HKSAR v. LEUNG WING KEUNG ALBERT

DCCC1065/2021

[2024] HKDC 929

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1065 OF 2021

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REASONS FOR SENTENCE

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1.  The defendant was convicted after trial on Fraud, contrary to Section 16A of the Theft Ordinance, Cap.210.

FACTS

2.  Jacobs China Limited (JCL)  entered into an agreement with the Civil Engineering and Development Department (CEDD)  to provide construction material testing services at Siu Ho Wan Laboratory (SHW Lab)  for the Hong Kong-Zhuhai-Macao Bridge Project and other public works.  

3.  The defendant was the Director of Operations of JCL in charge of JCL’s daily operations in Hong Kong, and a Divisional Director with expertise in structural engineering.  On 26 July 2016 officer of CEDD discovered the time manipulation irregularity happened at SHW Lab.  CEDD then requested JCL to investigate into the matter. 

4.  The defendant was not responsible for SHW Lab initially, he only got involved in the investigation since 29 July 2016, thereafter he also represented JCL on the matter to have meeting and promised to provide full findings to CEDD.   By 11 August 2016, he had knowledge of the Steel Bar Issue/Simulated Tests Irregularity.  JCL discovered the Simulated Tests Irregularity during the investigation, but the Senior Management decided not to disclose the matter to CEDD after seeking legal advice from both in-house counsel and external counsel from Pinsent Masons.

5.  The defendant was involved in some of the exchanges between the Senior Management and the lawyers.  He knew the Senior Management, according to the ordinary standards of reasonable and honest people, was dishonest when decided to conceal the Simulated Tests Irregularity from CEDD.

6.  The defendant was under a duty to disclose the Simulated Tests Irregularity to CEDD but he followed the Senior Management decision did not disclose the matter to CEDD.   He knew D2 did not have knowledge of the matter, the reports signed by D2 and submitted to CEDD was edited and had all reference to the Simulated Tests Irregularity removed.  He knew any right mind person would consider anyone under a duty to disclose the Simulated Tests Irregularity to CEDD but did not, was dishonest.

7.  The defendant by deceit with intent to defraud CEDD, deliberately concealed the Simulated Tests Irregularity.  His deliberate omission caused the officers of CEDD to believe the only problem was the Time Manipulation Irregularity when he knew that was not so, thereby induced staff members of CEDD to release payment in the sum of $1,971,514.96 to JCL, which resulted in benefit to the said JCL and prejudice to the CEDD.   

8.  Without knowledge of the Simulated Tests Irregularity, CEDD had failed to discharge its function to provide reliable, efficient and effective construction materials compliance testing services to public works projects, in particular, the Hong Kong-Zhuhai-Macao Bridge Project responsible by the Highway Department.

9.  Shortly after the final payment, ICAC informed CEDD of the Simulated Tests Irregularity of SHW Lab, but the scope of the malpractice was unknown.  CEDD carried out a series of follow-up actions, to ascertain the scope of the matter.  Highway Department being the client, and HKAS being the accreditation organization were also informed. 

10.  Following the discovery of Simulated Tests Irregularity, CEDD took the following remedial actions:

(1)  Undertaking reviews of data and reports of 399,948 concrete cube compression tests conducted by SHW Lab between January 2013 and March 2017 to identify and assess abnormalities of the test results;

(2)  Conducting non-destructive testing (rebound hammer tests)  at 221 locations in the Bridge project; and

(3)  Carrying out 810 number of concrete cubes compression tests and 545 number of concrete core compression tests to assist the Highways Department to investigate the quality of concrete used in the Bridge project.

11.  The direct manpower spent on the above remedial actions are estimated to be 225 man-days, which correspond to a staff cost of about $700,000 incurred by CEDD.  Costs of remedial actions undertaken by other Government Departments are not included in the said estimated sum.

MITIGATION

12.  The defendant aged 67, clear record, married with two daughters; a family of four depends on him financially.  His mother-in-law aged 90 requires care and attention from him and his wife.  He has a strong professional background and regarded by his family, former superiors, colleagues and friends to be a person with positive good character, friendly and helpful, open and sincere in sharing his knowledge and experience, and acknowledge his contribution to the Engineering Industry. In view of the costs of remedial actions, the defendant offers to make reimbursement.

13.  The defendant had been in the employment of JCL (or its predecessors)  since his graduation from University.  He left JCL in June 2020.  In September 2020 he joined the Atkins Group.  Since May 2023, he has been working part-time at a consultancy firm as an Executive Director, earning a monthly salary of $150,000.  He has been actively involved in various pro bono activities related to mediation, accreditation and arbitration.  Prior to the present proceedings, he also had two academic appointments with two local universities. 

14.  The defendant is suffering from Major Depressive Disorder, triggered by the first arrest in 2017 and compounded by the series of health problems he had since 2020.  Outpatient psychiatric treatment is recommended. 

