HKSAR v. TAM LAP-SHEK

DCCC 1212/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1212 OF 2008

____________

____________

REASONS FOR VERDICT

1.  D1 faces 6 charges of "Dealing with property known or reasonably believed to represent proceeds of an indictable offence" (Charges 1 to 6); whereas D2 faces 4 similar charges (Charges 7 to 10).  They both pleaded not guilty to the respective charges.

Procedural History

2.  This case first came before H.H. Judge A. WONG in July 2011. Before the trial commenced, Mr. Oderberg applied for a stay of proceedings on behalf of D1 and D2 on the grounds that neither of them could have a fair trial owing to D1's medical condition. Regarding D2, it was submitted that her case would be prejudiced by D1's medical condition and mental disability since D1 would not be able to give cogent and reliable evidence at the trial. The learned judge refused the application for both defendants and gave his reasons on 15 July 2011.

3.  Between October and November 2011, Judge WONG heard evidence on the issue whether D1 is fit to stand trial, pursuant to section 75 of the Criminal Procedure Ordinance (Cap.221). The learned judge decided that D1 is fit to stand trial and gave his reasons on 4 November 2011.  This case was then set down for trial commencing on 12 January 2012.

4.  This case came before me on 12 January 2012.  On that day, Mr. Oderberg informed me of the above procedural history of this case.  Mr. Oderberg further informed me that owing to D1's mental condition, he is unable to give meaningful instructions to counsel in the trial.  Thus, Mr. Oderberg would not be able to conduct meaningful cross-examination or to put forward D1's case.  Mr. Oderberg suggested to sever D1 from the present case (pending appeal against Judge WONG's decision on the stay application) and to proceed with the trial of D2 first.  I considered the matter and gave my ruling on 13 January 2012.  I directed the trial of D1 and D2 to proceed forthwith.

The Prosecution Case

5.  At all material times and until February 2010, Kirin Far East International Trading Limited ("Kirin") was the owner of Flat A, 33/F, Tower 1 ("Flat A") and Private Car Park No.5, Car Park Level 1, Bel-Air on the Peak, Island South, 68 Bel-Air Peak Avenue, Hong Kong (collectively the "Bel-Air Properties").

6.  D1 and D2 were and still are the only 2 directors and shareholders of Kirin.  Kirin was incorporated in Hong Kong on 28 April 2004.  It was set up for the sole purpose of holding the Bel-Air Properties.

7.  From the end of 2006 to February 2010, D1 and D2 were co-habiting at Flat A.  They were arrested by the Police at this home on 19 July 2007.  A house search was conducted on the same day.  The Police seized a long list of valuable items including jewelleries, brand name watches, brand name wallets and crystal products (see paragraph 5 of the Admitted Facts, Exhibit P35).  The keys to 2 safe deposit boxes located at 2 branches of Hang Seng Bank were also found at Flat A.  Both safe deposit boxes were opened by the Police on the same day; similar valuable items were found inside (see paragraphs 5 to 7 of Exhibit P35).

8.  As at 19 July 2007, D1 maintained the following bank or securities accounts in Hong Kong with the details set out below :-

Charge	Bank/Co.	Account No.	Period	Amount Received (HK$)
1	Hang Seng Bank Limited	225-176973-888	01/07/2001 to 18/07/2007	54,156,413.08
2	ICBC (Asia) Limited	01-11-122183 (also referred to as 861-011-12218-3)	08/01/2004 to 18/07/2007	2,580,000.00
3	ICIC Limited	01-3520-46079	13/02/2006 to 18/07/2007	1,575,087.83
4	Fubon Bank (Hong Kong) Limited	88-02986-6	06/10/2006 to 18/07/2007	1,441,048.02
5	Fubon Bank (Hong Kong) Limited	862-0-705277-1	06/10/2006 to 18/07/2007	3,849,411.36
6	Hang Tung Securities Limited	01-301	13/02/2007 to 18/07/2007	4,670,050.25

9.  D1 did not file any tax returns with the Inland Revenue Department for the 6 financial years from 2001/2002 to 2006/2007.

10.  In his video recorded interview[1], D1, under caution, claimed that he was a director of Discovery Castle Recreation Association Limited (a mahjong club) and the Stylish Thai Restaurant.  He also admitted that he co-habited with D2.  He remained silent on all other matters.

11.  As at 19 July 2007, D2 maintained the following bank or Jockey Club accounts in Hong Kong with the details set out below :-

Charge	Bank/Co.	Account No.	Period	Amount Received (HK$)
7	Hang Seng Bank Limited	265-079053-888	03/07/2001 to 18/07/2007	33,274,813.88
8	Hong Kong Jockey Club	05225037	01/07/2001 to 18/07/2007	3,251,895.00
9	Hang Seng Bank Limited	286-3-154700	03/07/2001 to 18/07/2007	5,579,850.95
10	Bank of China (Hong Kong) Limited	014-677-1-048324-8	07/07/2001 to 18/07/2007	1,739,857.30

12.  D2 had filed tax returns with the Inland Revenue Department reporting annual income in the sums of $180,000, $180,000 and $120,000 for the 3 financial years of 2003/2004, 2004/2005 and 2005/2006 respectively.  Such income was derived from her employment at the Stylish Thai Restaurant as a manageress.

