HKSAR v. LEUNG KIM FUNG

DCCC 432/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 432 OF 2014

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Reasons for Sentence

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1. The defendant has pleaded guilty to 22 charges today:

(1) Charges 1 to 8 are referring to an agent using a document with intent to deceive his principal, contrary to Section 9(3) and (12)(1) of the Prevention of Bribery Ordinance, Cap.201;

(2) Charges 9 to 20 and 22 are either using a false instrument, contrary to Section 73 of the Crimes Ordinance, or using copies of a false instrument, contrary to Section 74 of the Crimes Ordinance, Cap.200;

(3) Charge 21 is possessing equipment for making false instruments, contrary to Section 76(1) of the same ordinance.

2. Defendant at all material times, you were a manager of City School Bus Service Limited (“CSBS”).  This company provided school bus or coach services to schools, government departments and private entities. 

3. Unbeknownst to your employer, CSBS, you were also involved with three other companies in the same business. 

4. In CSBS, your role was responsibility to source for business, arrange transport according to contracts obtained, to compile monthly breakdown of fees due to CSBS and, ultimately, collecting payment. Your role made it easy for you to abuse the system and trust of your employer, which is what happened where Charges 1 to 8 is concerned.

5. The three other companies I have just referred to include ARL (“Asian Richest Limited”).  You were in charge of this limited company and the authorised signatory to the bank accounts. 

6. The second company is JSB (“Jackson School Bus Company Limited”), which you operated with other ex-staff of CSBS.  You were an authorised signatory to JSB’s bank accounts. 

7. The third company was PGAG (“Prime Glory Asia Group Limited”).  You were the director, sole shareholder and the sole signatory to the company’s bank account.

8. Where Charges 1 to 8 are concerned, you effectively fiddled the books and stole income that was due to CSBS and, over a period of seven months, the loss suffered was $421,870.  Each of the seven months represent Charges 1 to 7.

9. The prosecution’s facts are that for Charges 1 to 7, Country Coach Limited (“CCL”), who is the main contractor of the government logistics department, provided non-routine coach services to various government departments.  CCL subcontracted government orders to ARL.  CCL paid ARL according to the service records compiled by the defendant. 

10. You, the defendant, further subcontracted ARL’s business from CCL to CSBS.  Your employer, CSBS, had no idea that you ran ARL or that the business was sub-subcontracted from CCL.  You prepared the necessary paperwork for these orders for CSBS and omitted to record (in the seven months that spanned from January 2010 to August 2011) many orders. 

11. In effect, ARL was paid for those omitted orders, but not CSBS, when CSBS actually provided the services.  The amount of loss suffered, I repeat, is $421,870.  ARL pocketed this amount.

12. Charge 8 relates to an order for school transportation for AISHK (“Australian International School Hong Kong”).  The Parent-Teacher Association (“PTA”) engaged Chun Kee Company Limited (“CKC”) to provide school bus services, who subcontracted those school bus services to ARL.  ARL sub-subcontracted the services to CSBS. 

13. Again, CSBS had no knowledge of the defendant’s conflict of interest, being the operator of ARL. 

14. On paper, the defendant arranged not ARL, but JSB, to accept the AISHK order and subcontracted the services to CSBS at a lower amount than what ARL received.  He again fiddled the books. 

15. CSBS received a total, over the contract period, of $100,000, but ARL received $138,500, so ARL pocketed the difference in fees of $38,500.  The relevant amount for Charges 1 to 8 in total add up to $460,370.

16. Charges 9 to 20 relate to fake documents or copies of fake documents that you, the defendant, produced to the Transport Department to apply for valid passenger service licences, as is required to operate bus routes for schools or for non-franchised public buses.  They relate to many clients being schools and, in one case, a hospital.

17. You, the defendant, should have asked each client for letters on their respective letterhead stationery with their chops, confirming the bus routes contract and the requirements of bus services. Transport Department had to approve the licences and routes proposed.

