HKSAR v. CHEAH HANSON AND ANOTHER

DCCC 184/2014

[2019] HKDC 64

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 184 OF 2014

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REASONS FOR VERDICT

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1.  D1 and D2 are jointly charged with fraud, contrary to section 16A of the Theft Ordinance, Cap 210 (1st charge), using copies of false instruments, contrary to section 74 of the Crimes Ordinance, Cap 200 (3rd charge), using a false instrument, contrary to section 73 of the Crimes Ordinance, Cap 200 (5th charge) and dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455 (8th charge).

2.  D1 also faced two additional fraud charges (2nd charge and 4th charge) and one additional charge of possessing false instruments, contrary to section 75(1) of the Crimes Ordinance, Cap 200 (6th charge). 

3.  D2 also faced a charge of possessing false instruments, contrary to section 75(1) of the Crimes Ordinance, Cap 200 (7th charge). 

4.  D1 was represented legally whilst D2 acted in person.  At the start of the trial, D2 had confirmed to this court that he was ready for trial. 

5.  Both defendants pleaded not guilty to all charges.

Admitted Facts for D1

6.  Pursuant to section 65C of the Criminal Procedure Ordinance, Cap 221, the prosecution and the 1st defendant admitted inter alia the following facts:-

(a) that the identity of D1 is not in dispute;

(b) that D1 is the holder of Hong Kong ID Card Number P513112(3) and Malaysian passport number A17356235;

(c) that D1 has a clear record in Hong Kong;

(d) that D1 was arrested at his residence on 20 November 2012 and a Samsung mobile phone (Exhibit P148) as well as a Lenovo notebook computer (Exhibit P149) was seized from D1 and D1’s residence respectively;

(e) that a signed Asset Management Agreement (Exhibit P12(4)) was seized from a search of D1’s office on the same day.

(f) that the files relevant to this case were retrieved from Exhibit P148 and P149 by Police Technology Crime Division and the files together with the directories showing where these files were found were saved onto two compact discs (Exhibit P166 and Exhibit P176) respectively. The files in P176 were printed (Exhibit P44);

(g) that a letter from Standard Chartered Priority Banking dated 2 November 2012 addressed to D2 was printed from the said Samsung mobile phone (Exhibit P93).

(h) that D1 voluntarily attended three cautioned interviews with police on 20^th and 21^st November 2012 and 20 February 2013, and they were truly and accurately recorded onto video discs respectively produced as Exhibits P151, P154 and P157 and again truly and accurately recorded in the transcript (Exhibit P130(1)-(3)). Documents shown to D1 during the cautioned interviews were produced and marked as Exhibits P22, P25 and P30.

(i) that all of the copies of instruments particularised in Charge 3 are copies of false instruments. The said copies of time deposit certificates and confidential memos are produced and marked as Exhibits P125 and P124 respectively.

(j) that the image file particularised in Charge 5, namely, the image files of a letter dated 2 November 2012 purportedly issued by Standard Chartered Banking Limited Hong Kong is a false instrument. The printout of the same is produced and marked Exhibit P93.

(k) that all the instruments particularised in Charge 6 are false instruments. The image files particularised in Charge 6(a)(i) to (vii) were retrieved from the internal hard disk of D1’s Lenovo notebook computer (Exhibit P149) and the printout of these image files as particularised in Charge 6(a)(i) to (vi) are produced and marked Exhibits P70 to P74, P44(28), P76 to P78, P44(27) and P80 to P81A, P82, P84 to P86, P44(25), P88 to P90, P91 and P92 respectively. As for the image file particularised in Charge 6(b), namely an image file of a letter dated 2 November 2012 purportedly issued by Standard Chartered Bank Hong Kong Limited, was retrieved from D1’s Samsung mobile phone (Exhibit P148). The printout of the image file is in Exhibit P93. The instrument particularised in Charge 6(c) was seized from D1’s office on 20 November 2012 and produced and marked as Exhibit P12(4).

(l) that Li Jingqian (LJQ) opened a Power Vantage account (account number 636-734030-833) on 28 November 2006 and LJQ was the sole signatory to this account (LJQ account). The application form for this account is marked Exhibit P139.

(m) similarly, D1 opened a similar Power Vantage account (account number 593-166499-833)(“the Account”) on 8 May 1995 with similar facilities and D1 was the sole signatory to the Account. The Account opening form is marked Exhibit P140.

(n) that on or about 19 August 2008, PW1 remitted US$2 million (before deducting bank charges of US$7.05) to the account.

(o) that upon receipt of the US$2 million from PW1, D1 on 20 August 2008 transferred US$1 million from the Account to LJQ account.

(p) that on or about 21 August 2008 D1 exchanged a sum of US$75,000 to HK$584,842.5 and on the same day transferred the sum of HK$585,000 from the Account to a bank account with Hang Seng Bank held in the name of Highlink Corporation Limited.

(q) that on or about 18 September 2008, D1 transferred a sum of US$385,926.54 from the Account to a bank account with Hang Seng Bank held in the name of Travelzen, of which D1 was a director and shareholder, as a shareholder loan from D1 to Travelzen. The loan was later repaid on or before 2 October 2009.

(r) that on or about 22 September 2008, D1 exchanged a sum of US$50,000 to HK$388,345 and on the same day transferred the sum from the Account of HK$1,937,910.4 to LJQ account.

(s) that on or about 3 October 2008, D1 transferred a sum of US$198,428.04 from the Account to a bank account held in the name of Foo Boon Seng (“Foo”) in Standard Chartered Bank in Hong Kong.

(t) that on or about 10 October 2008, D1 transferred a sum of US$150,000 from his account to a bank account with HSBC held in the name of Chui, Duncan.

(u) that on or about 23 November 2011, D1 received a sum of US$70,000 (before deducting bank charges of US$30) from PW1 into the Account. On 10 February 2012, D1 exchanged the said sum into HK$542,080 and then withdrew HK$0.5 million in cash from the Account the same day.

7.  Between 2008 and 2012, there was numerous e-mails exchanged between PW1 and D1.  Some of the said e‑mail correspondence together with their attachments during the period are now produced and marked Exhibit P36.

8.  Exhibit P36(1) was an e-mail sent from D1 to PW1 persuading the latter to participate in a bond trading programme.  Parties shown on the attachment (Exhibit P36(1)) includes Fortress World Limited.  Both D1 and D2 were signatories of the Hongkong and Shanghai Bank account (account number 002-5-639964) and a BVI HSBC Business Vantage account (account number 813-605441-838).  The banker’s affirmation of the said accounts are marked Exhibits P141 and P142 respectively.

9.  On a day in 2009, D1 had a meeting with PW1 in Hong Kong.  During the meeting, D1 presented colour copies of a time deposit certificate with serial number CD 0096671-FJ dated 12 March 2009 showing a deposit of £6,000,000,000 (Exhibit P125) and a confidential memo relating to the said time deposit certificate (Exhibit P124), both purportedly issued by HSBC Bank PLC to Sino Era Ltd (represented by D1).

10.  D1 and Sino Era Limited did not have any account with and/or did not have any deposit record at HSBC Bank PLC, the office of which was situated at 8 Canada Square, London, E14 5HQ, United Kingdom.

11.  D1’s right index fingerprint was found on Exhibit P125.

12.  At the material time, D1’s e-mail address was hansoncheah@gmail.com. Exhibit P37 contains e-mail correspondence retrieved from D1’s email account hansoncheah@gmail.com, which includes the e-mail correspondence between D1 and PW1 and also correspondence between D1 and D2.

13.  E‑mails relevant to this case retrieved from the e‑mail account hansoncheah@gmail.com were saved on to a USB memory stick which is now produced and marked as Exhibit P167.

14.  The e-mail address used by PW1 at the material time was sami.alangari@gmail.com.

15.  The travel records of D1 for the period between 9 January 2007 and 13 November 2012 are produced and marked as Exhibit P119.

16.  A voice recording taken at a meeting during which D1, PW1, PW5 and Yuen Man-yung, Kenny at Mo Bar, Mandarin Hotel, Central Hong Kong on 2 November 2012 is marked Exhibit P190.  The transcript and certified English translation of the said audio recording is produced and marked as Exhibits P145 and P145(A).

17.  According to the records of the Company Registry, Integro Energy Limited was incorporated in Hong Kong on 30 June 2008.  D1, D2 and Foo were the directors of the company.  The shareholders included the three directors and Mr Truscott, its registered office being at 802, 8th Floor, Harcourt House, 39 Gloucester Road, Wan Chai, Hong Kong.  On 27 June 2011, D1 submitted a form to the Company Registry to change the registered office address to 1903, 19th Floor, Bank of East Asia Harbour View Centre.

Evidence from Prosecution Witnesses

PW1 – Sami Said Al-angari

18.  PW1 is a businessman from Saudi Arabia.  He said he was introduced to D1 by a friend.  In the presence of D1, this friend introduced D1 as a graduate from MIT, had worked in the famous IT Sun Group.  He was said to be also a young global leader in the World Economic Forum.  They met two times at the World Economic Forum and D1 also introduced him investment opportunities and had arranged and accompanied him to factories in different parts of China and Malaysia.  As a result PW1 had invested in some companies, including one of which D1 and his friend was a shareholder.  D1 had told him that he had a lot of connections and he was involved in bringing investment in China to Middle East and vice versa.  PW1 said D1 gave him the impression through relations of D1, his power, his support, D1 could create opportunity for PW1.  PW1 said he trusted D1.

19.  PW1 said on 13 August 2008 D1 informed him by e-mail (Exhibit P36(1)) of a bond trading programme, that if he invested US$1 million, at the end of eight weeks he will get at least return of US$5 million, ie at least return of US$4 million as profit and the return of US$1 million as capital.

20.  On 14 August 2008, he received from the D1 a copy of the Asset Management Agreement.  He said as he did not know the company called Fortress World, being the other party named in the Asset Management Agreement as being the asset manager, he therefore sent the US$2 million to the Account of D1, particulars of which was furnished to him by D1.

21.  PW1 said his bank had by mistake sent US$2 million instead of US$1 million to the Account.  When he realised the mistake, he had telephone conversations with D1 and the latter told him that they only had space at that time for the US$1 million in that programme and that he would put the other money in a similar investment later.

22.  PW1 confirmed that in the e-mail from D1 dated 20 August 2008 (Exhibit P36(2)) D1 confirmed receipt of the US$2 million from PW1.  D1 said in this e-mail, “I have already blocked the 1 million for the fund bond trading programme for three months commencing from 25 August 2008 ending 25 November 2008.”  Another quote: “I will look for a similar programme for the remaining 1 million at the end of August 2008.”

23.  PW1 said that he did not sign any Asset Management Agreement and that the signature on Exhibit P12(4), the signature on the Asset Management Agreement seized from D1’s office was not his signature.  He had not heard of this company called Integro Energy Limited which was named as the asset manager in that document.

24.  PW1 said that shortly after November 2008, when the money should have been due, he had been chasing D1 for return of his monies but was often given excuses by D1.  The e-mail exchange between PW1 and D1 were produced as Exhibit P36.

25.  PW1 said on 4 November 2011, D1 wrote to him by e‑mail and said, “Dear Sami, on the funds we are just waiting for the invoice for the bank charges still.  The regulator said it will come in Tuesday so we’ll get the funds released when the invoice comes.”  (Exhibit P37(50)).

26.  On 15 November 2011, D1 wrote to PW1 by e-mail (Exhibit P37(53)) and said “Hello Sami, in the matter of funds transfer, what I am waiting for still is the invoice for the fees incurred and this is the last stop...”

27.  On 17 November 2011, D1 again wrote to PW1, “Hello Sami, I finally received the news regarding the invoice from the bank official.  I was right in that the total fees could be about US$400,0000 and it will be payable on 25 November, after which the funds will be released.”

28.  Again, on 22 November, D1 wrote to PW1 in an e-mail headed “Bank invoice fees” that he had put together most of the amount but still short of US$70,000 and whether PW1 could loan him that money (Exhibit P37(55)) and after release of funds he would immediately send it back.

29.  As a result, on 23 November 2011, PW1 transferred US$70,000 to the Account.

30.  PW1 said he expected D1 to use the money to clear the investment and to return him the money as he mentioned in the e‑mail (Exhibit P36(59)).

31.  PW1 said when he chased D1 for repayment, he had different excuses every time.  He said as he felt that he did not have the right document to support his case against D1, he had to continue chasing D1.

32.  PW1 said that at one meeting with D1, D1 showed him a bank certificate dated 12 March 2009 (Exhibit P125) which showed a company called Sino Era Limited, represented by D1, had deposit of £6 billion in HSBC with maturity date on 12 March 2011.  PW1 said D1 gave him this to make him relax and waited further for repayment of his money.

33.  PW1 did not quite remember about the receipt of confidential memo relating to the above certificate of deposit but he said that D1 did give him a lot of documents and he gave all of them to his lawyer, PW5.

34.  PW1 said later he arranged a meeting with D1, his solicitor and the private investigator and D1 attended the meeting.  Conversation was recorded (Exhibit P190, transcript Exhibit P145).  At the meeting, PW1 said D1 showed him document Exhibit P93.  He said he understood from the letter that US$2.5 million would be paid to an account and then the US$2 million would then be transferred to the account of D1 who would then repay him.  He said he did not know D2 but he was told by D1 that D2, the one named in the letter, was his partner.  PW1 said his solicitor and he got a copy of the document (Exhibit P93).  PW1 said had he known that the US$2 million was not invested as per the e‑mail from D1 or the US$70,000 was not used for unlocking the funds, he would not have sent the money to D1.

35.  Initially, when PW1 gave evidence in court, he did not remember receiving US$100,000 from D1.  Later, when he was examined further after showing him his statement to police, he agreed that he had received US$100,000 from D1 on 11 March 2009.

36.  In cross-examination, PW1 said he met his friend Manfred on vacation but he could not remember if D1 and Manfred did have a conference call.  He said the incident happened ten years ago.

37.  In cross-examination by D2, PW1 said that he first learned of D2’s name in the Standard Chartered letter dated 2 November 2012 and that he had never seen or met D2 before.  He said he did not believe in the contents of the letter because the amount was too big.  He said even if D1 did not send him the Asset Management Agreement with Fortress World as a party, he would still remit the money to D1 for investment as per e-mail.  He said although he did not understand the bond trading programme mentioned, he said if the programme could bring high return and he understood D1 to be a smart and credible person, based on trust in D1, he transferred the money for investment in the programme.

38.  PW1 said the 2 November 2012 letter was an attachment to an e-mail from D1 to him on 2 November at 9.37 am.

39.  PW1 said he did not intend to sign the Asset Management Agreement and he did not sign the Asset Management Agreement with Integro Energy as a party. The signature on the document was not his signature.

PW2 – Nam Wai Yan

40.  PW2 is an investigator of Standard Chartered Bank.  At the time of her witness statement to police, she was the investigation manager of Standard Chartered Bank.  Her main duty is to handle fraud and suspected fraud cases. She has access to the company’s computers and documents.

41.  In relation to Exhibit P93, she said it was a false document. 

42.  First of all, at the spot where the Standard Chartered Bank logo was, there was the words “Priority Banking”.  PW2 said actually for Hong Kong branches of Standard Chartered Bank, firstly, there are priority banking in each branch, the bottom of the “Priority Banking” letter paper will state the address of that particular branch. 

43.  Secondly, the Chinese name of the Standard Chartered Bank should appear on the letter paper also. 

44.  Thirdly, she said according to company records in year 2012 there was no officer called George Lai and, further, title of this George Lai was said to be Director of Treasury Services.  According to the company record, there was no treasury services department in Standard Chartered Bank,

45.  Moreover, regarding letters concerning remittance, Standard Chartered Bank would not issue any letter but only generate notification letter automatically by computer and there would not be any signature or name of colleague at the ending part of this notification letter.

46.  Lastly, PW2 said letter paper from the bank would only be kept internally by colleagues and would not be sent out with access given to the public.  For remittance, only advice would be issued, not letter, and it would definitely not be “priority banking”.

47.  Further she said the account so mentioned in the letter consisted of 10 digits whilst account number in Standard Chartered Bank consists of 11 digits.

48.  She said she would give the same comments for the Exhibits P37(81), P37(82), P42(3) and P118, they are all false documents.

49.  When cross-examined by D2, PW2 confirmed 100 per cent that at the material times Standard Chartered Bank did not have Treasury Services Department.

PW3 – Fok Shiu Hong Anthony

50.  He joined HSBC in 1996 and was at the time of 2013, when he was asked to assist in this case, assistant manager in Financial Crime Investigation Security and Fraud Risk (Asia Pacific) Department.  He had access to the company’s computer servers, document or anything related to the bank to assist him in verifying fraud or suspected fraud involving the bank.

51.  When asked if Mr Ronny Kan named in the Asset Management Agreement was a bank officer of HSBC, he said he had checked the record of the bank and there was no such person, no such employee.  He also said the telephone number 21473059 appearing on the Asset Management Agreement did not belong to HSBC and the e-mail address ronnykan@hsbc.com.hk did not belong to anybody at HSBC. 

