HKSAR v. LIM BAN HOONG AND ANOTHER

CACC 465/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 465OF 2007

(on appeal from DCCC NO. 589 of 2007)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Hartmann JA (giving the Reasons for Judgment of the Court):

1.   On 10 December 2007, following a trial in the District Court before Deputy Judge William Lam, the applicants, together with one other, were convicted of one count of conspiracy to defraud. The first applicant, Lim, was sentenced to 18 months imprisonment. The second applicant, Ma, was sentenced to 39 months imprisonment. Both applicants sought leave to appeal their convictions. The second applicant also sought leave to appeal her sentence.

2.   In respect of the first applicant, there were a number of indirect indications that, having served his sentence and left Hong Kong, he did not wish to pursue his application for leave. We were informed that a letter formally confirming his desire to abandon his application was being sent to the court through consular channels but had not yet been received. As it was, the first applicant was not present in court to proceed with his application. In the circumstances, his application was dismissed.

3.   In respect of the second applicant, through her counsel, Mr McGowan, she sought leave at the commencement of the hearing to abandon her appeal against conviction. We granted leave, dismissing that application.

4.   That left only the second applicant’s application for leave to appeal her sentence of 39 months imprisonment. Having heard submissions, we refused leave saying that we would give our reasons later. We do so now.

5.   The application for leave to appeal sentence was based on two assertions, first that the judge had failed to take into account the sheer improbability of the conspiracy succeeding; in short, that there was only ever a notional risk of loss to the intended victim of a conspiracy, and, second, that the judge had fallen into error in taking as his starting point a sentence in excess of three years. Accordingly, so it was argued, the sentence was wrong in principle and manifestly excessive.

6.   What then was the nature of the conspiracy to defraud? By way of an overview, it consisted of the presentation to a bank in Hong Kong of a written agreement purportedly entered into in October 1948 in Shanghai in terms of which the bank, or more accurately one of its predecessors in title, acknowledged receipt of a deposit from a woman by the name of Sa Haiian in the astronomical amount of US$108 billion. Whether the deposit was in cash or in precious metals to that value was left uncertain in the agreement. However, the agreement made provision for interest on the capital calculated at 8% per annum and allowed Madam Sa or her representatives to make withdrawals against the deposit using one or more of 30 cheques, each cheque being in the sum of US$3.6 billion.

7.   The purpose of the presentation of the agreement and the cheques to the bank in Hong Kong by the applicant and her two co-conspirators was to obtain payment of the full deposit of US$108 billion plus accumulated interest, payments to be made into an account in the Mainland in the name of the applicant who purported to be acting under the authority of Madam Sa, the one who in 1948 had deposited either the funds or precious metals with the bank’s Shanghai branch.

8.   As to the involvement of the applicant in the conspiracy, the judge concluded that she was the mastermind. We have no reason to disagree with that assessment.

9.   In late April 2007, the applicant’s two co-conspirators first made contact with the bank in Hong Kong. They presented copies of the agreement and certain of the cheques, holding out that they were representing the applicant and asking for payment of all monies due into an account in her name. A further meeting followed together with a number of telephone communications. The bank officials, being gravely suspicious of the authenticity of the documents presented to them, were acting with caution.

10.   To place pressure on the bank, the applicant wrote two letters. The second letter contained the following demand:

“The treatment of my representatives by the bank and its senior officer thus far is highly unacceptable and I am compelled to demand from the top management an immediate reply to my request for the withdrawal of the deposits together with the cumulative interests (sic). I reserve my right to take appropriate action to protect my financial interests.”

11.   In early June 2007, for the first time, the applicant came with her two co-conspirators to the bank in Hong Kong. She presented the purported original of the 1948 agreement together with three original cheques. In addition, she presented a photostat copy of the agreement, photostat copies of all 30 cheques and a power of attorney purportedly signed by Madam Sa.

12.   It is to be noted that all of these copies were certified to be true copies of the originals by a well-known firm of Hong Kong solicitors. The certifications were later shown to be false.

13.   At this meeting, saying that she was acting under the authority of Madam Sa, the applicant gave instructions for the full capital sum plus accumulated interest since 1948 to be paid into an account in the Mainland.

14.   Immediately thereafter she and her co-conspirators were arrested. The bank suffered no loss.

15.   As we have said, it was Mr McGowan’s submission that the conspiracy to defraud the bank was so obviously doomed to failure that, in assessing sentence, the judge was obliged to take into account what in reality amounted to no more than a notional risk. We did not agree.

16.   This is not the first time that financial institutions and individuals in Hong Kong have been subjected to attempts to convince them that monetary instruments of different kinds, instruments of considerable vintage created in times of war and turbulence, are genuine and are either of enormous value in themselves or have such value by reason of the fact that they represent proof of a debt due. The fact that a conspiracy to defraud stretches the limits of audacity is not of itself a mitigating factor.

17.   All too often the values stated in these attempts to defraud are massive, as they were in the present case. But that is not necessarily a sign of naive avarice on the part of the perpetrators of the scheme. In respect of a financial institution, for example, the greater the claim, the higher the risk and thereby the more compelling the temptation to offer a lesser amount in settlement.

18.   Nor could the scheme masterminded by the applicant be dismissed as presenting no risk to the intended victim. The false documents employed by the applicant were meant to have been created in October 1948. That was a time of internecine struggle between forces of the Red Army and the Kuomintang, a time when Shanghai was flooded with refugees. An agreement purporting to have been made at that time, a time when banking records may have been lost or destroyed, may well have placed the bank in Hong Kong in difficulty in attempting to verify or disprove the existence of the debt.

19.   In the circumstances, the judge was correct to ignore what Mr McGowan described as the sheer improbability of the scheme as a mitigating factor.

20.   It was Mr McGowan’s second ground that, bearing in mind that the banks suffered no loss, the judge erred in taking as his starting point a figure in excess of three years, albeit by only three months. In this regard, he referred us to two judgments of this Court, differently constituted, in which sentences of three years, taken as the appropriate starting point for similar offences, were approved. The judgments concerned offences of using or possessing false instruments, in the one case a false bank draft, in the other fake US treasury bonds. There are, however, no guidelines for offences of this kind. Each case must be determined according to its own facts. In any event, taking into account that in the present case the starting point that was chosen was only three months more, we failed to see how, by that reason alone, it could be criticised as being manifestly excessive.

21.   The maximum penalty for conspiracy to defraud is 14 years imprisonment: s. 159C(6) of the Crimes Ordinance, Cap. 200. Although there was no loss to the bank, taking into account that the applicant was the mastermind of an elaborately conceived attempt to defraud which was aggressively pursued, we were satisfied that the sentence of 39 months was appropriate.