HKSAR v. TAI CHING

DCCC 527 & 1272/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 527 & 1272 OF 2010

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REASONS FOR VERDICT

1.  Overview

The defendant was employed by the Bank of China (BOC) as a Wealth Management Manager. At all material times she sold investment products to customers of the BOC while she was working at the Tai Koo Shing Branch of the bank.

2.   In the defendant’s position at the BOC she had sold investments in the form of minibonds to customers of the BOC.  Two of those customers were Madam Wong Sau Ching (PW1) and Mr. Ho Kit Sum (PW2).  Approximately nine months after PW1 and PW2 purchased the minibonds, a principal party in the structure of this product, Lehman Brothers Holdings (LBH) applied for bankruptcy.  Due to the insolvency of LBH and the resulting exposure to the current market value of the collateral, the value of the minibonds plunged. The holders of the minibonds (PW1 and PW2) understood that they may have lost all or a significant portion of their initial investment. 

3.  After the collapse of LBH, PW1 and PW2 as investors in the minibonds complained about the sales techniques adopted by the defendant.  They alleged in broad terms that the defendant gave them materially wrong information about this financial product leading them to make an investment decision that they would not have made if the correct information had been provided.  Further the minibonds was not a suitable product to invest in given the financial position, investment objectives, expectations and risk tolerance level.  In short they claim that the defendant assured them that the minibonds were low-risk products which was what they thought they were investing in when the defendant knew that they were high risk products. 

4.  The defendant does not dispute that she made representations to the purchasers (PW1 and PW2) but disputes that she made any of the statements as alleged by the PW1, PW2 and PW4.  It is her case that she did not give them any wrong information, did not tell them the product was a low risk product but contrarily informed them about the main factual details of the minibonds as they were laid out in the BOC leaflet, and more specifically that the product was high risk. 

5.  The defendant’s evidence as to the sale of the minibonds to PW1 and PW2 were on the whole based on her usual practice in explaining the minibonds to customers but because of the lapse of time it was not possible for her to recall precisely what was said by her to each of her customers.  When dealing with customers of advanced age she would follow the banks standard procedures and request another senior bank staff to witness the explanation given to the customers. 

6.  The prosecution case is that the defendant was motivated by her sales bonus which was significant when compared to her basic salary. For this reason she knowingly or recklessly misrepresented information to the purchasers about the minibonds so she could make as many sales as possible in order to earn herself a handsome bonus.

7.  The Charges

The defendant has been charged with two offences of “fraudulently or recklessly inducing others to invest money contrary to section 107 of the Securities and Futures Ordinance, Cap. 571. The defendant is alleged to have made certain statements to either PW1 or PW2 as particularised in the charge (which I will refer to later in my Verdict) which she knew to be false, misleading or deceptive or that she made those statements recklessly.

8.  Charge 1 relates to allegations made by PW1 and Charge 3 relates to allegations made by PW2 and his wife Madam Chung Yin-moi PW4.  There were originally three charges against the defendant on the indictment but the prosecution offered no evidence on charge 2 at the commencement of the trial and hence two charges remained. 

9.  Issues

The principal issue is whether the defendant made the statements as alleged by PW1, PW2 and PW4. If the defendant is found to have made those statements then whether those statements were false misleading or deceptive and if they were whether the defendant knew them to be or was reckless. Woven intrinsically with the principal issue is the credibility of PW1, PW2 and PW4.

10.   Witnesses

The prosecution called five witnesses. They were the investors PW1, PW2 and PW4, PW2’s wife. An expert in investment risk and strategy, wealth accumulation, investment markets, investment products Mr. Lee Siu Po, PW4. Madam Ng Shuk Fong, Fiona, a senior training manager of the Human resources Department of the BOC, PW5.

11.   The defendant elected to give evidence in her defence and called three witnesses.  They were two of her colleagues who worked at the BOC with her at the material time Ms. Lily Fu (DW3) and Ms. Cheung Tsui-fong (DW4).  An expert Dr. Tom Vinaimont DW2 was also called.

12.  The defendant has a clear record.  I had given myself the requisite directions of her clear record. 

13.  Admitted facts

Much of the documentary evidence was not in dispute. The documents included bank documents, leaflets on the minibonds products from the BOC, Issue Prospectuses, training manuals and materials related to the minibonds series 35 and a summary of the remuneration of the defendant with the BOC between 2007 and 2008.

