HKSAR v. WEE VIVIENNE AND OTHERS

 DCCC460/2009

IN THE DISTRICT COURT OF THE

HONG KONGSPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 460 OF 2009

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Reasons for Sentence

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1.  The defendants have been convicted after trial, the 1st, 2nd and 3rd defendants to the 1st charge of conspiracy to defraud, with the 3rd and 4th defendants to the 2nd charge of conspiracy to defraud, and the 4th defendant to the 3rd, 4th, 5th and 6th charges of dealing with property known or reasonably believed to represent proceeds of an indictable offence.

2.  Before beginning, let me say this that never have I done a case where sympathy of this court lies with the defendants. It is in my view that the 1st defendant was a victim of her circumstances and of the Financial Office’s incompetence of City University. It was out of desperation that the 1st defendant acted as she did.

3.  The background to this case is that the 1st defendant, a well respected academic professor, had won the project on behalf of City University which was a project funded by the British Government Foreign Office. It was due, I am sure and I accept, to her prominence in the field and the respect that a lot of her colleagues had owed or considered her to be capable of running such a project.

4.  From the probation officer’s report, I can see very clearly that the 1st defendant had done a lot of work throughout her years in academia and also throughout her years since she came out to work fighting for women’s rights and social justice. The 1st defendant was naturally very excited to have won this WEMC project, and this WEMC Project is called the Women’s Empowerment in a Muslim Context and would be very helpful to unprivileged Muslim women in the area.

5.  Of course running such a large project with participants in different countries, her project needed the setting up of an intranet and an internet network so that information can be disseminated to members of the public, and at the same time the confidentiality of the project of participants can be ensured. So, therefore, the internet project was an important part of this whole WEMC project although it is not necessarily the major part of it.

6.  I accept that the 1st defendant herself is not versed in the internet. It is clear from the evidence that at the outset the 1st defendant was very forthcoming and honest, and in fact the project did go out to outside parties to bid. But there was not much interest shown and so the 1st defendant then enlisted the assistance of the 2nd defendant, her brother, who is an expert in the internet field and also her sister-in-law’s company Locus International.

7.  The 1st defendant did not hide the fact that she was related to the 2nd and 3rd defendants because she did declare from the outset that there was a conflict of interest that the 2nd defendant was her brother. But either through incompetence or whatever, the Finance Office of the City University after receiving such a declaration did nothing about it.

8.  The 1st defendant therefore having received no objections or notification from the Finance Office of the City University, therefore carried on with the project thinking that there was no objection from City University in relation to her familial interest or relative interest or the participation of her brother in this project. So the requisite requisition forms were signed, purchase orders were signed, and City University’s Finance Office paid on these two initial purchase orders.

9.  Then as the evidence disclosed, someone from the Finance Office suggested that instead of seeking purchase orders piecemeal that perhaps a larger sum could be requested to pay Locus. And so that was when the 1st defendant submitted that final purchase order of about 900,000. And perhaps because the sum was so large that someone in the Finance Office sat up, took notice and discovered that there had been a declaration of conflict of interest. And as can be seen, Finance Office got jittery and wrote to the 1st defendant that they did not approve of the contract because of the conflict of interest and demanded that she terminated her contract with Locus and they refused to pay.

10.  Now, we are looking at a project which has already started. The internet and intranet has been set up and thus the 1st defendant was faced with a dilemma. Was she to stop the project and start all over again? She was also working under a time constraint. It has also been made very clear as the evidence developed at the trial that the Finance Office was putting up an obstructive attitude to this project, basically because they did not like the fact that the British Government Foreign Office, the section which was in charge of this project, the DFID, was not going to pay the money upfront. They would pay City U as the project went along. And so the Finance Office was not comfortable with this, and therefore when they discovered this conflict of interest some months later, they decided to tell the 1st defendant to terminate that contract.

11.  It was a very disgraceful attitude on the part of an international university. How was the 1st defendant supposed to terminate a properly signed contract without the assistance of City University? It would only have been responsible of the City U Finance Office to have told the 1st defendant, “Look, we have only just - it is our mistake - we have only just discovered the conflict of interest, how can we help? How can we terminate this contract and be fair to all parties? How can we pay Locus for the work they have done whilst believing that we had no objection to their participation? How can we fairly terminate this contract without any interference as far as possible or the least interference do this WEMC project?”

12.  No one in the Finance Office was interested, all they wanted to do was to wash their hands off this project and leave the 1st defendant to sink or swim. So out of desperation, the 1st defendant then decided that she would continue with this project with the assistance of her brother and sister-in-law, and somehow the scheme was devised in which a third company’s name would be used so that the 2nd defendant, and mainly the 2nd defendant, could carry on with this project. And this was a fatal mistake on the part of the 1st defendant.