18. The defendant, you being lazy or, as you say, for the sake of convenience, forged all the clients’ letters they should have supplied.  At paragraph 17 of the statement of facts, the prosecution sets out for each Charge 9 to 20 which client’s letter was forged by the defendant. 

19. In order to do this successfully, the defendant had to either cut and paste letterheads and/or buy chops to use, which gave rise to Charge 21, possession of equipment for making false instruments. Paragraph 13 of the summary of facts sets out all the letterheads and chops found in your possession.

20. Charge 22 relates to a forged Transport Department letter you gave a client, CHC, in your capacity as an employee of CSBS.  CHC had engaged CSBS for two bus routes and you, as part of your job, had to submit the applications for the two routes to the Transport Department. The application was initially rejected by the Transport Department, but you, in order to hang on to this business, forged a Transport Department letter, which on paper approved the routes. 

21. The Transport Department did, some months later, approve those routes, but for several months the routes were taken by CSBS buses without Transport Department approval.  CHC would have taken its business elsewhere if they had known that the Transport Department initially rejected the applications.

22. Your best mitigation today is your plea of guilty. 

23. I have heard mitigation put forward on your behalf.  At the material time you had a clear record.  You cooperated after you were arrested.  I have heard that you are 51 years old, single, but did live with your girlfriend.  You were in this business for many, many years.  You set up the other companies to try and better your own financial position, but I have been told your businesses have failed and you are now declared bankrupt and have been unemployed for a period of time.  You are still unemployed.  You have been, because of your financial situation, now living with your elder brother, who is supporting you.

24. Essentially, this is a breach of trust case, where you abused your position at CSBS.  They suffered financial losses and you gained more than you should have. 

25. Where a breach of trust is concerned, there are guidelines.  Guidelines from the Court of Appeal set out that from where between $250,000 to $1 million is the loss suffered, a 2- to 3-year term of imprisonment is appropriate as a starting point.  I take that into account.

26. I also take into account the offences, although 1 to 8 add up to $460,000, they took place over a substantial period of time.

27. I also take into account where Charges 9 to 22 are concerned, they took place over a substantial period of time; in fact, several years:  2009 to 2012. 

28. For this group of charges, I accept there is no loss suffered by any party or any gain to you.  There is no evidence of any danger to children on bus routes or clients because of these offences, but nonetheless, the offences are numerous and unacceptable, especially Charge 22, where you have forged a government department letter.  It is appropriate to consider a term of imprisonment for these offences.

29. I intend to take a global approach, but to divide the offences into two groups:  Charges 1 to 8 and Charges 9 to 22.

30. Defendant, please stand up.

31. After considering the facts of the case, the loss suffered, your previous clear record, all mitigation put forward and your plea of guilty:

(1) for the group of Charges 1 to 8, I take a starting point of 2 years and 6 months for each offence;

(2) for Charges 9 to 21, I take a starting point of 2 years’ imprisonment for each offence;

(3) for Charge 22, I take a slightly higher starting point of 2 years and 6 months to reflect it is a government department letter you have forged.

32. You have pleaded guilty and are entitled to a discount of one-third from the starting points for your plea.

33. After that discount:

(1) for Charges 1 to 8, for each charge, you are sentenced to 1 year and 8 months. All will be served concurrently;

(2) for Charges 9 to 21, after the discount for your plea, you are sentenced to 16 months’ imprisonment for each charge;

(3) for Charge 22, after the discount for your plea, you are sentenced to 1 year and 8 months for that charge.

34. For Charges 9 to 22, those sentences will be served concurrently.

35. I repeat:  Charges 1 to 8, all concurrent; 9 to 22 are all concurrent.  But I do intend to make 4 months of the total sentence for Charges 9 to 22 consecutive to the total sentence of Charges 1 to 8. 

36. That would mean a total sentence of 2 years’ imprisonment.