HKSAR v. ZHOU ZHAO BIN

CACC 56/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 56 OF 2002

(ON APPEAL FROM DCCC NO. 817 OF 2001)

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J U D G M E N T

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Hon Yeung JA (giving the judgment of the Court):

1. On 5 July 2002, we dismissed the application for leave to appeal against conviction. We indicated that we would give our reasons in writing and this we now do.

Background

2. The applicant Zhou Zhao Bin was convicted after trial by Judge Sweeney in the District Court on one count of conspiracy to export unmanifested cargoes (1st charge) and two counts of offering an advantage to a public servant (2nd and 3rd charges).

3. The 1st charge was said to have been committed with the co-accused Chow Hiu Ping (D2) and others including Leung Chiu Ming (PW1) and Xu Sheng (Xu). Xu was not prosecuted as he was not a Hong Kong resident and D2 was acquitted after trial.

4. The applicant was sentenced to 18 months' imprisonment for each of the charges. The sentences on 2nd and 3rd charges were ordered to run concurrently but consecutively to that of the 1st charge. The total sentence was 3 years' imprisonment. The applicant initially applied for leave to appeal against both conviction and sentence.

5. At the outset of the hearing, Mr. Macrae SC indicated that the application relating to sentence would only be pursued if the conviction on one or more of the charges was set aside. In the end, it was not pursued as the application relating to conviction was refused.

Protagonists

6. PW1 was the Freight Operation Manager of Kowloon-Canton Railway Corporation (KCRC), a public body under the Prevention of Bribery Ordinance. PW1 was thus a public servant.

7. Xu was the officer-in-charge of the Import Division of Shun Kong Customs Declaration Company (Shun Kong) in Shenzhen, a subsidiary company of China Railway Corporation. The Import Division of Shun Kong was responsible for clearance of goods from Hong Kong through KCRC.

8. The applicant was the Managing Director and major shareholder of Quite Yam Development Ltd. (Quite Yam). The only other director and shareholder of Quite Yam appeared to be the applicant's wife, Zhou Lin Xue-yin. D2 was at all material times the accountant employed by Quite Yam.

KCRC Operation

9. KCRC transports goods by train wagons between Hong Kong and Shenzhen. Charges will be levied on the shipments and to comply with the statutory requirements, consignment notes for the shipments had to be prepared by a subordinate of PW1. Such consignment notes would be sent to the consignors with copies to the Customs and Excise Department (C&E).

10. If the train wagons are loaded with goods at Hung Hom Terminal, C&E officers will inspect the goods and the wagons will then be locked and sealed by KCRC staff.

11. Empty train wagons will not be inspected nor sealed and at the Lo Wu Station, only loaded wagons will be inspected at random by Mainland Customs Officers.

Prosecution Case

12. On the 1st charge, it was the prosecution case that between June and October 1999, the applicant conspired with PW1 and Xu to export unmanifested cargoes from Hong Kong to the Mainland. Cargoes belonging to Quite Yam were transported to Shenzhen by train wagons, which were declared empty by PW1. As the wagons were declared empty, no charge was levied by KCRC and no document was submitted to C&E.

13. In June 1999, a cargo of unknown nature was smuggled into the Mainland. In late July and late August 1999, 8 wagons of cargoes of unknown nature and 6 containers of acetate tows respectively were smuggled to Shenzhen. Acetate tow is the raw material for the manufacture of cigarette filter and import into the Mainland of such material by private companies or individuals is prohibited.

14. In September 1999, upon hearing from PW1 that KCRC was going to freight a consignment of copper sheets to Dong Guan, Xu asked PW1 to allow him to smuggle computer compact discs manufactured by Quite Yam by placing them in the wagons carrying copper sheets. No manifest was submitted in respect of the compact discs.

15. In October 1999, the applicant again telephoned PW1 and requested to smuggle 7 wagons of goods to Shenzhen. PW1 initially refused because he was aware that the checking of imported cargoes by Customs in Shenzhen would be computerized. He was however persuaded by Xu to do it for the last time as Xu told him that Customs Officers in Shenzhen had been taken care of.