52.  He said he understood private placement programme was available only to the very high net worth individuals and not to regular HSBC customers.  He said to his knowledge in year 2008 there was no private placement programme for bank guarantees, nor was there trade programmes with direct access to the private placement collateral buy/sell investment programme.

53.  As for Exhibit P124, where it is shown that HSBC bank place was in United Kingdom and the principal seller is the entity called as Sino Era Limited.  He said he had checked with colleagues in the UK and confirmed that Sino Era Limited had no account in HSBC in UK nor was there any record of deposit.  The document was a false document.

54.  He said in relation to Exhibit P125, he did again ask colleagues in UK and confirmed that Sino Era Limited and Mr Hanson Cheah, D1, had no account in HSBC UK nor was there any record of deposits.

55.  As for Exhibit 44(29), PW3 said his previous comments apply.  Further, he said it was confirmed that the holder of passport number A17356235 did not have any account in HSBC UK.  Further, he said that colleagues from HSBC UK confirmed that the chop on the document was not theirs.  PW3 said that he had similar observations for Sino Era Limited and the chop on Exhibit P44(27).

56.  As for Exhibit P70, PW3 had similar comments for Sino Era Limited and D1 with the passport number, that they did not have an account in HSBC in UK nor was there any record of deposits and the chop on the document did not belong to HSBC UK (Exhibit P70).

57.  Similarly, he said for Exhibit P71 he had confirmed with colleagues for HSBC UK that Foo Boon Seng holding passport number A19577813 did not maintain any account with HSBC UK nor was there any record of deposit and further chop on the document did not belong to HSBC UK.

58.  Again, for Exhibit P72, PW3 confirmed from colleagues HSBC UK that Yu Wan Sheng with passport number G12244850 did not maintain any bank account in HSBC UK nor was there any record of deposit and that further the chop between the signatures did not belong to HSBC UK.

59.  PW3 said the checks with the colleagues in UK did include both checks under the name or as holder of the relevant passport numbers.

60.  PW3 again said in relation to Exhibits P73 and P74, holder maintained no account with HSBC UK nor was there any record of deposit and the chop was not that of HSBC UK.

61.  Coming to Exhibit P98, the purported Euroclear password document, PW3 said colleagues at HSBC UK confirmed that Sino Era Limited had no account with the bank HSBC UK nor was there any record of deposit and also the chop between the signatories did not belong to HSBC UK.

62.  Again, for Exhibits P76 and P77, PW3 confirmed that the person named therein, namely Foo Boon Seng and YU Wan-sheng did not maintain any account with HSBC UK nor was there any record of deposit and the chop on these documents did not belong to HSBC UK.

63.  He gave similar observations for Exhibits P44(25), P84, P85, P81, P81A, P80, P44(27), P78, and that the one named in the document did not hold any account with HSBC UK nor was there any record of deposit of these people with HSBC UK and that the chop therein, if any, did not belong to HSBC UK.

64.  As for Exhibit 82, PW3 said his colleagues from HSBC UK confirmed that there was no account in HSBC of this beneficiary, and as for Exhibit P83, PW3 said his colleagues from HSBC in UK confirmed that there was no HSBC account nor was there any record of deposit regarding the beneficiary and the applicant shown on this confirmation letter, Sino Era Limited and/or Mr CHEAH Hanson, Foo Boon Seng and holders of the passport numbers.  Further, the chop in between the signatures did not belong to HSBC UK.

65.  He also said for a document involving such enormous amount of money, no one would see typo mistakes in the document as this one, ie in this case “interest” being typed as “intereset”, “date of expiry” typed as “date of expire”.

66.  Similarly, for Exhibits P85 and P86, PW3 pointed out the same instances also of falsities as in the previous confirmation letters such as Exhibit P82.

67.  For Exhibits P44(25), P88, P89 and P90, PW3 said these documents were not issued by HSBC UK, the person named therein did not have any account or record of deposit in HSBC.

68.  As for Exhibit P91, PW3 said the account under the account name of Chen Win Hung was cancelled before the date 20 March 2008, ie date of document.  Further, the two company chops shown at the bottom of the document did not belong to HSBC, therefore Exhibit 91 was a false document.

69.  For Exhibit P92, PW3 said that the two company chops at the bottom of the document did not belong to HSBC and “HSBC Private Bank” shown on top right-hand corner and “HSBC International Trustee Limited” shown on the bottom left corner were two different entities or subsidiaries of HSBC.  He said HSBC would not show two different subsidiaries in one single document, and so this was a false document.

70.  Exhibits P95, P96, P97, he had similar observations as Exhibit P44(29).

71.  For Exhibits P98, P99, P100 and P102, same observations she said, that Sino Era Limited did not hold any bank account with HSBC UK nor was there any record of deposit, and further, the chop appearing on the document did not belong to HSBC UK.

72.  For Exhibit P101 and P103, again she said same observations, that Sino Era Limited did not have any account with HSBC UK and there was no record of deposit.

73.  For Exhibit P103, PW3 had observation that the beneficiary and the applicant, ie Sino Era Limited and Foo Boon Seng did not have any account with HSBC UK nor where there any record of deposit and the chops on the document were not used by, or belonged to, HSBC UK.  Further, there were again clear typo mistakes as previously mentioned, “intereset”, “date of expire” which would not exist in documents involving large sums.

74.  For Exhibit P104, PW3 had the same comments as the other confirmation letters mentioned earlier.

75.  For Exhibits P105 and P106, PW3 had the same comments as Exhibit P82.

76.  For Exhibits P107 and P108, PW3 had similar observations as Exhibit P44(25).

77.  For Exhibit P109, PW3 had said the document was not issued by HSBC UK and the beneficiary did not hold any account nor have any record of deposit with HSBC UK.

78.  As for certificate of balance, Exhibit P43(44), PW3 said Mr Foo Boon Seng did not hold any account at HSBC UK nor was there any record of deposit and the company chop at the bottom left corner of the document did not belong to HSBC UK.

79.  As for the certificate of time deposit, Exhibit P111, PW3 said he had checked with colleagues in HSBC UK and confirmed that Nippon Life International Limited Ecotrade AG did not maintain any account in HSBC UK nor was there any record of deposit.  Further, the chop between the two signatories did not belong to HSBC UK.

80.  Coming to Exhibit P112, PW3 said this “monthly statement” was a false document because he had checked the bank’s computer record which showed that on 8 October 2011, ie the date of the statement, the account 048302533838 was already cancelled.

81.  Further, PW3 said Exhibit P113 was again a false document as the account number 04830253383 did not belong to the person named on the document as the account holder, Liu Yu Kun.  In fact this Liu Yu Kun, according to bank record, did not maintain any account with the bank.

82.  As for the certificate of balance, Exhibit P114, the account number shown being 619829435888103 was an invalid account number.  Leaving out the last three digits, however, the account number 619829435888 was an account which was cancelled before 5 December 2011 and the two company chops in the document did not belong to HSBC Hong Kong either.  This was therefore a false document.  Further, the amount should be expressed in words and not in numerical figures.

83.  Coming to Exhibit P115, PW3 said this was a false document.  He said that the two company chops did not belong to HSBC Hong Kong and, as said before, the two subsidiaries of HSBC should not appear on the same document, and further the account number shown was an invalid account number and even if the suffix “103” was removed, the account was cancelled before 5 December 2011.  The staff number shown on the letter was invalid as the staff number should consist of eight digits and not four digits or five digits as shown in this document.

84.  As for Exhibit P110, PW3 had comments the same as for Exhibit P91.

85.  As for Exhibit P117, PW3 made similar observations as Exhibit P92.

PW4 – Wong Yat Hin Alan

86.  PW4 worked for a person called Samuel Alfred Moon (“Sam”) since year 2003.  He joined a company set up by Sam called Highlink Corporation Limited. He understood that D1 has agreed to invest US$150,000 in the company through a company called Silk Road Capital which he understood to be a venture capital company.  He also understood that only US$75,000 was paid by D1 and he remembered Sam chasing D1 a few times for the balance of US$75,000 but he did not know in the end whether or not the balance was paid.

87.  When cross-examined by defence counsel for D1, PW4 said he could not tell if the HK$577,500 received by the Highlink was the second half of this US$150,000 investment from D1.  PW4 also understood from Sam that D1 told him that the investor actually came from Saudi Arabia.  PW4 was shown the e-mail exchange between D1 and Sam where D1 asked Sam to treat US$75,000 as a loan pending signing of an agreement, which PW4 agreed.

88.  In re-examination, PW4 said he was unsure whether the US$75,0000 remained a loan or had been converted into investment.

PW5 – Mui Moosdeen, Azmat

89.  He is a solicitor and he first met D1 at the end of July 2012 after he invited D1 out.  At the time he was representing the Consulate of Saudi Arabia.  The purpose of meeting was to understand more from D1 the position about PW1’s investment.  He said during the meeting D1 confirmed he received the US$2 million from PW1 and he had told PW5 that PW1’s money was in bond trading programme then.  D1 also told PW5 big amount of money was being blocked in the bank and he was trying to release the fund so that he could return the money to the investors, including PW1.

90.  PW5 said that on 2 November 2012 he met D1 together with PW1, the private investigator Kenny at the Mo Bar in Mandarin Hotel.  The meeting was recorded by Kenny.  PW5 said he then was formally instructed to represent PW1. During the meeting, PW5 said D1 said a lot about the Standard Chartered Bank not able to return the £6 billion.  D1 also told them that the £6 billion came from a lot of investors and was being blocked initially at HSBC and then the money was transferred from HSBC to Standard Chartered Bank in year 2009.

91.  PW5 said he was suspicious about this large sum of money standing in the Account under the name of one entity and he asked D1 how PW1 could get back his money and also how D1 could prove the funds and where the funds came from. Then D1 pulled out his mobile phone and showed him on the screen of the mobile phone a letter from Standard Chartered Bank to a third party confirming that US$2.5 million was to be released soon to this third party and that after this third party got the money, he would release the US$2 million out of the 2.5 million and return it to PW1 in two weeks’ time.  PW5 said he got suspicious and he asked for a hard copy of the document which PW5 later got from PW1 as D1 only wanted to send it to PW1.

92.  PW5 said during the meeting, D1 told him the person named on the document, Chow Yuen Kong, ie D2, was his friend for over 25 years and that D2 was in the banking business.  He was unsure whether D1 then told him that D2 actually worked in Standard Chartered Bank.

93.  PW5 confirmed that he had not met D2 before and he also said that D1 told him at the meeting that £6 billion was originally placed with HSBC and later transferred to Standard Chartered in year 2009.  He said D1 gave him a lot of reasons for transferring the money from HSBC to Standard Chartered Bank, one of the reasons being HSBC did not have enough money to back up this fund and HSBC was under a lot of pressure for investigation against the bank for money laundering.  D1 also mentioned about making complaint to the Hong Kong Monetary Authority and complaints to the Standard Chartered Bank as well for holding up his funds.

PW6 - Chan Long Kam

94.  PW6 was tendered for cross-examination by D2.  He was a boss of a financial company in year 2007.  He said D2 told him that D2 himself had vast experience in finance and was able to get bank documents directly from people whom he knew working at the bank.

95.  In cross-examination by D2, PW6 confirmed that in a meeting between D2 and LJQ the latter had unwillingly wrote him a cheque for $10,312,910 dated 14 January 2013.  PW6 said he chased D2 for money and D2 told him the money was given to LJQ and he asked PW6 to chase LJQ for the money instead because D2 said that his own passport was being kept by the court and therefore cannot chase LJQ money.

PW7 - SPC 34029

96.  PW7 was the police officer who arrested D2 at the border control, Lo Wu, on 21 February 2013.  There was no cross-examination of this witness.

PW8 - PC 6848

97.  This police officer was attached to the fraud section of Commercial Crime Bureau in year 2013.  He arrived Ta Kwu Ling Police Station in early hours on 22 February 2013, picked up D2, a wanted person, and proceeded to North Point Police Station.  He seized from D2 a Fujitsu notebook computer (Exhibit P168) and an external hard disk (Exhibit P169).  They were since put in tamper-proof envelopes with own serial numbers and later kept in safe custody of the police station until they were taken to the Technology Crime Division (TCD) for examination.  Later, he did send these exhibits to TCD Department, opened the said envelopes in presence of examiner who examined them and downloaded the information onto the compact discs for use of PW8.  The exhibits were then returned to him and he put them in safe custody of police until they were brought to court.

98.  PW8 said he later went through the compact discs and downloaded and printed them for trial purpose documents relevant to this case.  He confirmed the documents from divider 10 of the prosecution bundle onwards till the end are documents printed from the said CDs.  PW8 said he downloaded a set of “Standard Chartered Priority Banking” documents from D2’s laptop computer (Exhibit P193) and another set of documents from D2’s external hard disk (Exhibit P195).  He also downloaded from D1’s computer a set of documents (Exhibit 194).

PW9 - SPC 46076

99.  He worked in the computer forensic investigation team of the Technology Crime Division in Commercial Crime Bureau (CCB).  He told of his qualification, experience and expertise in the area of retrieval of forensic data from computers and other electrical equipment.  The same was not challenged by the defendants and this court accepted him as an expert in that area.

100.  He confirmed that Exhibit P168, P169 were delivered to him on 6 March 2013 and 18 March 2013 respectively and he examined these computers and found them in good working order.  He then duplicated the items on the computer onto CD-ROMs for easier viewing by the police.  For the computer hard disk, he saved them to compact disc (Exhibit P175) and from the Fujitsu notebook computer, he duplicated the files to other discs (Exhibit P174).  The computer hard disk were later resealed and returned to police for safe custody. 

101.  He disagreed to the suggestion by defence counsel for D1 that the recipient of a PDF file could not alter the contents of PDF file easily.

PW10 - Choi Fe Yin, William

102.  He is a senior immigration officer of the Immigration Department and he produced movement records of D2 for the period of 1 January 2008 to 17 November 2015 via a printout dated 21 June 2018 (Exhibit P120).

PW11 - Tang Wan Pong

103.  PW11 confirmed the contents of his affirmation dated 2 May 2014 (Exhibit P133).  He was authorised by the bank to access data and information and to provide law enforcement agency information of bank accounts of individuals.  In this case, he supplied the opening mandate document in respect of the bank account of D2 which showed the information provided by D2 concerning his employment status, job nature and e-mail address.

PW12 - Ip Yuet May

104.  PW12 again confirmed contents of her affirmation (Exhibit P136) made on 27 June 2014 in respect of the bank account held by D2.  She said as an account investigator she had access to and was authorised by the bank to have access to documents related to banking materials, including the account opening details and statements details for D2.  The account opening form exhibits to the affirmation showed the applicant’s details provided by the applicant such as passport number, e-mail address and employer.  She also produced bank statement of D2’s account (Exhibit P136).

105.  This is the case for the prosecution.  Both defendants did not make any halfway submission and this court ruled that there is a case to answer by all defendants in respect of all charges they faced.

106.  D2 was explained of his rights to call defence witness irrespective of whether he himself elected to give evidence.  He is further advised that no adverse inference would be drawn against him should he elect not to give evidence and that the burden of proof remains with the prosecution; he does not need to prove anything.

Evidence from the defendants

D1

107.  D1 testified and said he was aged 53, married with two sons in university.

108.  He graduated from MIT and obtained a Bachelor and Master’s degree in mechanical engineering.  After that he worked in technology companies and later in 1993 he worked in private equity investment business focusing in technology companies as portfolio manager until 1997 when he together with his partners started their own technology investment fund until 2003 when he started a new fund called Silk Road Capital with a partner called Wissam Saadi.  They originally intended to raise money from Middle East for investment in China but failed.

109.  D1 said he and D2 were classmates in the same high school in Malaysia. Later, D1 said, he went to US to study and did not have any contact with D2 until the year 2000 or 2001 when he reconnected with D2.  He said D2 was then working in the finance department of Shell Oil for a long time and living in Beijing with his family.  D1 said he believed D2 was experienced in finance area and oil industry.

110.  In 2003 to 2004, D2 suggested that the two of them should start some oil trading business.  They later found they need vast amount of money to be engaged in oil trade.  They stopped.

111.  Later, in late 2006 or early 2007, D2 introduced him to Private Placement Programme (PPP) where people traded bonds or bond-like investment instruments and made huge profits using assets.  These assets, D1 said, usually came from people of high net worth.  Later, they started to work with an oil company called Krilem.  They intended to provide Krilem with a bank guarantee using the assets of a person called Foo Boon Seng (then residing in Bangkok) to fund the oil trading.  E-mails from D2 to Krilem and/or Foo were bcc copied to D1.

112.  Later, Krilem and the defendants and Foo all joined in to form Integro Energy Limited and Integro Capital Limited.  Later Foo issued a bank instrument in the name of Sino Era Limited.  Sino Era Limited was a BVI company with Foo and D2 as the majority shareholder and D1 owned 10 per cent of the company. The company was intended for oil trading using Foo’s assets.

113.  Foo later issued an instrument, the same was given to Krilem for blocking purpose in order that they could use the cash generating for oil trading.

114.  D1 said in order to facilitate oil trading, the defendants through a person called Truscott, then working for Krilem, were introduced to LGT Bank. D1 said that this LGT Bank was a very renowned private bank and they only did business with people with very high net worth.

