HKSAR v. YEOH KIM LOONG, EUGENE AND ANOTHER

[English Translation – 英譯本]

DCCC 743/2020

[2021] HKDC 1560

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 743 OF 2020

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Reasons for Verdict

1.  The 1^st and 2^nd defendants are jointly charged with one count of “Conspiracy to offer advantages to a public servant” (Charge 1). The 2^nd defendant is also by himself facing one count of “Offering advantages to a public servant” (Charge 2; alternative to Charge 1). The 1^st defendant is also by himself facing one count of “Misconduct in public office” (Charge 3). They pleaded not guilty to all charges.

Prosecution case

2.  The prosecution’s evidence was voluminous, but the vast majority of it was not disputed by the defence.

3.  The prosecution’s allegations against the two defendants were in fact not complicated.  In my view, there is no need to repeat each and every detail and it is sufficient to give a general description.

4.  At the material time of the case (namely from 30 April 2015 to 24 May 2019), the 1^st defendant (hereinafter referred to as “D1”)  was employed by HKEX[3] and jointly managed the “Initial Public Offer Transaction Team” (IPO Transaction Team)  with Ms Sze Lam (transliteration)  (PW30).  In January 2017, that department was renamed “Initial Public Offer Vetting Team” (IPO Vetting [T]eam)  (hereinafter referred to as “IPO Team” collectively). The IPO Team was responsible for handling all applications to the SEHK[4] for initial public offer (including on the Main Board and in the Growth Enterprise Market).

5.  On 2 September 2013, D1 joined HKEX. Around March 2019, HKEX conducted an internal investigation on D1. On 9 May 2019, D1 resigned. On 8 August 2019, D1 left HKEX.

6.  The prosecution alleged that the 2^nd defendant (hereinafter referred to as “D2”)  issued five cheques in the total amount of HKD 8.15 million between 20 June 2017 and 28 March 2019.  The five cheques were all deposited into a personal bank account of D1’s wife (hereinafter referred to as “Ms Hao”).  Besides, D2 issued two cheques, each in the amount of HKD 500,000, on 9 August and 13 September 2018 respectively.  Those two cheques (in the total amount of HKD 1 million)  were deposited into a joint bank account of D1 and Ms Hao.

7.  In December 2015, D1 filled out an application form of the Hong Kong Jockey Club (hereinafter referred to as “HKJC”)  for the membership as a “Racing Member”[5].  In that application form, D2, as a Third Supporting Member, supported D1’s application for membership[6]. (The date of signature was 16 January 2015, which was a typographical mistake, and the correct year should be 2016.)

8.  Between 30 April 2015 and 31 January 2019, 12 companies submitted applications to the SEHK for initial public offer at different times, and D2 had given suggestions and/or opinions to the companies and/or sponsors concerned. Eventually, approvals were given for the 12 companies to be listed either on the Main Board or in the Growth Enterprise Market[7].

Defence case

9.  Both D1 and D2 elected not to give evidence. D1 called Ms Hao as a defence witness.

10.  Ms Hao gave a detailed account on the purposes and movements of the HKD 9.15 million from D2.  To put it simply, Ms Hao testified that the HKD 9.15 million was held by her on D2’s behalf, and was all used to acquire a total of seven private equity funds with high entry thresholds.  In other words, the HKD 9.15 million was absolutely not bribes given by D2 to D1.

Assessment and analysis of the evidence

11.  The prosecution bears the burden of proving each and every element of each of the charges beyond reasonable doubt.

12.  Both D1 and D2 have clear records, and I have given myself the appropriate directions as to their good character.  I bear in mind that both defendants have the right to remain silent, for which I will not draw any adverse inference against them.

13.  The evidence of the prosecution and the defence in the present case was complicated and tedious, but it can be dealt with by induction and categorization, and there is no need to touch on the details.  There were already detailed descriptions of the relevant evidence in the written closing submissions of the prosecution and the defence.  I shall not repeat them here.

14.  The prosecution and the defence have both referred to the applicable legal principles in their written closing submissions.  In general, the two parties have a consensus with no obvious divergence.

15.  The crucial issues in the present case all involve the finding of facts, which indeed have no significant connection with how to interpret the relevant legal principles.  As for the finding of the relevant facts, I shall conduct the analysis in the following paragraphs.

Did D1 know that D2 had participated in the listing applications of the 12 companies

16.  It is an undisputed fact that D1 and D2, having known each other for years, were close personal friends; and the two of them often, bringing along their spouses, socialized together and had gatherings. It is also an undisputed fact that D2 did participate in the 12 listing applications.