14.   PW1 and PW2 held bank accounts with the BOC.  PW1 held a Hong Kong Dollars Savings Account, an MTC Settlement Account and a Securities Account and PW2 held a Settlement Account and a Securities Account at the BOC.

15.  On or about 31 January 2008, PW1 subscribed for Minibonds Series 35 for the sum of HK$320,000.  For the said subscription, PW1 signed on a Purchase Order For Wealth Management Product dated 31 January 2008 (Exhibit P6.)

16.  On or about 6 February 2008, PW2 subscribed for Minibonds Series 35 for the sum of HK$1,000,000.  For the said subscription, PW2 signed on a Purchase Order for Wealth Management Product dated the even date (Exhibit P24.)

17.  Proof

It is for the prosecution to prove beyond all reasonable doubt that the defendant made the statements as alleged knowingly or recklessly. No onus whatsoever falls upon the defendant.

18.   Expert evidence

Expert evidence called by both the prosecution and the defence concerned the characteristics of the minibonds which in general terms were not in serious dispute. The evidence gave the court an understanding of the product but was not fundamental to the issue.

19.   Minibonds were complex financial products.  In short minibonds are structured derivative products linked to the credit of certain reference entities.  Investors would purchase the minibonds coupon and receive quarterly interest on their investment per annum over a period of 3 years.  In this series 35 there were 7 reference entities.  If no reference entity suffered a credit event (eg. bankruptcy) before the maturity date and no other redemption event occurred the holders of the minibonds were entitled to receive payment on the maturity.  The apparent attraction to the financial product was the superior interest return on the amount invested.  The notes were not principal protected which added to the risk of the minibonds. 

20.  Submissions by counsel

I have been greatly assisted by counsel for the prosecution and the defence in their thorough written submissions. They have been helpful in setting out in detail the evidence of the witnesses and any matters of relevance with regard to their evidence.

21.  Prosecution submissions

Mr. Neil Mitchell counsel on fiat for the prosecution leading Ms. Sabra Lo submitted that the prosecution witnesses were honest and reliable. Mr. Mitchell however recognised in his words the “incomplete memories” of PW1 and PW2 of what had occurred on the day of the sale of the minibonds and other matters. He submitted that their flawed memories did not demonstrate that the statements made by the defendant concerning the product were not truthful. He submitted that the comments made by the defendant about the product were short and simple to recall and difficult to forget and therefore PW1 and PW2 were able to remember the most important part of the conversations which influenced them to purchase the product. He submitted that commonsense dictates that the statements made by the defendant would not be forgotten notwithstanding the passage of time.

22.   Defence submissions

The passage of time was about eight months when PW1 and PW2 were recalling the statements and the alleged misrepresentations by the defendant. These had not been reduced into writing contemporaneously by the witnesses. This lapse in time before the witnesses were called upon to remember the conversations was relied upon by the defendant’s counsel Mr. Peter Duncan S.C and his juniors submissions as showing the unreliability of the prosecution witnesses as to their recollection.

23.   It was submitted by the defence that the witnesses only had reason to recollect the conversations that took place with the defendant after the collapse of LBH in September 2008.  There was no reason to recall the conversations before then.  By the time the witnesses were giving evidence in court the conversations took place some three years previously. 

24.  It was submitted that there was a financial incentive or motive for the witnesses to assert they were misled as they had incurred a significant loss in the minibonds and were seeking compensation for their loss. 

25.  The witnesses had made complaints to regulatory bodies (such as the Monetary Authority or the SFC) or political parties asking for assistance in claiming compensation.  There was therefore opportunity to acquire extensive information about the financial products amidst suggestions that they were misled by the bank staff in acquiring the products or their accounts which were tainted by stories or incidents that the witnesses heard after the collapse of LBH.

26.  I turn now to consider the evidence and the glaring question of whether the misleading statements were made by the defendant.