115.  D1 said Mr Foo, D2, himself met the chief representative of LGT during which Mr Foo showed him the certificate of balance of Foo with US$1,000,000,000 and proof of funds in HSBC UK, and afterwards account under the name of Sino Era, Integro Energy, D1 and D2 were opened.  D1 therefore thought that the instruments given by Mr Foo to the bank must be genuine.

116.  He said reasons for opening the account at LGT was because the amount of money involved in oil trading was very large and the LGT Bank used to charge very low banking rates as opposed to other banks.  D1 said he was told by D2 that Mr Foo was a trustee of large amount of assets.

117.  D1 said he was introduced to PW1 in year 2007 by Wissam, his partner in Silk Road Capital.  He said PW1 was a good friend of Wissam and he agreed to and did invest in this Silk Road Capital fund.  D1 also introduced PW1 to invest in Thailand and Malaysia.  D1 also said that PW1 has through his introduction also invested US$150,000 in the Highlink Corporation Limited. Later, the project had to be abandoned due to political unrest in Qatar.  D1 said in around June/July or early 2008, D2 told him that there was an asset owner, LJQ, in Hua Xia Bank in China who was able to deploy assets for a PPP programme and D2 told him to find investor to fund this project.  D1 said he told someone about this and this someone in turn told PW1 of it.  Later, PW1 had arranged a conference call with his investment consultant, a friend called Manfred and D1, and Manfred during this conference call asked questions about the PPP.

118.  D1 agreed that the plan was that PW1 would invest US$1 million and in three months’ time will receive US$4 million plus his original principal of US$1 million, totaling US$5 million.  He in fact had sent an e-mail to PW1 on the subject (Exhibit P36(1)).

119.  D1 said on receipt of US$2 million from PW1, he deposited US$1 million to LJQ account.

120.  Later, D2 informed him by e-mail things regarding the trading of PPP for LJQ assets, including the timetable. 

121.  D1 said that he met LJQ a few times in the year 2008/2009.  As a result of discussions, an agreement was reached that D1 and D2 would pay the bank charges for LJQ and this would put LJQ assets into trade in a PPP and they would all share the profits of the trade.

122.  Later, he said he was told by D2 that extra charges of US$0.2 million was required to download the money of LJQ into a personal account to enable trading to start.  He said after he made the payment to LJQ, he was told by D2 that the dealing could not start because Hua Xia Bank had been investigated by the Mainland authorities.  Later, D1 said D2 told him by e-mail on 25 November 2009 that there was problems with the release of funds as the same need be signed off by the Finance Minister of PRC.

123.  D1 said as for the balance of US$1 million that was mistakenly sent to him by PW1, D1 said PW1 at first asked him also to invest the sum in the same PPP but he said that that was not possible.  In the end, PW1 asked D1 to invest the same in a similar PPP.  D1 said that he then asked PW1 if he could use the money to invest in Highlink to which PW1 agreed and D1 would then be left with US$0.85 million.  PW1 asked D1 to ask him for extra money when the time comes for investing in a similar programme.  D1 said later he could not find similar PPP.

124.  D1 also said that the Asset Management Agreement was given to him as a template by D2.  He edited the same, putting in particulars of PW1.  D1 agreed that the sample Asset Management Agreement was sent to him by D2 via e-mail dated 13 August 2008 (which is tab 2 of the prosecution’s bundle) where it reads, “Dear Hanson, please amend this draft for the US$1 million from Sami. Best regards, Andrew.”

125.  D1 said reason why he changed the name of asset manager in AMA from Fortress World to Integro Energy was because the latter had a bank account with LGT which Fortress World did not and also because of the lower banking charges.

126.  D1, when asked why PW1 said he did not sign the Asset Management Agreement and yet there appeared a signature of PW1 in the Asset Management Agreement, replied that he had no idea why.  He said the Asset Management Agreement was for the protection of PW1.

127.  He explained that the date of the agreement on the first page of the Asset Management Agreement ie, 14 September 2008 should actually be 14 August 2008 and it was a mistake on his part when he sent the same out.  The date of the signatories was stated to be 14 August 2008.

128.  D1 said on 22 September 2008 he remitted, as instructed by D2, the equivalent of RMB1.6 million, approximately US$252,000, as a loan to LJQ using PW1’s second US$1 million.  On 21 August 2008 and on 30 September 2008, he sent out two remittances of US$75,000 totalling US$150,000 as investment of PW1 in Highlink Investment Limited, and the rest he used as a loan to Travelzen of which he himself was director and shareholder and a loan to Mr Foo in sum of US$0.26 million on 14 August 2008 and US$198,000 on 3 October.  D1 said the loan to Travelzen was later repaid with interest.  D1 also said he could not find PPP similar to the one with LJQ, there was balance of US$100,000 out of the second US$1 million from PW1 and so he returned the same to PW1 on 9 April 2009.

129.  D1 said he did tell PW1 that the balance of US$1 million, he had applied them as loans or advance payments to others and would repay them when he was paid back.

130.  D1 testified and said as he paid as a loan to Foo the bank charges to issue the Sino Era CD, Sino Era Limited CD had him as the representative of Sino Era Limited printed on the certificate of deposit.  Later D1 said D2 told him that D1 was holding a Malaysian passport, it would hinder the trading programme and so his name was deleted from the later issues of the CD in the name of Sino Era Limited dated 19 June 2009 (Exhibit P97).

131.  D1 said on 1 August 2009, D2 wrote to him and Foo and said that the sum of GBP 100 million is expected to be paid to Sino Era Limited bank account designated in writing by Foo by 12 January 2009 Zurich time (D1’s bundle, page 63).

132.  D1 said since 2007, D2 had been sending him a lot of documents concerning kick start of trade programmes that D2 was working on, of which D1 was not involved, largely for the information and educational purpose on the mechanisms of PPP.

133.  He was told by D2 that D2 was working on a large number of programmes at the same time and if PW1’s programme failed, then D2 will repay PW1 from profits from other programmes not involving PW1’s money.

134.  D1 said concerning the deal mentioned in D2’s e-mail to another copied to him (page 84 of D1’s bundle), the company Century Force Limited of which the depositor of US$5 billion, Madam Chan, was said to be a director, D2 said she owned the company.  In this e-mail, D1 was named the executive director of the company by D2 and was said by D2 to be participating in the PPP to follow. Confirmation of funds, certificate of balance, deposit transaction statements, all allegedly issued by HSBC, passport copies of Chan and D1 were the attachment to the said e-mail.

135.  D1 said in April 2009, when he chased D2 for money to repay PW1, D2 told him that he had money in a bank account in Switzerland called Julius Baer and would arrange to send HK$4.5 million to D1’s HSBC account so that D2 could repay PW1.  D2 then sent D1 an electronic statement of an account under the name of Larimar Assets Inc dated 1 April 2009 under cover of e‑mail dated 24 April 2009 that as at that time D2 said that he owned US$28 million in this account (D1’s bundle, page 93).  D1 said he did not receive anything as a result.  D1 said later he asked D2 to remit money to PW1 direct and gave particulars of PW1’s bank account to D2 for such purpose but again, though D2 agreed to do so, he later explained on 30 January 2010 by e‑mail and said the sums sent to PW1 was returned as the bank told him that there was another Swift MT103 to “Sami” from Saadi.

136.  D1 said on 17 March 2010, after all the delays with the money in Julius Baer, D2 told him that he had still some money with Standard Chartered Bank. On 24 March 2010, D2 told him that approval from Hong Kong Monetary Authority (HKMA) for D2 to use the money was scheduled that day.  On 3 June 2010, D2 said he received an e-mail from D1 attaching a letter purportedly from Standard Chartered Bank dated 3 June 2010 confirming to D2 that overdraft facilities of HK$2 million and US$0.5 million has been approved for use on 8 June 2010 (page 102 in D1’s bundle).  On receipt of 3 June 2010 e-mail from D2, D1 did write to PW1 on 4 June 2010 and told him that he had finally received confirmation of funds drawdown to his account and Standard Chartered Bank was processing the transfer to PW1’s account.

137.  D1 on 11 June 2010 wrote to D2 complaining that D2 did not commit to the repayment of US$0.5 million for PW1 and then US$1.1 million for Wan Lik and another US$1.5 million for himself.  When asked why D2 should be responsible for repayment to PW1 in respect of US$1 million investment in PPP, D1 said because they had signed agreement with LJQ and D2 had promised D1 that if things did not turn out that he would be responsible for refunding the money to PW1.  He said he deposited the US$1 million with the account of LJQ as directed by D2.

138.  D1 said on 27 August 2010, D2 told him that he had received monies from PPP and he sent out a document purportedly from Standard Chartered Bank which showed the D2 had HK$7.2 million and US$5 million (page 106, D1 bundle) and that he had sent remittance form to the bank to transfer HK$6.5 million to D1’s account.  D1 said then he believed in D2 having money in that bank.

139.  D1 said on 7 August 2011, D2 wrote to D1 and said that D2’s brother has remitted US$2 million from CMIB, a bank in Malaysia, to D1’s account at HSBC. D1 said at that time he had this account with HSBC.

140.  He said what followed next was that his exchange with D2 concerning how the money was to be remitted and the numerous reasons given for the transfer of monies to D2 not being successful involving Central Bank of Malaysia, Hong Kong Monetary Authority inquiry as to the nature of funds, etc.

141.  On 14 September 2011, D1 wrote to D2 and said that it was his deadline for payment of the second deposit for the house purchase.  D1 said in years 2010 and 2011, D2 told him that he was working at different programmes at different times but every one of them faced different obstacles, either with the bank or with the regulatory authorities.

142.  D1 said he was told that a person named Simon was the officer in charge of his programme at Standard Chartered Bank and a person called Divesh is the officer in charge of his programme in HSBC.

143.  He said that D2 on 18 August 2011 sent him an undertaking confirming that D2 will remit $53 million to D1 for purchase of property within 10 to 15 days (page 131, D1’s bundle).  He said he did not later receive the money.

144.  On 22 August 2011, D2 wrote to D1 and said that he and others had a meeting with HKMA three days back and that they now had clear paths from regulators as to what to do and how to get funds released.  D1 said he believed D2 to have money at that time from the PPP involving LJQ at Hua Xia Bank.

145.  D1 also told of his purchase of property in June 2011, completion fixed in August 2011.  D1 said he has paid deposits for the purchase and compensation to the vendor for extension of time to complete in reliance of D2’s promise to pay him monies.  As a result of D2’s failure to honour his promise, D1 said he had not been able to complete the purchase and had suffered loss in the sum of HK$3 to HK$4 million.  D1 said during the course of the event, D2 had sent him and his conveyance solicitor e-mail regarding the imminent remittance of money from CIMB in Malaysia.  He failed to remit the money (page 144 to 160, D1’s bundle).  D1 said D2 had told him that he had applied for US$2.5 million facilities from Standard Chartered Bank and that he would be able to get the US$2 million out of which for D1 and that subsequently the US$35 million he had with Standard Chartered Bank would also be released on 9 November 2012.  D1 was told by D2 that George Lai at Standard Chartered Bank was handling this case.  D1 said that he pressed D2 for payment as he needed money to repay PW1 and for school fees of his son.  D2 had in his e-mail to D1 attached the 2 November and 9 November letter from Standard Chartered Bank (page 141 to 143 of D1’s bundle).  D1 said he believed that the money from D2 payable to him was profits from PPP programmes.

146.  D1 said on 18 March 2009, Foo e-mailed D2 and copied to D1 corrected copies of the Sino Era CD.  D1 said the reason why he was informed was because he had given a loan to Foo to issue the Sino Era CD; it was sent to him for information purpose only.

147.  D1 said he was bcc copy of the e-mail dated 5 June 2009 from D2 to Heather to keep him informed of the progress of the PPP for the investment involving Foo.  He presumed at that time that D2 was working with Heather to put the CD to trade, into a PPP.  D1 agreed that he kept those attachments in the hard drive of his computer for future reference.  D1 also received from D2 copy of D2’s e-mail dated 23 March 2009 to Esther and Monroe, who wanted to put the CD into PPP, concerning the steps to deal with CD dated 12 March 2001 from HSBC Bank PLC of £1 billion.  He said once he received those e-mails, all these attachments to the e-mail would be automatically downloaded into the hard drive of his computer.

148.  Again, for e-mail dated 8 January 2009, D1 said that was e-mail by D2 to Jerome, bcc to D1, together with the attachment relating to HSBC Bank PLC Euro 50 billion CD in the name of Foo dated 23 December 2008, related confirmation letter, confidential memo and Euroclear bank codes.  He said he presumed at that time that someone was putting the certificate of deposit into a PPP and D2 outlined the numbers of steps to be taken and the payment to be made for this particular PPP.  Again, D1 was given to understand that it was given to him for reference.  Again, D1 says that the attachment to the e-mail goes to his hard drive on receipt of the e-mail.

149.  Again, for e-mail from D2 to Dato Low dated 19 May 2008 together with attachments, D1 says the same was sent to him for his reference.  Again, there were bcc copy to D1 and there were six attachments.  D1 said again that D2 just to keep him informed.  D1 says that he did not take part in creating those false documents.  He said for all those cases of D1 receiving emails with false documents attachments, D1 explained that he thought at the time that they were genuine. 

150.  D1 admitting sending false document, the subject matter of Charge 3 (Exhibit P125), ie the CD serial number 0096671-FJ dated 12 March 2009 showing deposit of £6 billion to PW1 in late year 2009.

151.  D1 said in a meeting he had with PW1, he had told PW1 that part of the US$2 million, he had loaned it to a Mr Foo that issued bank documents to him, if they get the instrument return out of this, they will repay PW1 first.  He said apart from showing the CD to PW1, he probably did show the confidential memo in relation to this CD to PW1.   He said he then believed those documents were genuine.

152.  In relation to the 4th charge, D1 admitted receipt of the sum of US$70,000 in late 2011 from PW1.  D1 said D2 asked him to help out with US$70,000 being part of the bank charges to be paid for the release of US$2 million.  As D1 said he did not have the money, he asked PW1 for help and as a loan, to repay the same when money was released.  He said later he withdrew the money received from PW1 and withdrew the money in cash and gave it to D2 in February 2012.

153.  He admitted sending PW1 an e-mail dated 17 November 2011 where he says that he had finally received news regarding the invoice from the bank official that the total bank charges was about US$0.4 million which would be payable on 25 November, that he put together most of the amount but still short of US$70,000.

154.  D1 says in relation to instruments in Charge 6(a)(i), images of time deposit certificates, that on 17 March 2008 Foo sent e-mail to D2, copied to him, enclosing all the CDs.  Foo had issued to them and also in the e-mail noted there was wrong spelling, spelling mistakes, of the country Malaysia in one and he said he would get it corrected.  He said he retrieved and downloaded all those attachments in zip files.  He said of all the CDs sent to him, he participated only in the Sino Era CD for the Krilem oil deal he talked of earlier.

155.  He said D2 informed him at the time that he was working in a great number of PPP and before there was any profit from the LJQ programme, should any of these PPP work out, he would immediately pay PW1 as a priority.  D1 said he was told that none of these programmes succeeded.

156.  As for the documents in Charge 6(b), image of a letter dated 2 November 2012 purportedly issued by Standard Chartered Bank (Hong Kong), D1 admitted giving the same to PW1.  D1 said before he met PW1 and his solicitor and the others at the Mo Bar of Mandarin Hotel, he reported to PW1 that he got the document from the bank and the money will be in by 9 am.  D1 then showed PW1 the image of the letter on his phone.  PW1 asked for a hard copy and D1 said he was initially not comfortable as D2 asked that the letter was not to be shared with anyone to jeopardise George of Standard Chartered Bank.  D1 said he thought that the letter was genuine and that PW1 was not going to give any trouble to George and so he showed it to him.

157.  When asked why D2 had such unsigned letter in his computer, D1 said he had no idea, he did not receive this letter.

158.  D1 says on 9 November 2012 he still did not receive the money and he asked D2 to ask Standard Chartered Bank for an explanation.  D2 therefore gave him another letter dated 9 November 2012 allegedly from Standard Chartered Bank addressed to D2 which says D2 can draw the facilities on 13 November 2012 and that the same could be credited to D1’s account on the day.

159.  D1 said as he was a fund manager all these years, drafting an Asset Management Agreement was not a difficult task.  He said he made alterations to the template of the Asset Management Agreement D2 sent to him for the purpose of use with PW1, and when PW1 agreed to participate he sent him the amended soft copy in e-mail using Fortress World Limited as the signing party on their part.  D1 said PW1 did not return the Asset Management Agreement and by that time he thought he should use Integro Energy instead of Fortress World as it would have an LGT bank account to receive the large deposit and for future distribution and lower bank charges.  He therefore changed the party to Integro Energy, signed it and put it with a note explaining the alteration and couriered it to PW1 in duplicate.  D1 said after PW1 wired him the money, about a few weeks later he received the Asset Management Agreement back, executed with PW1’s signature.  He denied signing it for PW1.

