HKSAR v. OEI HENGKY WIRYO

CACC109/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 109 OF 2005

(ON APPEAL FROM DCCC 846 OF 2004)

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J U D G M E N T

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Hon McMahon J (giving the judgment of the Court) :

1. The applicant was convicted after trial before Deputy District Judge Patrick Li of an offence of conspiracy to commit bookmaking, contrary to section 7(1)(a) of the Gambling Ordinance, Cap. 148 and section 159A of the Crimes Ordinance, Cap. 200 (being the 1^st Charge) and of two offences of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap.455 (being the 2^nd and 3^rd Charges).

2. In respect of the 1^st charged offence, the applicant was sentenced to three and a half years’ imprisonment and fined $420,000, with nine months’ imprisonment to be served consecutively in default of payment.  For the 2^nd charged offence, he was sentenced to four years’ imprisonment and fined $250,000 with six months’ imprisonment to be served consecutively in default of payment; and for the 3^rd charged offence, to one and a half years’ imprisonment.  Two years of the sentence imposed for the 2^nd charged offence were to be served consecutively to the term of imprisonment imposed in respect of the 1^st charged offence with the balance of the sentences to be served concurrently.  That arrived at a totality of five and a half years’ imprisonment.

3. The applicant seeks leave to appeal against his convictions and sentences.

Background

4. The applicant is an Indonesian citizen who, during the period of the offences, resided in that country and only occasionally travelled to Hong Kong.  His co-conspirator, Kam Susanto (“Kam”) was resident in Hong Kong. 

5. On 1^st September 2001, police raided Kam’s flat at Mei Foo Sun Chuen in Kowloon.  When they entered the premises they found Kam in the sitting room on a sofa with a notebook (Exh. P10) containing betting information and phone numbers next to him.  A torn betting slip (Exh. P13) was found in a wastepaper bin next to the sofa.  In a wall unit in the same room were found 40 pages of timetables for soccer matches in various countries (Exh. P18 and Exh. P19) and a four page photocopy of handwritten betting information (Exh. P20).  Various coloured pens and a calculator were also seized.

6. Two days later, on 3 September 2001, Kam’s office in Cheung Sha Wan Road, Kowloon was searched.  In the drawer of his desk were found five pages of handwritten documentation comprising four pages of betting information and a fifth page being an account which became known as the “Yenny note” all of which became Exh. P24, the first three pages of which were the originals of three pages of Exh. P20 found at Kam’s flat.  In the same drawer was found a cheque book originally containing 50 cheques relating to the applicant’s account at the Hongkong and Shanghai Banking Corporation Ltd (“HSBC”) with 30 remaining cheques all signed in blank by the applicant.  A computer printout of betting records (Exh. P29), a book containing telephone numbers (Exh. P31), as well as some other HSBC documents relating to the applicant’s bank accounts were also found.

7. The documents primarily relevant to this application were the notebook (Exh. P10), the sheets of betting information and account (Exh. P24) and the telephone book (Exh. P31).

8. Subsequent police investigations revealed Kam and the applicant had a number of bank accounts in Hong Kong.  Five of Kam’s accounts had very substantial dealings with two bank accounts of the applicant at HSBC and Hang Seng Bank (“HSB”) which were opened on 19 June 1997 and 29 June 2001 respectively.  

9. During the period of the charges, the applicant’s HSBC and HSB accounts recorded 126 transfers to a value of $70 million to Kam’s accounts and 99 transfers, totalling $84 million from Kam’s accounts into the applicant’s accounts.  In addition, a total of about $16 million was remitted from Kam’s accounts to overseas accounts of the applicant in Singapore and Indonesia.

10. Also during the period of the charges, there were 14 individuals who had banking transactions with both Kam’s and the applicant’s bank accounts.  Some of those transactions were considerable.  There were also transactions between the applicant’s accounts and individuals linked with the bookmaking documents found in Kam’s flat and office.  That linkage was by way of those individuals’ names or telephone numbers being recorded on those documents.  Various individuals had their telephone or account numbers recorded in the telephone book (Exh. P31) found in Kam’s office desk.  Some of the telephone numbers in Exh. P31 were further recorded on a rear cover of the note pad (Exh. P10) which contained various betting notes.  Some of the individuals whose account numbers were found in the telephone book (Exh. P31) were transferees in respect of the applicant’s bank accounts.  The HSBC and HSB had been instructed to send copies of the statements of the applicant’s accounts held with those banks to Kam’s office address.  Kam’s mobile phone number was given as a contact number.

