COURT: The defendant had pleaded guilty to one count of fraud in the lower court and committed to this court for sentencing.
The particulars are that he, between 1 January 2016 and 7 July 2017, by deceit, namely, by concealing from or failing to disclose to PCCW Services Limited (“PSL”) his or his family member’s interests in Go Go Wifi Limited (“GGWL”), and with intent to defraud, induced PSL to include and maintain GGWL in the list of approved suppliers for the provision of goods and services; and second, place purchase orders with GGWL, which resulted in benefit to GGWL or prejudice or substantial risk of prejudice to PSL and/or its subsidiaries.
PSL was a subsidiary of the PCCW Group and it provides information technology, commonly known as IT, and network solutions to its clients.
On 24 October 2014, the defendant signed an employment contract with PSL, I mean PCCW Services Limited, which is a subsidiary of the PCCW Group. A month later, the defendant
was deployed to PSL as a manager of PSL’s Network Service Team and his responsibility was to monitor the daily operations of PSL’s Network Service Team and to provide advice concerning network support to PSL’s other departments and teams. And at the time of his employment, he was provided with a copy of PSL’s Corporate Responsibility Policy and which stipulated that he should not put himself in a conflict of interest with the company’s interests. And it also provides that if a potential conflict of interest arises, he must complete a form declaring the conflict of interest.
GGWL was incorporated in May 2014 by the defendant’s mother-in-law and this was done at the request of the defendant. The defendant was the sole director of that company between 8 and 14 July 2014. And then on 14 July, the defendant’s mother, Madam Lee, replaced the defendant as the sole director of GGWL and since 5 August 2014 had been the sole shareholder of GGWL.
On 12 August 2014, Madam Lee opened GGWL’s bank account with the Bank of East Asia and she was the sole authorised signatory of that account.
Then on 5 January 2016, GGWL submitted a vendor registration form supposedly signed by an assistant manager surnamed Ng to the Group Strategic Purchasing Department, that is in short form GSP, of PCCW-HKT Limited, an associate company of the PCCW Group. And on that form, the telephone number was entered, 39914222, which had Madam Lee as the registered subscriber and that was listed on the form as GGWL’s contact number. And the registered business address of GGWL on the form was in fact premises occupied by Lee’s friend and not by GGWL. And in the form, GGWL also declared that no members of the PCCW Group had any interest in GGWL. Therefore, this indicated their pre-planning of this whole offence.
Then the defendant, sometime in January of the same year, recommended to his supervisor, Mr Mak, to engage GGWL to provide licences and support services in respect of hardware that PSL had bought from A10 Networks Inc. The defendant also told Mr Mak that GGWL was an authorised distributor of A10. He also said to Mr Mak that GGWL was the only company that had passed the technical evaluation of the said project and he claimed that he had no conflict of interest in the engagement of GGWL. So Mr Mak, believing the defendant’s representations, agreed to engage GGWL as a supplier. So, on 22 January 2016, GGWL was approved to be on the list of approved vendors of the PCCW Group and its subsidiaries.
So between January 2016 and March 2017, PSL awarded 29 purchase orders or POs to GGWL worth a total sum of $30,390,153. And as at 7 July 2017, PSL via PCCW-HKT Limited had paid a total of HK$8,678,191.95 and US$988,066.64 into GGWL’s bank account in respect of these purchase orders.
The defendant also admitted that he was responsible at all material times for obtaining quotations, requesting Group Strategic Purchasing Department or GSP to issue purchase orders and confirm receipt of such goods and services to GGWL for the 29 purchase orders before payments were released to GGWL.
Furthermore, in the course of procurement procedure of five purchase orders between 13 May 2016 and 24 February 2017 involving amounts of HK$780,000 or more, in four of those five purchase orders, the defendant himself confirmed in writing that he had no conflict of interest in the purchase.
Also, in the course of the procurement procedure, a person named Ho who had joined A10 as a sales director, assisted the defendant in obtaining dummy quotations from other companies on several occasions in order that GGWL appeared to be the lowest bidder among other quotations submitted to PSL and was awarded the contracts.
Furthermore, in July 2017, the defendant and Ho had a meeting with Mr Chiu who was the immediate supervisor of the defendant. And in that meeting, Ho informed Mr Chiu that GGWL was one of three suppliers of “Software Defined Network service” software support to A10, when in fact GGWL was not an authorised distributor of A10.
In April 2017, PSL conducted internal investigations and found that in fact no service had been provided by GGWL under the 29 awarded purchase orders and that the service stated in the 29 purchase orders were not necessary as they were either covered by other hardware suppliers of PSL or carried out with the use of internal resources or manpower.
Forensic examination of the defendant’s company email account and personal folder at PSL’s server revealed that quotations submitted by GGWL in relation to six of the purchase orders were very likely prepared by the defendant. It was very likely that the soft copies of the said quotations of the same content were created on the company’s system using the defendant’s login shortly before his purported receipt of such quotations from GGWL. It was clear therefore that had PSL been informed of the defendant’s interest in GGWL, GGWL would not have been included in the list of approved vendors or awarded any purchase orders.
The defendant was arrested on 18 September 2017 and an ATM card which relates to the GGWL’s bank account was found in the defendant’s wallet at that time.
And subsequent police enquiries revealed that between May 2016 and August 2017, GGWL’s bank account received a total of HK$8,678,191.95 and US$987,646.64 (net bank handling charge) from PSL.