27.  Charge 1.

The evidence against the defendant was adduced from PW1. PW1 alleges that the defendant made the following statements to her:-

i. The said product was very secure;

ii. There was only low economic risk of loss in relation to the said product;

iii. The said product was linked to seven entities, namely HSBC Bank PLC, Hutchinson Whampoa Limited, MRT Corporation Limited, the People’s Republic of China, Standard Chartered Bank, Sun Hung Kai Properties Limited, Swire Pacific Limited; the worst that could happen would be one of the seven entities closed down;

iv. It was impossible for all seven entities to get into trouble,

28.   The evidence of PW1

PW1 was a housewife aged 57 years in January 2008. She had been a customer of BOC for over 20 years and used the banking facilities offered at the Tai Koo Shing Branch of BOC where the defendant was employed. She was a VIP customer and had had some dealings with the defendant in relation to her accounts.

29.   On or about 31 January 2008 PW1 went to the Tai Koo Shing Branch to withdraw some money from her account.  After completing the transaction and when she was about to leave the bank she was met by the defendant who said that there was a product that she would like to introduce called minibonds and asked PW1 to enter her office.  The defendant told her that a unit would cost $40,000.  PW1 told her she did not have the cash to invest whereupon the defendant told her she had checked PW1’s account and found that there was a sum of $320,000 on time deposit which was due to mature on 15 February which could be used. The defendant told her the interest to be earned from the product was higher that the time deposit.  PW1 said she was afraid of risk to which the defendant replied that the risk was very low and that all PW1 needed to do was to sign the documents and the defendant would deal with it.  The defendant then also completed a Questionnaire on Investment Preference (QIP) form and filled it in. 

30.   PW1 said she was eventually persuaded to purchase the product after the defendant made the statements alleged above.  PW1 said while waiting for the defendant to fill out all the forms there was a continued persuasion by the defendant with repeated assurances that the product was secure and the risk was low. 

31.  PW1 said she signed the documents all in one go.  PW1 admitted that she was negligent when she signed documents as she did not read them and the defendant had not explained them to her.  PW1 said she had only spent about 10 minutes with the defendant. 

32.  PW1 suggested that her admission of her negligence was because she trusted BOC. 

33.  In September 2008 she had believed that the minibonds product she had purchased was linked to the collapse of LBH and went to the BOC to make enquiries.  She asked the defendant how something of low risk could turn out like this.  The defendant told her even government bonds could turn to zero.

34.  On 22 September 2008 during a telephone conversation the defendant admitted that she had misled PW1 when selling the minibonds to her.

35.  In an agreement between PW1 and BOC she has received compensation of 60% of her investment. 

36.  Analysis of PW1, 2 and 4’s evidence generally

PW1, 2 and 4 were recalling events and conversation that happened some three years ago by the time they gave evidence at trial. The first time they had refreshed their memory about the event was at least some 8 months after the purchase.

37.   When recalling matters after that length of time I acknowledge that there may be flaws in one’s memory and witnesses can be wrong and forget without being untruthful.  I have also borne in mind the witnesses age. 

38.  Analysis of PW1’s evidence

I have been referred to a number of inconsistencies in PW1’s evidence in the submissions made by Mr. Duncan S.C. I shall not reiterate all of them but refer to some.

39.   Memory of events

Bearing in mind the submissions advanced by Mr. Duncan S.C. about flawed memories, PW1 was adamant that she could remember everything clearly and correctly even though some time had lapsed. PW1 was asked in cross-examination :-

Q. only after you learnt of the demise of LB this was the first time you consciously addressed what was said on 31 January

A. Yes I needed to recollect according to the hint given by the SFC

40.   PW1’s answer was disconcerting, most telling was that she recollected the events only after a hint was given by the SFC.  Apparent from her answer was that her recollection of the events were not entirely hers.

41.  Notably there were inconsistencies in PW1’s evidence as to the alleged statements the defendant had made.  From these inconsistencies it showed that her memory was not as clear and correct as PW1 suggested.  There were two amendments made to Charge 1.  The first immediately before the commencement of the trial and the last upon the closing of the prosecution case after PW1 had given evidence.  

42.  It appears the amendments to the charge arose as there was a difference in what PW1 had said to the police in her witness statement and at trial.  I shall not set out the differences but suffice it to say that they were highlighted at the trial and in the written submissions of the defence. 