Grounds of Appeal

11. There were three grounds of appeal advanced by Mr Caplan QC and Mr Grossman SC on behalf of the applicant in respect of the 1^st charged offence and one in respect of both the 2^nd and 3^rd charged offences. 

12. The grounds can conveniently be summarized under the following headings :

(1)   1^st charged offence -

(a)   The judge erred in admitting into evidence hearsay documents seized from the home and office premises of Kam (the co-conspirators’ rule).

(b)   The judge erred in his assessment of the evidence as to the circumstances of the finding of the “Yenny note” and wrongly associated it with the finding of other exhibits (the “Yenny note” ground).

(c)   The judge failed properly to consider the possibility that the applicant was legitimately carrying on the business of bookmaking from Indonesia (the international ground).

(2)   2^nd and 3^rd charged offence —

The judge failed to find that the prosecution had to prove the funds the subject of each charge in fact represented the proceeds of an indictable offence (the proceeds of the offence ground).

We will deal with each in turn.

The co-conspirators’ rule

13. Mr Caplan complains that the judge used the documentary evidence found in Kam’s flat and office as evidence against the applicant.  He says the judge was wrong to do so as that evidence was plainly hearsay and the judge had never properly considered the application of the rule permitting the acts and declarations of a co-conspirator (that is, Kam) to be admitted into evidence against the applicant.  In any event, Mr Caplan argues, as there was no proof those documents were made by or under the direction of Kam, the rule could not apply for the reason that any statement in the documents could not be said to be Kam’s.

14. It is true that the prosecution had never asserted at trial that Kam was the author of the documents found in his flat and office.  Their authorship remained unknown throughout the trial.

15. Mr Marash SC leading Mr Shiu SADPP for the respondent argue that it was never the prosecution case that the documents should be used as proof of the truth of their contents, but that they were produced on the more limited basis that they were the sort of documents or records which would be generated by bookmaking activity, and as such, were part of the bookmaking paraphernalia found in Kam’s flat linking him to that activity.  They say that because there was also evidence linking the applicant to those documents they were admissible for that same limited purpose as against him.

16. HKSAR v. Or Suen Hong [2001] 2 HKLRD 669 was a case with some similarities to the present.  It involved the police finding various betting slips in the applicant’s flat together with other betting documents.  It was argued in seeking leave to appeal that the documents were hearsay evidence as against the applicant and should not have been admitted in evidence.  There was no proof that the applicant was the author of those documents. 

17. In delivering the judgment of this court, Stock JA recited the passage from AAS Zuckerman, The Principles of Criminal Evidence, at pp.179–180, to the effect that :

“… the prohibition of the hearsay rule… does not apply to all words and utterances as such.  If this fundamental principle is clearly realized, its application is comparatively simple.  The hearsay rule excludes extra judicial utterances only when offered for a special purpose, namely, as assertions to evidence the truth of the matter asserted.”  (See Wigmore on Evidence (3^rd ed., vol. 6, p.178) referred to in Mawaz Khan v R [1967] AC 454, 459)”

and goes on to say :

“The question then is this: What was the purpose in this particular trial of the production of the exhibits analyzed by the expert?  The issue in this case was whether it was proved, to the requisite standard, that the applicant was, on 15 September 1999, receiving bets ‘by way of business’ (see s.2).  Now the mere fact that the applicant had in his possession these betting slips could not in themselves in accordance with the rules of evidence have proved that the persons named in the various records had in fact placed the bets which those records purported to evidence.  That is because the purpose of their production, if so limited, and if directed to that end, would have been to establish the facts stated in the records.  … But that was not the purpose for which the records in this case were produced.  A key issue was whether the applicant was in business as a bookmaker.  To show that someone is in business of a particular kind, whether it be as a bookmaker, a banker, a butcher, or a baker, it will always be probative of that fact to show that he kept records, and that they were the type of records kept by a businessman of that category.  …”

18. If in the present case the bookmaking records were produced on the narrow basis that they were the sort of records kept by a bookmaker and were, as such, simply a part of the paraphernalia of a bookmaker as much as electronic calculators, telephones and coloured pencils, then they were not being used as proof of the truth of the matters asserted in their contents and the question of their use as hearsay evidence, and therefore of the application of the co-conspirators’ rule simply does not arise.