16. Pursuant to the agreement, on 13 October 1999, PW1 arranged 7 containers of acetate tows to be loaded without any manifest. The cargoes were intercepted by the ICAC at the Lowu terminal.

17. PW1 was paid a total of RMB110,000 in Shenzhen by Xu and $60,000 in Hong Kong by the applicant for his effort.

18. The 2nd charge related to an incident in late June 1999 when the applicant met PW1 with his friend So Chor-mo (So) in a restaurant at the Peninsula Hotel. It was alleged against the applicant that he asked PW1 to help him to smuggle tobacco leaves from Hong Kong to Shenzhen. He offered to pay PW1 $300,000 as reward on top of the RMB 10,000 per wagon that Xu had earlier promised.

19. The 3rd charge related to the payment of $60,000 by the applicant to PW1 on or about 31 August 1999. The money was paid to reward PW1 for his effort in helping to smuggle the 6 containers of acetate tows to Shenzhen in late August 1999.

The Evidence

20. As expected, the evidence against the applicant came mainly from PW1 who was convicted of smuggling and corruption offences and was serving a total of 4 years imprisonment.

21. PW1 detailed how he rose through the ranks in KCRC to become Freight Operations Manager in 1997 in charge of operation of all KCRC terminals. In 1998, PW1 was put in charge of a new commercial division to promote the freight business. KCRC freights would invariably leave Hong Kong from Lo Wu border, then through Shenzhen to other parts of the Mainland.

22. PW1 mentioned about the difficulties with the Mainland Customs that resulted in substantial delays in the shipments of cargoes from Hong Kong and thus significant financial loss. PW1 tried to improve the relationship by socializing with Mainland officials and as a result he came to know Xu.

23. Because of intervention by Xu, business became smoother and Xu then asked PW1 for help so that goods could be freighted from Hong Kong free of charge.

24. Xu then introduced PW1 to the applicant who claimed to be in tobacco business. There were then deals with Quite Yam for the shipment of goods to the Mainland.

25. In early June 1999, Xu asked PW1 to help transporting goods to the Mainland free of charge as previously agreed. D2 subsequently contacted PW1 and goods described as cardboard cartons were loaded into wagons marked "empty wagons" and shipped into the Mainland.

26. There were then requests by Xu to smuggle tobacco leaves for the applicant and Xu offered to pay PW1 $10,000 for one wagon of goods.

27. According to PW1, the applicant telephoned him in late June 1999 and arranged to meet him with So at the Peninsula Hotel. During the meeting, the applicant asked PW1 to smuggle tobacco leaves for him into Shenzhen and that on top of what Xu had promised to pay, he would also pay PW1 $300,000. The applicant also agreed to pay the transportation fees.

28. PW1 realized that smuggling tobacco leaves was difficult as they were prohibited items and had to be stored in a bonded godown under strict supervision of C&E, he declined the invitation by the applicant. The applicant then asked PW1 of his relationship with C&E and hinted that he could bribe them. PW1 again declined the suggestion.

29. In late July 1999, Xu told PW1 that Quite Yam had 7 to 8 wagonloads of goods to be transported to Shenzhen. He indicated that the goods were not tobacco leaves as he realized that PW1 refused to deal with tobacco leaves.

30. PW1 then sent a staff member to the office of Quite Yam to get the bills of lading and the batch of goods was sent to Kowloon Freight Terminal by the Pui Kee Transportation Company. Again the wagons were declared empty and no documentations were submitted to C&E or the Shenzhen Customs. KCRC also did not charge any fee.

31. For his effort, PW1 said he was paid RMB 80,000 by Xu in Shenzhen.

32. In or around mid-August 1999, the applicant invited PW1 to his new office in Shatin and showed him his new CD manufacturing plant. The applicant told PW1 that he was in the CD business and offered an agency to PW1 for the European market, which was an attractive offer. PW1 then went to Europe on a fact-finding mission and upon his return, the applicant again said he had 6 containers of goods that needed to be smuggled to the Mainland urgently. He indicated he would pay PW1 an additional $10,000 for each container.

33. It was subsequently arranged that the goods were to be labeled "cardboard" and would travel in "empty wagons". The goods were in fact acetate tows belonging to Quite Yam.

