HKSAR v. LIAN JINING

DCCC617/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 617 OF 2011

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Reasons for Sentence

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1.  Defendant has pleaded guilty to two charges of conspiracy to defraud, contrary to common law and section 159C of the Crimes Ordinance, Cap.200.

2.  Defendant was a finance accounts manager of a mainland company, Shum Yip Materials Company Limited, in its Hong Kong office.  Originally, he worked for this company in mainland China but was brought to Hong Kong in 1992.  It meant a better salary for the defendant but also separation from his wife and son.  They remained in China during his employment in Hong Kong, but he would regularly travel back to visit.

3.  The company got into financial troubles and needs in October 1998.  The defendant’s managing director, Mr Luk, and a deputy managing director, Ding, who are co-conspirators in the charges, arranged a letter of credit with another company, Shum Yip Luen Hing Company Limited.  The plan was for this company to pass the US$1 million-odd LC funds to the defendant’s employer’s company.  When that did not happen, a second letter of credit, the subject of Charge 2, was arranged between the defendant’s company and a third company, Fundsing Industrial Limited.  The amount in that letter of credit was US$878,800.  These letters of credit were issued by Sin Hua Bank, now the Bank of China.  That amount was eventually passed to defendant’s company, Shum Yip Materials.  

4.  There is a connection between these aforementioned companies.  One of the co-conspirators is married to a director of Fundsing Industrial Limited as well as being a director of Shum Yip Luen Hing Company Limited. 

5.  The defendant being the finance manager has admitted signing certain documents that allowed the letter of credit to be drawn on and money deposited into the company’s account.  Defendant knew at the material time that there was no underlying genuine goods transaction where both letters of credits were concerned.  In short, the defendant’s superiors used a letter of credit to raise finance for the company or themselves.  During the 1990s, this type of case was prevalent.  The system of letter of credits were widely abused in this way, and a proportion of these offences meant that the banks’ interests were jeopardised in that they suffered losses.

6.  In this case, the bank has recuperated the amount for the letter of credit, the subject of Charge 1, but not the second letter of credit, the subject of Charge 2.  Unfortunately, it meant that an innocent, ignorant director of Fundsing Industrial Limited was pursued by the bank and was later declared bankrupt.  However, I can accept that the defendant was not to know that nor anticipate that.  I can accept that.

7.  From the facts, I can see and I do accept that the defendant was an employee only.  He admits that he acted blindly according to his superiors’ instructions.  Effectively, he was used by his employers. Despite knowing that the letters of credits were fraudulently obtained, he participated in the scheme in this conspiracy.  There is no evidence and I do accept that it is very likely this defendant did not personally benefit from this amount of money fraudulently obtained. 

8.  I have heard mitigation in full, and defendant is a 55‑year-old man and has a clear record in Hong Kong.  It has been 10 years since the offences and his interview by the police.  Soon after, he left Hong Kong, and as he sets out in his letter to the court, it has hung over him all this time.  I am sure it would have an effect on how he has lived his life for the last 10 years, but this he has brought upon himself.

9.  I have seen letters from the defendant, and he accepts that he has brought this upon himself.  He explains why he agreed to participate in the scheme and his remorse.  I have also seen letters from the defendant’s wife and son, and I can accept the defendant has from a humble beginning or background worked very hard and cared for and provided for his family.  He has obviously been a responsible husband, father, brother and uncle to a nephew who is seriously disabled.  And a lot of the defendant’s family have travelled to Hong Kong today from the mainland China to support him in court.

10.  There are no guidelines, tariffs or customary sentences for offences of this nature.  Where sentence is concerned, one would look at the individual facts of each case.  What I feel is relevant here is, amongst other considerations, the amount of money for these two letters of credit and the ultimate loss suffered by the Bank of China.  I do take into consideration the defendant, I accept, was an employee only, doing as he was asked and would have little or no personal benefit from his role in the offence.

11.  Defendant has pleaded guilty today and is a man of clear record.  He has a health problem, an eye problem that will eventually deteriorate.  And as submitted on his behalf, he is very unlikely to re-offend, and that I accept.  However, a term of imprisonment is inevitable, but most of the relevant material factors I have just set out do support the defence submission that this is not the most serious case for an offence of this nature. 

12.  For both charges, I will take a starting point of 24 months.  You have pleaded guilty and you will for that receive a discount of 8 months’ imprisonment for each charge.  I have considered mitigation put forward and I am going to give you a further discount of 3 months for your health issues.  For each charge, I am going to impose a term of imprisonment of 13 months.  Do you understand the sentence?  They will both be served concurrently.  That is a total of 13 months.  Understand?

DEFENDANT: Yes.