19. The issue then is what use the judge made of these records at trial.

20. As a preliminary matter, it plainly appears from the transcript of the further submissions made by the prosecution at the judge’s request after trial that the judge was perfectly aware of the hearsay issue so far as these bookmaking documents were concerned.  Indeed, Mr Shiu (who appeared at trial) was at pains to bring to the judge’s attention the distinction the prosecution proceeded upon in using the documents only for the narrow purpose described above rather than as proof of the truth of their contents.  The judge accepted the distinction.

21. It was upon that “narrow” basis that the prosecution proceeded.  It was never their case that the documents could be used as proof of the truth of any statement found in them, but only that the statements made by the documents identified them as genuine bookmaking records.

22. To prove that they were such records, the prosecution called an expert witness, a police officer (PW2) who went through various entries in the documents found in Kam’s flat and office, and who concluded because of the nature and juxtaposition of those entries and their internal mathematical relationships that the documents containing those entries were records produced by a “tang chai”, that is, a bookmaker’s agent.

23. PW2’s opinion was accepted by the judge.  In that regard, the judge said this :

“10.    As to PW2, he had explained the betting slips in Exh.P10 and P24 in detail.  I had checked the calculations suggested by this witness on my own.  I was satisfied that his analysis and explanation of the various entries in the betting slips were logical and accurate.  I accept his evidence in this respect.  I accept his opinion that Exh.P10, P13, P24 & P29 consisted of betting slips.”

And then he went on to give more particular reasons for his acceptance of PW2’s evidence :

“11.   In relation to Exh.P10 and P24, PW2 opined that :

a.  ‘H’ and ‘SUN’ were bookmakers and the author of Exh.P10 should be a ‘tang chai’.  The reason being that all the other groups were laying bets with either ‘H’ or ‘SUN’.  I have checked the entries in the exhibits.  They support his opinion.

b.  The commission is generally 0.5% of the actual sum lost or won by the punter.  He illustrated this point by calculations.  I have counter-checked the calculations.  I am convinced that the calculation tallies with his opinion.  The detailed record of amounts payable or receivable by various parties in the betting slips shows that the author was a ‘tang chai’.

c.  There were entries in Exh.P10 in which the author offered to the punter a different discount from that offered by the bookmaker ‘H’.  I have checked these entries.  I accept that this illustrates that the author was not a simple conduit of bets.

d.  In relation to the first page of Exh.P24, the author was actually betting with a punter ‘KM’.  There was no corresponding entry in any other groups.  I accept this illustrated that the author was not a simple conduit of bets (paragraph 3(b)(xvii) above).

e.  The total amount of bets transferred to the bookmaker was larger than the total amount laid by punters.  I accept that this was due to the author laying additional bets on the bookmaker.

f.  There were calculations of total win or loss at various parts of the exhibits, namely, the third and fourth pages of Exh.P20 (paragraph 3(b)(xvi)), the ‘Yenny note’ in Exh.P24.  PW2 checked the calculations at the bottom of each group in the third page of Exh.P20.  They tallied with the total sum of the bets recorded in the individual betting slip.  I have checked the calculations on my own.  I am satisfied that the witness was correct.  In my view, there is no need for a punter or a person who was a conduit of bets to record all these detailed calculations.  This is another illustration that the author was not a simple punter nor was he a conduit of bets.

g.  Before August/03, only illegal bookmakers accepted handicaps in bets.  Given that most of the bets involved handicaps, it is a strong indicator that the author of these exhibits was involved in illegal bookmaking.

h. The total transferred bets was $3.4 million in Exh.P10 and $4.9 in Exh.P24.

12.   Having considered the points above, I am sure PW2 is a reliable expert witness.  I accept his opinion that the author of Exh.P10 and 24 was a ‘tang chai’, i.e., agent of a bookmaker.”

