HKSAR v. LAU SI SING

DCCC114/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 114 OF 2008

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Reasons for Sentence

1.  The defendant, Mr Lau Si-sing, stands convicted after a full trial of one charge of conspiracy for an agent to accept advantages (the 1st charge) and one of conspiracy to pervert the course of public justice (the 3rd charge). 

2.  The defendant joined McDonald’s (Hong Kong) in May 2004 as the managing director, and he was holding the same office at all material times.  Siam Ready was a company incorporated in Thailand.  PW1 was a director-cum-shareholder of the company.  The defendant came to know PW1 when he worked for a company called Global Kitchen in 2003.  After the defendant and PW1 left Global Kitchen, they maintained contact with each other.  The defendant rejoined McDonald’s (Hong Kong) whereas PW1 worked for his family business in Thailand.

3.  In May 2005, McDonald’s (Hong Kong) decided to include more fruits and vegetables in its menu.  The defendant asked PW1 if the latter’s company would be interested in becoming a supplier for McDonald’s (Hong Kong).  PW1 replied in the positive, and a presentation was arranged to be held at the office of McDonald’s (Hong Kong) on 9 May 2005.  PW1 and his staff would come to Hong Kong to introduce its products to McDonald’s (Hong Kong).

4.  On 8 May 2005, PW1 arrived in Hong Kong, and on the same day, he went to Macau with the defendant.  While they were in Macau, the defendant gave PW1 advice and suggestions on the presentations to be held on 9 May 2005.  Amongst other things, the defendant told PW1 “not to sell too cheap” to McDonald’s (Hong Kong).

5.  On 9 May 2005, PW1 attended the office of McDonald’s (Hong Kong) and presented the products of Siam Ready to the defendant and his staff.  It was unusual for the managing director of McDonald’s (Hong Kong) to attend a presentation by a potential supplier. 

6.  After the presentation, it was the unanimous view of those present at the presentation that corn was the product that McDonald’s (Hong Kong) was interested in.  Various departments started to work on the project.  Staff members of the purchasing and quality assurance department were sent to Thailand to visit the premises of Siam Ready.  A business case was prepared under the co-ordination of the marketing department.

7.  In one of the trips to Macau and at a time the deal between McDonald’s (Hong Kong) and Siam Ready was not yet struck but was imminent, the defendant asked PW1 to pay him 10 per cent of the sales amount of corn supplied by Siam Ready to McDonald’s (Hong Kong).  PW1 agreed.  The defendant signed the business case for the promotion of corn and approved Siam Ready to be the corn supplier for McDonald’s (Hong Kong) at around the end of June 2005.  Since then, McDonald’s (Hong Kong) commenced placing order for corn with Siam Ready. 

8.  The defendant provided PW1 by emails the particulars of the bank account and gave instructions to PW1 on how much money was to be deposited into each account.  PW1 acted accordingly.  The first payment made by PW1 to the defendant was on 14 December 2005.  The total sales for Hong Kong during the relevant period amounted to US$3,019,337.84.  For the 1st charge, over HK$2 million was involved.  McDonald’s (Hong Kong) employees are not allowed to accept advantages from the suppliers.

9.  On 29 June 2007, the defendant and PW1 were intercepted at the Macau Ferry Terminal in Hong Kong.  While they were arranged to wait for the law enforcement agents in a room, the defendant coached PW1 to, if asked, say that the illegal rebate that PW1 had paid him was for the purpose of their joint investment in properties in China.  Both the defendant and PW1 told the ICAC officers the same account when they were later arrested on the same day.  In fact, PW1 had not invested with the defendant in real property in China. 

10.  The defendant had hitherto a clear record.

11.  The background report of the defendant sets out the family background of the defendant, his education and employment history, and his attitude towards the offences.  The defendant was brought up under difficult circumstances.  He received some tertiary education in the States, but he was unable to complete it.  Through his hard work, he became the top man for McDonald’s (Hong Kong).

12.  Towards the offences, the defendant said he was innocent of the offences but exhibits some shallow regret for placing himself in a conflict-of-interest position in his dealings with PW1. 