17.  Since they were close personal friends, as a matter of common sense, it is reasonable that D1 knew D2’s particulars such as the nature of his job, the company to which he belonged, his job title and so on. However, at present there is no evidence showing that D1 has come to know through any channel that D2 had participated in the 12 listing applications in any capacity. Save and except the seven emails[8] that D2 sent to D1 relating to “LC”[9], there is no document or evidence showing that D1 had the knowledge of D2’s connection with the 12 listing applications. Considering with common sense, even though D1 knew the nature of D2’s job, unless D2 told D1 about his participation or any of the documents submitted to the SEHK showed D2’s participation, the court cannot, merely on the basis of their friendship, draw any inference that D1 knew about each listing application that D2 had participated in.

18.  The case spanned as long as 4 years. I do not know the total number of listing applications handled by D1 in those 4 years. By common sense, I believe that there are more than 12 listing applications approved by the SEHK every year. On the basis of the existing evidence, the prosecution cannot prove that D1 knew about D2’s participation in the 12 listing applications.

19.  Regarding the listing application of LC, save and except the email(s)  that D2 sent to D1[10], the SEHK’s documents did not show D2’s participation. Even if D2 did email to D1 “for enquiry”, it cannot prove that D2 has actually participated in that listing application, nor can any inference of D1’s knowledge be drawn accordingly.

20.  D1 had worked in the financial sector for years before joining HKEX.  Therefore, to a certain extent, he has definitely known different “people in the same field” who participate in listing applications (such as sponsors, underwriters, lawyers and so on). Of course, these people were not necessarily all D1’s “friends”, but they could be regarded as “acquaintances”.  On such basis, it is my view that among the various types of “IPO players” with whom D1 came into contact in his daily work, it was not possible that all of them were strangers with whom he came into contact for the first time. There were always some friends and some “acquaintances”. It is the same as judges who face different legal representatives in court.  Some are strangers, some are friends and some are “acquaintances”.

21.  Let me give an example: Judge A and Counsel B are close personal friends; Counsel C is dealing with a certain case before Judge A, and Counsel B offers advice (be it pro bono or paid)  behind the scene. Unless there is other evidence, under normal circumstances, no inference can be drawn on the basis of the friendship between Judge A and Counsel B that Judge A knows Counsel B’s participation in that case.  By the same reasoning, D1 and D2 were close personal friends, but without further evidence, the court cannot draw any inference that D1 knew which listing applications D2 participated in.

D2’s support of D1’s application for membership of the HKJC

22.  According to the testimony of Ms Yeung (transliteration)  (PW21), Membership Manager of the HKJC, in July every year, only Honorary Stewards, Honorary Voting Members and Voting Members are each issued 5 application forms for “Racing Membership” for them to invite suitable candidates to join the HKJC. In other words, only these high-ranking members are qualified for giving out application forms for membership; and every year there is a strict quota on the application forms issued to each high-ranking member.  As a result of such arrangement, each application form is in demand and has good value (commonly described as “having a good value and high demand on the market”).

23.  On the other hand, a HKJC member of any rank can act as a Supporting Member for an applicant for “Racing Membership”, which has no quota. This is a significant difference from the privilege of a high-ranking member who can only give out five application forms each year as mentioned above.  Acting as a Supporting Member for an applicant for “Racing Membership” can be regarded as doing a small favour, which can be accomplished by simply writing a few sentences of recommendation and signing.  What D2 did was no different from giving D1 a “lift” while driving.

24.  In my view, D2’s acting as a Supporting Member for D1’s application for “Racing Membership” does not constitute an “advantage”[11] under the Prevention of Bribery Ordinance. As far as the present case is concerned, immediately before and after D2 signed D1’s application form (namely in around January 2016[12]), no listing application in which D2 participated was submitted to the SEHK.

Nature of the HKD 9.15 million provided by D2 to Ms Hao

25.  Regarding this issue, the prosecution and the defence held to its respective case. It is an undisputed fact that during the period of 1 year and 9 months from 20 June 2017 to 28 March 2019, D2 has deposited a total of HKD 9.15 million into the personal bank account of Ms Hao or the joint bank account of D1 and Ms Hao on 7 occasions.  On the face of it, these were indeed unusual circumstances. However, Ms Hao explained in court that the monies did not belong to her or D1, and that it was out of friendship that she invested in private equity funds on behalf of D2. It is also an undisputed fact that Ms Hao acquired different funds with US dollars of equivalent value.

26.  The prosecution gave a detailed analysis of Ms Hao’s testimony in their written closing submission. The conclusion was that she was not credible.