24. In our view, it is clear from a careful reading of the judge’s comments that his detailed reference to the various matters appearing on the face of the documents such as the amount of commission and the differential in discounts, when taken in context, were simply matters taken into account by him in determining the nature of the documents and forming his view as to whether PW2 was correct in concluding that the documents were genuinely those made by a “tang chai”.  That is not to use the documents as proof of the truth of their contents.

25. Nor in our view, did the judge use the documents as hearsay evidence when he came to consider the case against the applicant on the 1^st Charge.  In that regard, he said this :

“18.  In assessing the evidence in relation to this charge, it is necessary to answer the following questions :

             (a)   What was the role of the author of Exh.P10 and P24?  Whether there was a bookmaking business?

             (b)   What was the role of Kam?

             (c)   What was the role of the defendant and his relationship with Kam?”

26. In considering (a), the judge relied upon his earlier analysis of and conclusions from PW2’s evidence that the role of the author of Exh. P10 and Exh. P24 was that of a “tang chai”. 

27. In considering (b), the role of Kam, he reminded himself that there was no evidence that Kam was the author of the documents but took into account the physical nexus between Kam and the documents, that is, that they were found in his flat and his office.  He took into account also that Exh. P10 and Exh. P24 were bookmaking records (as he had already concluded).  He formed the view that Exh. P31, a telephone book found in Kam’s office desk drawer, was used by Kam and that the commonality of telephone numbers in that book and Exh. P10 linked Kam with the entries in Exh. P10.

28. He then concluded :

“22.  From the above, I am sure that the only reasonable inference is that Kam was closely connected with the bookmaking activities as revealed by Exh.P10 and P24.  The possession of betting slips and photocopies of betting slips at home and in his office, coupled with the nature of these betting slips, supported the only reasonable inference that Kam actively assisted the author of the Exh.P10 and P24 in receiving and settling bets.”

Those conclusions, so far as they were based upon the contents of the bookmaking documents, went no further than to rely on what those contents asserted in common with other documents and so link the bookmaking documents to Kam.  The judge did not rely upon the contents as proof of the truth of their assertions.

29. Having found that Kam was actively involved in bookmaking, the judge went on to consider (c), that is, the role of the applicant.  He took into account those aspects of the evidence which pointed to a connection between the applicant and Kam’s financial dealings and, more particularly also, the connection between the applicant and the bookmaking documents. 

30. He referred generally to the fact that Exh. P30, a cheque book for the applicant’s HSBC account which had been pre-signed by him, had been found in Kam’s office desk drawer; that other documents relating to the applicant’s bank account were also found in Kam’s premises, and to other very significant connections between the applicant’s bank accounts and their operation and Kam’s bank accounts.

31. In respect particularly to the bookmaking documents, the judge took into account connections between transactions in the applicant’s bank accounts (proven by the facts admitted for the purpose of the trial) and references to persons or account numbers referred to in the bookmaking documents, including the “Yenny note” which was an accounting document the judge was satisfied formed part of Exh. P24.

32. In adopting this approach, the judge was doing nothing more than relying upon that evidence which showed a connection between the operation of the applicant’s bank accounts and the bookmaking documents.

33. Establishing a co-incidence between what is said in a document and some act of an individual (in this case, the operation of bank accounts) is evidence of a connection between that individual and the documents.  It certainly does not mean the contents of the documents are used to prove the truth of what they assert.  Rather their contents, whether true or false are, because of what is said, connected to the individual as a step along the way to establishing, perhaps, his knowledge, use or other involvement with them.

34. Again, it is necessary to refer to excerpts from the judge’s Reasons for Verdict to illustrate this point :

“h.  In the telephone book found in the upper drawer of Kam’s desk (Exh. P31), a telephone number 90996633 appeared adjacent to the name Leung Kin Hong.  The account number 011106002888 was also found adjacent to the name.  The same telephone number appeared under the group ‘L’ in the back cover page of Exh. P10.  I accept there is no evidence to prove the identity of ‘C’ nor could I conclude the telephone number belonged to Leung.  However, the way the same number appeared in both exhibits supports the irresistible inference that Leung Kin Hong was linked to ‘L’ and the bookmaking activities as revealed by Exh. P10.  According to paragraph 4.1.20 [of the accountant’s report], Leung had 102 transactions with the defendant through his accounts.  A total of $10 million were deposited to and $50 million withdrawn from the defendant’s HSBC account.  These transactions were made from September/97 to April/01.

