HKSAR v. YIK SIU-HUNG AND OTHERS

HCCC 561/2013

[2021] HKCFI 60

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 561 OF 2013

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D E C I S I O N

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Background and the Application

1.  HCCC 561/2013 was a trial concerning a number of money laundering counts as well as a count of conspiracy to defraud the Stock Exchange of Hong Kong (SEHK) and another count of conspiracy to defraud Pearl Oriental Innovation Limited (POIL), a company listed on the SEHK. 

2.  On 20 May 2015, at the conclusion of that trial, the second defendant (D2), Yik Siu-hung, was convicted by the jury of two counts of conspiracy to defraud and three counts of money laundering. Likewise, the third defendant (D3), Yip Sui-kuen, Kitty, was convicted by the jury of one count of conspiracy to defraud and one count of money laundering. 

3.  The facts disclosed at trial were that Wong Kwan, the chairman of POIL, who jumped bail before the trial commenced, made use of various BVI companies, which appeared to be held by D2 as an unrelated third party, for the acquisition of certain oilfields in the USA when in fact Wong Kwan himself was the sole owner of the beneficial interest in the oilfields.  Pursuant to their fraudulent agreement, false representations were made to the SEHK and to POIL.  As a result, the acquisition of the oilfields and the issue of new shares for the payment of the oilfields were approved by POIL.  The acquisition money paid by POIL was then channelled by D2 back to Wong Kwan or to other accounts. 

4.  On 22 May 2015, following their convictions, I sentenced D2 and D3 to the respective terms of 7 years and 5 years.  Before sentence, the prosecution had made an application for a confiscation order against both of them under section 8 of the Organized and Serious Crimes Ordinance, Cap. 455 (OSCO).  The application was subsequently adjourned pending the two defendants’ appeals which came to a conclusion in March 2019. 

5.  Thereafter, the prosecution continued with the application for confiscation and pursuant to my directions, various statements and written submissions were filed on behalf of the prosecution and by D2 and D3. 

6.  On 17 December 2020, after hearing further submissions from the parties, I reserved my decision on the application, saying that I would hand down my decision in due course which I now do. 

The Relevant Provisions under OSCO

7.  Section 2(6) reads,

“(a) a person’s proceeds of an offence are—

(i) any payments or other rewards received by him at any time … in connection with the commission of that offence;

(ii) any property derived or realised, directly or indirectly, by him from any of the payments or other rewards; and

(iii) any pecuniary advantage obtained in connection with the commission of that offence;

(b) the value of the person’s proceeds of that offence is the aggregate of the values of—

(i) the payments or other rewards;

(ii) that property; and

(iii) that pecuniary advantage.”

8.  Section 2(8) reads,

“For the purposes of this Ordinance, a person who has at any time … received any payment or other reward in connection with the commission of an offence or an organized crime has benefited from that offence or organized crime, as the case may be.”

9.  Further, section 8(8B) stipulates that,

“… the standard of proof required to determine any question arising under this Ordinance as to—

(a) whether a person has benefited from a specified offence or offences;

(b) whether a person has benefited from organized crime; or

(c) the amount to be recovered in his case in pursuance of a confiscation order,

shall be on the balance of probabilities.”

This Application

10.  There is no dispute between the prosecution on the one hand and D2 and D3 on the other that the offences the defendants committed are specified offences in respect of which a confiscation order could be made.  There is also no dispute that each of D2 and D3 benefited from the offences.  The only dispute in this application is the value of the benefit each received. 

11.  In the case of D2, the prosecution’s contention is that there were 5 transactions which constituted the benefit received by her (a total of HK$9 million).  However, while D2 does not seek to contend Transactions 3 to 5, she submits that Transactions 1 and 2 were her own money and were not proceeds of the offences. 

12.  In the case of D3, the prosecution is only going after one transaction, that is, the amount of HK$3 million given by D2 to D3.  In respect of this payment, it is accepted by D3 that the sum was given to her by D2 as a reward payment in connection with the offences.  However, she argues that, out of this sum, she had returned HK$2 million to D2 subsequently.  Therefore, D2 seeks to persuade this Court that the value of her benefit was only HK$1 million, not HK$3 million. 

Discussion: D2

13.  There is no dispute that a sum of HK$156 million, being proceeds from the offences, was deposited into D2’s Bank of China (BOC) savings account on 9 March 2010.  Then, on the following day (10 March 2010), D2 transferred HK$81 million from that savings account to her BOC current account. Out of this HK$81 million, D2, on the same day, drew out a cheque of HK$1 million from her current account and deposited the money into her account with Hang Seng Bank.  This cheque payment of HK$1 million is what Transaction 1 is about.  

14.  D2 stated that credits in the total sum of about HK$1.5 million were made to her BOC savings account on 2 and 4 March 2010 as two of her time deposit matured at that time.  Therefore, D2 contends that, even before the deposit of the proceeds of HK$156 million was made on 9 March 2010, the account had a balance sufficient to meet the cheque payment of HK$1 million.  D2 therefore maintains that the cheque was drawn to take out her own money.  

15.  Further, D2 said that although the proceeds were paid into her BOC savings account, she kept a mental note to separate her own funds from the proceeds. 