34. At that stage, the ICAC was already monitoring the matters. PW1 was videotaped when he was supervising the loading of the goods on 28 August 1999. There was again no export declaration.

35. According to PW1, the applicant later gave him a white envelope with the name Quite Yam printed on it. Inside the envelope, there was a wad of thousand-dollar notes amounting to $60,000.

36. In early September 1999, PW1 had a meeting with Xu in Shenzhen and Xu gave him RMB 30,000. Xu also told him that the applicant had made him the agent in Shenzhen for his CD business. Xu then asked PW1 to ship boxes of CD and arrangement was made for the CD to be mixed with copper sheets to avoid Customs. No manifests were prepared for the CD and according to Xu, they subsequently arrived safely in Shenzhen.

37. In early October 1999, the applicant again asked PW1 to ship 7 containers of acetate tows to Shenzhen without manifest. PW1 was reluctant but eventually agreed as he was assured that Xu would take care of the Mainland Customs and that he also wanted to secure the post-retirement agency that the applicant had promised him.

38. PW1 then arranged for the cargoes to be loaded into 4 wagons on 13 October 1999. The cargoes did not in fact leave Hong Kong as they were seized by the ICAC and both the applicant and PW1 were arrested.

39. Apart from PW1, the only other prosecution witness was Cheng Won-ton of Daicel Corporation that sold the batch of acetate tows to Quite Yam. That batch of acetate tow was shipped to Shenzhen in late August 1999 without manifest.

40. Apart from the evidence of the prosecution witnesses, there was also agreed evidence pertaining to the purchase of 5,000 master cartons by Quite Yam and the consignment of those cartons to Shenzhen Gaojia Company via KCRC on 10 June 1999. There were no Customs declarations for the cargo, as the wagons were declared empty.

41. There was the unchallenged evidence that 10 container loads of cigarette paper were collected on behalf of Quite Yam and loaded onto rail wagons at KCRC Hung Hom Freight Terminal on 27 July 1999. The cargo was described as "cardboard" and there was no export declaration submitted to C&E.

42. It was agreed that through the applicant, Quite Yam purchased and obtained delivery of a cargo of acetate tows prior to August 1999. The shipping documents described the cargo as "cardboard" and no export declaration was filed in relation to the cargo.

43. On 17 September 1999, Quite Yam took delivery of US$430,000 worth of acetate tows manufactured by Mitsubishi Rayon Company. The batch of acetate tows corresponded to those seized by the ICAC. They had been loaded onto KCRC wagons to be freighted to Shenzhen. There was no export declaration submitted to C&E.

44. The applicant chose not to give nor call any evidence.

Findings by the Judge

45. The judge recognized that PW1 was a tainted witness and was an accomplice. He was giving evidence with a view to obtain remission or reduction of sentence and therefore he had a motive to lie. The judge reminded himself that PW1 had pleaded not guilty at his own trial and had blamed the ICAC for inducing him to make the confession. His attitude changed only after all avenues of appeal were closed.

46. The judge cautioned himself that he must approach the evidence of PW1 with extreme caution.

47. The judge also referred to PW1's explanation as to why he did not mention in his initial statements the payment of $60,000 and certain discrepancies as to what he was carrying on occasions when he left the office of Quite Yam, the means of transport and other minor details.

48. Nevertheless, the judge was satisfied that PW1 was a truthful and impressive witness with good memory for details. In particular, the judge was satisfied that PW1 had plenty of time to reflect on the events whilst in prison and wanted to get everything off his chest.

49. The Judge accepted the allegation of PW1 against the applicant. He found that the applicant was the boss of Quite Yam and he had played an active role in enabling Quite Yam to export unmanifested cargoes to Shenzhen which was well documented as revealed in the evidence of PW1.

50. The judge therefore convicted the applicant on all three charges.

Analysis of the Evidence

51. PW1 gave direct evidence of his meetings and conversations with the applicant which evidence supported the prosecution case against the applicant. The applicant asked PW1 to smuggle goods for him. He told PW1 that the Customs in Shenzhen had been taken care of. As an inducement, not only did the applicant offer to pay and did pay substantial sums of money to PW1, he also offered business opportunity to PW1 after his retirement. Clearly the post-retirement opportunity was attractive to PW1 to the extent that he went to Europe on a fact-finding mission because of it.