13.  Whilst this court sympathizes with the 1st defendant’s plight, it would have been open, and perhaps it would have taken time, for the 1st defendant to have appealed to perhaps the University Council or somebody who has a say in the running of the university and put her case before them to see what can be done. But she chose, perhaps at that time to her it was, an easier way out.

14.  I accept that the 1st defendant stood to gain no financial benefit from this project. Perhaps one could say the only gain she would perhaps receive at the end of the project would be her credibility, her prominence in this field. So in considering sentence, I have to take into account all this.

15.  This is a case where the defendant was not the architect of her own downfall. She was majorly assisted in this by the Finance Office of the City University. So considering the facts of the case, I consider that an appropriate starting point is 30 months’ imprisonment. Because of the Finance Office’s role in this, in misleading the 1st defendant in the first place, I would discount the sentence by 15 months and a further 3 months because it is the 1st defendant’s first offence.

16.  She is a lady of mature years and she faces the destruction of her credibility as a result of this offence in the academic world. She has done a lot of good and not only within her own circle, but a lot of good in benefiting women around the world. She has also participated in some United Nations projects. It is also because of all this good work she has done that I am prepared to temper justice with mercy and I will therefore suspend her sentence of 12 months for 3 years, and I am sure that counsel for the 1st defendant will explain to the 1st defendant what that means. And that means that the 1st defendant will not need to serve a sentence of 12 months if within the next 3 years she does not commit another criminal offence. If she does commit another criminal offence, which I think is unlikely, she will need to go to prison for these 12 months.

17.  1st Defendant, you may sit down.

18.  Now, the 2nd defendant in this case. It is clear from all the reports I have read that the 2nd and 3rd defendants are a well respected couple. They are well liked and they are decent people. They have both worked hard to establish themselves in the IT field in Hong Kong, and it is without a doubt that to their credit that the first company that they established they were able to sell to a Singaporean company. And it was only after that, that the 3rd defendant set up Locus.

19.  The 2nd and 3rd defendants are by all accounts a loving couple, loving parents and lead a civilized and decent life in Discovery Bay. As I have said for the 1st defendant, I accept that the 2nd and the 3rd defendants did not set out to cheat or defraud City University. They participated in this project basically because the 1st defendant was involved in it and also of course it would bring business to Locus. The 2nd and 3rd defendants in fact through Locus had declared the conflict of interest to City University after they were told by the 1st defendant that she had already declared it.

20.  It is clear therefore that the 2nd and the 3rd defendants knew that there was a conflict of interest. But since the project was set up, the 2nd defendant had been thoroughly involved in setting up the internet and intranet of the WEMC project. Their initial payments were accepted by City University and they were paid. And it must have come as a shock to both of them when they were told that City University objected to their further participation because of the relationship between the 2nd and the 1st defendants. Yet the 2nd and 3rd defendants continued to help on the project after they were told this.

21.  And I have asked myself why. Was it on the part of the 2nd defendant completely altruistic in order to help the 1st defendant? Was it a bit of both, to help the 1st defendant, to earn money for Locus and increase the prestige of Locus? I think that at the end of the day that it was largely to help the 1st defendant and as a sideline it would also increase the prestige of Locus in being involved in such an international project.

22.  I have considered all the outpouring of letters in support of the 2nd defendant and his past achievements. I also accept that he is very close to the 1st defendant and would do all he can to help her as he would appreciate what this project meant to her. Again, none of this would have happened had the Finance Office of the City University done its work properly. Because of the mess created by the Finance Office, the 2nd defendant and the 1st defendant had to find a way to try and resolve this. And, unfortunately, they chose an illegitimate and illegal way.

23.  However, having said that, I can understand the frustration felt by the 2nd defendant as he had invested a lot of time in this project, all because he had not received any objection from the Finance Office. So the 2nd defendant did find himself in an invidious position, and there was a great temptation to resolve the situation by therefore cooking up this scheme to continue the work using the Sparkland name. And this was his mistake. He should have been the voice of reason and advised his sister to appeal to higher authorities, but he did not do so.

24.  So having said that, I do consider that the overall sentence should not be different from that of the 1st defendant in that the starting point should be 30 months’ imprisonment, but reduced by 15 months because of the Finance Office’s negligence, and reduced to 12 months because of the previous good character of the 2nd defendant.

25.  I have considered the psychological report made by the psychiatrist of the 2nd defendant and I accept that he may be suffering from depression. But I have to consider what exceptional circumstances there may be for me to suspend the sentence. The 2nd defendant did, whoever created this matters, did actively help his sister prepare the IT data in order to submit to the General Tender Board so that Locus would be chosen, knowing full well that that would ensure that the General Tender Board would choose Locus.

26.  And whilst accepting that he may be suffering from depression, I cannot see any reason to say it is such an exceptional case that I should suspend his sentence, and so the 2nd defendant will go to prison for 12 months.