15.  The defendant’s health has significantly deteriorated since 2020.  In July 2020 he underwent a surgical operation for prostate cancer, in April 2023 had a right total hip replacement, in January 2024 an operation for posterior neck abscess, the first two conditions require regular monitoring.

16.  Apart from the defendant’s personal background, clear record and positive good character, the defence also invites me to take into account that he received no personal benefit, did not in any way condoned the behavior of the technicians, the investigation was properly and fully documented, the receipt of wrong legal advice, no direct monetary loss arose from the present fraud, the safety of the bridge was not compromised in any way, and no risk of reoffending.

17.  Further, it is submitted that the length of the delay in the present case is another exceptional circumstance.  The defendant was first arrested on 17 May 2017 and he was charged after a period of 4.5 years on 5 November 2021.  In the meantime, the defendant has moved on with his family.

18.  Finally, it is submitted that the cumulative effect of the mitigating factors in the defendant’s case warrants a lower starting point for any term of imprisonment, and further constitutes exceptional circumstances to be considered in favour of suspending the sentence.  A suspended sentence would reflect the gravity of the offence and culpability of the defendant, while acknowledging the unique set of circumstances present in this case, including the exemplary record of the defendant, the contribution of wrong legal advice, and the lengthy delay.

SENTENCE

19.  Section 16A(1)  of the Ordinance provided that a person committed the offence of fraud is liable on conviction upon indictment to imprisonment for 14 years.

20.  Both parties refer to HKSAR v Chow Che Wai CACC 545/2001, the applicant together with other 2 defendants were charged with three conspiracies to defraud the Housing Department by dishonestly submitting false and misleading documents to the Housing Department purporting to satisfy the Department that all the failed reinforcement steel bars had been removed from the construction site and had not been used in the construction.  The applicant was convicted of two charges after trial.  On appeal, the Court of Appeal uphold the 2.5 year starting point but reduced the overall sentence of 3.5 years’ imprisonment to 3 years. 

21.  The defence submits that the defendant’s culpability is significantly less than the applicant in Chow Che Wai.   Not only was the defendant not in charge of the SHW Lab, he was also not in charge of the investigation into the technicians’ misconduct, and he was not the person who made the decision to conceal the Simulated Test Irregularity from the CEDD.  Further, unlike Chow Che Wai, there were no falsification of any documentation.  Full records documenting the investigation, including the Simulated Test Irregularity, were properly retained.

22.  It is true that full records documenting the investigation were retained, yet these were not disclosed to CEDD.  The defendant knew the reports submitted to CEDD were extensively edited with all reference to Simulated Tests Irregularity removed; those are plainly misleading reports.  The defendant knew the Simulated Tests Irregularity was not an isolated incident, but a failure of the quality management system, and this has happened for years.  He knew the cement was to be used in the Bridge Project.

23.  I recognize that the JCL internal investigation started off in accordance with the Code of Conduct, the defendant did not obtain any personal benefit, he was not involved or in any way condoned the behavior of the technicians, and the decision on non-disclosure first came from the Senior Management after seeking legal advice, and the safety of the Bridge was not comprised.  Otherwise, I will adopt a much higher starting point.  Yet being the Director of Operations of JCL and with his experience in the industry, he knew the Senior Management was acting dishonestly, and it was his own decision when he deliberately concealed the matter from CEDD. 

24.  The substance of the legal advice was unknown.   As per my judgement at para. 159, “legal advice is only lawyer’s opinion on a particular matter; whatever the advice given, it could not change the nature of the subject matter.  The subject matter concerned was “the Steel Bar Issue, the Simulated Tests Irregularity”.  Once D1 knew and agreed it was “an error, omission and shortcoming” stipulated in Clause 22.  According to Clause 22, he on behalf JCL upon discovery of the Simulated Tests Irregularity, being “an error and shortcoming”, should report to CEDD.”

25.  The defendant was under a duty to disclose the Simulated Tests Irregularity upon discovery, he had knowledge of the matter by 11 August 2016 but he deliberately concealed the matter.  While it was the fraudulent acts of the technicians that directly caused the monetary loss, yet should the defendant disclose the matter to CEDD upon discovery in August/September 2016, the subsequent remedial actions could be carried out much earlier and would only require to verify the tests done up to August/September 2016, instead of up to March 2017.

26.  The significance of this case is upon the damage caused to the public confidence, in HKSAR v Poon Ka Wai , CACC 345/2018, the applicant was one of the technicians of SHW Lab, in refusing his leave to appeal against sentence, regarding the gravity of the offence committed by the applicant, the single judge of the Court of Appeal put it as follows:

“ 1)  It undermined public confidence in the tests concerned and the accreditation system;

2)  It seriously affected public confidence in the quality of the Bridge, caused panic among the public and violated public interest, and the government had to take remedial measures to restore public confidence;

3)  It created an extremely negative impact on the reputation of the works carried out in Hong Kong, Zhuhai, Macau and even in the whole Greater China Region;

4)  In an attempt to remedy the situation, the government had to spend an extra $58 million in public funds to conduct further tests in order to allay public concern; and

5)  It was an on-going event over a long period of time involving collective actions and thus inevitably caused a delay in the works and resulted in incidental financial losses.”