43.  The latest version in the re-amended charge sheet in relation to Charge 1 (iii) is that the defendant said “the worst thing that could happen would be one of the seven entities closed down.”  Surprisingly none of the written statements PW1 made referred to “the worst case scenario” or “the worst thing” that could happen.  I found PW1’s allegation that she had told the police this but that the police did not write it down to be highly improbable. 

44.  PW1 also gave differing accounts in her witness statement and her oral evidence in relation to particular (iv).  In her witness statement to the police dated 15 October 2008 she said “it was impossible for all seven entities to get into trouble” while in court she said the defendant said it was “not possible even if one of the seven companies would be in trouble.”  This was not recorded in any of her statements and when questioned why PW1 did not say that to the police she said that the police did not have enough time to record her answer.  Again I found that beyond belief.

45.  Further in cross-examination PW1 could not point out in her witness statement the wording, of the defendant telling her that what “she was buying was the 7 big companies.” 

46.  The amendment of the charges and the different versions alluded to by PW1 as to what the defendant said is an indication of PW1’s faulty memory. 

47.  PW1 was searchingly cross-examined on her QIP’s exhibited as P7 and P9.  In her witness statements she said that she had no recollection about the content and did not remember why she signed them.  In her vive voce she said she could remember why she signed the QIP and the statement in the witness statement was wrong.  Despite repeated questions in cross examination PW1 was reluctant and evasive in answering the simple question that the statement made to the police was wrong.  She eventually admitted that it was false but excused that there was a misunderstanding between her and the police officer taking the statement.  I found this unconvincing.

48.  There was a material contradiction in PW1’s evidence in court and her statement to the police about whether the defendant told her whether the product was principal protected.  In PW1’s written statement to the police it demonstrated that the defendant had told PW1 that it was not principal protected and what it meant.  Yet when PW1 was cross-examined upon that statement she said that was an untrue statement.  She said that the word ‘she’ in the statement was not the defendant and thus was never told by the defendant that it was not principal protected.  Most astonishingly PW1 said that the reference to she was a reference to herself meaning that there should be an I.  PW1 tried to bend the meaning of the statement unconvincingly. PW1 made a hopeless and desperate attempt to stretch the obvious and conclusive clear meaning to a wholly unrealistic meaning.

49.  PW1 agreed in cross examination that in her witness statement she had said that she had no previous experience in buying and selling bonds however she had no idea why it was written like that.  Clearly that was not true.  I was unable to accept that this was just a minor unwitting mistake.  Although PW1 was a housewife, she had prior experience in investments.  The minibonds investment was not her first investment.  Despite her claims in only investing in low risk conservative investments it was elicited in cross-examination that she had previously subscribed to a high risk product which was an equity linked deposit.  Her low risk investments were inconsistent with her QIP in which she indicated that her investment preference was assessed as moderate or moderate aggressive.  Further it is apparent that she signed on the form (exhibit P2) which clearly stated that it was high risk. 

50.  PW1 painted a picture of being easily persuaded by the defendant who did not go through the leaflet or explain the features of the minibonds to her.  Upon the defendant’s recommendation PW1 without any questioning purchased the minibonds.  These characteristics of compliance and her indifference to the product are contrary to those she displayed at trial.  I was unable to accept that she “tacitly” complied with the defendant’s recommendation.  As demonstrated in her evidence PW1 was wordy and despite straight forward simple questions she did not give relevant straight forward brief answers. 

51.  After the demise of LBH PW1 was motivated by her desire to recover 100% of her investment.  She was active with the authorities and other bodies in the collapse of LBH.  She made various complaints to the Democratic Party, to the Hong Kong Monetary and Consumer Council.  She had joined the group called “LB Victims Alliance” LBVA where she had participated in number of demonstrations. 

52.  The defence submissions that PW1’s allegations about the defendant’s misrepresentations may have been tainted or acquired amidst hearing through other investor’s stories or incidents or through third parties cannot therefore be dismissed. 

53.  Mr. Duncan S.C had made very powerful and persuasive submissions upon the inconsistencies and unreliability of PW1’s evidence. 

54.  I bore in mind that it was for the prosecution to prove the charge beyond all reasonable doubt against the defendant no onus whatsoever lay with the defendant. 