27.  Now, the 3rd defendant. The 3rd defendant, I accept, is a good wife and a good mother. And as all the testimonials assert, she is a caring and a very capable lady. And in this case I have no doubt she was also helping her husband, the 2nd defendant. I have no doubt that she loves her family, she loves her husband and I have no doubt that she would follow his lead, and if he decides to help his sister, she would do so too.

28.  I am particularly impressed by the letter from her brother-in-law in Melbourne testifying to her character. And I have no doubt that she agreed to do this in order to help her sister-in-law and therefore she did ask her friend, the 4th defendant, to lend the company name to the enterprise. So she is charged with two conspiracies. For the purpose of sentencing, I will view it as one continuous act on her part.

29.  I am therefore also inclined to the view that she is a victim of the Finance Office’s incompetence, and therefore the sentence will reflect that. The 3rd defendant will be sentenced as a starting point to 30 months’ imprisonment, reduced by half to 15 months because of the Finance Office’s incompetence, and then 3 months more because this is her first conviction.

30.  I have considered the plight of her two young infant children. I have read very heartbreaking reports particularly about her daughter who is of a very young age, and I do accept the psychological impact of losing both parents for a period of time in her young age. I therefore take the exceptional step in the circumstances to temper justice with mercy because this is a case where her two infant children would need their mother with them.

31.  So I will sentence the 3rd defendant in the following way: Count 2, 12 months’ imprisonment; Count 3, 12 months’ imprisonment; both concurrent. And the 12 months’ imprisonment will be suspended for 2 years.

32.  And I am sure that Ms Cheng will explain to the 3rd defendant what that means, and that means that if within the next 2 years, she does not commit another criminal offence, and I am quite persuaded that she will not, then she will not have to serve this 12 months’ imprisonment.

33.  Now, the 4th defendant. In considering the 4th defendant’s case, I accept that she is a close friend of the 3rd defendant. I believe that it had been mentioned that she is also a godmother to one of the 3rd defendant’s children. I accept what Mr Ma says that she committed these offences out of basically friendship for the 3rd defendant and that her gain is minimal.

34.  Nevertheless, it is serious to set up a company and to lend the name of the company and the company chop to somebody else to use in order to fool a third party. I accept, the profit, the monetary profit was minimal. I think it is less than $3,000. But nevertheless, it is unlawful, what she did. And her role although coming at the tail end is also an important, a very important role, because without the use of her company name, this scheme could not have happened.

35.  So having considered the mitigation advanced on her behalf, the many letters testifying to her previous good character, and I totally accept that the 4th defendant is a decent, hardworking lady, and she did suffer a family misfortune in her young years and has been trying to cope with it with psychological assistance. But she knew what she was doing and she knew that she was lending her company because the 3rd defendant could not use her company because of peer relationship or relative relationship. So, therefore, she is culpable of these offences.

36.  And what is more, invoices were sent out to City University in the name of her company. And after receiving the cheques she would forward it or rather she would write cheques to Locus and thus pay Locus after deducting her 1 per cent fee.

37.  So having considered her case, I consider that a starting point of 15 months’ imprisonment is appropriate on the 2nd charge, and it will be reduced by 12 months because of her clear record. As for the charges 3, 4, 5 and 6, I consider that 6 months’ imprisonment on each of those charges is appropriate.

38.  In considering the totality principle and the fact that these charges really -- for the purpose of sentencing, I can consider them to be related to the conspiracy in Charge 2. And taking into account this is her first offence, her background and why she fell into this offence, I am therefore prepared to be lenient in this case. I will make all the sentences concurrent. So the concurrent sentence of 6 months for Charges 3, 4, 5 and 6 will be made concurrent to the 12 months in Charge 2, and so the 4th defendant will go to prison for 12 months.

39.  I did consider whether to suspend her sentence. I have asked myself does the 4th defendant -- are there any exceptional circumstances in her case where I can justify a suspended sentence. Mr Ma had pointed out various factors which he considered to be exceptional circumstances. I do not consider them to be exceptional circumstances. The 4th defendant was not a pawn; she knew what she was doing. Although she did not participate in the initial conspiracy, she knew that she was lending her company for use and she did not want to know and she shut her eyes to what was happening. So she was not a pawn, and I cannot therefore think that there are exceptional circumstances for me to suspend her sentence. So she will go to prison for 12 months.

40.  It was drawn to my attention by my very efficient clerk that I had made a slip of the tongue in relation to the 3rd accused. I should have said Count 1, 12 months; Court 2, 12 months; concurrent, instead I said Count 2 and Count 3 concurrent. And we all know that the 3rd defendant was not involved in Count 3, so I make this correction. It was a slip of the tongue, but there you are.