27.  The integrity of the Engineering & Construction Industry in Hong Kong is of utmost importance.  Test reports containing false result (obtained via simulated tests)  had been presented to CEDD as valid HOKLAS reports over the years.  But for the ICAC investigation, the Simulated Tests Irregularity would not be unveiled.  The first three points mentioned in Poon Ka Wai are directly applicable in the present case. 

28.  Having consider the scale of the Simulated Tests Irregularity, the damage caused to the public confidence, the negative impact on the reputation of Hong Kong Engineering & Construction Industry in the whole Greater China Region, and the costs on the remedial work in particular that related to the non-disclosure upon discovery.  I consider the appropriate starting point is one of 3 years imprisonment.

DELAY

29.  Delay in prosecution could amount to a mitigating factor.  Both parties refer to HKSAR v Chiu Chi Wing CACC 243/2012, the relevant remark of the Court of Appeal is at para.37:

“The seven factors identified by Buss JA, which were stated not to be intended to be exhaustive or inflexible, were:

“ First, delay is not, of itself, a mitigating factor.

Secondly, delay will not ordinarily be a mitigating factor if it has been caused by difficulties in detecting, investigating or proving the offences committed by the offender, and the period of the delay is reasonable in the circumstances.

Thirdly, delay will not ordinarily be a mitigating factor if it is caused by the offender’s obstruction or lack of co-operation with the State, prosecuting authorities or investigatory bodies, but the offender’s reliance on his or her legal rights is not obstruction or lack of co-operation for this purpose.

Fourthly, delay will not ordinarily be a mitigating factor if it results from the normal operation of the criminal justice system, including delay as a result of the offender or a co-offender exercising his or her rights; for example, interlocutory appeals and other interlocutory processes.

Fifthly, delay may be conducive to the emergence of mitigating factors; for example, if, during the period of delay, the offender has made progress towards rehabilitation or other circumstances favourable to him or her have emerged.

Sixthly, delay (not being delay of the kind described in the second, third and fourth guiding principles)  will ordinarily be a mitigating factor if:

(a) The delay has resulted in significant stress for the offender or left him or her, to a significant degree, in ‘uncertain suspense’; or

(b) During the period of delay the offender has adopted a reasonable expectation that he or she would not be charged, or a pending prosecution would not proceed, and the offender has ordered his or her affairs on the faith of that expectation.

Seventhly, delay caused by dilatory or neglectful conduct by the State, prosecuting authorities or investigatory bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it an appropriate means of marking its disapproval of the conduct in question.”

30.  The prosecution has prepared the chronology of events for my consideration.  The defendant was arrested on 16 May 2017 and released on ICAC bail on the next day.  Thereafter time was spent on the seizures subject to LPP, further investigation and legal advice.  The defendant was charged on 5 November 2021.  Taking into account of the volume of the seizures, the issue of LPP, the number of overseas witnesses, I consider the time spent was reasonable. 

31.  The defendant’s case was subsequently brought to West Kowloon Magistrates’ Court for transfer on 26 November 2021.  The defendant appeared at District Court on 14 December 2021. Thereafter the defence made several applications for adjournment.  Eventually plea was taken on 18 October 2022, dates in 2023 were given for the defendant’s stay application, PTRs and trial.  All were within the normal operation of the criminal justice system during the period of COVID-19 pandemic.  Thus, the delay alleged is not of itself a mitigating factor available to the defendant.

OTHER MITIGATING FACTORS

32.  The defendant was Director of Operation of JCL at time of the offence, he secured another employment in September 2020 after he left JCL in June 2020, and he worked part-time prior to his remand.  Because of the nature of the offence, the termination of his academic appointments is inevitable.   The usual retirement age in Hong Kong is around 65, the defendant is currently 67, though the family of four depends on him financially, it probably is the time for the family to prepare, if they have not done so, for the defendant’s retirement.  The two daughters are old enough to offer assistance in the care of their grandmother.

33.  The defendant is convicted after trial.  Having consider the defendant’s previous good character and contribution in academic field and the Engineering Industry as shown in the mitigation letters, the various pro bono activities he participated, his health condition since his arrest in 2017, the stress he encountered after his arrest and pending trial which contributes to his Major Depressive Disorder condition, I allow him a global reduction of 6 months.  I do not consider there to be any further mitigating factor that calls for further reduction.  That being the case, Section 109B of the Criminal Procedure Ordinance is not applicable in his case.

34.  The defendant had two operations in respect of his prostate cancer and total hip replacement which require monitoring, and has Major Depressive Disorder.  I direct the Correctional Services Department to provide him with the necessary medical care and psychiatric treatment.  With the defendant’s consent, copy of his psychiatric report provided to CSD for reference.

ORDER

The defendant is sentenced to 30 months’ imprisonment for Charge Two.