55.  Despite PW1’s portrayal of having a good memory it was apparent from the evidence that PW1’s memory of the incident was flawed.

56.  When PW1’s evidence was considered together and in its entirety I found that I was unable to rely upon PW1’s evidence.  I was not satisfied that the prosecution had proved Charge 1 beyond all reasonable doubt.

57.  The defendant is acquitted of charge 1. 

58.  Charge 3

The charge is the same as that of charge 1. However the particulars differ in that in relation to PW2 it is alleged that the defendant said (i) the product was very secure and (ii) the product was linked to seven entities, naming the entities and the defendant told PW3 that “so long as those seven entities did not get into trouble, there would be no problem with the money invested into the said product.”

59.   The prosecution relied on the evidence of PW3 Mr. Ho Kit Sum and PW4 his wife Madam Chung Ying Mui.  He was 69 years of age in 2008.  He had received only 2 years of primary school education however he could read and write Chinese.  He had retired in 1999.

60.  He had previously invested in a number of investments at the BOC.  The defendant had assisted him in his past investments made at the Tai Koo Shing Branch of BOC.  PW2 was not compensated after the collapse of LBH by BOC on his investment in the minibonds. 

61.  PW2 said that sometime in the beginning of February 2008 the defendant telephoned him regarding the imminent maturity of his time deposit and invited him to go to the bank about it.

62.  On 6 February he and his wife (PW4) went to see the defendant at the bank.  The defendant gave him the minibonds leaflet and told him that the interest rate which could be earned was better than for his time deposit.  He said that the defendant did not use the word “bond” and PW2 thought that what he was investing in was something similar to a time deposit, except that the term was for three years with quarterly interest payments and if there was no problem with the seven entities then there would be no problem with the money he invested.

63.  PW2 agreed upon the defendant’s recommendation to purchase the minibonds.  He had read that the amount was $1 million on the purchase order.  PW2 could see his name but the defendant provided no explanation of the details of the form in particular she had not explained that the product was of high risk.  Nor had the defendant informed PW2 that his risk assessment on the QIP was “moderate aggressive.”

64.  PW2 said that he had spent about 10 minutes with the defendant in her office.  No one else came into the office and he could not recall if his wife PW4 had remained there with him till he had signed to confirm his purchase of the minibonds. 

65.  The gist of PW2’s evidence was that as he was old and retired, he would invest and had only invested in low risk investment products. PW2 said that he believed that the defendant on 6 February and at previous times had sold and would not be selling him any high risk products.  Specifically the defendant had never told him the minibonds were high risk products. 

66.  It was PW2’s case that even though he had sustained losses in his past investments he made no complaint because he knew the risks associated with those products as the defendant had explained them to him.  In the case of these minibonds the defendant had not explained the risks and had given him assurances that the product was secure. 

67.  In cross examination PW2 was shown many documents of PW2’s past purchase of investment products.  He had invested in about 40 equity linked notes (ELN’s) and private placement products during the period from 2004 to 2008.  Almost all of these were categorised as “high risk.”  PW2 signed these subscription documents to acknowledge he understood what was stated in the customer confirmation section.  In that section the risk was stated as high. 

68.  PW2 was searchingly cross examined on his knowledge that he had invested in high risk products as evidenced by the documents.  PW2 denied he had knowledge that the nature of his past investments were high risk.  He went so far to say that had he known that they were high risk investments he would not have bought them.  At all material times PW2 said all he wanted was for his investments to be low risk. 

69.  Analysis of PW2’s evidence

I borne in mind that no contemporaneous notes were made after the meeting with the defendant on 6 February 2008 by PW2 or PW4. PW2 frankly admitted it was very difficult for him to remember everything that was said on 6 February 2008.

70.   It was PW2’s evidence that the defendant did not tell him that the product was not principal protected.  It was he himself who read this from the leaflet and asked the defendant about the risk involved.  It was then the defendant told him if these seven companies have no trouble then there will be no trouble with his money.  This was in clear contradiction to his police statement which he made only some three months before the trial (26 January 2011) where PW2 stated that he was not aware of the words ‘not principal protected’ before he signed the purchase form. 