i. Paragraph 12 of the admitted facts showed that the telephone number 6036772 belonged to Mok Siu Kei from 19/10/00 to 18/9/01.  The same number appeared in the back cover page of Exh. P10 under the group ‘C’.  I accept there is no evidence to prove the identity of ‘C’.  The fact that the same number appeared in Exh. P10 supports an irresistible inference that Mok was linked to ‘C’ and the bookmaking activities.  According to the bank documents in Exh. P44C and P61B, the defendant issued a cheque in the sum of $891,900 to Mok on 16/1/01.”

35. That illustrates the approach of the judge to the bookmaking documents in considering the role of the applicant.  He was consistent in using the information in the documents, whether that information was a name or a number, simply to link it with the same name or number as it appeared in the records of the applicant’s bank transactions as evidence of no more than a connection between the applicant and the bookmaking documents.  The judge then concluded :

“26.  The various payments by the defendant to persons linked to the telephone list on the back cover page in Exh. P10 showed that the defendant and Kam were connected with the bookmaking activities as revealed in the betting slips in Exh. P10 and P24.  For the reasons stated in the analysis in paragraph 11 above, I reject the argument that the author of Exh. P10 and P24 was only a conduit of bets or a punter.  It follows that Kam and the defendant cannot be so either.”

36. In arriving at that conclusion, at no stage did the judge as against the applicant, or indeed in any other way, purport to use the contents of the bookmaking documents as hearsay evidence.  For that reason, the co-conspirators’ rule quite simply never arose for consideration. 

37. There is nothing in the 1^st ground of appeal.

The “Yenny note” ground

38. This document was the 5^th and last page of Exh. P24 at trial.  The first four loose pages recorded soccer betting information.  The “Yenny note” was a simple handwritten accounting record showing two deposits and two withdrawals into and out of an account, and its balance, as of 27 August 2001.  It was headed “Attn: Mrs Yenny”, hence its name.

39. The judge found that the Yenny note was connected to the four pages recording soccer betting information because he had accepted the evidence of the police officer, PW1, who had searched Kam’s desk drawer and found the five documents, that they had all been folded together.

40. The circumstances of the Yenny note at the time of its finding were important because it contained reference to two entries which matched with deposits into the applicant’s bank accounts, and another entry which matched a transfer to an account by Kam.  In other words, it connected both Kam and the applicant to the bookmaking documents, if it was itself part of those documents.

41. The applicant’s complaint was that the judge had found it to be part of the other documents in Exh. P24 containing betting information on the basis of evidence which was flawed.  That evidence came from PW1, who was the officer who had searched the office premises of Kam.  The admitted facts at paragraph 11(b)(i) referred to PW1 seizing “from the upper drawer of Kam’s desk in the room …. (i) 5 pages of hand written notes which are now produced and marked as Exhibit P24.”

42. In cross-examination, PW1 described the contents of the drawer as containing “lots of documents all piled in together”.  In respect of Exh. P24, PW1 had described the five pages as themselves being found “together”.

43. He then gave this evidence :

“Q.  … Anyway, what I’d like to ask is why you lumped these five documents together under one exhibit number.  Just keep it out of the plastic.  Why have you put them together as one?

A.    Because when I see this page — when I saw this page, I was of the view that this page was — had something to do with the settlement or some about soccer so I placed them together.

Q.   I see.  So that’s why you put the four together.

A.    Yes.”

And later :

“Q.  … And can you again take out from the plastic cover, the documents inside Exhibit 24.  Yes, take them out of the plastic because I want you to look at them.  Now, would you turn them over, please, so you can see the back of each of them.  Now, if you look at the back of the first four, that is, the ones with the soccer notations, I think you see they’ve been folded lengthways and halfway — long-ways and lengthways.  Can you see that?

A.    Yes.

Q.    So they seem to have been folded together.

A.    Yes.

Q.    Yes.  If you look at the fifth page, that appears to have been folded only across the middle.

A.    Yes.

Q.    So it does not appear to have been folded together with the other four pages.

A.    Yes.

Q.   Right.  So can we take it then, the only connection between the first four pages and the fifth page was your belief that the fifth page had something to do with soccer — settling bets?