160.  D1 did refer to an e-mail from him to D2 on 9 April 2016 displaying his dissatisfaction at the promises and delays from D2.  He said it was 1½ years after PW1 has paid his money and D1 said he had been given multiple deadlines by D2 about the return of money which did not materialise and that he was facing a lot of pressure from PW1 and a friend called Wan Lik to return the money.  He said by that time the PPP programme of LJQ was gone and in 2010 he had taken interest in D2’s other programmes because D2 told him that he would give priority to repay PW1.  When asked who this Wan Lik was, D1 replied he was another creditor D2 and him had borrowed money from.  D1 referred to another e-mail dated 11 August 2011 he sent to D2 where he queried why D2 could not touch the US$35 million he had with the bank.  D2 replied him that the bank requires collateral before it can grant him a loan but until the funds were legally paid into his account he did not have a collateral yet.

161.  D1 said he was anxious at the time because he was afraid that PW1 would file a civil suit against him and also that the deadline for further deposit for purchase of property was due.  In the forthcoming e-mail D1 mentioned to D2 that the head of Treasury of CIMB was an old classmate and he could ask him for help.  At that time D1 said he believed D2 that the loan from CIMB was genuine.

162.  In cross-examination by D2, D1 agreed that Fortress World was a BVI company of which D2 hold 95 per cent shareholding and D1 holds 5 per cent as at 29 October 2007 and that both D1 and D2 are signatory to the HSBC account of Fortress World. 

163.  Further, D1 admitted that as at 24 June 2008, the shareholding in Sino Era were Foo 45 per cent, D2 45 per cent, Hanson Cheah, D1, 10 per cent as at 11 July 2008.  D1 agreed that D1 and D2 had discussed about raising US$1 million and D1 had alerted D2 that they might raise the same from PW1 and D1 therefore asked D2 for the Word version of the Asset Management Agreement. 

164.  When asked by D2 about the Asset Management Agreement, D2 says that the sole fund contributor was LJQ who had US$5 billion in HSBC Hong Kong and Fortress World was the asset manager and would assist the fund contributor to put the US$5 billion into trade.  D1 replied that actually he had no knowledge of this.  D1 said that he did go through the draft Asset Management Agreement sent to him by D2 and edited the entire agreement and put in particulars of PW1. 

165.  When asked by D2 whether D1 did notice at that time that the applicable law in the agreement was French law, D1 replied at first that he remembered editing that as well; later he corrected and said that he did not correct it. D1 said in relation to the e-mail to PW1 offering to invest in PPP programme, attaching the Asset Management Agreement, he did not copy the same to D2.  D1 said the reason for raising US$1 million was to fund the programme by LJQ, ie US$680 million at Hua Xia Bank.

166.  D1 also said that the Asset Management Agreement D2 sent to him was that the investor agreed to finance the arrangement fees and the banking costs of US$1 million in order that the private placement programme could start.  D1 said he could not remember when he sent the Asset Management Agreement to PW1 for execution but he thought that it was two to three weeks prior to 14 September 2018 and that PW1 executed it on 14 September 2018.  He said that he did not remember if he did send the copy of the Asset Management Agreement with Integro Energy Limited as a party instead of Fortress World to D2.

167.  D1 admitted that he had not copied the e-mail from him to PW1 dated 13 August 2008 to D2.

168.  D2 asked D1 to confirm under the joint venture agreement with LJQ, clause 5, estimated trading profit will be no less than US$5 billion which will be distributed to party A, D2, Mr Samael, D1 each US$1 billion.  D1 agreed if he received US$1 billion, he could repay PW1.

169.  D1 said he had never contacted LJQ directly asking him for arrangement regarding the US$680 million at Hua Xia Bank or LJQ for bank statements at Hua Xia Bank or for block fund letters at Hua Xia Bank or for the 800 net printout.  D1 confirmed D2 never talked or communicated with PW1 direct.

170.  D2 said after D1 remitted US$1 million to LJQ on 20 August 2008, on 9 September 2008 D2 wrote to D1 to advise him of the need for an additional bank fee of around US$0.2 million, of RMB1.6 million, and later D1 transferred from his account to LJQ the sum of HK$1,937,910.

171.  D1 confirmed when D2 cross-examined him that after LJQ had failed to start the PPP, D1 had done a lot of work in organising PPP using LJQ funds with Hua Xia Bank with others.

172.  D2 agreed that they had tried to use the instrument of Mr Foo and gave it to Krilem as security for Integro Energy Limited to purchase oil from Krilem.  The deal did not go through.

173.  D1 said the reason why he did not repay PW1 was that the latter was pressing him for the return of profit and capital, and further that PW1 only got anxious about return of money from April/May 2009.  He said that in April 2009, he repaid Sami US$100,000.

174.  D1 said D2 told him that the money that Foo had in HSBC, the £60 billion, could not be moved, withdrawn or transferred.

175.  D1 denied he told PW1 at Mo Bar that PW1’s money was in the Hongkong Shanghai Bank pooled with other’s money in the £60 billion deposit.  When D1 was asked why he said that the £6 billion was transferred to Standard Chartered Bank from HSBC, D1 then replied that at that time what he was trying to say was that the trading was transferred, not that the money was transferred.

176.  He said he relied on the 2 November 2012 letter from Standard Chartered Bank addressed to D2.  The letter was actually addressed to D2 with subject caption as “Monetization of collateral provided by the National Westminister Bank PLC London to Standard Chartered Bank HK in favour of Mr Chow Yuen‑kong.” D1 says for the US$0.2 million that he loaned to Foo on 3 October 2008, later the Sino Era CD serial number 966671-FJ was issued.

177.  In cross-examination by D2, D1 admitted that he knew that the US$1 million from PW1 would be spent on bank fees for LJQ when he wrote the e-mail to PW1 on 13 August 2008.  D1 said it was D2 who told him to find an investor of US$1 million and with promised return of US$5 million.  He said therefore he edited the Asset Management Agreement draft he received from D2 accordingly. D1 said that he did not know in detail how the funds would be used until he saw the LJQ Asset Management Agreement which came into existence after he sent out the 13 August 2008 e-mail to PW1.

178.  D1 also told of his working with a person Harrison on LJQ instrument who made promises of incoming funds but never materialised.  Cease and desist letter was sent out to Harrison on 15 June 2009.  When asked why if PW1 pressed him for payment that instead of paying PW1 part of the monies, D1 used the monies to purchase property worth $40 million, D1 replied because PW1 did not want to accept part payment, the few millions Hong Kong was just a small sum - and he did offer that to PW1, which PW1 refused.

179.  Further, D1 said that he believed in D2 who told him that there was already trading profits and the sum D1 was entitled to was more than enough to repay PW1 the capital and the profit and for the purchase of property.  D1 however agreed that he had previously paid and PW1 had accepted the return of US$100,000 from him.  D1 said he showed PW1 the Standard Chartered Bank letter in the Mo Bar so that PW1 knows that he would receive the US$2 million on 7 November and then immediately thereafter he would repay the money to him.

180.  D1 agreed that as at 2 December 2008 they were no longer expecting trading profit from the LJQ trade on payment of US$1 million as the contract would not be met.  The Joint Venture Agreement with LJQ practically failed.  When asked if he did advise PW1 of this at around that time on 2 December 2008, D1 said that he did tell PW1 that the attempts to start trading was not successful and that there were hiccups.

181.  D1 said that after paying the HK$1.9 million on 22 September 2009 to LJQ for the second set of bank documents, they failed to enter into a trade programme or derive profit from the trading.

182.  In cross-examination, D1 admitted telling PW1 progress of instruments including those not funded by PW1’s money as he thought that money would be paid in priority for him from trading profits arising from the other PPP.

183.  In cross-examination by prosecution, D1 says that up to 20 August 2008 when PW1 paid for the investment, he had dealt with no other PPP like the one in the case of PW1.  D1 said he was in partnership with D2 in the investment from PW1’s money.  D1 told D2 that PW1 agreed to invest and D2 sent him the draft Asset Management Agreement.  D1 altered it to suit the case of PW1.

184.  When D1 was cross-examined about paragraph 2 of the recital of the Asset Management Agreement where it stated “Whereas the asset manager named herein have hereby successfully arranged a secure eight-week private placement programme for the cash deposit at HSBC Limited Hong Kong for the value of US$1 million provided by the fund distributor.” 

185.  There was no mention about this US$680 million or mention of LJQ or other PPP programmes other than the programmes therein mentioned and that the bank officer stated in the Asset Management Agreement as being the one responsible for the asset manager, ie Fortress World’s bank account, D1 said he did meet this Ronald Kan before two/three times but he could not recall if he ever used his telephone number or his e-mail address.  He probably did not use the fax number.  D1 said he did not communicate with him regarding the PPP.  As to whether the PPP was a real programme as D1 said D2 told him that only few people knew of this programme, a lot of people did not know of it even if they worked in the same bank, HSBC. 

186.  When asked why D1 himself did not invest in this PPP programme as the return was overwhelmingly good, D1 said that he did not have money or ability to raise a loan large enough to make US$1 million which he understood from D2 to be the minimum investment for the programme. 

187.  He also said that he did not think of pooling his own funds with those funds from other investors in order to make the investment.

188.  D1 admitted that apart from relying on D2, he did nothing to verify the PPP. 

189.  D1 was asked by counsel for the prosecution in cross-examination that by paying US$1 million to LJQ as bank fees to unlock the US$680 million which LJQ had with the bank, D1 and D2 each expecting $1 billion profit, D1 agreed.  He added that actually a lot more work was involved.  D1 said the ability to find it at that time such a programme was, in his words, “like finding a needle in the haystack”.  Further, he said D2 told him that as he was familiar with Hua Xia Bank others would be unable to organise such a programme and that D2 had extensive knowledge on how to orchestrate PPP.

190.  D1 was asked why if LJQ was so wealthy that he would need US$0.2 million from him to unlock the funds.  D1 replied that if they were not paying for it, then they would not be entitled to any of the trading profit.  He further said apart from the money to pay the charges to unlock the money, he also need different trading platform to unlock his money.

191.  When D1 was asked why he would in the signed copy of the Asset Management Agreement remove the words “witnessed by” under the signature of the fund contributor, ie that of PW1, or where he is supposed to sign from the draft he sent to PW1 by e-mail, why he removed the words “witnessed by” under his signature, D1 said that he thought the same was not useful.

192.  When he was asked whether he could offer reasons why PW1 said he did not sign the Asset Management Agreement that PW1 replied firmly that that was not his signature, D1 explained that that might be PW1 remembered wrongly.

193.  D1 also said that he did not by e-mail acknowledge receipt of the signed Asset Management Agreement from PW1.  He said the reason was that he should have signed the receipt from the courier.

194.  D1 admitted that during the years after money was due to PW1, when PW1 chased him for return of his money, he had given multiple reasons for delay in returning the money.  He said most of these reasons came from D2 and he relayed them to PW1.  These include all the monies have to be approved the Federal Reserve since 9/11, or problems with the Bank of England, problems with NatWest Bank, with banks like CIMB, Standard Chartered Bank, HSBC, Hong Kong Monetary Authority approval, Mint Office, awaiting fund release pending tax opinions etc.

195.  When asked why D1 said he raised no suspicion on those excuses, D1 said he genuinely believed these were real issues that D2 was facing at the time and there was nothing dishonest about D2. 

196.  When asked if D2 did have the inheritance in CIMB or the vast sums in Standard Chartered Bank as shown in the certificate of balance as he alleged, why would D2 need to ask D1 for extra money to pay Foo’s bank charges, D1 replied he just believed D2 and in any event and the US$37 million in Standard Chartered Bank was the statement in year 2011 whereas the loan was made in 2010.

197.  D1 maintained that with all the reasons given by D2 for the delays in getting the money to repay PW1, despite the three and half years, there was nothing forthcoming from D2 until November 2012 when he saw the letter from Standard Chartered Bank from D2.  Up to that point he still believed in D2.

198.  During cross-examination, when asked if the reasons given to PW1 was true, D1 admitted the same were not true; for example, the 24 June e-mail from D1 to PW1, “The money’s been wired to the bank in Hong Kong and then to our account. It will unfortunately be next week before the bank can in turn wire it over to your account.”  D1 admitted in fact the money had never entered his own account.

199.  On another occasion D1 wrote to PW1 on 28 October 2011 and said he managed to scrape US$0.55 million for bank fees unlocking the fund; actually he said he did not have the money to do so and although he said he believed D2 had some money short of $0.55 million.

200.  D1 admitted that with the reasons given by D2 he never checked or made inquiries as to whether the money was truly on their way although he did at one time ask to offer help from CIMB.  When asked then why in Mo Bar D1 did say “We went there”, meaning Hong Kong Monetary Authority, then D1 said because he thought that PW1 should treat him and D2 as a team.

201.  D1 agreed that on 17 November 2011 the bank fees were reduced by US$0.15 million to US$0.4 million and he still had shortfall of US$70,000 and he wrote to PW1 for US$70,000 as a loan for payment of the bank fees for release of funds so that he could immediately send the money back to PW1.

202.  When cross-examined, D1 said D2 told him that he had US$0.33 million. Actually when he wrote “I”, it meant “we”, meaning D1 and D2; he himself did not have the money.

203.  Later, on 22 November 2016, D1 wrote to PW1 and said that the bank fees became US$0.46 million and he had put together US$390,000 million, and together with the extra US$70,000 loaned to him by PW1, he would be sending US$0.46 million on 25 November 2011 for the bank to release the funds.

204.  When asked why according to the bank statements of D1 that in fact the US$70,000 that he got from PW1 as bank fees actually sit in his own account for another three months and then was converted into Hong Kong dollars and withdrawn by him in the form of cash, D1 agreed that the money sit in his account for three months but explained that he had handed the money to D2 in the end as D2 said there was a delay.  He said he believed in D2 then.

205.  D1 said in the meeting after 12 March 2009 with PW1 he had shown PW1 the Certificate of Deposit (CD) of Sino Era in the sum of £6 billion and as he had 10 per cent shareholding in Sino Era, his shareholdings worthed £600 million. D1 was asked to confirm whether by showing this CD to PW1, D1 did so to ensure PW1 that his money formed part of this £6 billion.  D1 agreed.  He said that at that time he did not know Sino Era had no account with HSBC London.  He did not know the falsity of the document at that time even though he was a director and shareholder of Sino Era.  He said D2 told him Foo had assets in HSBC UK and he was able to issue a certificate of deposit based on his assets.

206.  Likewise, D1 agreed when he showed the Standard Chartered Bank letter dated 2 November 2012 (tab 21) to PW1 and his solicitors at the Mo Bar to placate PW1 so that he would not worry about his money.  D1 told PW1 that he would have his money and in turn repay PW1 in a few days’ time.  D1 said at the time he had no idea George Lai did not work at Standard Chartered Bank, that Standard Chartered Bank had no treasury services or that the account number was wrong and the letter was a false document.  He confirmed again that he did not make inquiries with HSBC London as he could not check.  He explained because he was told by D2 that the assets belonged to Foo and only Foo could check because Foo is the asset owner, he insisted he believed D2 even at that stage as he said that was the first time in the four years that he got a letter and commitment from the bank.  D1 confirmed that he himself had never gone to HSBC UK.  D1 also told this court that the fact that all PPP that D1 and D2 were engaged in between the years 2008 to 2012 were unsuccessful although in 2010 D1 was told by D2 that the PPP with LJQ was successful which he now knew was false.

207.  D1 was asked why he told PW1 at Mo Bar that his money being part of the £6 billion was transferred from HSBC to Standard Chartered Bank (Exhibit P74, counter 348 to 349) and said what he actually meant was that the trading platform was changed and not the funds transferred. 

208.  He was cross-examined further that he had explained reasons for the transfer was that HSBC was being investigated for money laundering and that further HSBC did not have enough money.  At one stage D1 explained that it was difficult to explain that the trading platform had changed from HSBC to Standard Chartered Bank and so he told them that the money was transferred instead.

209.  When further cross-examined as to whether D1 really believed in what he agreed to in the Mo Bar when PW5 summarised what D1 said, “So you mean that Standard Chartered will go bankrupt if he returns the £6 billion to you?  So from saving themselves from bankrupt, they refuse to give you back the money. So supposedly they should have given you some penalty interest”, to which D1 replied, “Absolutely”.

210.  D1 said that at that time D1 genuinely believed that as the trading programme was being transferred to Standard Chartered Bank, Standard Chartered Bank had borrowed against that and if that trade programme failed, then Standard Chartered would be in trouble.

211.  D1 said he told PW5 that part of the US$2 million that PW1 sent to D1 was invested in this PPP programme.  He said that PW5 was mistaken in remembering that D1 told PW5 that all US$2 million was so invested.

212.  D1 said all false documents concerned in this case were sent to him by D2 or Foo and were found his computer and hard drive.

213.  In cross-examination, D1 agreed that his understanding at the relevant time was that once the date of the CD changed, a new CD had to be reissued with a different number.

214.  D1 denied that the false documents in his computer were there to serve the purpose of showing people that he represented people of great wealth and to satisfy or at least placate people when he was trying to persuade people to invest with their substantial funds, backing his claims of investment and to give them the impression that D1 was an experienced fund manager.

