HKSAR v. HIDHAYATHULLA HAMEED ABDUL CADER

HCCC 3/2023

[2025] HKCFI 2752

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 3 OF 2023

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Transcript of the Audio Recording
of the Sentence in the above Case

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COURT: The defendant was convicted after trial of two counts of money laundering, a jury found him guilty by a majority of six to one.

The defendant opened two bank accounts in the name of a sole proprietorship, Penta Exim, in 2007. The multi-currency accounts were opened with DBS and HSBC. He was the sole authorised signatory.

The particulars of the 1st count relates to the transactions of the DBS account. That DBS account received 958 deposits, totalling $602.38 million after all foreign currency is converted to Hong Kong dollars between 24 July 2007 and 13 October 2010. During the same period, $602.35 million was withdrawn.

The particulars of the 2nd count relates to the transactions of the HSBC account. That HSBC account received 977 deposits, totalling HK$300.25 million, that is after all foreign currency is converted to Hong Kong dollars, between 27 August 2007 and 9 February 2010. During the same period, HK$300.21 million was withdrawn.

These two accounts, after eliminating or ignoring interbank transfers, received a total of HK$895,520,827 in deposits and HK$895,443,620 was withdrawn. The prosecution’s forensic accountant calculated that all money deposited was withdrawn, within on average two days.

The speed of the fund flow, she said, could be a hallmark of money laundering. The account could have been used to park, clean and dispose of tainted money quickly. In addition, the pattern of money in and out of these two accounts, the prosecution says, were not consistent with the account holder’s declared principal business, namely, trading. The prosecution’s case was that these two accounts were used for the purposes of money laundering.

This case came to light because of five elderly victims scammed in Australia. They transferred money as directed by fraudsters to an HSBC account opened in Hong Kong. Investigations showed that that money and more was then transferred from that account into the defendant’s accounts.

The defendant’s case was that he opened a sole proprietorship, as well as two bank accounts in that company’s name, and handed them over to a legitimate diamond merchant based in Bangkok who wanted to do business in Hong Kong. The defendant had no dealings with the proceeds in and out of both accounts during that period. He knew nothing of the transactions or their origins. Nevertheless, for the assessment year of 2008 to 2009, he informed the Inland Revenue that this company, Penta Exim, had no income.

The prosecution relied on evidence that showed to the contrary. Evidence that showed the defendant was involved in many of the over-the-counter transactions of these accounts. There were bank vouchers authorising withdrawals and TT forms with the defendant’s signature and company chop. Many vouchers contained notes scribbled by bank staff indicating they had communicated directly with the defendant to confirm he authorised transactions.

There was also a loan of nearly HK$250,000 taken out with the HSBC account and repaid monthly. Only the defendant could have applied for the loan as the sole signatory. Moreover, there is evidence he personally repaid that loan from his personal account.

In addition, the forensic accountant in her first report, August 2020, made reference to other bank accounts of Penta Exim and the defendant. She was very clear when she said those account details were not included in her report because they were outside of her scope of review. However, I can see from references to it, for example, she found Euros 36,985 withdrawn from the DBS Euro account and deposited into another Penta Exim account.

At page 95 of that first report, she found a single deposit from another Penta Exim account that is not the DBS or the HSBC account of these charges, totalling HK$1,085,464. She also found 30 withdrawals paid to Penta Exim’s other accounts from the HSBC account of Charge 2, totalling HK$10,894,261. In fact, Penta Exim would appear to have had four other accounts that received this HK$10.8 million as set out in paragraph 101.2 of page 96 of her first report.

Mitigation

The defendant elected to give evidence. He said he was born in India. He came to Hong Kong in 1981 as a teenager and later returned to India to attend university. He is married with four adult children. At the time of these offences, he was working in the accounts department of a Hong Kong diamond trader. He is a man who, prior to this case, had a clear record. I have read the contents of many letters submitted from family members, the defendant, and Indian Muslim Association members, as well as a letter today from the Chief Imam of the Mosque. Everything that can be said in mitigation has been put forward for my consideration by Mr Young.

I have been urged to take into account a substantial delay in prosecution. I have seen a helpful chronology of the investigation prepared by the prosecution. I am not apportioning blame with anyone or either party. These money laundering cases notoriously involve a lot of time to investigate, in particular where there are vast sums of money, many transactions, and in this case, numerous counterparties requiring time to investigate, but clearly this has taken a long time to get to trial.

I have been urged to take into account the defendant’s role was passive and limited. It has been suggested the present case did not involve a sophisticated scheme of money laundering.

I have been urged to accept, because there is no direct proof that the majority of the funds flowing in and flowing out were proceeds of indictable offences, they could have been legitimate business transactions, for example, diamond sales. I have been urged to take into account that only HK$10.8 million was proved to be or identified to be tainted money, so therefore I should not take into account the other HK$885 million.