A.    I agree.

Q.   And it was for that reason that you gave them all the same exhibit number.

A.    Yes.

Q.    Thank you.” 

(emphasis added)

44. Mr Grossman (who appeared for the applicant at trial), in his submissions before us, relied upon that passage of evidence in arguing that the evidence of PW1 to the effect that he had found the Yenny note together with the other four pages of Exh. P24 was not reliable, in that PW1 had simply assumed the Yenny note was connected to the other four pages and had treated them all as the one document.

45. In re-examination, the prosecution returned to the finding of Exh. P24 :

“Q.  What do you mean by that — the five pages were piled together?  Can you tell us more details?

A.     Piled together like this.

COURT:     Witness demonstrated — you mean — can you describe?

A.     The four pages were together and then all of them were folded into half like this.  The four were on top and the other one was, I believe, with them.

COURT:     So five pages were together but folded halfway.

A.    Yes.

MR GROSSMAN:    Now, I’m sorry.  That’s not what — I don’t understand the language.  It’s not what I understood him to say.  I understood — say there were four piles that were folded together; the fifth one was with them.  But I…

COURT:     Together with the other one.  Can you show the defence counsel how these five pages were found by you when you seized it?

A.    As far as I remember, I took them…

MR GROSSMAN:    Yes, ‘As far as I remember…’

A.       …out together in a pile.  They were folded up in this way.

COURT:       Yes.

…

COURT:       Yes, I’m going to.

MR SHIU:    You’re going to do that, are you?

COURT:        …make an entry in my record that the witness demonstrated by folding the five pages included under Exhibit P24.  They are piled together and folded halfway.

MR SHIU:    In the middle.

COURT:      …in the middle.

MR GROSSMAN:    Yes, as far as he could remember.

COURT:        Yes…”

46. It is plain from the transcript that in re-examination the witness was taken back to the issue which had first arisen in cross-examination for the purpose of clarifying the evidence he had given.  That was perfectly proper.

47. In his Reasons for Verdict, the judge said :

“… It was until re-examination that he demonstrated how the five pages were folded breadthwise in the middle.

The defence argued that this answer was only elicited during re-examination.  They had no chance to put further question.  They invited me not to accept this answer.  I have also examined the folding marks on the five pages in question, they were both lengthwise and breadthwise.  Some of them matched each other by shifting the pages.  I do not think the folding marks were decisive to the issue.

In my view, the defence had ample opportunities to question PW1 on this issue.  In fact, the condition of these five pages, when found by PW1, was first taken up during cross-examination.  The witness was forthcoming in answering questions.  I reject the argument that the relevant answer should not be relied on.  I accept PW1’s evidence.  Given that the note was folded together with other betting slips, I am of the view that the ‘Yenny note’ was connected with other parts of Exh.P24.  It was a record on the calculation of accounts related to bookmaking activities.”

48. An initial complaint made on behalf of the applicant is that the judge’s findings were contradictory on this issue in that he had said : “I do not think the folding marks were decisive to the issue” and, later : “I accept PW1’s evidence.  Given that the note was folding together with other betting slips I am of the view the Yenny note was connected with other parts of Ex. P24.”

49. These findings are not contradictory.  The judge was simply saying that the location and type of folding marks on the Yenny note as compared to the other pages of Exh. P24 did not determine the issue, but that once PW1’s evidence was accepted as to how the pages of Exh. P24 were found by him, then the judge concluded that the Yenny note was connected with the other pages of Exh. P24.  In our view, the judge was entitled to arrive at that finding.

50. So far as the evidence of PW1 was concerned, we cannot accept that it was so inherently flawed as to make either the judge’s understanding of it or his reliance upon it unsafe.  If there was any confusion in PW1’s evidence in cross-examination, his evidence as to the physical nexus of the pages of Exh. P24 was made sufficiently clear in re-examination.

51. This was a matter of weight.  The judge cannot be criticised for regarding PW1 as a reliable witness and concluding that the Yenny note was found in close physical proximity to the other pages and so connected to the bookmaking documents. 

52. It was argued before us as a final point on this ground that Mr Grossman had no opportunity further to question the witness after his re-examination.  But no application was made to do so at the time, and there had been ample opportunity fully to ventilate the matter during cross-examination.

