HKSAR v. XU ZHUO AND ANOTHER

DCCC 149/2019

[2021] HKDC 799

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 149 OF 2019

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REASONS FOR SENTENCE

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Charge

1.  D1 and D2 plead not guilty to conspiracy for agent to accept advantage (Charge 1).  They are convicted after trial.

Facts as found by court

2.  D1 owned a company Joy Fly Jet (“JFJ”)  in the business of charter brokerage and selling of private jets.  She earned commissions from both affairs.  She was also a senior sales member in Bellawings, an air operator serving private clients.  She made use of both her personal bank account and JFJ bank account interchangeably for banking transactions.  

3.  L’Voyage (“LV”)  was a charter broker.  LV would first get a quotation from flight operators, which provided jets for hire, together with pilots and cabin crew.  LV would in turn quote a price for LV’s clients.  LV’s profit margin was the difference between what LV agreed to pay the flight operator and what LV’s client agreed to pay LV.  LV relied on the sales staff, which included the account manager D2, to negotiate the best possible deals with flight operators.  LV would give D2 commissions for successful transactions.

4.  After D2 left the employ of LV and returned his mobile phone to LV, PW1 discovered some messages in it where D2 acknowledged to D1 for having received monies from D1 for certain charter flights.  Upon checking LV’s charter flights and D2’s office emails, he discovered that D2 had on several occasions placed flights with Bellawings through JFJ, which was an air broker.  He suspected that D2 had received secret commissions from JFJ.  This would reduce LV’s profit.  It resulted in a report to ICAC. 

5.  The Prosecution has proved a conspiracy between D1 and D2 for D1 to pay D2 commissions for placing flights with JFJ without the knowledge of, let alone consent by, LV.  Pursuant to this agreement, D1/JFJ paid D2 (in Payments 3, 4, 7, 9, 10, and 12 the respective sums of HKD 62,477.22, HKD 109,182.05, USD 10,000, USD 7,000, USD 32,000, and USD 10,000), i.e., HKD 171,659.27 and USD 59,000 in total (or the equivalent of HKD 628,000 in all). D1/JFJ made a profit of about USD 2,000 each time.  D2’s commissions were met by D1 and D2 agreeing between themselves on an inflated price to be paid by LV. 

6.  The conspiracy and corresponding payment lasted for 2 ½ months.

Background and mitigation

7.  Counsel for D2 submits that the Court may consider various relevant factors including but not limited to the scale and scope of the offence, level of sophistication, presence of international element, involvement of public officer, impact on Hong Kong as a financial center, and/or the duration and amount involved.  I agree with this submission. 

8.  From the cases referred to me, it can be noted that the amount involved is a very significant factor in sentencing.  Other factors unchanged, larger sums of money warranted higher sentences.  For sums over $1,000,000, the starting points were invariably over 4 years (Attorney General v Ki Hon & Another [1988] 2 HKLR 220; HKSAR v Lau Si Sing [2010] 3 HKC 242; HKSAR v Chan Ngan Lau [2010] 1 HKLRD 472; HKSAR v Pau Chin Hung Andy [2014] 1 HKLRD 600).    

9.  D1 is 35 years of age, of previous good character.  After graduation from university, she worked as a flight attendant for 6 years and then a sales representative in selling private jets for 2 or 3 years.  She set up JFJ in 2014 to continue her business of selling private jets.  JFJ has now 10 staff. They would lose their jobs if D1 had to serve a lengthy sentence.  In 2015, she joined Bellawings as a sales representative to bring private jets from her clients to Bellawings for management.   

10.  In 2/2020, D1 being the majority shareholder of a company in the Mainland had, together with her friends, donated RMB 2,000,000 worth of medical gear to the Red Cross of Fujian Province to combat the Covid-19 Pandemic (D1’s Mitigation Bundle at Enclosure 6).  In 9/2020, D1 donated HKD 39,000 to sponsor 100 vaccines to Pok Oi Hospital (Enclosure 7).  She also financially and emotionally supported a friend who separated from her boyfriend but then found herself pregnant (Enclosure 3).

11.  The conspiracy was on a small scale involving only two people, 7 flights, and 2 ½ months.  The financial loss to LV was limited.  There is actually evidence that LV would not have sourced private jets for these flights, so that the client would have to take commercial flights not the ambit of LV.  D1’s profit was insignificant compared to D2’s commissions.  The WeChat messages reflect that D2 was the one to initiate each time, and decide and direct what amounts to be given to whom.  There is no sophistication in the scheme. Counsel also submits that D1 has conducted trial with a lot of agreement on facts.  There was no challenge to the documentary evidence. 

12.  D2 is 37 years of age, of previous good character.  He graduated as a Bachelor of Civil Aviation in 2012 in Australia.  Afterwards, he worked in aviation-related business.  His parents are in their sixties and depend on him financially.  He is married with a 11-month-old baby.  His wife is now 3 months pregnant.  She works as an office clerk.  She is an orphan with no family tie in Hong Kong.  She will have to look after the first child, and the second child in due course, by herself.  The mitigating letters from his friends commend his good character.  They indicate that he had made momentary misjudgments in committing the present offence out of character.  

Sentencing D1 and D2

13.  Before me is a simple, small-scale conspiracy between two persons for secret commissions to be paid out at the expense of the employer.  I agree with D1’s counsel’s submission that D2 was the instigator and mastermind of the conspiracy. 

14.  In D2’s case, I take 2 years 8 months (ie 32 months)  as the starting point.  I reduce it by months in view of his family circumstances in the aftermath of his conviction and sentence.  He is unable to pay any compensation as sought by the prosecution after conviction in the sum of HKD 628,400.  There is no other mitigating factor.  The sentence is 2 years 6 months (ie 30 months).   

15.  I take a starting point of 2 years 2 months (ie 26 months)  as the starting point for D1.  The donation of medical gear in the Mainland and the donation of vaccines to Pok Oi Hospital, despite being after her arrest, were no less deeds of compassion and practical aid rendered to the community, as much as her financial and emotional support for her pregnant friend.  I reduce her sentence by 2 months.   For her compensation to LV in the sum of HKD 128,790 sought by the prosecution after conviction, I reduce her sentence further by 2 months.  Whilst most of the documentary evidence is admitted by defence, such evidence is really difficult to be challenged in any event.  I do not regard this conduct of defence at trial a mitigating factor.  Her sentence is 1 year 10 months (ie 22 months).