13.  In her video recorded interview[2], D2 admitted under caution that D1 was her co-habiting boyfriend.  She remained silent on all other matters.

14.  Records kept by the Companies Registry show that D1 was neither a shareholder nor a director of Discovery Castle Recreation Association Limited ("Discovery Castle").

15.  Mr. SHIU Chi-nang, owner of the Stylish Thai Restaurant, employed D2 in early 2005 for promoting the restaurant's business. Her monthly salary was $15,000.  D2 left the restaurant in December 2005, but resumed her employment in May 2006 until December 2006.  Mr. SHIU was acquainted with D1, but D1 was neither a director nor a shareholder of the restaurant at all material times.

16.  The defence admitted all of the facts stated above.

17.  An expert report dated 5 October 2009 prepared by forensic accountant Mr. John Robert Lees was produced as Exhibit P32 under section 65B of Cap.221.

Defence Case

18.  D1 elected not to give evidence or call any defence witness.  This is his right, I drew no adverse inference against him in this regard.

19.  D2 elected to give evidence and called 3 defence witnesses (Mr. NG Hon-ming, Mr. IP Wai-chung and Madam HONG Mat).

20.  D2 stated that she has been living together with D1 since 1992.  D2 has received education up to Primary 4 level.  She left school shortly after 15 and she is now 53.  D2 went to Australia in the 1980s; she met D1 there.  In 1992, she returned to Hong Kong together with D1.  D2 said when she met D1, D1 told her that he is a businessman running his father's antique shop in Macau.  D2 claimed that she received a major operation in November 1992; she has been having very poor memory ever since.

21.  D2 claimed she does not know any details about D1's father's antique shop such as its annual revenue, D1's shareholding in the shop or D1's involvement in its operation. D2 did not ask D1 about his annual income.  She claimed that D1 had mentioned to her he could earn several million a year.  However, D1 did not tell her the source of his earnings; she did not ask and did not want to know.  D2 also claimed that much of the money in her accounts were given to her by D1, but she did not ask D1 why he gave her so much money or why he used her accounts instead of his own.  D2 claimed that she was a member of a chit fund for social purpose.  Her monthly contribution to the fund was about $3,000.  In any event, the amounts allegedly related to D2's chit fund are only a $10,000 deposit from MA Wendy Yuk-chun[3] and a $14,005 payment to MA[4].

22.  DW2 Mr. NG said he and D1 were members of a chit fund which had a pool in the sum of about $1.5 million.  A total of 5 cheques in a total sum of $309,700 issued by Mr. NG were deposited into D2's bank account in relation to Charge 7[5]. Mr. NG said part of this total sum was related to the chit fund and part may be related to other types of transactions such as mahjong.  Mr. NG was unable to say respectively how much was for mahjong and the chit fund.

23.  From 2001 to 2007, DW3 Mr. IP played mahjong with D1 for money 3 to 4 times a week.  He was also a member of the same chit fund together with D1 and Mr. NG.  A total of 7 cheques in a total sum of $275,500 issued by Mr. IP were deposited into D2's bank account in relation to Charge 7[6]; a cheque in the sum of $18,000 issued by Mr. IP was deposited into D2's bank account in relation to Charge 9[7]; and a cheque in the sum of $88,000 issued by Mr. IP was deposited into D2's bank account in relation to Charge 10[8]. Mr. IP does not remember drawing these cheques, but claimed that they were mostly for playing mahjong.  He also claimed that for all the cheques he issued, he had left the payee column blank.

24.  DW4 Madam HONG is the licensee of a mahjong club operated by Discovery Castle.  She said D1 was a shareholder of Discovery Castle; he purchased 2 shares at $600,000 in May/June 2006.  D1 withdrew from the business in January/February 2008.  The club's business was poor, so D1 could not get any money back.  Madam HONG was asked why D1 was not registered as a shareholder.  She explained that the company had 10 shareholders, and the company's accountant told her a limited company can only have 1 or 2 shareholders.  In fact, her husband is the only registered shareholder of Discovery Castle.

Assessment and Analysis of Evidence

25.  Both D1 and D2 have a clear record.  I have directed myself on their good character accordingly.

26.  D1 and D2 were the sole account holder and sole signatory of the 10 subject accounts respectively. By receiving, withdrawing and transferring money into or from their respective accounts, they must have dealt with the money specified in each charge.