215.  D1 denied the case put to him by counsel for the prosecution that D1 and D2 actually were jointly cheating people, each having a role of their own; D1 in locating gullible and greedy investors and tease them with high return in fictitious sham programmes using major institutions to entice those people to invest with him.

216.  D1 denied that at the time when he lured PW1 to invest he knew that there was no way that the sum of US$1 million could generate US$4 million profit in three months’ time.  He said his belief was that it was true. Further, he denied not having placed PW1’s money to PPP as he told PW1 but rather for his own use.  He denied he had no intention to return any sum to PW1; the US$100,000 was repaid to PW1, to keep him, the prosecution says, on a leash to invest further.  He denied that.  The further US$70,000 he obtained from PW1 was never applied to use as he told PW1.  That was denied as well.  D1 said up till the time of cross-examination he still intended to repay PW1.  D1 confirmed that he had received money from D2 but not arising from matters covered in this case.

D2

217.  D2 said he held a bachelor’s degree in accounting from University of Canterbury and a master’s degree of commerce with first honours, also from the same university.  He was also a chartered accountant and a chartered cost and management accountant by profession.  He said when he was studying his master’s degree, he was at the same time being employed as a lecturer teaching accounting and finance.  He was also the main supervisor and examiner for mergers and acquisition subject in the faculty.

218.  He joined Shell Singapore as a financial controller and was cross-posted to various countries in Asia.  Because of his posting, he dealt with trading of all products, later promoted to be finance manager for the whole ASEAN region for Shell Singapore. 

219.  He resigned in 2000 and joined a listed company in Singapore and then a Singapore-based advertising and media company as a Chief Financial Officer.  He was also involved in raising China petroleum investment fund based in Beijing.

220.  Subsequent to his arrest in February 2013, he had through his counsel applied for a letter of request to cross-examine Mr Foo in Malaysia, as Foo was a key witness.  Because of the failure to vary bail conditions, D2 said he was unable to return to Malaysia to engage counsel in Malaysia to apply to High Court of Malaysia for the letter of request.

221.  D2 said Foo was introduced to him by a beneficiary of a bank guarantee, of which Foo was the applicant.  Foo presented as an individual holding large assets and cash in HSBC Holdings PLC and he could use those assets to issue bank guarantee for all trading purposes or to use bank guarantees as a collateral for the credit line.

222.  As D2 knew Foo was purchasing oil product from Petronas, he introduced Foo to purchase from a company called “Krilem” instead.  Foo said raising a bank guarantee for the said purpose was easy, but the purchaser had to know how to use the instrument and later D2 arranged a deal with Krilem for supply of oil products.  The latter asked for bank guarantee of €4 billion be issued and Foo offered bank guarantee backed by cash, meaning Foo has cash in the master account HSBC Holdings backing the bank guarantee.  Foo stated however, D2 said, that the cash could not be moved.  It could only be used to issue bank instrument as collateral and the instrument should not be called at the end of maturity. D2 says Foo says in the email that that was a special arrangement with US Treasury.

223.  D2 said that the chairman for Krilem was a former minister in Australia and Roland, the head of compliance of Krilem had sent D2 a corporate overview of Krilem.  The finance director of Krilem, D2 said, had extensive experience working in private banks such as Credit Suisse and Julius Baer, which was the private banking arm of UBS, and been CEO of bank.  He said after he structured this oil transaction, he wrote to Mr Truscott, who introduced him to Krilem, copied to D1.  As D2 said that he had given sample bank guarantee to Krilem after checking with the bank, the chief administrator of Krilem wrote and confirmed that he agreed to the format sample of bank guarantee.

224.  D2 said he had told Krilem, as advised by Foo, that the bank guarantee could be blocked by external blocking, which means Krilem instructs its banker to block the bank guarantee on HSBC screen or internal bank blocking within HSBC.  In order to block, Krilem must have cash, ready cash deposit or credit line in PLC.  Once the bank guarantee is blocked and HSBC Holdings PLC will issue the blocking confirmation by SWIFT MT 760.

225.  D2 says the bank guarantee from HSBC Holdings comes with a letter of authentication, confirmation letter, confidential memo, onscreen registration data, security display, Euroclear international banking screen, Euroclear account access, Morgan Guaranty Trust, Euroclear printout, history of funds, and commitments of issuing MT 760.

226.  Later, D2 said that the sale and purchase agreement for purchase of the gas oil was executed between Integro Energy and Krilem.  It is agreed that Integro Energy was to establish an unconditional, irrevocable bank guarantee for €5.4 billion into 10 bank guarantees for €540 million each.

227.  D2 said the bank need be paid US$200,000.  D2 said therefore Foo asked for US$200,000 be paid to the account of a Mr Riady, of which Foo was the asset manager.

228.  D2 says, from the CV of Foo, he was a managing director of a futures trading house in Kuala Lumpur, also founding member of Kuala Lumpur Commodity Exchange; executive director of a joint venture with Emperor Group in Hong Kong; also the asset manager of Riady in Indonesia regarding his worldwide assets.

229.  Before payment of sum, Mr Riady has caused HSBC London to issue the notice of readiness addressed to Krilem. 

230.  D2 says the US$200,000 was funded by him.

231.  D2 said also that he was new to the banking instrument issued by Foo. They had paid a retired banker to illustrate to them how they could engage Foo’s bank guarantee in the banking system.

232.  He also said at the time he genuinely believed that the bank instruments issued by Foo were genuine and therefore he had joint venture with Foo in three companies.

233.  D2 admitted sending the template Asset Management Agreement to D1 for use in PW1’s case.  He said D1 did not copy his email to PW1 dated 13 August 2008 to him, and he was not aware that PW1 had remitted US$2 million to D1 up to 21 August 2008.

234.  He said, with regard to the US$1 million paid by PW1, that was for the arrangement fee.  Total cost required was US$2 million, but, with US$1 million, they could start the PPP with LJQ.

235.  D2 said in this joint venture agreement, in order to protect party B, which is D2 himself and D1, in the event that the funding arrangement on the private placement arrangement was not successful, party A, ie LJQ, undertakes to refund the US$1 million within 30 days after receipt and should he fail in repayment then the guarantor Mr Samael would be there to pay.

236.  D2 said, as party B did not have an active role, therefore he needed this protection.  Later, D1 and D2 executed the joint venture agreement.

237.  D2 said later the US$680 million at Hua Xia Bank could not be engaged by the platform because of foreign exchange control in China.  It has been decided by LJQ that, as Hong Kong did not have such exchange control, that the platform would be better to engage funds for PPP if funds were in Hong Kong, and LJQ decided to come to Hong Kong to download US$1 billion in order to do so.  There was a bank fee of US$0.2 million.  D1 told D2 that he could finance the US$0.2 million.  RMB¥1.7 million was therefore wired to LJQ account in HSBC.

238.  He said he still tried to save the transaction one year later, on 23 September 2009 and 27 October 2009, and he caused further remittance, US$0.5 million or its equivalent in the sum of HK$3,875,000, and US$0.4 million, to LJQ.

239.  D2 also said that PW6 had sent him a cheque signed by LJQ representing the sum of HK$10,312,910, which confirmed that LJQ acknowledged that he had received from party B and was trying to honour his commitment under clause 6 of the joint venture agreement.

240.  D2 said the cheque was dated 14 January 2013 and the sum was enough to pay back PW1 but as he was arrested he could not cash in the cheque or contact LJQ who was later arrested, charged and absconded.  D2 said, since the original PPP concerning the US$680 million of LJQ did not work, on 2 December 2008 D1 took the lead and organised a contract for placement of the US$680 million with one company called “Sigma”.  D2 said that D1 worked hard for six months until 15 June 2009, when they decided to issue cease-and-desist letter to Sigma and others to terminate the relationship.

241.  D2 said on 3 October 2008, Foo was paid HK1.54 million and four days later Foo sent an email to D2 that this was the CD for the £6 billion in name of Sino Era Limited dated 6 October 2008, stated to be represented by D1, with his passport number imprinted on the certificate of deposit.  The CD was accompanied with confirmation letter, confidential memo, Euroclear screen code.

242.  Five months later, on 18 March 2009, Foo again emailed D2, copied to D1, enclosing the corrected versions of the Sino Era CD.  This time, the serial number has changed to CD0096671-FJ (exhibit P125) and date of CD was 12 March 2009.  The spelling mistakes of “Malayasia” is amended to “Malaysia”, whilst in the certificate the words “intereset” remained incorrect.

243.  D2 said he understood from Foo that if CD was put on the coded screen like Euroclear and if it was accessed for three times for checking, then the screen would close and the CD would need to be reissued and bank charges need to be paid again.

244.  D2 said that the issue of the CD was unrelated to PW1 and he had no idea why D1 would present this CD to PW1.

245.  D2 in court referred to an e-mail dated 25 May 2009 from Foo, which says that CD on reissue due to close of screen would have the same CD number unchanged, but all documents need to be reissued and the date of maturity would be different.

246.  D2 said Foo sent him, copied to D1, via email dated 25 May 2009 the CD of Sino Era Limited, represented by D1, reissued on 25 May 2009, being the same CD number as the one on 12 March 2009, CD0096671-FJ.  Attachment of this email included reissued CD, related confidential memo, HSBC Euroclear password, bank codes, all dated 25 May 2009.

247.  D2 said on 20 June 2009 Foo again emailed D2 and attached thereto, quote, “copy for Sino Era 6B GBP CD with the changes except the serial number of the CD”, unquote.  The attachment were ZIP files and they were the reissued CD dated 19 June 2009 and the corresponding confirmation letter, confidential memo, HSBC Euroclear password, bank codes, all carrying the same date.

248.  D2 said on 11 February 2010, Stanwell wrote him an email enclosing an email from Jay Hammer to her dated 10 February 2010, wherein he talked of a chance to work directly with the German Central Bank, the Deutsche Bundesbank. Persons involved were said to be of high credentials like those from World Bank, IMF and UN.  Later, in furthering, the discussion on the project, he asked Foo for the proof of funds for US$500 billion and therefore Foo sent the documents to him, ie D2, on 16 March 2010.

249.  D2 said on 16 March 2010 Foo emailed D2 and sent him four sets of bank documents; each set involved US$500 billion.  The four sets of bank documents looked the same, except the BB number.  For the certificate of balance dated 15 March 2010, the BB number was AY4109748.

250.  In relation to the evidence of PW3 who served in HSBC Hong Kong, D2 said that he did cross-examine PW3 and asked if he did ask the UK colleague to check the bank instrument on Euroclear or DTC screen.  He said he did not.  He criticised the prosecution having called a HSBC Hong Kong staff to give evidence on a HSBC UK bank instrument.

251.  D2 said, in relation to the certificate of time deposit dated 26 March 2007 under the name of Nippon Light International Limited (exhibit P111), the same was sent to him by email dated 4 February 2008 by a Valerio Astolfi who said that the same was sent to D2 on behalf of a Mr Chang in China.  D2 said that he did not request for this document and the document was kept in the hard disk.

252.  D2 said, so far as the exhibit P112 and P113 were concerned, those related to US$4.5 billion in HSBC Hong Kong under the name of China Choi Kin International Finance Investment Group (Hong Kong) Limited.

253.  Exhibit P112 was the HSBC Hong Kong bank statement dated 8 October 2011, which stated that at that time the account holder has US$4.49 billion in the account.  D2 said these documents were sent to him by Stephanie Chase, who had originally intended to work on the bank instrument but because client was difficult, the file was closed.

254.  As for exhibit P114, certificate of balance dated 5 December 2011 from HSBC Hong Kong, and exhibit P115, the confirmation of funds from HSBC Private Bank dated 5 December 2011 under the name of Liu Li for US$210 billion, these, D2 said, were sent to him by Stanley Goldberg via email dated 15 December 2011 (page 604 of D2 bundle), who did not understand Chinese, and on receipt of document on page 609 of D2 bundle, Stanley sent those documents to him.  D2 said he did not ask for these documents.

255.  As for exhibit P110 and P117, D2 said these were sent to him by Yang Foo Ching via email on 18 May 2008.  He said this was the first time he received documents from him.  Sum involved in these documents was US$5 billion.

256.  As for 2 November 2012 letter from Standard Chartered Bank, D2 said that was subject matter of the fifth charge also.

257.  He said, around October/September 2012, D1 was chasing him to find funds to pay PW1.  D1 was under pressure as he said PW1 was going to sue him.

258.  D2 said D1 told him that D1 would be meeting PW1, and D1 actually asked D2 for documented evidence, hopefully, to pay PW1 before the meeting.  D2 said at that time he was working with Stanley Goldberg, who said he would organise with Standard Chartered Bank Hong Kong to issue a letter, and he did not know exactly what was the contents of the letter that they want.  D2 said Stanley asked D2 to draft the letter so that he could ask the banker at Standard Chartered Bank, George Lai, to issue the letter.

259.  So D2 drafted the letter including thereto the expected returns and the time frame that he would be so entitled on completion of the deal that he and Stanley was working on at the time, and he handed the same to LJQ who took to Standard Chartered Bank office and LJQ then took the signed letter back to him.  He returned late at night and gave the letter to D2 the next morning.

260.  D2 said that he had no reason to doubt or suspect the money D1 received from PW1 was proceeds of an indictable offence.

261.  D2 proceeded to tell the court the basis for him giving D1 timeframe of the expected monetary returns.

262.  In cross-examination, D2 said the fundraising activity that D1 had with PW1 had nothing to do with him.

263.  As far as he is concerned, if D1 could raise US$1 million, they can then take part in the LJQ PPP organised by LJQ.  If D1 was unsuccessful in fundraising, they would not take part in the joint venture agreement.  Now that D1 had raised the sum, they became investor to the joint venture agreement with LJQ as the other contracting party.

264.  D2 said PW1 was never an investor in the PPP organised by LJQ.

265.  D2, when asked if he wanted to see what D1 actually told PW1 about the PPP with LJQ, said he had no role and no rights to know what D1 said to his investor as part of his fundraising.  He said therefore that D1 did not copy him the Asset Management Agreement or forward the email of 13 August 2008 to him, and he never asked because he was not privy to this fundraising.

266.  D2 when cross-examined agreed that the 2 November 2012 Standard Chartered Bank letter was prepared so that D1 could provide documented evidence to PW1 when payment could be made to him and that was the purpose of his meeting with PW1.

267.  As D2 asked LJQ to take the draft letter to Standard Chartered Bank for issue of the 2 November 2012 letter, D2 must be aware that the letter must be very urgent, so urgent that D2 himself said that he had asked the fund-holder of US$680 million to act as his courier to go to Hong Kong to take the draft letter to Standard Chartered Bank and also take the letter back to Shenzhen to D2 when the letter was ready.

268.  D2 in cross-examination also said that in the year 2012, D2 knew from D1 that PW1 did not care about the profit on the US$2 million; he just wanted his money back.  D2 said at that time the arrangement between D1 and D2 was that they were to repay PW1 the US$2 million.

269.  D2 was asked, under the joint venture agreement with LJQ, LJQ put in his US$680 million and D1 and D2 paid their US$1 million and would in due course be entitled to profit sharing of US$2 billion for LJQ’s side and US$2 billion for D1 and D2’s side; the deal was extremely good.  D2 agreed.  Further, the US$1 million D1 and D2 paid was in fact guaranteed by Mr Samael, in case LJQ could not pay if the deal did not go through.

270.  In cross-examination, D2 said actually LJQ did not own the US$680 million.  It was that, after the arrangement fee and the banking fee of US$1 million had been paid, that Hua Xia Bank would “loan” US$680 million into LJQ account so that, LJQ bank statement and proof of funds showed US$680 million.

271.  D2 said the bank documents he sent to D1 were not for educational purpose but so that if D1 were to take over the assignment concerning those instruments, he need those documents.  They were partners in these works on bank instruments and, as D1 and D2 are using companies of which they were both interested, the other party needed be informed as director or shareholder of the company.

272.  D2 disagreed there was no need for him to verify the PPP with any bank because D1 and D2 had both intended to cheat PW1 of his money and D2 organised the false documents to be used by D1 for PW1.

273.  D2, when cross-examined, said he did not check the authenticity of bank documents he received, including the CD in the name of Sino Era Limited, of which he was the director and shareholder.  He said that Sino Era did not maintain an account with HSBC UK, but he said it was possible for Sino Era to have £6 billion in CD without having a bank account.

274.  D2, when asked why he did not call Standard Chartered Bank to check the progress of the payment of the money to him, as per the Standard Chartered Bank letter drafted, said because he had no right to call George Lai, who was banker of Goldberg, though his telephone number was at the bottom of the letter and although the letter was addressed to him.  He also said he did not think of calling George Lai.

275.  It was put to D2 that D2 would just supply whatever documents that would satisfy PW1 agreeing to invest and pay the US$1 million and that therefore D2 sent the template Asset Management Agreement to D1 for use in August 2008, although the contents of the Asset Management Agreement did not refer to money from PW1 was to be applied to bank charges involved in the PPP involving LJQ.

276.  D2 replied that anything between D1 and PW1 was fundraising, which was the sole responsibility of D1.  D2 said that he did not ask for copy of the executed Asset Management Agreement because that was something only privy between D1 and PW1.

