COURT: The defendant joined a subsidiary of Johnson Electric Holdings Limited as an Assistant Manager in 2006. Between 2006 and 2017, he was deployed to various positions (Assistant Manager/Manager) within the Johnson Electric Holdings Limited and its subsidiaries (“JE Group”). The defendant was responsible for procurement and selection of suitable suppliers for the JE Group.
Between September 2010 and March 2017, the defendant on behalf of JE Group approved one company called Eaton Enterprise Limited (“EEL”) to become a supplier of component/part for the manufacturing of its products/goods.
EEL was incorporated in May 2010 by the defendant’s girlfriend who was a mainland resident. In essence, the operation of EEL was managed or handled by the defendant.
Between September 2010 and December 2013, the JE Group had placed 407 orders for electric parts with EEL for a total of over HK$12 million (Count 1).
Between January 2014 and 30 August 2016, the JE Group had placed 909 orders for electric parts with EEL for a total of over HK$57 million.
In September 2015, the JE Group was informed that the defendant and his girlfriend were in fact the owners of EEL. Investigation had been conducted and subsequently led to a report being made to the ICAC.
Between 15 September 2012 and 9 September 2016, the defendant had received a total of HK$7.39 million presumably profit from EEL. Had the JE Group known that the defendant had an interest with EEL, it would not have approved EEL as a supplier. The defendant failed to make any declaration of his relationship with EEL throughout according to the company policy.
In short, the defendant abused his position and in breach of trust, made a secret profit of HK$7.39 million. There is, however, no allegation that the JE Group had been put in any substantial risk of financial prejudice.
The defendant is now 60, educated up to university level. He has a clear record.
At the request of this court, counsel from both sides have helpfully provided past precedents to this court for the purpose of sentencing. This court is of course aware of the limitation placed on those past precedents.
It seems clear that the guidelines set down in the case of Cheung Mee Kiu and Ng Kwok Wing are applicable in a case like the present one, ie imprisonment terms of 5 to 10 years for theft of HK$3 million to 15 million in breach of trust.
In this case, the secret profit involved was HK$7.3 million. The period involved was between 2010 and 2017, a period of seven years. The modus operandi was not particularly complicated. The present case bears resemblance to the case of HKSAR v Cheung Cheuk Man, HCCC 375/2023.
The defendant in that case was given 5 years, ie 60 months after full restitution payment of 16 million being made to his employer. When I say 5 years, I mean 5 years as the notional starting point. In this case, the period of the fraud was much longer.
The defendant in the present case was not able to make any restitution. However, the secret profit he made was slightly less than half of that in the Cheung Cheuk Man case.
As such, the notional starting point in my view for the overall criminality of the present case would attract a sentence of around 7 years’ imprisonment. The defendant would of course be entitled to the full one-third discount for his plea.
The defendant was investigated by his company in late 2015. He was interviewed by the ICAC in May 2017. However, he was not brought to court till November 2022, a gap of seven years in between.
This court was informed on the last hearing that the lateness was probably due to a number of legal advises being sought. Five different government counsel had given legal advice at various stages of the investigation.
This court of course is also fully aware of what had happened between 2019 and 2021, namely, the outbreak of COVID and civil unrest in Hong Kong. As such, reasonable delay was inevitable. However, similar to the case in Cheung Cheuk Man, it could not be excluded that there may be an adverse psychological effect on the defendant’s mental wellness. In view of that, a small discount in my view should be given.
The defendant of course was charged with two counts of fraud. To simplify the sentencing process, the profit received in relation to the two counts of fraud would be apportioned. The profit generated in the 1st count would be HK$1.285 million. The profit generated from Count 2 would be HK$6.105 million. The formula I adopt for the 1st count is 12 over 12 plus 57 times 7.39.
In view of what I have just set out, for the 1st count, the defendant is therefore sentenced to 2 years’ imprisonment with a notional starting point of 3 years. For the 2nd count, the defendant is sentenced to 4 years’ imprisonment with a notional starting point of 6 years.
Having considered the total amount of profit the defendant managed to obtain, 8 months of Count 1 would be ordered to serve consecutively to the 48 months imposed on Count 2, thus making a total of 56 months’ imprisonment. An additional discount of 2 months would be given for the delay/adverse psychological effect on the defendant in the overall sentence.
In conclusion, for the two counts of fraud that the defendant stands convicted, he is sentenced to a total term of 54 months’ imprisonment.