DCCC 1234/2004 (Part A)
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL CASE NO. 1234 OF 2004 (Part A)
Coram : Deputy Judge W. Lam in Court
Date of Sentence: 18th January 2006
Offence : Conspiracy to default (串謀行騙)
1. As a result of commercial events occurring from the latter part of 2001 to May 2003, D1 and D2 were convicted after trial, as follows:
2. Briefly, the facts were that D1, Chau and Mo were on Angel Field’s
side as buyer, while D2 and his financial controller PW1 were on Ying Wing’s side as vendor. They conspired in a scheme and succeeded,namely in hiding the asset value of Ying Wing’s fabric business from the “victims”, primarily the minority shareholders ofYing Wing, to whom Angel Field offered a price per share to “sell up” so that Angel Field could completely take over Ying Wing. The minority shareholders did not know the true position, sold up all their shares to Angel Field at undervalue, and suffered asa result.
3. Counsel for the Defendants urged me to have regard to a recent set of sentences imposed by another Judge upon D1’s co-directorMs Mo for Conspiracy, Mo being also a co-conspirator in our case today. While a number of the personalities in the other case andthose in our case overlapped, the subject matter of the Conspiracy in the other case was different from ours. Furthermore, the Court of Appeal has repeatedly said that unless thesentence itself is wrong, no complaint can be made merely because of a disparity where different Judges have imposed different sentences,even in the same case. And today we are speaking about different cases with different facts.
4. Neither defendant has any previous criminal record. I have heard mitigation from Counsel, and have read the letters written by friendsof the defendants and by D1’s family, together with certificates and testimonials showing the generous side of both defendantswith their charity donations. I accept D1 was not a mastermind like her co-conspirators Chau and Mo. However D1 was clearly well-qualifiedand experienced, and a capable financial planner in corporate affairs, who had willingly and actively taken part in the present offences. She was sent by Chau to Hong Kong to help the latter acquire Hong Kong assets such as publicly listed companies, but her side didnot want to pay the full price while wanting the company name and its listing status. This practice of “backdoor listing” damagesthe corporate financial system of Hong Kong, in addition to exposing the uninformed general public into buying shares in a listedcompany which possesses no business to conduct, having only a bare name. D1 was a university graduate from Shanghai majoring incommerce and international finance, and was director of several companies as related to this case. Her role was significant, asfor example in directing PW8 to issue shares to Angel Field (on her own side) so that Shanghai Merchants would be paid $50M and beable to “sell back” the fabric business at less than the statutory 15% of company net asset value, a piece of ingenious veiledtransaction requiring considerable pre-meditation, and she requested for, and then signed, the minutes of a bogus telephone conferencein order to “put the records straight” the sham sale of the fabric business to D2. And her such conduct was especially culpablein circumstances where independent non-executive director and solicitor Mr Ng, charged with the responsibility to protect minorityshareholders, had already protested about the irregularity of devaluation which itself was also a sham, but D1 via her above conductsuccessfully bypassed Mr Ng’s efforts. In addition, D1 participated in asking puppets like PW26 to sign blank forms which weresubsequently used for the veiled transfer of funds in furtherance of the conspiracy. In addition, the amount of money involved intoday’s case was well above the top band under CHAN Boon-ning’s case, and I have seen no evidence of remorse by either defendant. Furthermore, the events extended over a lengthy period of17 months, which points to careful pre-meditation and a high degree of intricate planning. The gravemen of the 1st Charge is twofold:(1) general members of the public as shareholders, not usually or necessarily specialist accountants or auditors, were entitled torely on official company documents like Annual Reports and Board Committee recommendations, to represent the truth. As ample evidenceshows, the SFC and SEHK cannot be expected to investigate into the financial state of every company in the market, and they are entitledto trust company directors and their agents to be honest and to inform them of the truth, and (2) Money has been transferred outof Shanghai Land to fund Shanghai Merchants as if it was D1, Chau and Mo’s private money, but Shanghai Land was a public listedcompany with shareholders being members of the public, and these shareholders are entitled to safeguards rather than having theirmoney transferred away “under the table” for Chau or anybody else’ own purposes.
5. Having taken all the relevant factors into account, I sentence as follows:
Mr. John DUNN, Counsel on Fiat, for Prosecution.
Mr. Andrew BRUCE, S.C. leading Ms. Vivian CHIH instructed by Messrs. Ng & Shum for the 2nd Defendant.