277.  When asked if D2 really had the US$28 million under the bank account of Larimer Inc with Julius Baer, D2 said yes.  He agreed, however, that the money did not go to D1 because his wife filed a divorce and he gave all the money and property to his wife to avoid what an “ugly divorce”.

278.  He also confirmed that for the document dated 18 August 2011, where it stated that D2 had US$35 million in his account, actually he did not have the money in his account then.  D2 however insisted the same was not a false document, as he said he was told that the amount was pre-advised.  He confirmed he did not get the money afterwards. 

279.  He disagreed to the prosecution’s suggestion that he always put, “private and confidential”, on these bank documents so that others, when reading these documents, would think that these were not intended for the eyes of anyone other than the recipient of the document.

280.  He denied that it was joint effort on the part of D1 and D2 to cheat PW1 of the money.

281.  There was no other defence witness called for the defence case, and this was the case for the defendants.

Discussion

282.  Before reaching the verdict, this court had carefully considered all the evidence as well as the submissions, authorities submitted by the parties. 

283.  This court has also reminded itself the burden of proof lies on the prosecution; the defendants do not have to prove anything and that, even if the evidence of the defence was not accepted, it is still the prosecution who had the burden of discharging and proving the elements of the charges beyond reasonable doubt.

284.  In this case, the defendants have elected to give evidence themselves. They did not call any defence witness.

285.  The court was informed, and it reminded itself also, that the defendants are both men of clear record.  Accordingly, due consideration regarding their credibility and propensity to commit crime has been given.

286.  The defendants in our case have both impressed this court to be intelligent, quick-minded and well-educated individuals.  Both of them have attained master’s degree from famous university.  They have extreme experience working in companies of substantial worth and for a long time at high positions and in areas that concern investment and finance.  Both held themselves out as persons experienced in such fields.

287.  For the 3rd, 5th, 6th and 7th charges, they are all charges brought under the Crimes Ordinance, Cap 200, involving false instruments. 

288.  Section 68 of the Crimes Ordinance set out the meaning of “instruments”:-

“Section 68 Interpretation:-

‘Instrument’ means:-

(a) any document whether of a formal or informal nature;

(b) any postage stamp or revenue stamp;

(c) any seal or die; and

(d) any disc, card, tape, microchip, sound track or other device on or in which information is recorded or stored by mechanical, electronic, optical or other means”.

289.  Section 69 of the Crimes Ordinance reads:-

“Meaning of ‘false’ and ‘making’:-

For the purpose of this part:-

(a) an instrument is false if it purports to have been:-

(i) made in the form in which it is made by a person who did not in fact make it in that form;

(ii) made in the form in which it is made on the authority of a person who did not in fact authorise its making in that form;

(iii) made in the terms in which it is made by a person who did not in fact make it in those terms;

(iv) made in the terms in which it is made on the authority of a person who did not in fact authorise its making on those terms;

(v) altered in any respect by a person who did not in fact alter it in that respect;

(vi) altered in any respect on the authority of any person who did not in fact authorise its alteration in that respect;

(vii) made or altered on a date on which or place at which or otherwise in circumstances in which it was not in fact made or altered; or

(viii) made or altered by an existing person but he did not in fact exists;

(b) a person is to be treated as making a false instrument if it alters an instrument so as to make it false in any respect, whether or not it is false in some other respect apart from that alteration.”

290.  Section 70(1) of the Crimes Ordinance reads:-

“Meaning of ‘prejudice’ and ‘induce’:-

(1) Subject to subsections (2) and (4), an act or omission intended to be induced is to a person’s prejudice if, and only if, it is one which, if it occurs, will:-

(a) result in his permanent or temporary loss of property;

(b) result in his being deprived of an opportunity to earn remuneration or greater remuneration;

(c) result in his being deprived of an opportunity to gain a financial advantage otherwise than by way of remuneration;

(d) result in somebody being given an opportunity to earn remuneration or greater remuneration from him;

(e) result in somebody being given an opportunity to gain a financial advantage from him otherwise than by way of remuneration; or

(f) be the result of his having accepted a false instrument as genuine, or a copy of a false instrument as a copy of a genuine one, in connection with his performance of any duty.

291.  D1 was legally represented at trial and, pursuant to section 65C of CPO, admitted that all instruments particularised in Charge 6 were false instruments.  The Asset Management Agreement dated 14 August 2008, particularised in Charge 6(c), was therefore covered in the admitted facts by D1.  This court was therefore at a loss when defence counsel for D1 at the later half of the trial appeared not to concede the instrument was a false instrument, even in the face of the admitted facts earlier.

292.  This court finds as a fact that the Asset Management Agreement had not been executed by PW1, but, because of the presence of the forged signature of PW1, the instrument appeared as if it had been signed by PW1, who had not in fact done so.  Further, without such signature, the document would not have been an agreement, as it appeared.  The instrument is a false instrument.

293.  D2 was not legally represented at trial and there was no admitted fact so far as the case against D2 was concerned. 

294.  In order to prove, “false instrument”, in Charges 3, 5 and 7 (ie charges against D2 in relation to false instruments), prosecution had called PW2, investigator for fraud cases of Standard Chartered Bank; PW3, from Financial Crime Investigation, Security and Fraud Risk, Asia Pacific Department of HSBC, to give evidence on the issue of falsity on these documents with the detailed reasons given in each case.  Their evidence were totally unshaken during cross-examination and this court gave full weight to their evidence, even having considered the doubts raised by D2.

295.  D2 was saying that if X purchased a CD from Y, CD being issued by HSBC, though X has to inform issuer of the change of ownership (ie HSBC) and a new CD issued in the name of X, HSBC had no record of such deposit of X and there need not be a bank account for X in HSBC.

296.  While this court might agree that there need not have been a bank account as far as a person holds a certificate of deposit with a bank, the former scenario where he says that one can be a holder of a certificate of deposit in a bank but then the bank will have no record of such deposit, this is something totally unbelievable.

297.  This court finds beyond reasonable doubt that the documents involved under these charges were all false instruments within the meaning of the Crimes Ordinance.

298.  In evaluating the evidence of the defendants, due consideration will be given to their background.

299.  In D1’s case, the provenance and the chain of exhibits seized in relation to investigation of this case were admitted as being part of the admitted facts.

300.  In D2’s case, since there was no admitted facts, prosecution has called PW7, PW8 and PW9 to testify regarding the arrest of D2, the subsequent seizure of exhibits from D2, as well as retrieval of data from the seized exhibits, and saving them on CDs (compact discs) and the chain of evidence.  This court accepted their evidence as their evidence again went unchallenged.

301.  PW11 and PW12 were both called to give evidence and produce documents pertaining to D2’s bank account.  Their evidence was again unchallenged and was therefore accepted by this court.

Charge 1

302.  Now, coming to the first charge, it is agreed by the defendants that the terms of “Bond Trading Programme” (BTP) and “Private Placement Programme” (PPP) are interchangeable. 

303.  Evidence from PW1 said, in essence, was that he trusted DW1 at the material times.  He was impressed by the qualifications of D1 being graduate from MIT and a young global leader in the World Economic Forum. 

304.  He believed in what D1 represented to him as evidenced in the 13 August 2008 email from D1, with the attachment, of course.  Subject matter in this email from D1 to PW1 was stated as “Terms for Bond Trading Programme”.  The email “Bond Trading Programme” sets out the proposal for short-term funded Bond Trading Programme, that US$1 million would be invested in a short-term funded Bond Trading Programme.  The funds would be blocked for three months, at the end of which the funds would be unblocked and returned to the investor.  The trading involved buy/sell programmes for bonds with investment grade of AA and above.  This was what was said in the email.

305.  He had also received the attachment to the email, the Asset Management Agreement, but he did not sign it as he said that he did not know the company Fortress World, the asset manager stated in the agreement, so he remitted the money directly to a bank account of D1 ie the Account after D1 gave him the account particulars.

306.  Although at one stage PW1, when asked about this incident which happened around 10 years ago, PW1 appeared not sure of the happening of the incident or he would not remember, the emails at the relevant times between the parties helped to build up what actually transpired then.

307.  In the Asset Management Agreement attached to the email of 13 August 2008, PW1 was stated to be the fund contributor and Fortress World Limited was stated to be the asset manager.

308.  Paragraph 2, 4, 6 of the recital of the Asset Management Agreement read:-

Paragraph 2:-

“Whereas the asset manager named herein hereby successfully arranged a secure eight-week private placement programme for the cash deposit at Hongkong and Shanghai Bank Corporation Limited-Hong Kong of the value of US$1,000,000 (1 million US dollars) provided by the fund contributor”.

Paragraph 4:-

“Whereas the purpose of this agreement is for the private placement management of funds and/or assets for profit and project funding”.

Paragraph 6:-

“Whereas the fund contributor hereby agrees to place with the asset manager the cash deposit at Hongkong and Shanghai Bank Corporation Limited-Hong Kong of the value of US1,000,000 (1 million US dollars), which fund contributor warrants are good, clean and cleared funds duly earned from non-criminal activities.”

309.  Further, under caption “Eight-week PPP” of paragraph 1.4 of the Asset Management Agreement reads:-

“Eight-week PPP:

Subject to availability of the trading programme at the time of commitment, the profit attributed to the fund contributor for the eight-week trading programme is expected at US$0.5 million per week for eight weeks. The total yield for the eight-week programme will be US$4 million.”

310.  It was clear that D1 had represented to PW1 that money from PW1 would be deposited in HSBC Hong Kong and became part of the private placement programme concerning cash deposit at HSBC-Hong Kong.  In fact, by 20 August 2008, after PW1 had remitted the money to D1, D1 wrote to PW1 by email:-

“I have already blocked the US$1 million for the funded trading programme for three months commencing 25 August 2008 and ending on November 25, 2008. I will look for a similar programme for the remaining US$1 million at the end of August 2008.”

311.  The reality was, after PW1 remitted the money into D1’s account, D1 in turn remitted US$1 million to the account of LJQ.  According to D1, the sum was paid to LJQ for him to defray the same as bank charges allegedly to start a PPP using bank instrument owned by LJQ at the Hua Xia Bank.  The money never went to HSBC as deposit.

312.  It is the evidence of D1 that he had received the template Asset Management Agreement from D2.  He amended it to suit the case concerning PW1 and sent it to PW1 for execution.  The profit returns information in the Asset Management Agreement was supplied to him by D2.  This is not disputed by D2. At that time he knew exactly that the same was not to be deposited with HSBC-HK, as said in the Asset Management Agreement.

313.  In the video recorded interview, D1 admitted that, according to the Asset Management Agreement, that money from PW1 would be deposited at HSBC and not as bank charges for D1 or D2 to participate in a joint venture agreement with LJQ.

314.  PW1 was never an investor of a PPP with HSBC or other PPP intended as set out in the Asset Management Agreement.  He was merely financing the defendants in participating in such purported PPP.

315.  Further, when one reads the Asset Management Agreement sent to D1, one would be puzzled at the way the AMA or Asset Management Agreement was adapted for the use.  Why would the applicable law be the “international laws of France and that the court of France shall have jurisdiction and/or ICC 500”?  Why would dispute be referred to Arbitration Act 1950, whatever that is?

316.  D1, when cross-examined, could not explain the applicable law.  He said he has amended the clause, but he did not.  There is nothing in this case that supports the applicable law should be French laws.

317.  Next, coming to the paragraph 1.5 of the Asset Management Agreement, where it set out the banking coordinates of the asset manager, Fortress World Limited.

318.  According to the undisputed evidence of PW3, there was no staff in HSBC-HK named “Ronnie Kan”.  The stated bank telephone number did not belong to HSBC and the stated email address also did not belong to HSBC.

319.  Both D1 and D2 at the material times was a director and shareholder of Fortress World Limited.  In fact, they were the only two signatories to the HSBC bank account of Fortress World.  Yet the mistake about this officer and the particulars in the bank coordinates of Fortress World in the Asset Management Agreement was wrong and they go undetected or did they go undetected by D1 and D2 before they were sent to PW1? 

320.  The account number of Fortress World, however, strangely, was correct. Why would it be so?  It was D2 who sent the template with the bank coordinates details to D1 for use in PW1’s case.  Both D1 and D2 did not explain why there were these mistakes undetected.  D1 said he met this Ronnie Kan before but did not remember if she phoned him at such telephone number or emailed him at such email address.

321.  The email dated 13 August 2008 was sent by D1 to PW1, so that D1 must be fully aware of the contents of the email.  Likewise, D2 is the one who sent the template Asset Management Agreement to D1, so he must also be aware of the contents of the so-called template Asset Management Agreement.

322.  At the same time, D1 said that he did go through the Asset Management Agreement sent to him by D2 and made amendments thereto, so he must be aware of the contents of this Asset Management Agreement allegedly putting the fund contributor as PW1 in this case to be engaged in the PPP for cash deposit at HSBC stated therein.

323.  The truth of the matter was that the money from PW1 was never intended by both defendants to be so applied, as was stated in the Asset Management Agreement or anything about a Bond Trading Programme with such return.

324.  In court, D1 at one time did say actually when he sent the Asset Management Agreement to PW1 he did not know what would happen to the money later.  I reject this evidence.  It was agreed between D1 and D2 that they had, even according to their evidence, jointly decided to raise the US$1 million, they say, as bank charges for the joint venture with LJQ.

325.  D1 was saying that he intended to pay the profits and the principal to PW1 on receipt of profits from the JVA between the defendants and LJQ, and that, unfortunately, the PPP with LJQ did not materialise or work out, and as said earlier in the video recorded interview with police, D1 admitted under the terms of the Asset Management Agreement that money from the PW1 should be deposited with HSBC-HK.  This is counter 268, 269 of the 21 November 2012 video recorded interview.

326.  It is clear that at no time did D1, as asset manager of PW1, did tell PW1 what actually was the position, what would happen to his money, and the risk pertaining thereto.  There is absolutely no doubt in the mind of this court that the representation made to PW1 by D1 was false, ie that his money would be so invested in the BTP as mentioned in the Asset Management Agreement, and that D1 knew the same to be false and yet intentionally falsely represented to PW1 with intent to defraud him and did induce him to remit the sum of US$1 million to D1’s bank account as stated in Charge 1.  His dishonest intent is evident.  He knew the purpose of the fund from the start.

327.  The same had resulted in substantial prejudice to PW1 in this case, total loss of US$1 million, and at the same time financial advantage to D1 and D2.

328.  Did D2 participate in this scheme?

329.  There is undisputed evidence that it was D2 who supplied D1 with this Asset Management Agreement as template at a time when D2 knew that PW1 was likely, if not already, agreed to invest US$1 million.  It was D2 who, according to his evidence, requested D1 to fundraise US$1 million as banking charges for the defendant themselves to participate in this joint venture agreement with LJQ using bank instruments generated from LJQ assets at Hua Xia Bank.

330.  D2 also emailed D1 on 21 August 2008 reminding him to complete the Asset Management Agreement with PW1.

331.  D2 in his evidence at one stage said that the fundraising from PW1 was D1’s sole responsibility; he was not privy to it.  Yet, on the other hand, he had allowed Fortress World Limited, of which he was a director and majority shareholder, to be engaged with PW1.  In the Asset Management Agreement, the template that he sent to D1, Fortress World was named as the asset manager. 

332.  In fact, in cross-examination of D1, he asked D1 why D1 would not render copy of the Asset Management Agreement prior and subsequent to execution by PW1 for his perusal, as he said he was an interested party of Fortress World or Integro Energy, as he was director and shareholder in both companies.

333.  In court, D2 said although the role played by D1 and D2 might be different in different PPP, D1 was partner of D2 and he would share profits with D1 in all PPP that D2 was working on.

334.  In the case of PPP with LJQ, it was D2’s evidence that D1 was responsible for fundraising the US$1 million, whereas he would be the one working with Hua Xia Bank.

335.  Further, on receipt of PW1’s money, both defendants then could take part in the joint venture agreement with LJQ.  Irrespective of whether this so-called joint venture was true or not, defendants did gain financial advantage as a result.

336.  That being the case, the court could not accept D2’s evidence that the fundraising from PW1 by D1 had nothing to do with him.

337.  Further, it was D2’s evidence that when D1 was chased by PW1 for return of monies, that D2 promised to repay PW1 out of profits generated from other projects not connected with PW1.  Why?  Was it solely because D1 and D2 were friends over 25 years that D2 did not want D1 in trouble?

338.  It is D2’s evidence that at no time would the one who contributed the bank charges of US$1 million become investor in the PPP with LJQ.  The investor in PPP would always remain to be the defendants themselves.

339.  In paragraph 1.4 of the template that D2 sent to D1 expressly for use in PW1’s case, the fund contributor actually participated in the PPP.  It says that, upon signing of the Asset Management Agreement, the fund contributor will arrange with HSBC-HK to “block” on non-depletion basis the cash deposit for certain period for trading platform.

340.  D2 knew at the time that that would not be the case for PW1’s money. Yet, he sent the Asset Management Agreement to D1 for use by him in PW1’s case.  No doubt, as the prosecution has put to D2, the fact is that D2, in my view, would supply any documents to D1 just to satisfy PW1 agreeing to invest and remit the US$1 million.  D2 would supply documents good enough for that purpose irrespective.