53. There is no merit in this ground.

The international ground

54. The 1^st charged offence took place before the 2002 amendments to the Gambling Ordinance which, for the first time, made it an offence to accept or settle from outside Hong Kong a bet placed from within Hong Kong.

55. Accordingly, between the dates of the 1^st Charge, that is, June 1997 to 1 September 2001, it was no offence to receive bets outside Hong Kong from Hong Kong based gamblers.

56. It was argued by Mr Caplan that the judge had in this regard ignored part of the evidence of PW2 (the expert witness) where he had agreed that one possibility on the documentary evidence was that Kam or the author of the documents hedged his bets by placing them with bookmakers offshore.  On that basis, the applicant (if an offshore bookmaker) would have been legally accepting bets from within Hong Kong.

57. But that suggestion ignores the fundamental finding of the judge that the applicant was acting together in Hong Kong with Kam.  That finding was based on evidence additional to the documents to which PW2 had been referred in giving that part of his evidence.  That other evidence included the various transactions in the applicant’s bank accounts in Hong Kong, the close financial relationship he had in Hong Kong with persons referred to in the various bookmaking documents and the pre-signed cheque book and other banking documents of the applicant found in Kam’s office. 

58. Whilst PW2’s evidence as to there being a possibility on the documents he was shown that the author of the bookmaking documents had in fact placed bets with overseas bookmakers was no doubt correct, that possibility for the purposes of this case had been firmly laid to rest.  As the judge said :

“27.  The evidence showed that the receipt and settling of bets took place in Hong Kong.  The defendant was settling bets for a bookmaker through his accounts in Hong Kong.  This conduct already amounted to bookmaking in law at the material time of the first charge.  The fact that the ultimate bookmaker might be overseas cannot of any assistance to the defendant.   By receiving and settling bets in Hong Kong, the defendant had committed illegal bookmaking in Hong Kong.”

59. There is no merit in this ground.

The proceeds of crime ground

60. We turn now to deal with the sole ground of appeal advanced in respect of the applicant’s convictions on the 2^nd and 3^rd Charges, that is, the 4^th ground of appeal which complains that the prosecution were, as a matter of law, required to prove that the money the subject of each charge in fact represented the proceeds of an indictable offence.

61. Section 25(1) of the Organised and Serious Crimes Ordinance is in the following terms :

“25. Dealing with property known or believed to represent proceeds of indictable offence

(1)   … a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence, he deals with that property.”

62. Mr Caplan brought to our attention the recent House of Lords’ case of R. v. Montila & Others [2004] 1 WLR 3141, where the court held that under the provisions of section 49(2)(b) of the Drug Trafficking Act 1994 and section 93C(2) of the Criminal Justice Act 1988, which are expressed in similar though not identical terms to section 25(1) of the Organised and Serious Crimes Ordinance, there was imported a requirement that the prosecution prove that the relevant funds in fact represented the proceeds of the described offence.

63. The law in Hong Kong is well-established.  In HKSAR v. Wong Ping Shui [2001] 1 HKLRD 346, Ribeiro PJ, in refusing leave to appeal on this point, said :

“      … s.25(1) of Cap.  455 does not define the actus reus as dealing with the proceeds of an indictable offence.  It defines it as dealing with ‘property’ which the defendant knows or has reasonable grounds to believe represents the proceeds of an indictable offence.  The quality of the goods being such proceeds is therefore an element in the mens rea but not the actus reus.

…

The mental element to be proved, whether in terms of knowledge or belief on reasonable grounds, is directed merely at the property being dealt with.  All the provisions of s.25 operate without difficulty on that basis.

Quite apart from these points of construction, it is wholly implausible that the legislature could have intended proof of money laundering offences to require proof of the underlying criminal offences that generated the money being sanitised.  There is the obvious likelihood that such activities would be cloaked in secrecy and that they may well have taken place in one or more foreign jurisdictions.”

64. In an earlier decision of this court, HKSAR v. Li Ching [1997] 4 HKC 108, the same point had been decided in the same way.  

65. In our view, we are bound by the decision in Wong Ping Shui.  Nor therefore are we persuaded that the decision in Li Ching was in error.