71.  I found PW2’s evidence on the question of not principal protected difficult to reconcile, as it was apparent from PW2’s oral evidence that the defendant only assured him about having no trouble with the money only after he had asked her about the words not principal protected.  I found this to be a material inconsistency.  

72.  PW2 said that the defendant informed him that his time deposit was going to mature and for that reason the defendant had asked him to go to the bank.  It was pointed out to him in cross-examination that his time deposit had already matured on 4 February and had been reinvested by the time he went to the bank.  PW2 said :-

“I can’t recall the details those small details like the days from when to when. In fact what I remember after all when my wife and I were there and what she said was if these 7 companies do not close down then there will be no problem with the money.”

73.   Ostensibly the reason why he was asked to go to the bank was because his deposit was going to mature and hence I found it surprising that he could not remember that his deposit had matured.  PW2’s memory was shown to be deficient about the time his deposit was to mature.

74.  There were contrasting accounts of events by PW2 as against the defendant, Ms. Cheung and Ms. Lily Fu.  

75.  PW2 stated that the defendant did not question him about the QIP dated 19 December 2007.  He said that Ms. Lily Fu (DW4) a bank teller at the Tai Koo Shing Branch had seen him and asked him to sign the QIP in blank and told him that it was an internal survey which the defendant would help him to fill in.  This evidence was in direct contradiction to Ms. Lily Fu’s evidence. 

76.  Ms. Fu stated that she did not ask PW2 to sign the QIP in blank.  She would have never have asked PW2 to sign a QIP in blank because it was the bank policy that they would never ask any customer to sign any blank form. 

77.  It was the defence case that a third party was present when the defendant made the explanation to PW2 after he had agreed to purchase the minibonds and past products.  That person was usually another bank staff Ms. Emily Cheung (DW3).  Ms. Cheung was the third person present when the defendant sold the minibonds to PW2. 

78.  PW2 denied that there was any other person other than the defendant present when he purchased the minibonds or that any other bank staff had explained the product to him on the material day or at any of his past investments. 

79.  The defendant and Ms. Cheung said that the bank had a policy with regard to sales to persons of PW2’s age.  For those customers over 65 they had an internal guideline to follow.  The bank required a witnessing process and the bank required a form to be filled in.  It was a confirmation form.  Exhibit D12 was the sort of form used during the witnessing process.  Ms. Cheung’s signature was seen as witness on the form in relation to the minibonds purchased by PW2 and many of the past investments of PW2.  

80.  Ms. Cheung informed the court of the usual procedure for the sale of this minibonds product.  The sales staff would explain this is not principal protected and high risk and it was done in her presence also.  The amount would also be mentioned for the purchase.  In her presence the sales staff will explain to the customer the key features of the product. Then she would ask the customer if the customer had any questions.  If the customer did not understand then she would repeat again that this product was carrying high risk and was not principal protected and if the customer said there were no questions then the customer would be invited to sign on the purchase order. Then she would sign on this confirmation form. 

81.  When Ms. Cheung signed on the confirmation form, the customer, she and the sales staff were there together.  

82.  Ms. Cheung knew PW2 because she had witnessed many sale processes between the defendant and PW2.  She had been a witness to the purchase of the past investments.  Fifteen previous confirmation forms were produced by the defence to support her evidence.  Ms. Cheung remembered this incident of PW2 purchasing the minibonds because it was different from what PW2 had purchased in the past which was equity linked notes. 

83.  On that day of the sale of the minibonds Ms. Cheung was the witness present with PW2 and the defendant.  The defendant had amongst others explained the key features of the product, that the product was not principal protected and was of high risk. 

84.  After looking at the Confirmation Forms exhibit D11(1-15) Ms. Cheung was able to confirm that she was the witnessing person in the transaction for each of those occasions. 

85.  PW4 was PW2’s wife aged 70.  She was illiterate.  Most if not all investments were made on her behalf by her husband.  It was PW4’s evidence that she was present on 6 February when the defendant made the statements to PW2.  

86.  It was the defence case that PW4 had left the bank when the defendant explained the product to PW2.  PW4’s evidence was in contradiction to Ms. Cheung’s evidence who gave evidence that PW4 was not present when the purchase order was signed.  Ms. Cheung had seen PW4 on occasions when PW4 had visited the bank. 