27.  It is trite law that the Prosecution does not need to prove that the property in question (i.e. money in the 10 accounts) is in fact proceeds of an indictable offence.[9] In this case, there is no evidence of any underlying criminal activities.  What the Prosecution needs to prove is the defendants had reasonable grounds to believe that the property represented the proceeds of an indictable offence.  It is now well settled that having "reasonable grounds to believe" involves both subjective and objective elements.  Objectively, it requires proof that there are grounds that a common sense, right-thinking member of the community would consider sufficient to lead a person to hold a particular belief.  Thereafter, subjectively, it has to be proved that these grounds were known to a defendant.[10]

28.  The forensic accountant Mr. Lees has meticulously reviewed all the bank statements and transaction records of the 10 accounts in question.  He then analyzed the source and application of funds in the 10 accounts for the relevant period.  He came to a firm conclusion that the transaction size and nature of activities in the 10 accounts display characteristics of money laundering.  The basis of Mr. Lees' findings is sound and his methodology is reliable.  As a juror, I accept Mr. Lees' expert opinion without reservation.  His analysis is set out in great details in his report (Exhibit P32).  I need not repeat them here.

28. I will adopt a common sense approach when deciding this case. D1 is a person who had no declared income during the 6 financial years from 2001/2002 to 2006/2007. There is some evidence showing that D1 might be a mahjong player, member of a chit fund, investor of a mahjong club and operator of an antique shop. Having looked at the substantial amounts of money involved in each of his account, one cannot help but to ask rhetorically "Where did the money come from?" The question simply cannot be answered based on the available evidence. Even if the evidence of DWs 2 to 4 is accepted, the amount of funds accounted for by these 3 witnesses only constitutes a drop in the bucket.

30.  As a juror, I do not for one moment believe that D1 had the ability to generate the amounts of money in his 6 accounts by engaging in gambling, chit fund and trading antiques.  There is simply no such evidence showing D1's capability of doing so.  According to the legal principles laid down in LI Defan and another v HKSAR [2002] 1 HKLRD 527 and HKSAR v YAM Ho-keung CACC 555/2001, in the absence of explanation from the defendant, the court is perfectly entitled to regard the failure of the accused to give any explanation on oath as strengthening the inference to be drawn from the Prosecution case.  In my view, legitimate money, large or small sums, does not come by easily and for no good reason.  The only reasonable inference to be drawn is D1, both objectively and subjectively, had reasonable grounds to believe that the money he received in his 6 accounts must be wholly or partly proceeds of an indictable offence.  Yet, he had dealt with those funds.

31.  For genuine reasons or otherwise, D2 has a weak memory.  Her evidence is fragmented and uncomprehensible.  She mumbled to herself in the witness box and whenever clarification was sought, she blamed her memory and lapse of time claiming that she was unable to recall any concrete facts.  Sometimes, she simply did not know the answers.

32.  In her evidence, D2 generically claimed that much of the money she received in her 4 accounts was given to her by D1.  However, she did not ask D1 why he gave her so much money or why he used her accounts instead of his own.  About the source of D1's earnings, D1 did not tell her; she did not ask and did not want to know.

33.  D2 had meager declared income during the 6 financial years from 2001/2002 to 2006/2007. The Court of Appeal in HKSAR v WAN Yet Kwai CACC 372/2008 held :

"…if a person, although he cannot know for certain, nevertheless has reasonable grounds to believe that, having regard to all the circumstances, he may well be dealing in the proceeds on an indictable offence, and if that person goes ahead and deals then he commits an offence under s.25(1). This is so even if there also exist reasonable grounds for believing in some alternative scenario.

What cannot be ignored is that money laundering is invariably a devious activity, its purpose being to appear what it is not. In our view, it would therefore undermine the purpose of the legislation if a person was able to ‘turn a blind eye’ to a reasonably held believe that certain property represents the proceeds of an indictable offence by being able to focus instead on some alternative reasonably held belief as to its provenance."[11]

In my view, D2 cannot close her eyes and shut her ears to the money which went through her accounts, even if D1 gave her most of it. D2 might have had limited education and she might feel inferior to D1 being his woman; however, any reasonable person in her position must at least have the curiosity to find out how D1 was able to earn so much money.

34.  Lord Bridge in Westminster City Council v Croyalgrange Ltd. and another [1986] 2 All ER 353 held :

"...it is always open to the tribunal of fact, when knowledge on the part of a defendant is required to be proved, to base a finding of knowledge on evidence that the defendant had deliberately shut his eyes to the obvious or refrained from inquiry because he suspected the truth but did not want to have his suspicion confirmed." [12]

In my view, there is only one inference to be drawn. Either D2 knew about the illegitimacy of the sources of the money which went through her 4 accounts or she simply turned a blind eye to the obvious truth.

35.  Based on the reasons stated above, I am satisfied that the Prosecution has proved beyond reasonable doubt Charges 1 to 6 against D1; and Charges 7 to 10 against D2.  Accordingly, I find both of them guilty of the respective charges.