HKSAR v. LEE KAI HUNG

DCCC333/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 333 OF 2008

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Reasons for Sentence

1.  The defendant, an elected member of the Wanchai District Council, pleaded guilty to five counts of fraud and one count of misconduct in public office.

2.  Charge 2 occurred in April 2006 and the amount of operating expenses allowances - in short, I will refer to it as OEA - claimed for April 2006 was $4,000.  In fact, the council assistant had only worked two nights and was paid $250 for that month. 

3.  Charge 3 related to the OEA claim for the month of May 2006 for the same council assistant who no longer worked for the defendant and the amount claimed was also $4,000.

4.  Charge 5 was related to a claim for OEA for $5,500 for the month of October 2006 and Charge 6 was another OEA claim for $5,500 for the same council assistant for the same amount.  The council assistant was, in fact, only paid $1,980 and $3,371 respectively for these two months.

5.  Charge 7 was related to a claim for OEA for February 2007.  The amount was $6,500 and the council assistant involved in this charge was paid only $750 for that month.

6.  Charge 8 was related to the defendant’s dishonesty in using his assistant to do his private insurance business work and preparing his private teaching materials when in claiming OEA he had declared that the OEA expenses were incurred wholly and solely in discharging his District Board duties. 

7.  The defendant’s dishonest conduct was not a one-off act of greed.  In fact, it formed a pattern of dishonesty and the conduct was over a period of time; months.  I am quite sure he would have carried on doing it had the offences not come to light.  It was blatantly outrageous to claim thousands of dollars from the District Council when he had only paid a fraction of the amounts to his assistants. 

8.  The evidence against the defendant in this case was quite overwhelming.  The petty cash vouchers were not even signed by the assistants and these assistants had given statements to the ICAC that they had not received all or part of the OEA claimed.  The defendant had also admitted the offence in a VRI interview. 

9.  I did not find the defendant remorseful.  He had not pleaded guilty at the first available opportunity.  He challenged the prosecution case, applying for a permanent stay of proceedings on the ground of abuse of power and abuse of process on the part of the ICAC.  I refused the application.  There was no real or substantive ground to make that challenge for permanent stay. 

10.  After the application failed, the defendant then pleaded guilty to five of the seven counts of fraud and also pleaded guilty to the misconduct charge.  The prosecution offered no evidence against him on the remaining two counts of fraud.

11.  The defence asked this court to consider community service order as an appropriate sentencing option.  I have intimated that I did not think it was the appropriate sentence for this type of offence, particularly when the defendant was an elected member of the District Board Council and he had used his position as a district councillor to carry out the fraud. 

12.  I adhere to my view that a CSO or community service order or suspended sentence is not appropriate in this case.  I do not agree with defence mitigation that it was more reckless than intentional for the defendant to have committed these offences.  It was clear as daylight to me that the defendant was utterly dishonest and greedy and had meant to dishonestly enrich himself claiming more than he was entitled under the OEA allowance scheme.  The scheme was meant to help and subsidise District Board members in running the District Offices and the government was, of course, helping the people of Hong Kong by indirectly helping the District Board members to run their offices more efficiently.

13.  There was a period of some 11 months from the date of arrest to the date the defendant was charged.  The defendant was a serving district councillor during all this time and he was also doing his insurance work.  On the other hand, the investigation and obtaining of legal advice were ongoing.  I do not think there was undue delay as such that would enable this court to consider a suspended sentence. 

14.  The defendant had not changed his position in the meantime.  In the case of HKSAR v Tang Ching Ming Magistracy Appeal 249 of 2007, the appellant there was also a District Board member and he was complaining on appeal that his sentence of 3 months’ imprisonment had not been suspended.  The Honourable Mr. Justice McMahon had this to say in paragraph 63 on page 242 of the appeal judgment:

“The 2nd appellant was in a position whereby he was in a position of breach of trust.  He was a serving district councillor at the time he was providing the Kwun Tong District Council, and necessarily the District Office, with forged documents.  He was subverting the system of local government he had been elected to uphold.  There was no exceptional circumstance warranting the suspension of his sentence.  His previous good character could not, given the totality of the facts of the case, have amounted to such a circumstance.”

15.  In my view fraud is a very serious offence and when it involved a person holding public office and involved cheating the government out of sheer greed, an immediate custodial sentence is called for. 

16.  I also think some form of deterrence is necessary when the making of claims for allowances is quite easy and is based on honour and trust and detecting such an offence is no easy task. 

17.  The amount involved here is not large.  To be exact, the amounts totalled $19,149.  However, in terms of the amounts that were actually paid to the assistants, the ratio of the money kept by the defendant was quite large. 