52. The contacts between Xu and PW1 indicated that Xu was acting on behalf of the applicant. Xu had, on a number of occasion asked PW1 to transport goods for Quite Yam free of charge. Xu rewarded PW1 by paying him substantial sums of money. Documents pertaining to the shipments of goods of Quite Yam were brought to Xu in Shenzhen. Xu even admitted that he had to pay corruption money to the relevant authorities to ensure the smooth transit of goods from Quite Yam.

53. The unchallenged evidence and admitted facts clearly showed that Quite Yam had been exporting unmanifested cargoes through KCRC to Shenzhen. The applicant was in effective control of Quite Yam being its managing director and was personally involved in the purchase of some of the unmanifested cargoes. There were occasions when PW1 visited the office of the applicant. Such circumstantial evidence supported the prosecution case.

Applicant's Contention

54. Despite such evidence, it was suggested that there was insufficient evidence to support the charges against the applicant and that the convictions were unsafe and unsatisfactory.

55. Mr. Macrae SC, on behalf of the applicant suggested that the judge was wrong in admitting what Xu told PW1 about the applicant.

56. He pointed out the shortcomings and the discrepancies in the evidence of PW1, particularly those relating to the 2nd and 3rd charges to demonstrate that PW1 was an unreliable witness. He suggested that the judge had not properly evaluated the evidence pertaining to the 2nd charge and had failed to look for evidence supportive of PW1's testimony. He pointed out that PW1 only mentioned the $60,000 18 months after his own arrest despite repeated interviews by the ICAC.

57. Mr. Macrae SC, also attacked the judge for his failure to mention or consider the good character of the applicant. He suggested the judge wrongly assumed there was an admission by the applicant that Quite Yam was in the business of exporting unmanifested goods which assumption might have deprived the applicant the benefit that he was entitled to as a person of good character.

Approach of the Court

58. It was true that PW1 appeared to have made mistakes as to when exactly he visited the applicant in his office, what he was carrying when he left and whether he got into a private car or a taxi. He was mistaken when he said the bales of acetate tows he saw on 29 August 1999 were labeled "Carolan" when they were in fact labeled "Daicel". It was also true that PW1 clearly was trying to minimize his own culpability and to obtain reduction in sentence by offering to become a prosecution witness.

59. PW1 explained that he did not mention the $60,000 at the earlier stage because he was afraid that he would be prosecuted. He mentioned the offer of $300,000 because he thought the offer did not materialize and the matter was thus less serious.

60. The explanation was a logical one and was accepted by the judge. Indeed it is not uncommon for a witness such as PW1 to initially withhold certain information and then disclose everything at a later stage.

61. It was difficult to expect PW1 to be completely frank when he was still appealing his conviction. It was a gradual process from initial defiance to final acceptance of the harsh reality as pointed out by the judge.

62. The other discrepancies were indeed minor matters and there was no reason for PW1 to lie on such matters. PW1 was obviously confused in some of the details on the two occasions he went to the applicant's office after 29 August 1999. To some extent, such confusion was compounded if not caused by the way he was questioned.

63. The judge was fully aware of the discrepancies. He was entitled to attach such weight, as he considered appropriate to those discrepancies. The fact that a witness was mistaken on part of his evidence does not mean all his evidence had to be rejected by the court. The judge was aware that PW1 had the motive to lie and he must approach his evidence with extreme caution. The judge also accepted PW1's explanation as to why he did not initially implicate the applicant. The judge of course was in the best position to assess the credibility of PW1 as he heard his evidence and observed his demeanour. The judge also had the history of the entire matter before him.

64. What was important was that PW1 did visit the applicant's office as such visits were being monitored by the ICAC. He was adamant that the applicant paid him $60,000 in one of the visits although he admitted he could have recalled the date wrongly.

65. The fact that he was given $60,000 must have left a much deeper impression than other details such as what he was carrying and what mode of transport he took. It must be borne in mind that the statement on this incident was made many months after the event. The evidence also suggested that the $60,000 was paid in accordance with the earlier promise made by the applicant.