16.  For the following reasons, I find D2’s submissions not worthy of belief:

(1)  If D2 intended to withdraw her own money, she could get the cash from her BOC savings account after her time deposits matured on 2 and 4 March without the need to wait for the deposit of the proceeds of HK$156 million on 9 March and then withdrawing the money on 10 March;

(2)  If D2 was dealing with her own money, she could get the cash from the BOC savings account directly.  There was no need for her to first transfer HK$81 million to her BOC current account and then drew out the cheque of HK$1 million;

(3)  Even if D2 had first to transfer the money to her current account, if she was dealing with her own money, then, based on her alleged practice of funds separation, she should transfer one sum of HK$1 million (allegedly her own money) and another sum of HK$80 million (from the proceeds) to her BOC current account instead of transferring the HK$81 million in one transaction; and

(4)  If D2 indeed used her own money for the withdrawal of HK$1 million, that would bring the balance of her own money in the BOC savings account below the required amount and that was something which she said was important to her. 

17.  Therefore, having considered all the relevant matters, in particular, in view of the proximity in time of the withdrawal of the HK$1 million and the deposit of the proceeds of HK$156 million; the way the transfer and the withdrawal were handled; and the balance remaining in D2’s BOC savings account if she were withdrawing her own money, I came to the conclusion that the prosecution has proved to the required standard that Transaction 1 involved money coming from the proceeds of the offences committed by D2.

18.  Let me now turn to Transaction 2 which concerns a cash withdrawal of HK$1 million by D2 from her HSBC account on 30 April 2010.  For this transaction, D2 does not dispute that the balance (about HK$200,000) of her own money in that account was, at the time, insufficient for her withdrawal of this sum of HK$1 million.  However, D2 said that she had investment products of the total worth of about HK$1.9 million with HSBC and it was always her intention to use her own money, including her investment products, for the withdrawal of the HK$1 million (or to “fill the cash deficit of about HK$800,000 back to the savings balance by selling the Investment Products” [1]).  It is in these circumstances that D2 urges upon this Court that Transaction 2 was not the benefit she obtained. 

19.  Plainly, this suggestion of D2 is not at all tenable.  If D2 had really intended to use her own money for the withdrawal and if she had really intended to sell her investment products to obtain the cash, she should have done so there and then.  It is no use paying lip service while making use of the proceeds for the withdrawal.  Having considered all the relevant circumstances, I have no doubt at all that the money in Transaction 2 was D2’s benefit and was derived from the proceeds of the offences which she committed in this case. 

20.  In view of the above findings, I determine that the total value to which D2 benefited from the proceeds is HK$9 million (Transactions 1 to 5).  As submitted by the prosecution, D2’s realisable asset as at 17 June 2020 is approximately HK$9.4 million.  Pursuant to section 8(7) of OSCO, I make a confiscation order of HK$9 million against D2.  

Discussion: D3

21.  The contention of D3 is a narrow one.  She does not dispute that she had received HK$3 million from D2 as a reward.  She only claims that she returned HK$2 million to D2 about 6 months later.  Therefore, she seeks to convince this Court that the benefit she obtained was only HK$1 million. 

22.  Let me say this at the outset, although both D2 and D3 made the assertion that out of the HK$3 million, HK$2 million was returned, I do not consider this to be a relevant matter requiring a determination.  The reason is that even assuming that D3 indeed returned HK$2 million to D2, it does not mean that D3 had not benefited from the HK$2 million for the following reasons.  Firstly, it remains a fact that D3 had HK$3 million with her for about 6 months during which she could make use of the money in any way she wanted.  In fact, according to the records, one day after D2’s cheque was deposited into D3’s account, that is, on 27 January 2011, D3 wrote a cheque of the same amount in favour of Leung Hang-yu.  This clearly shows that D3 had dealt with the HK$3 million as the beneficial owner of this reward.  Further, according to D3, she allegedly returned the sum of HK$2 million because Wong Kwan asked her not to take so much from D2.  In other words, D3 could have retained the cash against Wong’s advice or suggestion and it was a choice she made in relation to the reward given to her.  Therefore, the return of the HK$2 million, even if it did happen, was in a way, made by D3 in order to win the goodwill of Wong Kwan and/or D2. Such use of the money, therefore, was for D3’s own benefit.  

23.  The Court of Final Appeal in HKSAR v Li Kwok Cheung George[2] pointed out that,

“In an ‘Endnote’, Lord Bingham summarised the broad principles applicable in confiscation cases.…

‘(1) The legislation is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means.’” (emphasis added)

24.  During this hearing, counsel for D3 accepts that if D3 had donated the HK$3 million to a charitable organisation after receiving it as a reward from D2, she would still be regarded as having benefited from the HK$3 million and she could not rely on the donation to suggest that she had not benefited at all. 

25.  Therefore, I find that the benefit received by D3 in this case is HK$3 million and I make a confiscation order in that sum against D3 accordingly.  The value of D3’s realisable asset as at 24 April 2020 is above that sum. 

Conclusion

26.  In short, I grant the prosecution’s application and make the confiscation order against D2 and D3 as stated above.  In accordance with section 13(1)(a)(i) of OSCO, I order that D2 should make the payment within 6 months from the date of the order whereas D3 is to satisfy the order within a period of 3 months from the date of the order.  

27.  In default of making the payment required under the confiscation order and in accordance with section 13(1)(a)(ii) and (2) of OSCO, D2 is to serve a term of imprisonment of 56 months whereas D3 is to serve a term of imprisonment of 37 months.