13.  The defendant’s family has been financially strained since the defendant’s incarceration.

Section 12(1) Application

14.  Mr Iu applied for a section 12(1) order.  He submitted a chart setting out the total invoice amount related to the 1st charge, the 10 per cent rebate calculated and the details of the bank accounts which are under a restraining order.  The three bank accounts have a total balance of around HK$2.7 million.  Mr Iu asked that the court should order that the money be paid to McDonald’s (Hong Kong).

15.  Mr Ching Y Wong SC submitted that McDonald’s (Hong Kong) had suffered no loss in this case.  Whatever that was given to the defendant came from PW1’s own pocket.  Mr Wong submitted that if a section 12 order is to be made, the court should not order that the money be paid to PW1.  For a section 12 order, it is within the court’s discretion as to who is to be paid and how much.

16.  It has been eventually agreed between the prosecution and the defence that:

(1)  The prosecution is asking for a section 12(1) order for the amount of HK$2,325,000.

(2)  If the court is to make an order for the full sum to be paid to McDonald’s (Hong Kong), it is agreed between the parties that the entire amount of $863,566.86 held in the bank accounts of Chan Bing-di should be paid to McDonald’s (Hong Kong), and for the remaining balance of the order, it should be paid out from the two accounts of the defendant held with the Hang Seng Bank and the Standard Chartered Bank.

Mitigation

17.  Mr Wong submitted that of the two offences that the defendant stands convicted, the 1st charge is more serious than the third one.  For the 1st charge, there is no sentencing tariff apart from cases dealing with the length of sentences and so forth.  Mr Wong submitted that the 3rd charge flowed from the 1st charge, but for the 1st, the conspiracy to pervert would not have taken place.  He submitted that sentences for the two charges ought to be considered in the light of the totality principle. 

18.  Mr Wong submitted that there is no aggravating factor for the 1st charge.  The defendant as an agent for McDonald’s (Hong Kong) was accepting bribes without performing any corrupt act as such.  The selection process had gone through various departments within McDonald’s (Hong Kong), and each department had done its own assessment.  Finally, the departments came up with the business case signed by the defendant as part of his job.  There had never been a situation where all departments had approved a supplier and the defendant disapproved of it.  The signing of the business case was only a pro forma act and there was nothing special done by the defendant to the benefit of or in favour of Siam Ready.  There is no evidence of the defendant ever promising to PW1 that in return for what the defendant received, the defendant would do any act of favour.  PW1 paid the defendant because he thought the defendant was in charge of McDonald’s (Hong Kong). 

19.  Mr Wong submitted that there is no suggestion that the price of corn was inflated as a result of the corrupt payments.  Prices for corn were not increased, and what PW1 paid the defendant came from his own pocket.  Quality of the corn was not affected.  There was no criminal act involved in that the defendant had never threatened PW1 that if the latter did not pay the defendant, the defendant would disapprove.

20.  Mr Wong submitted that there is no specific mention by PW1 of any specific favour.  It is unlikely that the defendant would re-offend in future.  The defendant has been hardworking and capable all along.  He worked his way up and he finally became the managing director of McDonald’s (Hong Kong).  He had been in charge of McDonald’s (China) and the Philippines.  As a result of his convictions, it is doubtful he would be employed by McDonald’s or any other fast-food establishment.  His hard work has all gone and he has to start all over again.

21.  Mr Wong drew my attention to the evidence of Mr Guy Russell who has high regard for the defendant.  From Mr Russell’s evidence and the escalation of the defendant, one can see that the defendant had worked hard in the past and was able to discharge his duties.

22.  Mr Wong submitted that this case involved only one supplier; McDonald’s (Hong Kong) had suffered no financial loss.

23.  For the 3rd charge, Mr Wong submitted that the false statement made by PW1 was one made under caution.  It is quite unusual that when a court rejects what a defendant said in a cautioned statement and that defendant is charged with perjury or perverting.  At the material times, PW1 was not a prosecution witness and the culpability should be at the lower end along the scale.

Discussion

24.  I find the present case a serious case of corruption in the private sector.  The total bribes received by the defendant amounted to over $2.3 million.  The conspiracy for the 1st charge spanned over a period of almost two years.  The defendant at the material times was the top man of McDonald’s (Hong Kong), a well-known corporation employing many employees.  Many of them are youngsters.