341.  Clearly, on the evidence before this court, it is the joint efforts of D1 and D2 to cause PW1 to invest this by payment of US$1 million allegedly for purpose as set out in the Asset Management Agreement, but, in fact, was not. Even on the evidence of the defendants, which I do not accept, of course, that they were for the purpose as a loan to them for banking charges so that they could participate in a JVA with LJQ.

342.  The representation as presented in the Asset Management Agreement was false.  The defendants knew they were false.  Their dishonest intent was evident and they had the intention to defraud PW1 and induce him to invest by remitting the US$1 million, which he did, relying on such representation.

343.  Although in court at one stage PW1 said, or seemed to say that, even if there was no such an agreement, he would have remitted the money anyway, as he trusted D1, since he is credible and smart.

344.  This answer must be considered in the light of what actually happened, in circumstances when PW1 had, after he had received the email together with Asset Management Agreement.  He actually, as D1 has pointed out, after receipt of the email with the attachment, PW1 did still ask his friend Manfred to consider the proposal and, according to D1, they had a conference call and this friend Manfred asked a lot of questions.

345.  Now, if PW1 did so accept credibility of D1 without asking reasons why, why would this be the case?  This court accepted this piece of evidence from D1 that there was in fact this telephone conference between Manfred, D1 and the defendant.  This shows, therefore, that it is not solely on relying on D1 his words, his credibility, or trust in him that PW1 invested.

346.  This court finds beyond reasonable doubt, whilst PW1 at the time did trust D1, the representation made by defendants in the Asset Management Agreement sent to PW1 was one of the main inducement resulting in PW1 remitting the monies which result in prejudice to PW1.

347.  PW1 in court did actually say that, had he known the funds would be so applied, he would not have so remitted the money or paid him this US$1 million.

348.  Again, D2 did say that D1 failed to let him approve the Asset Management Agreement before and after the same was sent to PW1.  Nevertheless, one can see from the Asset Management Agreement sent to PW1 that the same was largely in the original terms of the template Asset Management Agreement sent by D2 to D1, save for the particulars of the fund contributor or the period of the PPP.  It was always and it remains that there was the BTP where monies would be placed with HSBC with the unrealistic returns.

349.  The nature of the investment undertaken by the fund contributor in the AMA amended by D1 was the same as the one sent by D2 to D1.  These did not affect the falsity of the representation meant for PW1 by D2 in the template Asset Management Agreement.

350.  It is submitted that if D1 deceived PW1 of the sum, that D1 would simply disappear.  There is no logic in this submission.  D1 were partners with PW1 in companies at the time.  They were participants in World Economic Forum and they had mutual friends, coupled with the fact that at a later stage PW5 was later directed by Consulate-General in Saudi Arabia to enquire into the matter and, according to evidence of D1 himself and also that of D2, had threatened legal action against D1.

351.  In the circumstances, I find all elements of the charge proved beyond reasonable doubt against the two defendants and they are so convicted.

352.  Coming to D1, who claimed to have been a fund manager for 10 years or so, he only learnt of these PPP by D2 and Foo.  He himself was not too familiar with these PPP.

353.  As for D2, he said, with his work experience, including his experience working in Shell for long time as finance director, he was not familiar with PPP and had to pay US$50,000 to others for coaching him in these respects.

354.  Coming to the issue of existence of such PPP or BTP with such high return as claimed by the defendants, the only evidence came from the defendants themselves.  There were a lot of emails before this court.  They were largely emails exchanged amongst the parties, including defendants themselves or parties whom they say was working with them on financial instruments for the purpose of PPP.  There appeared to be no documents from institutions like banks regarding, for example, issue of bank instruments, credit lines using such bank instruments as collateral, etc.

355.  According to D1, none of these PPP worked or was proved successful.

356.  Whilst the defendants had always been telling this court the intricate logistics and mechanisms as to how the bank instruments could be used for such PPP, no evidence come from the defendants as to how these profits could be generated from this “secretive” PPP, and for documents that should be abundant if one were actually working on PPP over these years.

357.  Apart from those document exhibited and bank documents which are in fact false documents, one cannot see other documents being exhibited or produced by the defendant.  Of course, this court reminds itself that the burden still rests with the prosecution and that the defendant did not need to prove anything.

358.  But in the PPP represented by the defendants here, weekly profit was said to be 50 per cent of the principal and it could sustain for eight weeks.

359.  Further, on the other hand, the defendants were saying that they were led to believe that LJQ had US$680 million at the Hua Xia Bank.  On the other hand, they also said LJQ was willing to share with them the profit on PPP on condition that they just paid this US$2 million as bank fees to start the PPP and in return they would get US$1 billion each after short period of time.

360.  This is totally unbelievable.  One would have thought that, if there was such a person who had such monies or assets in the bank, he must have the sort of monies for bank charges.  Surely, deposits in the bank would not be his only assets.

361.  Secondly, assuming that he really was short of such funds, the bank, knowing that this person had substantial assets in the same bank or even in other bank, would be more than willing to lend him a loan/credit line well above the banking charges of US$2 million, because they would have the assets as collateral and the loan must be a no or low risk loan, and they could earn interest.

362.  Thirdly, if the owner has substantial assets in a bank and assuming no one was willing to lend him the bank charges, then he could always reduce part of the sums at the bank and use them as bank charges.

363.  This court noted that D2 did say at one stage that the funds in the bank could not be moved by the asset-owner for some reasons.  Now, if that were the case, how could the assets be able to perform the function as a collateral?

364.  The evidence adduced by D2, that, although there was a certificate of deposit issued by a bank in one’s name, one does not necessarily have the amount stated on the certificate of deposit in the bank, that the owner of a CD is willing to, when paid a small fee (relative to the amount shown on the CD) issue a fresh CD instead in the name of the person who paid the small fee, these are simply unbelievable.

365.  It is true that PW3 from Hongkong Bank did say he had heard of PPP and that that was only open for very high net worth people.  He also said, as far as he was aware, there was no PPP at HSBC in the year 2008.

366.  While this court accepts that there are PPP as such, but the same being a broad term, this court finds as a fact and beyond any doubt that PPP which would work in the way as alleged by the defendants and producing such out of proportion profit simply could not and did not exist.

367.  Are the defendants aware of its non-existence or were they misled? 

368.  Both D1 and D2 are not just a man on the street or a “see lai” (師奶) in a housing estate.  They had been in the financial market for a long time.  No doubt they had contacts in the financial market and would be able to check.  Of course they knew.

369.  Say, for example, certificate of deposit issued by HSBC Bank PLC in the name of Sino Era Limited represented by D1 in the amount of £6 billion.  The wordings of the CD is such that the bank certified that they have received £6 billion from Sino Era Limited as time deposit for two years, with annual interest at 3 per cent.

370.  Should the defendants not be seriously concerned if they were actually entitled to the amount as per their shareholdings in the company?  D1 owns 10 per cent whereas D2 owns 45 per cent.  As a fund manager, is it believable that he would so trust people?  Does he not owe a duty to his investor?  What about the compliance and “Know Your Client” duties?

371.  Similarly for D2, he had been working in the finance market for so long, as he said he had been the CFO in a Singapore-listed company and finance director in Shell, Singapore for Asia Pacific region.  Why would he not know the falsity?  In court, he said he had been working on a lot of these PPPs.

372.  This court is convinced that they both knew these PPP, functioning in the way they alleged, producing such unrealistic profit, did not exist.

373.  In fact, when D1 was asked in the video recorded interview about the mechanism of how this PPP worked, he stuttered and said several times that he did not actually quite know the details.  Yet, in court he said he had been working six months in the PPP preparation work until this cease-and-desist letter was issued.

374.  D1 in court did say he understood from D2 that all PPP failed except the LJQ one, which D2 told him then succeeded, but later of course he learnt again that that had failed as well.

375.  As for the email trails before this court, this court noted largely these appeared to be evidencing attempts made by the defendants here to invite others working in the PPP they proposed or exchanges between defendants and the “bearers” named on these false instruments.

376.  As said, there are a total absence of exchanges or documents with financial institutions which would be so involved in the PPP had what the defendants said been true.

377.  The fact that they had received funds from PW1 and remitted the same elsewhere is neither here nor there.  It does not necessarily and did not really support their saying that the recipient was supplying the same as bank charges for PPP.

378.  Of course there was also the joint venture agreement with LJQ.  A deal involving investment of US$1 million and getting a return of US$2 billion is too good to be true to any person of clear mind, let alone two individuals holding masters degree from MIT and University of Canterbury.  If one reads the joint venture agreement before this court, the same was poorly drafted for an agreement involving US$5 billion profit.  A Mr Samael, supposed to be the guarantor, did not even have the full name imprinted and the address imprinted there.

379.  As for the several million loss suffered by D1 resulting from his failure to complete the purchase of the Conduit Road flats, alleged in reliance of D2’s words, that was the state of affairs in June 2011.

380.  According to all the email exchanges between the defendants, it appears from emails that D2 had been giving multiple reasons and excuses to D1 in remitting money to D1 for repayment to PW1 ever since PW1 lost his US$1 million at the end of year 2008.  So why would D1 still believe in D2?

381.  In court, D1 was asked if D2 did send him money over this period of time from year 2008.  He said, yes, but not from the partnership.  That said, it meant D1 must have received money from D2 from other projects they have undertaken.

382.  In court, D1 did not tell the court why he thought he would be so entitled to, say, HK$50 million from D2 for the purchase of the flat, value of which was roughly 10 times the value of his then residence.

383.  This court has considered the charges against D1, even in light of evidence regarding his purchase of flat, even accepting that on this occasion D2 did again lie to D1 on the date of the availability of funds to D1.

384.  What was the nature of these funds when D1 said that the PPP actually all failed?  Did D2 make himself liable for distribution of profit to D1, by lying to D1 that he had in fact succeeded?

385.  The purchase of the property by D1 raised the question as to why, if D1 really intended, as he portrayed, to repay PW1 as soon as possible, why would he instead use these few millions that he used to purchase the flat and not use that to repay PW1?  In fact, in his evidence, the loan to Travelzen was repaid in sum of US$410,000 in year 2009.  Yet, he failed to repay PW1.

386.  D1 did say in court because he had offered to pay PW1 part of the US$2 million, but PW1 on return of the whole principal and profit.

387.  It is not in dispute that, in fact, shortly before the date of the provisional agreement for purchase of the apartment by D1 in June 2011, namely on 9 April 2011, PW1 had in fact accepted from the defendant US$100,000.  PW1 had not been asked in court by defence counsel for D1 whether he had refused to accept part-payment of the money due to him, as alleged by D1.

388.  In fact, according to D2, PW1 was willing to accept just the return of the principal of US$2 million, without interest or profit.

389.  This piece of evidence from D1 contradicts also the undisputed fact that PW1 did in fact accept repayment of US$100,000 just shortly before.  There is therefore no reason why he would not accept the few million Hong Kong.

390.  I reject the evidence of D1 that he had asked PW1 to accept part-payment of this outstanding sum to PW1.

391.  D1’s excuses about not repaying PW1 was sometimes disgusting.  He testified and said PW1 did not really get anxious about his money until around April to May 2009.

392.  Credibility of D1 was seriously in doubt.  In fact, I do not find him credible at all.  There are numerous and numerous examples, but, just to mention a few, in the MO Bar meeting, he told the others that the money from PW1 was kept in Standard Chartered Bank and not released, because if the same was released then the Standard Chartered Bank will go bankrupt.  He also lied about the US$2 million from PW1 was pooled with funds from others and were therefore still deposited with the bank.

Charge 2

393.  Going to Charge 2.  This court had made the findings, as said earlier, that these PPP, working in the way that the defendants say they worked, with the returns that they said would result, simply did not exist and actually did not exist, and that both defendants were fully aware of this fact.

394.  Then the issue to be considered by this court is whether D1 did falsely represent to PW1 that the overpaid US$1 million would be so invested in an investment programme similar to that invested in the first charge.

395.  D1 testified that he had represented to PW1 that he could return the extra US$1 million or keep it for other investments, and that PW1 had agreed that the money be invested in a programme similar to the BTP.  By this, it meant, according to D1, that the investment of the additional US$1 million had to meet two criteria:  it would have to have a BTP programme and it would have to be of the same type of investment return, or better.

396.  D1 agreed that he did not seek permission from PW1 to spend the additional US$1 million in the way he did, except for, according to his evidence, the investment to Highlink Corporation.

397.  By his email dated 20 August 2008 to PW1, PW1 wrote:-

“First of all, thank you for the wire transfer of US2 million, which I received today. I have already blocked the US1 million for the funded Bond Trading Programme for three months commencing 25 August 2008 and ending in November 25, 2008. I will look for a similar programme for the remaining US1 million at the end of August 2008. As requested, I have sent to you a copy of the write-up for the BT trading programme, as requested. I ask that you show it only to senior officials of the bank. Last but not least, could you please send me your bank account details that can receive US dollars that we can remit the weekly profit into the bank account?”

398.  D1 had therefore falsely represented to PW1 that this extra US$1 million would be so invested by him as directed by PW1, when he knew as a fact that the chance was nil that these monies would be so applied to such a PPP, as he falsely represented.

399.  Was there the intent to defraud?  The answer must be “yes”.  When D1 knew there was never in existence any such PPP (with such return) and make such false representation, surely he was dishonest and had the intent to defraud PW1, making him to believe the extra US$1 million would be so invested and not take prompt action to recover such sum from D1.

400.  This, of course, led to the benefit to D1, as he had the money to spend without authorisation from PW1, which he did subsequently, resulting to actual loss to PW1, ie prejudice to PW1, and financial benefit to himself, which also amounts to prejudice to PW1.

401.  I do not think that it can be disputed that actually none of this extra US$1 million was invested as requested by PW1, ie in a similar BTP.

402.  I find the charge against D1 proved beyond reasonable doubt and I so convict him.

Charge 4

403.  Evidence from PW1 was that D1 approached him and told PW1 that he needed US$70,000 as a loan from him to pay bank charges for the release of funds to PW1, and that deadline for such payment was 25 November 2011.  D1 said in the last email that the total bank charges was about US$0.46 million and that he had already managed to raise US$0.39 million but is still short of US$70,000 to pay the balance.  This was evidenced by emails from D1 dated 17 November 2011 (Exhibit P37(55)) and 22 November 2011 email (Exhibit P37(56)).

404.  As a result of this representation, PW1 did remit US$70,000 to D1 on 23 November 2011.  Attachment is Exhibit P37(57).

405.  It is a fact that this money sits in the account of D1 for another three months until 10 February 2012, evidenced by the table in paragraph 16 of the affirmation of Tam Wan Pong dated 12 June 2014.

406.  There is no doubt that the representation made by D1 via the email on 28 October 2011, 17 November 2011 and 22 November 2011, that the US$70,000 was required, being shortfall for the bank charges for release of US$2 million to PW1, were false.

407.  D1 admitted in court he did not have the other US$0.39 million for bank charges at that time.  He said he was told by D2 that such bank charges was needed for the release of the funds of US$2 million to PW1.  D1 did not further explain why the money was not paid out for bank charges on or before 25 November or why he would not have written to PW1 that the bank charges was only to be paid at a later stage, and why he would wrote to the PW1 that the bank charges had already been paid on 25 November 2012.

408.  This court rejects his explanation.

409.  As for the submission by defence counsel for D1, that the sum to be released to PW1 could not be US$2 million, in fact, PW1 in court did not mention the figure, but there was the evidence from D1 in court that he said PW1 went after him for US$2 million.  D1 also said the same thing in the video recorded interview with police and in the MO bar meeting.  D2 also said PW1 had been demanding this return of US$2 million, with no interest and profit.  So I have no doubt that the sum to be released then was US$2 million.

410.  Apart from the sum paid by PW1 to D1’s account not withdrawn until 10 February 2012, there was also actually funds still in D1’s bank account other than the US$70,000 credited by PW1, which was not withdrawn even after 25 November 2011.  So D1 was not actually out of funds, as he told PW1.

411.  Apart from the email of D1 to PW1 saying that the bank charges was paid, there was no other evidence in support of such demand for bank charges or receipt by bank of such bank charges.  This court, as said earlier, rejects his evidence that he was simply misled by D2.

412.  The representation by D1 to PW1 that a sum of US$70,000 was needed to pay the bank as bank charges for the release of funds of US$2 million to PW1 was false and I found that, in fact, D1 knew the same to be false.

413.  Again, he had the dishonest intent to defraud by deceit, inducing PW1 to remit the said sum of US$70,000 to his own account, resulting in benefit to himself and, of course the obvious loss of US$70,000 to PW1.  PW1 in court did say expressly that, had he known the truth, he would not have remitted the sum.

414.  Again, I find all elements of the charge being proved beyond reasonable doubt and I convict D1 of such charge.

Charge 6

415.  D1 had admitted that all the instruments particularised under this charge were false.  It is also part of the admitted facts that the Samsung mobile phone was seized from D1 whilst the computer was seized from his residence and the Asset Management Agreement was seized from the office of D1. These items and the files therein are therefore in custody and control of D1.