27.  As a juror, I have the following comments on Ms Hao’s testimony. According to the “Table of the flow of monies[13]” compiled by the prosecution, every time after receiving money from D2, Ms Hao acquired the relevant fund(s)  with all the money (except the HKD 1 million that was intended for investment in Lufax[14])  within a few days to 1 week.  This tends to prove the genuineness of Ms Hao’s testimony.  If the monies from D2 were bribes, why did D1 or Ms Hao need to make all the efforts to acquire private equity funds and be subject to the restriction of the non-redemption period?  Even if such extra income was not spent on timely enjoyment, was it not the case that higher and faster returns could be obtained if investments had been made in stocks and real estate? Besides, if private equity funds were to be used as cover-up or for exoneration in future, why had D2 not been requested to make payments through other non-transparent channels?  D1, D2 and Ms Hao were all elites in the financial and investment sectors.  I believe that since they knew how to use private equity funds as the front, they definitely would not have been as careless and flagrant as having bribes deposited directly into Ms Hao’s bank account.

28.  By the same reasoning, regarding the HKD 1 million intended for investment in Lufax, I am of the view that Ms Hao’s explanation (D2 was requested to deposit money into the joint account for convenience only because D1 requested her to pay certain family expenses at that time)  was not unreasonable. I also find it understandable that Ms Hao kept the monies for as long as 8 months because she had to wait for instructions coming from big businesspersons at any time.

29.  The prosecution also criticized that Ms Hao deliberately refrained from disclosing WhatsApp and WeChat messages among her and D2 and Shirley[15] until she adduced the so-called “corroborative evidence” in court at the very last moment. In my view, Ms Hao had no obligation to assist the Independent Commission Against Corruption (“ICAC”)  or the prosecution. As a defence witness, she had no duty to disclose in advance the content of her testimony either. During cross-examination, the prosecution had a chance to inspect Ms Hao’s mobile phone (the one that was not handed to the ICAC during the initial stage of investigation).  After inspecting it, the prosecution did not cross-examine her in respect of matters such as the genuineness of the messages in the mobile phone, whether editing had been done and so on. Therefore, I am satisfied that those messages were not fabricated after the event, and that they were real-time records of the communications among the persons concerned.

30.  As a juror, I am of the view that rather than spending time and efforts to fabricate text communication records involving at least four persons[16] years ago, the defence must have thought of fabricating formal documents by which D2 and Shirley respectively entrusted Ms Hao with holding and acquisition of funds on their behalf.  Would the latter not be more convincing? However, that was not what the defence did.  Instead, they relied on fragmented and unorganised text messages to prove the truthfulness of Ms Hao’s testimony. I believe that Ms Hao’s account that she held and acquired funds on behalf of D2 may be true.

31.  The prosecution also challenged why it was necessary to rely on Ms Hao all the way whilst D2 and Shirley were both professionals in the financial and investment sectors. Besides, the amount of money that each of them invested was as much as HKD 10 million, but things worked merely on “trust”. I am satisfied with Ms Hao’s explanation that the financial and investment sectors, like those of doctors and lawyers, were in fact divided into many specialized areas. The private equity funds that Ms Hao acquired had high-priced entry thresholds, and only professional investors or people with considerable knowledge of investment could participate.  Ms Hao knew the persons in charge of the funds concerned, which was precisely the reason that they let her acquire the funds “as a token of respect”.  Without such personal connections, there was no way that D2 and Shirley could enter the market. It is therefore not surprising that they relied on Ms Hao all the way. As to the level of the amounts of monies, it is in fact a matter of relativeness. To certain people who have considerable incomes and assets, millions or even tens of million dollars is insignificant. In a case where each of several basic-level colleagues working in the same company put up tens to one hundred dollars to pool money to place a bet on Mark Six, horse-racing or a soccer game, things are also usually done depending on “trust”. I believe that high earners may also, by each contributing several million dollars, acquire a private equity fund together depending merely on “trust”.

32.  As a juror, I am satisfied with Ms Hao’s testimony.  Her account that she held the HKD 9.15 million on behalf of D2 for acquisition of private equity funds may be true.

33.  Based on the analysis of the various issues above, I am of the view that the prosecution has failed to prove beyond reasonable doubt that: (i)  D1 knew that D2 had participated in the 12 listing applications in any way; (ii)  D2’s acting as a Supporting Member for D1’s application for “Racing Membership” to the HKJC constituted an “advantage”; and (iii)  the HKD 9.15 million that D2 provided to Ms Hao constituted an advantage to D1 and/or his spouse. I therefore find D1 and D2 not guilty of Charge 1, and D2 not guilty of Charge 2.

34.  As for Charge 3, since D1 did not know that D2 had participated in the 12 listing applications, nor did D2 provide any advantage to D1, D1 was just not required to make any declaration of interests to HKEX, or withdraw himself from the vetting and approval of the listing applications concerned. I find D1 not guilty.

35.  During the trial, I rejected the defence’s application for producing to the court the affirmations of D2 and Ms Hao in reply to the ICAC, and gave brief reasons.  In the light of the present verdicts, I do not think that it is necessary to give detailed reasons for the decision concerned.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. P. Y. Lo, Barrister-at-law.