66. Accordingly, in the present case, in our view, there was no requirement in law for the prosecution to prove that the proceeds the subject of the 2^nd and 3^rd charged offences were in fact the proceeds of the indictable offence.

67. For that reason, this final ground cannot succeed before this court.

SENTENCE

68. The applicant’s grounds of appeal against his sentences are restricted to the terms of imprisonment imposed by the judge for the offences, and do not extend to the fines or to the consecutive terms of imprisonment ordered in lieu of payment of those fines.  The complaint is that the individual sentences and the totality of sentence were manifestly excessive, and because the applicant’s total sentence of five years and six months’ imprisonment was greater than the four years and six months’ sentence of imprisonment imposed on Kam, it was also wrong in principle.

69. In respect of the 1^st charged offence of conspiring to commit bookmaking, the judge imposed a sentence after trial of three years and six months’ imprisonment.  In R. v. Yip Kam Fai [1993] 2 HKC 196, this court said that a substantial bookmaking operation would attract sentences of between two and three years’ imprisonment after trial.  In the present case, the judge concluded from the evidence before him that the conspiracy had been on foot for about four years and that the role of the applicant had been to assist, with Kam, unknown bookmakers in accepting and settling debts, and that the applicant had allowed his bank accounts to be used for this purpose.  That activity had resulted in a turnover of about $4 million every week.  That is the equivalent of $200 million a year, for four years, although obviously the profits and the applicant’s share of the profits would be much less.  

70. This was a very substantial operation and we are of the view that the sentence imposed could not be said to be manifestly excessive. 

71. So far as the 2^nd and 3^rd charged offences were concerned, the judge imposed sentences of four years and 18 months’ imprisonment respectively.  The difference in sentence between the two offences reflected the different time spans and volume of funds involved.

72. The 2^nd charged offence related to the applicant’s money laundering activities involving his HSBC bank accounts over the charged period of 19 June 1997 to 17 November 2001, involving some $698,223,829, which for the purposes of sentence was reduced to $236,766,329 to allow for the possibility of “double counting” transfers between the applicant’s accounts.  The 3^rd charged offence involved the applicant’s HSB accounts being used to launder some $25,495,116 over the period of 29 June 2001 to 12 November 2001, that sum being reduced to $11,495,116 to allow for the same possibility of double counting.  The judge accepted also that only part of these funds represented or were believed by the applicant to represent the proceeds of the indictable offence, that is, bookmaking.

73. Even taking those matters into account, the sentences of four years’ imprisonment and 18 months’ imprisonment imposed in respect of the two offences cannot be regarded as manifestly excessive.  The amount of funds laundered by the applicant through his two bank accounts remained very large and, in our view, the sentences properly reflected the financial scale of the activities and the time frames over which they were conducted.

74. A further complaint of the applicant was that the totality of sentence arrived at by the judge was too high.  The judge ordered that the sentences imposed in respect of the 2^nd and 3^rd charged offences be served concurrently, but that two years of the sentence imposed for the 2^nd charged offence be served consecutively to the sentence imposed in respect of the 1^st charged offence.  That resulted in a totality of five years and six months’ imprisonment.

75. The money laundering offences involved additional funds and different elements to the offence of conspiracy to commit bookmaking.  It is true that both categories of offence occurred over the same time frame and there was considerable commonality of evidence establishing the offences.  But sufficiently different activities were involved which were properly regarded as warranting partly consecutive sentences.

76. The totality of sentence which resulted was not manifestly excessive.

77. The final substantial complaint of the applicant in respect of the total sentence imposed upon him is that he received a heavier sentence than Kam who was sentenced by another judge to a total term of four years and six months’ imprisonment.  No particular details of Kam’s sentencing were placed before us, but one matter stands out.  The applicant was central to the funding of the bookmaking activities.  Such activities depend heavily upon access to funds.  Without the applicant performing his role in this regard, there would not have been possible the business of bookmaking in the volume which took place.  We do not accept the submissions made on behalf of the applicant that he played a role less important than that played by Kam.  We do not think any disparity of sentence between the applicant and Kam to be such as to demonstrate an error of principle.

78. Accordingly, the applicant must fail on this ground also.

CONCLUSION

79. For the reasons we have given, we dismiss the applications for leave to appeal against convictions and sentences.