And investigation revealed that the money, HK$3,007,000 and US$53,900, was transferred to the defendant’s mother’s bank account held with Bank of East Asia and 3 million was further transferred to the defendant’s bank account held with Standard Chartered Bank; and $1,140,000 was transferred from GGWL’s bank account to the bank account of the defendant’s spouse held with Bank of East Asia; and an ATM card of GGWL was used to withdraw $877,100 by way of 121 cash withdrawals and a total of HK$449,900 was deposited in over 29 transactions into the defendant’s personal bank account held with the Hang Seng Bank and HSBC and Standard Chartered Bank.
And during the relevant period, GGWL’s bank account did not have any cash deposits of substantial amounts except from PSL and at all material times there were no payments made from GGWL’ bank account to any companies engaged in providing IT services.
In June 2018, the defendant, his wife, Lee and GGWL had fully restituted the amount received from PSL, namely about HK$16 million, to PSL upon the order of the Court of First Instance.
As far as the case history is concerned, the defendant was first arrested by the ICAC on 18 September 2017. He was released on bail until June 2018 when he was no longer required by the ICAC to extend his bail. So therefore he was in other words released unconditionally from June 2018 until he was rearrested on 28 September 2022 and charged with this present offence. When he appeared in court on 29 September 2022, he was granted bail.
In mitigation, Mr Lee on his behalf has informed the court that the defendant is now aged 46 and is married with one daughter who is 3 years old. And he had received education up to university level in the Hong Kong University of Science and Technology where he obtained his bachelor degree in electronic engineering in the year 2000. And he subsequently had also acquired the master’s degree of science in electronic and information engineering from the Hong Kong Polytechnic University in 2001. He was also awarded another master’s degree in science in global finance from the Hong Kong University of Science and Technology and New York University in 2012. So, according to Mr Lee, the defendant’s jobs have since been related to science and information technology. And as has already been disclosed, the defendant had joined PCCW Limited in November 2014, but as a result of this case he resigned from the company in January 2018.
Mr Lee on his behalf also asks that the sentence reflect the undue delay in charging the defendant as he was first arrested in 2017 and only charged in September 2022. However, Mr Lee also properly, rightly accepted that in investigations of this kind, extensive investigation of documents, etc, has to be made. However, he submits that in this case there has been an unreasonable delay in proceeding against the defendant and he is entitled to a discount to be reflected in his sentence.
As a result of this, I had asked Ms Parwani to supply to this court a chronology of this case in order for this court to see what had happened between the time of the defendant’s re-arrest up to the time he has been brought to court. And it is clear from the chronology that the case was investigated thoroughly with some over 50 witnesses being interviewed and statements taken. And the ICAC had acted most properly because they had released the defendant and his mother unconditionally in September 2018 whilst they were still continuing with the investigation.
There is no doubt that during this time, before the re-arrest of the defendant, may legal advices were sought during that time. And subsequently, after the defendant’s re-arrest, he was granted bail on the following day and the matter was brought up to court without any delay that can be blamed on either the prosecution or the defence. Of course, although no blame can be attached to anyone, once I view the chronology of events, however, as has been submitted by Mr Lee, there must inevitably be some form of psychological burden on the defendant during this time.
Now, this is a very bad case of breach of trust. Although the victim has been fully repaid - that reflects the defendant’s remorse for what he has done - it does not mean that a deterrent sentence should not be imposed because it is to help deter others who are tempted to act in the way the defendant did.
Of course I recognise that each case is fact specific and as has been submitted by both counsel, the relevant cases of Ng Kwok Wing and Cheung Mee Kiu in 2008 and 2006 do make suggestions as to what the proper sentencing guideline should be.
Of course the facts in that case, in the Cheung Mee Kiu case, is not similar at all to this present case, however the guideline also can be considered, and in that case the suggested guideline is that for sums over 15 million a sentence of 10 years or more can be visited on the defendant.
In the case of Ng Kwok Wing, the court reaffirmed the guideline set out in Cheung Mee Kiu again, but in that case the facts were also different and the defendant’s background was also different because the defendant in that case had extensive conviction records. That case involved theft of cheques from a company.
Now, the more recent case is the one of HKSAR v Leung Chun Hei, which was in March in 2023, reported in HKCA 223. That was a case where the defendant pleaded to one count of fraud and which involved a breach of trust and the Court of Appeal considered the cases of Cheung Mee Kiu and Ng Kwok Wing.
The Court of Appeal commented that, “The amount involved is but one of the factors to be taken into consideration when determining the sentence.” Other factors to be taken into account is “the quality and degree of trust reposed in the offender, including his rank; the period over which the fraud had been perpetrated”; and amongst other things, “the effect on the fellow employers or partners and also the personal history and effect on the defendant”. The Court of Appeal also observed that the aggravating features of that case included pre-planning by the defendant and clear conflict of interest.
And as in this case, as I have mentioned already, there was clearly pre-planning, there was clear conflict of interest, and therefore, in considering the starting point, I would say that in the circumstances of this case that a proper starting point would be in the region of 5 to 6 years’ imprisonment.
And the mitigating factor in this case is of course the defendant’s early plea, there has been full restitution, the defendant has a clear record. And, as I have indicated, I do not think there is any unreasonable or undue delay in the circumstances, however, of course there may be an effect on the defendant’s psychological make-up because of the time when he was first arrested until the time the case was brought to court.
And in considering all that, I have decided to adopt the starting point of 5 years’ imprisonment as a starting point. Giving him one-third off for his early plea, the defendant is therefore sentenced to 40 months’ imprisonment.