavily on two pieces of documents against D1, insofar as the Soka Land Project was concerned, namely Exhibit 58 and Exhibit 74 & 74A.

168.  Exhibit 58 (paragraphs 3 & 8)  reads:-

“Para 3

The price

We have secured with the current owner, the same for the past 28 years, an option to buy this land for the IDR equivalent of approximately USD 50 per sqm, inclusive of taxes, Notary fee, and subdivision

in up to 12 individual Certificates of Ownership. The option is valid until December1^st.”

Para 8

The Partnership

We are very excited by this piece of land as we consider it has a fantastic potential for very high medium-term appreciation, and we really think we have to buy it quickly.

On the other hand, we cannot afford to buy it all on our own, needless to say that the owner does not want to split it.

We personally would like to take around 10,000 sqm for ourselves.

We are looking for people who are interested in buying this land with us.

At this stage we are thinking of gathering interests of at least 2000 sqm each (i.e. a minimum investment of USD 100,000.00)  ...”

169.  Exhibit 74 & 74A reads:-

“I am glad and honored to team up with you for this Soka Project.

The next step takes place at the notary, where we will officially purchase the land. We will initially purchase it through an Indonesian representative who will act as a nominee. At a later stage, we can consider setting-up a PMA (Indonesian corporate)  that will hold the land on our behalf, so the split between the three of us is clear and simple.

In the meantime, I will need you to transfer this week the following amount each: USD 473,500.00

(1/3 x 27850 sqm x USD 51 per sqm)”

170.  True it is that D1 did not expressly state in Exhibit 58 or Exhibit 74 that he already obtained the said option and expected to buy the land at US$17/sqm.

171.  Likewise, time and again as seen from the email exchanges between D1 and PW1 in Exhibit D1, D1 repeatedly avoided to answer PW1’s question as to whether he (D1)  was putting in US$500,000.00 himself.

172.  However, by being vague in his answers is not the same as making a clear representation.  Likewise, not being completely transparent does not necessarily mean that D1’s act was fraudulent.

173.  This court accepts the defence’s contention that nowhere in the present case did D1 represents to either PW7 or PW10 that he (D1)  bought/was going to buy the Soka Land at the unit price of US$51/sqm.

174.  Further, this court accepts that D1 did send a CD containing the relevant documents connected with the Soka Land’s purchase to PW10 on or around 14 May 2007, as supported by Exhibit P90 and Exhibit D26.

175.  It was agreed by PW10 that he told the police in his witness statement dated 15 December 2020 that (i)  he received a CD from D1 in 2012 and (ii)  Exhibit P90 was already inside the said CD.

176.  This piece of evidence further enhanced the court’s finding that D1 did send such a CD to PW10 back in May 2007 as this court does not think D1 would have additionally store a soft copy of Exhibit P90 in the CD that was sent to PW10 in the year 2012.

177.  This court further accepts the defence’s contention that D1’s act of sending the CD to PW10 in May 2007 is indicative of the fact that he was being transparent.

178.  For these reasons, this court cannot be satisfied beyond doubt that D1 made any fraudulent representation to either PW7 or PW10 with regard to the price of the Soka Land.

179.  The prosecution therefore fails to prove beyond doubt that money received and dealt with by D1 under the Soka Land Project represented proceeds of an indictable offence.

180.  Further, I do not find that if a reasonable person who shared D1’s knowledge of the relevant facts and circumstances would be bound to believe that the money stipulated in the Charge, wholly or in part, was tainted.

181.  For the above reasons, I cannot be satisfied beyond reasonable doubt that D1 had committed the offence stated in the Charge.  I find him not guilty.

182.  D1 is therefore acquitted of the Charge.