87.  I found PW4 had memory difficulties.  She agreed in her oral evidence that the defendant was talking to PW2 and she was just sitting there.  PW4 frankly admitted that she had difficulty in recalling what had happened on 6 February.  She could not remember what was said by the defendant or if anything was said about the leaflet.  She could not remember if any documents were signed. 

88.  As to the conversation with the defendant, she said in her HKMA statement that the defendant had given her an explanation of the product however this was in direct contradiction to what she had said in her oral evidence.  Her vive voce evidence that she was not asked by the Bank concerning her investment preference and never signing any documents were contradicted by various documents.  I was unable to rely on PW4’s evidence. 

89.  PW2 had been compensated in respect of the sale of a similar LBH related investment with ABN Amro which was also affected by the collapse of LBH.  He was compensated US$24,000 for his US$50,000 investment. He made no complaint to the police about that investment. 

90.  In cross examination he acknowledged that he wanted 70% compensation for this minibonds product but was rejected and he was unhappy.  He telling admitted that he went to the police on 16 September 2010 about the purchase of these minibonds because he wanted to seek justice.

91.  PW2 had not received any compensation at all from his investment in the minibonds.  I was aware that he may bolster his evidence in his desire to recover the lost in his investment. 

92.  It was abundantly clear particularly from the content of exhibit D2 the past investments made by PW2, that PW2 was a person well versed in making high risk investments.  His claim that he did not appreciate that the bulk of those investments were high risk was simply untenable.  The contemporaneous documents signed by PW2 are inconsistent to his claim. 

93.  PW2 was an experienced investor.  I found it difficult to accept that while all the documentation laid out in front of PW2 said that the investment were high risk, he would believe that they were low risk.  I was unable to accept that the defendant would daringly make statements which were totally at odds with the written documentation before her and PW2 and Ms. Cheung. 

94.  Ms. Fu and Ms. Cheung are colleagues of the defendant and all of them are employees of the BOC.  I have taken into consideration that they may be interested in protecting each other as well as the bank.  Their evidence was straightforward. 

95.  Ms. Cheung’s evidence was supported by contemporaneous bank documents.  I found it difficult to accept that that these documents or Ms. Cheung told a lie.  Having carefully considered Ms. Fu and Ms. Cheung’s evidence and the documents in support of their evidence I found them to be reliable witnesses.  There was no basis for me to reject their evidence.

96.  The defendant’s evidence

Although it was unnecessary for me to consider the defendant’s evidence as it was for the prosecution to prove their case beyond reasonable doubt and no onus lay with the defendant for completion of my verdict I have the following to say about the defendant’s evidence.

97.   I found that the defendant was doing her best to recall all the circumstances at the time.  She was forthright and surprisingly frank about not having followed certain procedures and made certain mistakes.  The procedure she adopted was far from ideal.  From the BOC documents, i.e. ‘The Training Manual’ from the bank to its employees, the minibonds were classified as ‘high risk.’  The subscription form stated it was ‘high risk.’  The defendant knew this.  I found it difficult to believe that she would boldly make statements in direct contradiction to the documents before her to PW2 or PW1.  It was inherently improbable that she would be telling the customers that it was low risk when on the other hand the document they were signing stated it was high risk. 

98.  Curiously the defendant had numerous past investments and dealings with PW2 all of those supported by contemporaneous documents and almost all evidenced a high risk investment.  I found it again most improbable that on all those occasions the defendant kept quiet about the high risk investments and contrarily led PW2 to believe they were low risk investments.  What the defendant was effectively doing with PW2 was writing one thing and saying another.  I found it more remarkable that PW2 would believe them to be so.  Notably the past investments were not one off or just a few investments but numerous over many years and in the region of about 40. 

99.  It was of some consequence that prior to the collapse of LBH the defendant’s professional integrity had never been questioned.  I was satisfied that she was carrying out her professional duties in an honest albeit imperfect manner. 

100.  Conclusion

In considering all the evidence and submissions before me I found I was unable to rely on PW1, PW2 and PW4’s evidence to prove the prosecution case to the requisite criminal level of proof. I was satisfied that the prosecution had not proved beyond all reasonable doubt that the defendant was guilty of the charges.

101.   The defendant is acquitted of charge 1 and 3 accordingly.