25.  The defendant started to work for McDonald’s when he was a young man himself.  Through his hard work and ability, he was raised from the bottom and he finally became the managing director of McDonald’s (Hong Kong).  He was supposed to lead all those who worked under him.  However, he abused his position, and what he did in asking for and accepting illegal rebates from its supplier was a flagrant breach of the trust that his employer had on him.  He was setting a very bad example to all those who worked with him and under him.

26.  For the submission that McDonald’s (Hong Kong) suffered no financial loss, one shouldn’t forget what the defendant told PW1 at one of the meetings in Macau: “not to sell too cheap” to McDonald’s (Hong Kong).  All along, PW1 found the advice given by the defendant useful in his dealings with McDonald’s.  In any event, the corporate image of McDonald’s (Hong Kong) suffered a great deal that the very top man was found engaging in corrupt activities with a supplier for almost two years.

27.  I do not think one can take the absence of aggravating features as identified by Mr Wong as mitigating factors.  If there exist aggravating factors, they add to the seriousness of the offences, and a heavier sentence is called for.  The absence of aggravating factors does not call for a lighter sentence.

28.  I appreciate that both the defendant and his family members have much to lose as a result of this conviction, but the defendant has only himself to blame.  He was in gainful employment, yet he chose to ask for and receive illegal rebates to meet his insatiable demand for money. 

29.  In setting the starting point, I have borne in mind the facts as found by this court and assessed the seriousness of the case on the findings of facts.  For the 1st charge, a large amount of money was involved, and the conspiracy spanned over a long period.  The defendant was in a position of trust and he acted in breach of that trust.  Bank accounts of third parties were used in receiving payments.  The defendant pleaded not guilty to the charge and has shown little remorse. 

30.  The defendant is a man of clear record, and the background report shows that he had done some voluntary work pending his trial.  For a serious case like the present case, the clear record of the defendant carries little weight in mitigation, but for the defendant’s hitherto clear record, he would not be employed as the managing director of McDonald’s (Hong Kong) and he would not be in a position to abuse his power.

31.  Courts in Hong Kong have long made clear the damage that corruption causes to Hong Kong, AG v Hui Kin Hong [1995] 1 HKCLR 227, R v Turner [1989] 2 HKLR 123.  Lawton LJ in R v Wellburn [1979] 1 Cr App R 64 said this:

“Corruption in all forms has now become widespread.  The court must do what they can to stop the spread of corruption in public and commercial life.  All they can do is to show by the sentences passed that the giving and accepting of bribes will not be tolerated in this realm.”

32.  For the 1st charge, a deterrent sentence is called for despite the defendant’s hitherto clear record.  For the 3rd charge, I accept that PW1 was not a witness at the time.  The conspiracy was formed within minutes during the short time the defendant and PW1 were detained in the room.  The intention on the part of the defendant was to mislead the investigating authorities through the lies told by PW1 and the defendant.  An immediate custodial term is necessary.  In my judgment, the sentences for the 1st and the 3rd charge shall run consecutively with each other subject to the totality principle.

33.  On the 1st charge, I take 4 years as the starting point, allow the defendant 3 months’ reduction for his clear record.  On the 1st charge, I sentence the defendant to 45 months’ imprisonment.

34.  On the 3rd charge, I take 18 months as the starting point.  I allow the defendant 3 months’ reduction for his clear record.  On the 3rd charge, I sentence the defendant to 15 months’ imprisonment.

35.  Bearing totality in mind, in my judgment, an overall sentence of 53 months should adequately reflect the overall criminality of the two offences.  I order 8 months of the sentence for the 3rd charge to run consecutively to the sentence for the 1st charge, making a total of 53 months. 

36.  I make a section 12(1) order and order the defendant to pay to McDonald’s (Hong Kong) HK$2,325,000.  The whole balance of the money held under the account number 232366955888 with Hang Seng Bank, i.e. Chan Bing-di’s account, should be used towards the payment under the said order.  The remaining balance should be paid from the balances of the defendant’s account with Hang Seng Bank No. 220418453888 and the Standard Chartered Bank account No. 41019978306.