66. There was clear evidence that Quite Yam acquired the substantial quantity of goods that were ultimately shipped to Shenzhen without making any declaration to C&E. The export of unmanifested cargoes by Quite Yam on the evidence could not be disputed.

67. A judge of course has to evaluate the evidence before reaching a conclusion. The nature of such evaluation would depend on the evidence and the extent to which the evidence is being challenged. A judge is not obliged to state each and every mental path that he had undergone in reaching his verdict.

68. In R v Sheik Abdul Rahman Bux & Others [1989] 1 HKLR 1, Roberts CJ made the following observation at page 4:

"It is thus clear that, when reaching his conclusion that he believed the prosecution witnesses, he was well aware of the inconsistencies which are to be found in their evidence.

It was argued for the defendants that the judge should have included in his judgment a careful dissection of each piece of evidence on which there could be said to have some inconsistency or conflict, whether between the evidence of different prosecution witnesses or between different parts of the evidence of the same witness.

That would place a wholly unreasonable burden on a trial judge. In our view it is sufficient if the judge shows that he is aware that these inconsistencies exist and that nevertheless, having taken them into account, he is prepared to believe the various witnesses involved, save to such extent as he may specify."

69. PW1 had made clear and positive allegations against the applicant. There was undisputed documentary evidence supportive of some of those allegations. The applicant had offered no evidence to challenge such allegations. The judge needed hardly say anything more than indicating that he accepted the allegations of PW1. Although it would have been better if the judge had expressed specifically his findings in respect of the 2nd charge, we are however satisfied that the judge had in fact made such a finding, reading his reasons for verdict in its entirety.

70. With respect, on the evidence before the judge, he was perfectly entitled to accept PW1's allegations against the applicant, including the allegation that the applicant had offered to pay him $300,000 at the meeting in the Peninsula Hotel.

Acts and Declaration of Xu as Evidence

71. In admitting the evidence of acts and declarations of Xu made in the absence of the applicant, the judge said the following:

"In this case, we have heard evidence of acts and declarations by Mr. Xu Sheng who is not before this court. We have even heard evidence of acts and declarations made without either defendant present. Ordinarily, such acts or declarations would be inadmissible against these defendants as hearsay. However, acts and declarations in furtherance of a common purpose can be evidence against another in a conspiracy trial provided;

(a) that the acts or declarations of that co-conspirator must be in furtherance of that common purpose or conspiracy; and

(b) that independent evidence be adduced of the existence of the conspiracy and the involvement in it of each individual defendant.............

.................

In relation to those two requirements it is clear;

1) that the acts and declarations of Xu Sheng were in furtherance of the common purpose to export unmanifested cargo, and

2) we have a complete chain of documentary evidence to show that in the summer of 1999, D1's company Quite Yam Development Limited exported a number of valuable consignments of goods to Shenzhen without export declarations or manifests."

72. Mr. Macrae SC argued that the judge was wrong. He suggested that before any words and acts of a co-conspirator, done in furtherance of the conspiracy, are admissible against the accused, there must be independent evidence linking the accused to the conspiracy charge. He said there was no independent evidence linking the applicant to the 1st charge relied on by the judge. He said the judge premised his findings on the wrong assumption that the export of the unmanifested goods by Quite Yam was not challenged. He relied on the following passages to support his contention:

"1. However, what is important is the unchallenged documentary chain of evidence to show that Quite Yam sent this large consignment of Daicel acetate tow up to Shenzhen without any exports declaration or manifest as required by the Import & Export Ordinance, Cap. 60.

2. We have a complete chain of documentary evidence to show that in the summer of 1999, D1's company Quite Yam Development Limited exported a number of valuable consignments of goods to Shenzhen without export declarations or manifests.

3. In particular, there has been no evidence to disassociate D1 from Quite Yam or its well-documented exporting of unmanifested cargo."

73. We did not agree with the submission of Mr. Macrae SC.

74. The judge did not make the assumption as suggested. He was just pointing out that the unchallenged evidence showed that Quite Yam did export goods to Shenzhen without manifest. On the unchallenged evidence, the conclusion was clearly a reasonable conclusion to be drawn.