Mr Young therefore submits the defendant should be sentenced on the basis that he had reasonable grounds to believe that only HK$10.8 million represented the proceeds of an indictable offence, not the other over HK$885 million accounted for in both accounts. If the prosecution is of a view he should be sentenced on the basis that he had reasonable grounds to believe that more than HK$10.8 million was tainted money, then, according to Mr Young, they had to prove it with certainty. With respect, that is not a proposition I agree with.

Mr Young refers to the counterparties set out in the Admitted Facts. That is those that appear to deal with Penta Exim. They were investigated by the police, yet no criminal charges were brought against any other party, although true that does not necessarily prove money flowed from legitimate underlying transactions with Penta Exim.

He stresses Penta Trades received the equivalent of HK$64 million from these two accounts. Penta Trade was run by a sole proprietor who used the defendant’s home address to open his bank accounts and as his registered company address. The defendant gave evidence that this man was his flatmate for many years in this two-bedroom premises. This flatmate independently did business with the man, Jogi, in Bangkok in very large amounts through the defendant’s company, Penta Exim. Yet, the defendant did not think anything of it when he found out.

Now, the owner of Penta Trades personally, from the documents, handled many of the transactions over‑the‑counter relating to withdrawals from these two Penta Exim accounts. It is hard to believe in coincidences of this magnitude.

That is the coincidence of the defendant’s university friend having a sole proprietorship, also starting with the word “Penta”, using the defendant’s address as his company’s registered address for banks and business registration, and then him coincidentally, separately doing a vast amount of business with Jogi in Bangkok.

Mr Young has suggested that since only HK$10.8 million is proven tainted money, as far as the defendant is concerned, a starting point of only 3 years would be appropriate. He suggests I should take into account the significant delay, reduce that 3 year starting point by a further 1 year, and pass a sentence of 2 years’ imprisonment or less. I am afraid that is not a submission I agree with. That is not a realistic starting point for these facts in this case.

Sentencing

The maximum sentence to be imposed for money laundering is 14 years’ imprisonment. There are no guidelines or tariffs for this type of offence. Appropriate sentences will be fact specific for every case. There are a number of pertinent factors the court should take into account when sentencing those who deal with the proceeds of indictable offences. I have taken into account the Court of Appeal authority of HKSAR v Boma Amaso [2012] 1 HKC 380.

These factors include obviously the amount of money laundered, although, this is not the be-all and end-all of a case. Other factors include: the nature of the predicate offence, if known; whether there is an international dimension; the sophistication of the offence, the number of transactions as well as the length of time over which the offences were committed; whether the offences were committed by or on behalf of an organised criminal syndicate would be an aggravating factor; the role of the defendant and whether the defendant received any benefit, and if so, how much would also be relevant.

As I have said above, some funds were identified as coming from an account used by fraudsters to defraud Australian victims over the phone to invest in non-existent schemes. The majority of the funds were identified to come from many countries and were dispersed to many countries. There is no doubt an international element in this case.

Moreover, I take into account all the money that flowed in and out, did so within two days, not only the HKK$10.8 million.

I doubt this company, Penta Exim, and these accounts were set up with a legitimate business in mind. The fact they were declared to be set up for trading in electronics and in one bank account, specifically MP3s and DVDs, shows the subsequent story of a diamond trader doing business in Hong Kong through Penta Exim is hard to believe. Moreover, as I have said, fund flow speed of within two days, that is money in and out, appears without any pattern normally associated with trading. This indicates the accounts were used for the purposes of money laundering. PW1 gave evidence that the fund flow speed was not consistent with the business declared. I am sure it was consistent with parking tainted money and cleaning it quickly.

The evidence showed the defendant could not have been in the dark about the volume of monies going in and out of his accounts. I accept there is no evidence he was involved in any predicate offences. If he did open these two accounts for others to use for this purpose, then surely he would have done it for a reward. No one takes a risk of this nature and magnitude without remuneration.

In my view, the defendant played a pivotal role in the scheme to launder tainted money. What has been said time and time again is that sentences imposed for offences of this nature must deter others. Deterrence is of utmost importance. The court has a duty to deter the commission of these types of offences.

I have considered all mitigation put forward. I have also considered the fact the defendant had a clear record. However, that fact alone in my view is not a mitigating factor of any weight or force given the serious nature of the offences here.

Having considered the facts of this case and the amount of the money involved in both counts globally, I am of a view that a starting point of 8 years’ imprisonment is appropriate for these money laundering offences.

I do agree with the submission that delay is a factor and I take it into count. I will reduce that starting point by 6 months. I will order the sentences of both counts to be served concurrently.

In conclusion, for Count 1, you are sentenced to 7 years and 6 months’ imprisonment. For Count 2, you are sentenced to 7 years and 6 months’ imprisonment. I have ordered both sentences to be served concurrently. Therefore, you are sentenced to a total of 7 years and 6 months’ imprisonment.