416.  Now we come to the issue of whether he knew or believed those instruments were false.  The instruments issued in name of Sino Era Limited represented by D1’s name with his passport number on it, D1’s evidence was that the issue of these instruments were not arranged by him.  He said that he was not aware if Sino Era had an account with HSBC PLC and that he had never been to PLC HSBC.  He did not make enquiries as to the authenticity of these documents. 

417.  He himself was director and shareholder of Sino Era and was the named representative on the instrument.  In such capacity, he has every right to make enquiries and confirm the authenticity of the instrument from the issuing bank.

418.  As a man of his background, he would obviously know and be able to check if his company did have such an account with the bank and, further, that it must be unusual that the issuance of the instrument with his own name on it, with his passport number on it, did not involve his attendance at the bank, especially in circumstances when the certificate of deposit involved such an astronomical sum of money.  Yet, he did not make enquiries.

419.  Concerning the Sino Era Limited instruments, of course all these doubts and observations of this court would apply on every charge when these Sino Era Limited documents/instruments were involved in this case.  They might not be fully set out in the contents of each and every charge, but they would apply.

420.  The other thing, of course, is, as I have mentioned earlier, that he himself is a 10-per-cent shareholder of Sino Era.  Would he not be interested that he was so entitled to this 10 per cent of this money involved?

421.  Then, of course, there is this letter from Standard Chartered Bank dated 2 November 2012 addressed to D2, contents of which was that US$2 million was to be transferred to D2, after which US$2 million would be transferred to D1 by 7 November 2012.  D1’s evidence was that the letter was sent to him by D2 at a time when he was anxiously waiting for money to come. 

422.  According to D1’s evidence, D2 had been using numerous excuses before this time over a long period in delaying transfer of money to him.  That being the case, why would D1 not actually ring up George Lai, signatory of letter, with phone number printed, and ask for an actual state of affairs before 7 November 2012, and, more so, after 7 November 2012, when he did not receive the money?  As D2 was the one named in the letter being named as a recipient of the expected US$2 million, obviously he had the right to ask.

423.  Further, in court, when D1 was asked what was the nature of the US$2 million due from D2 to him, he hesitated and said, “Possibly PPP profits.” Later he said D2 told him at the time that the PPP project was successful and that was the profit he was entitled to share.

424.  But, in fact, as it turned out, they say now that the PPP did not actually succeed.  So what was the nature of these monies that was due from D2 to D1?  Why was D1 not aware even of the nature of this US$2 million?  Was it genuine that there was going to be such sum due from D2 to D1?  I think not.

425.  As for the other documents particularised under this charge, they relate to CDs in sum of €50 billion in name of Foo, another €1 billion in name of Foo, £1 billion CD in name of Wen Xiang.  These are all CDs of very substantial amount.

426.  D1 said these are all sent to him by D2 for educational purpose or information purpose and, in court, he did say, for future reference.  D2 however said these instruments were sent to D2 to keep him informed of the progress of work and for him possibly to deal with these documents later, when he had to work on the PPP.

427.  D1 himself held out to be an experienced person in finance and investment.  Why would he continue to accept and keep those documents for, what he said, educational and information purpose?  According to his evidence, in fact, he had actually been working on this PPP in the past, such as the LJQ instruments.

428.  Concerning the instruments in the name of Foo, Foo was the holder of CD in amount of €50 billion.  He was also a shareholder, like the defendants, in Sino Era Limited. 

429.  D1’s evidence was in fact that, based on assets of Foo, that CD in the name of Sino Era was issued.  Yet, D1’s evidence was also that he had been lending small loans to Foo in the past for reissuance of CD.  Why?  Did he ask Foo where his money came from?  As he had been issuing instruments in his own name or instruments in the name of Sino Era, should that not raise suspicion that Foo was not as rich as he portrayed and doubts as to the genuineness of these instruments?

430.  D1, as a sophisticated, smart and resourceful person, I must say, said he never made enquiries.  Why?  Had D1 ever considered how come he always come into possession of bank instruments involving all these astronomical figures? Yet he did not query.  This did not make sense at all.

431.  As for the Asset Management Agreement found in D1’s office, PW1 said that he did not sign the agreement sent to him.  The name of the asset manager was noted by PW1 as being Fortress World.  He said he had never heard of Integro Energy before. 

432.  Further, according to D1’s evidence in court, after he sent the agreement to PW1, PW1 did not return it for a long time, after which he decided to change the asset manager of the Asset Management Agreement to Integro Energy and he sent this edited/amended Asset Management Agreement to PW1 with a covering note.  Later somehow he had said that he received the executed copy of the amended Asset Management Agreement.

433.  Strange thing about D1’s evidence was that, out of no reason at all, he had deleted the witness clause for the signatory of the fund distributor, ie the place where PW1 was supposed to sign.  He said reason being that the same was not useful.  Yet, if he had been so careful in editing the Asset Management Agreement, why did he not notice the mistake in the particulars of the asset manager HSBC account responsible officer contacts or the inappropriate clause on applicable law?

434.  In fact, the Asset Management Agreement found in D1’s office, though the asset manager was that of Integro Energy, the bank coordinates remained that under Fortress World.

435.  Further, although PW1 might not, as human memory, be able to remember details of events happening 10 years ago, he is confident and firm in denying that the signature on this Asset Management Agreement seized in D1’s office was his. 

436.  When D1 was interviewed on 20 February 2013 by police and asked about the seized Asset Management Agreement, at first D1 tried to say this Asset Management Agreement had nothing to do with PW1’s case:-

“He said we did not, uh, sign an agreement with Sami on the programme, if that’s what you ...(inaudible)... referring to.”

437.  He said Foo and D2 were involved in the mechanisms of the PPP.  D1 himself was not.

438.  But he actually in his evidence in court said he did work on it for six months, at least until the cease-and-desist letter was issued.

439.  D1 also said during this video recorded interview, referring to the Asset Management Agreement seized, that:-

“... that was an original agreement that we wanted to use but we did not, we did not, uh, uh, did not go through with it.”

That is counter 638.

440.  It was only later when the interviewer pointed out to him that the two signatures on the agreement in the Asset Management Agreement that he agreed that this was the Asset Management Agreement sent to PW1.  D1 then said that he signed it, sent it to PW1 and after a long time the same was returned and he said by that time he could not do it.  Then D1 said he could not recall if PW1 signed it.  That is counter 686.  If PW1 did not sign it and he received it, who did?

441.  D1, when questioned, repeated that they tried but they did not go through with it.  That is counter 654.

442.  D1’s evidence in this video recorded interview is inconsistent with his evidence in court as to how he came into possession of this executed AMA.  His knowledge of its falsity again is evident.

443.  This court rejects the explanation given by D1.  The only necessary irresistible inference was that he knew that these are all false documents and he had kept it in his custody for use, with the intention that he or another would use them to induce persons to accept that these are genuine instruments and that he dealt with people of substantial worth and, by reason of so accepting them, to do or not to do some act to his own or any person’s prejudice.

444.  I find again the elements of sixth charge proved against D1 beyond reasonable doubt.

Charge 8

445.  Both defendants were convicted of Charge 1 in this case.  The US$1 million from PW1 obviously was proceeds of an indictable offence and both defendants were of course within knowledge of the same.

446.  Section 2 of the Organized and Serious Crimes Ordinance, Cap 455, defines “dealing” as:-

“... dealing, in relation to property referred to in section 15(1) or 25, includes:-

(a) receiving or acquiring the property;

(b) concealing or disguising the property (whether concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it or otherwise);

(c) disposing of or converting the property;

(d) bringing into or removing from Hong Kong the property;

(e) using the property to borrow money, or as security (whether by way of charge, mortgage or pledge or otherwise)”.

447.  In this case, D1 has received the US$1 million.  He has also transferred the money to the account of LJQ.  D1 had therefore dealt with the proceeds (see paragraph (a) and (c) above, as defined).

448.  Although it was D1 who actually transferred the money from his account to LJQ on 20 August 2008, the act of D1 was part and parcel of the fraud undertaken by both defendants on PW1.

449.  Again, I find the elements of charge proved beyond reasonable doubt by the prosecution, and defendants are both convicted of this charge.

Charge 7

450.  As said earlier, PW2 and 3 had dealt with each of these instruments particularised under the charge and had given detailed reasons and explanations as to why these are all false instruments.  This court accepted their evidence in full.

451.  Further, the chain of evidence regarding those instruments were all proved by the prosecution by calling the relevant police officers and I found those in order as well.

452.  No doubt D2 was in custody and control of the false instruments.  The same included the three sets of documents under the name of Sino Era (that concerns Exhibits P95, P96, P97, P98, P99, P100, P101, P102, P103, P104, P105, P106, P107, P108 and P109), and these are documents particularised under Charge 7(i) to (v).

453.  D2 was shareholder and director of Sino Era Limited, and I adopt all observations concerning the instruments under Sino Era vis-à-vis D1 and would apply the same in the case of D2.  These documents were issued in his company’s name and in such huge amount, £6 billion.  Why did he not enquire about the authenticity?

454.  As an experienced person in the finance field, was he not concerned about money laundering?  What about the compliance duties like “Know Your Client” compliance duties?  Why did he not perform checks and make enquiries? He had given evidence as to how he came into possession of these documents, and he had known of the fact that small loans were made to this Foo for the issuance of documents which is something totally not logical.

455.  And so this court now repeats its observations on these instruments so far as concerns D1 in the case of D2.

456.  As for the false instrument under the name of Foo, same observations as before.

457.  He also has the false instruments of the Standard Chartered Bank letter dated 2 November 2012 (Exhibit P118), issued to him, which, according to him, was a letter which was drafted by him for LJQ to take to this George Lai of Standard Chartered Bank for issue.

458.  Further, the basis of the contents of this letter was that D2 would be entitled to these funds in due course, but Standard Chartered Bank had not really actually received those funds.  So the contents of the Standard Chartered Bank, as drafted by D2, even on the evidence of D2, was false.

459.  The way that D2 said that this letter from Standard Chartered Bank could be so generated, drafted by client, handed to LJQ, whom he said was a man of US$680 million asset-owner, asked him to act as a courier, although he said he owed him some money, and go to Hong Kong, caused the letter to be issued by Standard Chartered Bank, took it back to Shenzhen on an urgent basis for him, is something totally unbelievable.

460.  This court again rejects the evidence of D2.  He must be aware the document or the instrument is false.

461.  Then, of course, D2 also gave evidence as to how he had custody of the other false instruments particularised in this charge, involving this Chen Win Hung, who had this US$5 billion; Lui Liu, having US$210 billion; China Choi Kin International Finance Investment Group (HK) Ltd, US$4.49 billion; Nippo Light International Ltd Ecotrade AG, having US$10 billion; Mr Foo Boon Seng, having US$500 billion.

462.  He is a sophisticated, well-educated, experienced person having years of experience in finance.  This court does not accept that the documents were sent to him without a purpose, otherwise, he would have just deleted them and would have just complained to the other person:  “Why do you send it to me?” 

463.  Would he not know all these are false documents?  Would he not enquire from the issuer to check its authenticity and the source of funds from these people before he worked with these instruments?  There is always the basic, as I said earlier, due compliance duties when one deals with such sum of money. Was he just negligent in not checking or being naïve?  Or were the documents given to him to serve no purpose at all?

464.  I find that it is, beyond any comprehension, not believable.  It must be sent for him to work on later or as a document bank.  In my view, the only irresistible and necessary inference was that D2 knew these are all false instruments, that they were sent to him for use at a later stage.

465.  The fact this court found was that D2 kept these false instruments knowing that they are false, keep them with the intention that he or any other person would use them to induce other to accept them as genuine documents/instruments, and by reason  so accepting them to do or not to do some act to his own or any person’s prejudice.

466.  Again, I find the charge proved beyond reasonable doubt and I convict D2 of Charge 7.

Charge 5

467.  Now, coming to Charge 5.

468.  Pursuant to the findings of this court in Charge 6 and 7, defendants both knew at the time of those offence date that the subject Standard Chartered Bank letter was a false instrument.

469.  2 November 2012 was the date when PW1, PW5, private investigator and D2 met at the MO Bar, Mandarin Hotel.

470.  Before this meeting, D1 had already been invited by PW5 to an earlier meeting whereby D1 was told that he was solicitor then representing the Consulate-General of Saudi Arabia, that they wished to know what happened to PW1’s money and when he could recover the money.

471.  It was the evidence of PW1, not disputed by D1, that during the meeting D1 showed PW1 the 2 November 2012 Standard Chartered letter, the contents of which said that by 7 November 2012 D1 would be paid US$2 million.  It was clear from Standard Chartered Bank letter that the US$2 million there was not PW1’s money.  It was clear therefore that the reason why D1 showed this letter was D1’s intention to, as the prosecution put it, placate PW1 and PW5.

472.  During this meeting, D1 confirmed to PW1 and others that PW1’s money was pooled with others’ money and transferred from Hong Kong HSBC to SCB, Standard Chartered Bank.  Although in court D1 clarified that what he meant then was really that the trading platform was transferred, not that the money was transferred. This was not what was recorded and as shown in the transcript of the MO Bar meeting and it conflicted with evidence of PW5 in court.

473.  According to D1, he got off the plane and went to the office, leaving his baggage and at once went to the MO Bar to meet PW1 and others.

474.  The offence date in the sixth charge was 2 November 2012.  The offence date for this charge was 2 November 2012, the same date as the date of the Standard Chartered letter.  D1 said he only received it when he got off the plane on the day and rushed to the MO Bar after leaving his baggage in the office.

475.  This court therefore also has to consider whether on the day that D1 actually already knew the instrument was false, as the time gap between his alleged time of receipt of the instrument to its actual use of the instrument at the MO bar was only a matter of hours.  But a single call to the bank would only take a few minutes.

476.  The evidence from D1 was also that after the meeting and before the due date for payment, and after the due date for payment, he did not check with George Lai, coupled with the fact that, when asked in court as to the nature of the US$2 million due to him from D2, D1 was hesitant in answering and said they might have come from PPP, which contradicted his earlier evidence that all PPP actually failed.

477.  In the circumstances, even considering that possibility, I found beyond reasonable doubt that when he showed the instrument to PW1 he at that point in time already knew that was a false document.

478.  Now, knowing the document was false, D1 used it by showing it to PW1, intending, without doubt, in my view, to induce him to believe that the Standard Chartered Bank letter was genuine and, if so accepted, at least waited for longer before taking further action for recovery of the money, bearing in mind that PW1 was then on the verge of suing D1, as then said by D1 and as said by D2.  This would amount to prejudice to PW1 within the meaning of the section.

479.  Coming to the case of D2, according to D2’s evidence, he was the one who prepared the letter and he was the one who sent it to D1.  D2 said he knew PW1 had been chasing D1 for repayment of his instrument and that D1 was on the verge of a civil suit from PW1, and he caused this letter to be made and sent to D1 because he said D1 wanted something documented for his meeting with PW1. Of course, he knew it was to be used by D1 to pacify PW1 at the MO Bar meeting that day.

480.  Like D1, he had intended this false instrument to be used to induce PW1 in accepting as a genuine document and in so accepting not taking action against D1, at least not before 7 November, which resulted in prejudice to PW1.

481.  Although it was the case of D2 that D1 was not to show the letter to anyone, nevertheless the evidence was overwhelming that he knew the letter had to be used in time for the MO Bar, that, irrespective of what he said to D1, that D1 would still use the contents at least of the letter that he sent to him, this 2 November letter, for the use on PW1, whether by means of showing to PW1, whether by relating to PW1 the contents of this letter, that he is going to receive this US$2 million.

482.  That, of course, already amounted to the use of the false instrument. It did not really matter also that even if, as D2 said, that he sent out this letter via the email when he was still outside jurisdiction in Shenzhen.  The same was received in Hong Kong and he had intended and had, as a joint venture with D1, did use this false instrument, on PW1 in Hong Kong.

Charge 3

483.  We now come to Charge 3.

484.  D1’s evidence was that D2 sent this subject CD to him.  D2 disputed this and said it was actually sent by Foo in his email to D2 dated 18 March 2009, copied to D1, enclosing such instrument.  I accept his evidence in this respect, as there was this email in support.

485.  As this court found earlier, both defendants knew these were false instruments.  On the occasion when D1 met PW1, it is not in dispute that D1 showed the instrument to PW1.  D2 was not present.  There is no evidence that it is D2 who has asked D1 to show the instruments to PW1 or that he had supplied it with the intent that D1 shall use it on PW1, so the actual using of this instrument on that particular occasion only concerned D1.

486.  Evidence before this court shows that on that occasion PW1 and D1 met over PW1’s chasing of the return of the investment from D1.  D1 showed this false instrument to PW1 under these circumstances. 

487.  It must have been his dishonest intent of D1, intending to induce PW1 to accept these are genuine documents, leading him to believe that D1 would soon be able to repay him by reason of having such large sum in a company of which he himself was interested in and, in so accepting, refrain from taking recovery action for the investment sums due to PW1, which resulted of course to a prejudice to the PW1.

488.  This is the only irresistible inference in the circumstances.

489.  I find all elements again in this Charge 3 proved against D1 and I so convict him. 

490.  As for D2, I will dismiss this charge against him.