75. As we had indicated earlier, PW1 said the applicant had asked him to smuggle goods for him and they had direct discussions about the various shipments. Xu introduced the applicant to PW1 and thereafter there were repeated conversations about Xu. The applicant had indicated to PW1 that the Mainland Customs had been taken care of and that he should bribe the C&E.

76. On top of the offer of $300,000 and the payment of $60,000, the applicant also offered PW1 business opportunity as an inducement.

77. The applicant was the majority shareholder and director of Quite Yam and the only other director and shareholder appeared to be his wife.

78. The undisputed documentary evidence also indicated that Quite Yam was linked to the export of unmanifested cargoes to Shenzhen at the material times.

79. To justify the receipt of words and acts of Xu done in furtherance of the conspiracy as evidence against the applicant, there must be independent evidence linking the applicant to the conspiracy. (see R v Au Shui Yuen, Alick [1993] 2 HKC 219). The independent evidence required was reasonable evidence or evidence establishing a prima facie case against the applicant. (see R v Jones & others [1997] 2 Cr App R 119)

80. In our judgment the evidence that we have outlined constituted both direct and circumstantial evidence independent of the words and acts of Xu showing the existence of a conspiracy and that the applicant was a party to it. Such evidence was more than reasonable evidence or prima facie case against the applicant.

81. The judge was right in suggesting that the documentary evidence was independent of the evidence of PW1.

82. The judge must be right in admitting the evidence of Xu against the applicant.

Character Evidence

83. When the judge said, "In particular, there has been no evidence to disassociate D1 (the applicant) from Quite Yam or its well-documented exporting of unmanifested cargo", he was not thereby suggesting that the applicant was a person of dubious character. He was instead making a comment on the undisputed evidence.

84. As we have repeatedly pointed out, Quite Yam was clearly exporting unmanifested good to Shenzhen at the material times; the applicant was one of its only two directors and shareholders, the other being his wife. The comment by the judge was legitimate and proper and it did not have the connotation suggested by Mr. Macrae SC.

85. The judge is a professional judge. To insist that a judge must always repeat obvious statements of law mechanically in his reasons for verdict is neither necessary nor desirable. In Queen v Fok Tin-yau [1995] 1 HKCLR 351, Power VP said at p. 356;

"Where a judge is sitting alone and evidence of good character has been given, this court will, even if he makes no mention of it, unless there be some express or implied indication otherwise, act upon the basis that he was aware of the character evidence and that he gave it the weight which he thought it deserved."

86. We respectfully adopt such observation. Indeed, in the present case when the applicant had not given nor called any evidence in his defence, his good character, which the judge must be aware of, would hardly make any difference to the way the judge approached the prosecution evidence.

Conclusions

87. The evidence against the applicant was strong. The judge was entitled to accept the prosecution evidence and on such evidence, the applicant was rightly convicted of the charges. The application for leave to appeal against conviction must be refused.

Sentence

88. As the application for leave to appeal against sentence was not pursued, we would just dismiss the application.

89. We wish to point that any corruption offence strikes at the foundation of a civilized society and damages the public interest of the community. They must be deterred.

90. The present case is quite a serious case of the type. Not only did the applicant corrupt a senior staff of KCRC by initiating payments and offers of payment of large sums of money, he had also enlisted the assistance of a Mainland official in perpetrating the crime.

91. In addition to the 2 charges of offering advantages, there is the further charge of conspiracy to export unmanifested cargoes.

92. The offences were cross-border offences. Substantial quantity of goods was smuggled to the Mainland over a period of 4 to 5 months and some of the goods appeared to be prohibited goods. The fact that goods were transported in train wagons that were declared empty meant that there would be loss of revenues to a public body.

93. The offences also undermine business integrity in Hong Kong and adversely affect the co-operation and possibly the relationship of the relevant authorities in the Mainland and Hong Kong.

94. Despite the background of the applicant, the overall sentence of 3 years was in fact on the low side and in the circumstances, the decision not to pursue the application in respect of sentence was clearly a correct one.

Results

95. The applications for leave to appeal against conviction and sentence are both refused.