18.  The defendant had a clear record.  He is a serving District Board member.  No evidence is before the court of any outstanding work he has done.  I take it he is serving the community, especially the people of Wanchai whom he represents and whom he has let down terribly with his greed and folly. 

19.  The defence said the money had been repaid; in fact, the defendant provided a cheque for $20,000.  This cheque was held by the prosecution as an exhibit.  I have already made a compensation order and I have no doubt the defendant will honour it.

20.  The offences are a series of transaction involving the same dishonesty and misconduct.  For this reason I would adopt the global approach in sentencing and make all the terms run concurrent to each other. 

(Discussion re further mitigation)

21.  I was delivering my reasons for sentence.  In fact, a copy of my written reasons for sentence was handed down to both counsel for the prosecution and defence.  I was reading up to paragraph 10 of my written reasons when Mr Wong, leading counsel for the defence, got up and addressed the court that he had not completed his mitigation and was only expecting the court to give an answer whether CSO was an appropriate sentence.  It was probably an unfortunate misunderstanding.

22.  I then heard Mr Wong on further mitigation.  I also stood the matter down for further consideration and to read all the reference letters submitted.  In further mitigation, Mr Wong, leading counsel for the defence, highlighted the public services the defendant had performed for the Hong Kong communities for many years, starting as early as 1980.  I am not going to outline each and every one but these letters showed outstanding public service by the defendant.  There are letters from outstanding public figures like serving member or ex member of Legco, a professor from a university, fellow DB member, regional council member and the heads of charitable organisations, just to mention a few.  In short, the defendant has a remarkable, an outstanding record in terms of public services. 

23.  Mr Wong also informed the court again that the application to apply for permanent stay was due to legal advice given by the defence.  Nonetheless, the decision and the instruction to go ahead with the application must be the defendant’s after weighing the weight of the evidence, after obtaining full legal advice.

24.  In the VRIs, the records of interview, my impression was that the defendant had not shown full remorse, not shown full co-operation as the defence would like this court to think.  I adhere to my view that the defendant was not genuinely remorseful.  He must have known from the very outset of his utter dishonesty.  It would be futile to try to wriggle out of his responsibility when the evidence was so overwhelmingly against him.

25.  In any event, even though if I accept that the defendant has some degree of remorse and even though my view was that he should have pleaded guilty right from the outset, I still adhere to my view that for these offences of fraud and misconduct in public office, an immediate custodial sentence is appropriate, and CSO is not the right sentence for people in public office committing fraud as in this case.

26.  I will, after consideration of further mitigation and public services that the defendant has performed over the years, give the defendant a bigger discount in sentence than I had originally intended. 

27.  I had delivered most of my reasons for sentence earlier on.  I would therefore reiterate and adopt the reasons I earlier stated in open court save and except any part that I had clarified just a minute ago and I will now carry on from there.

28.  I think I was at, as I said in paragraph 10 of my written reasons - I reiterate that paragraph - the offences are a series of transactions involving the same dishonesty and misconduct.  For this reason I would adopt the global approach in sentencing and make all the terms run concurrent to each other. 

29.  Having considered all relevant factors I think a term of 12 months’ imprisonment is appropriate for these offences.  The defendant’s late plea entitles him to a discount; however, not a full one-third discount.  I take into consideration the defence saying that it was mostly on the defence part that they advised him to have a go in the application for permanent stay.  So in terms of the discount I will give him one-quarter discount instead of one-third, so I will take 3 months off the 12 months.

30.  Although full restitution had not yet been made, I agree with defence that the defendant had always wanted and shown willingness to repay the whole sum.  It was not a large sum of money, only $19,149.  I think the larger the amount, the larger the discount should be given for the full restitution.  So an amount of just less than $20,000 as far as restitution is concerned or the damage for non-restitution is concerned, that is almost negligible.  Well, I would not say negligible; that is of a lesser degree as far as it goes when it comes to discount.  However, I am prepared to give the defendant another one month in discount. 

31.  For his public services since 1980 and as a District Board member serving the community, the fact that he is a man of unblemished record hitherto and the consequences of the present incarceration upon his future, I give him a bigger discount than I originally intended.  I originally intended one month before hearing Mr Wong in his further mitigation.  I will now give defendant 3 months’ discount off the sentence for this reason.  By simple arithmetic the defendant will receive a sentence of 5 months.  I hope I have not got it wrong.  So 7 months off the 12 months. 

32.  I therefore sentence the defendant to 5 months’ imprisonment on Charges 2, 3, 5, 6, 7 and 8, the terms to run concurrently.