Case Detail

CACC000015A/2003

CACC 15/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO.15 OF 2003

(ON APPEAL FROM DCCC NO.224 OF 2002)

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BETWEEN
	HKSAR	Respondent

	AND

	CHEUNG KAM LUN	Applicant

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Coram: Hon Ma CJHC, Gall & Hartmann JJ in Court

Date of Hearing: 2 March 2004

Date of Judgment: 2 March 2004

Date of Handing Down Reasons for Judgment: 2 April 2004

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REASONS FOR JUDGMENT

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Hon Hartmann J (giving the judgment of the Court) :

Introduction

1. On 23 December 2002, after a trial before Deputy Judge Tong in the District Court, the applicant was convicted of the offence of conspiracy to deal with property known or believed to represent proceeds of an indictable offence, contrary to s.159A(1) of the Crimes Ordinance, Cap.200 and s.25(1) of the Organized and Serious Crimes Ordinance, Cap.455. In everyday language, the offence of which the applicant was convicted is known as conspiracy to launder money. The applicant was sentenced to a term of imprisonment of two years and nine months.

2. On 17 April 2003, the applicant appeared before Woo JA (as he then was) seeking leave to appeal against his conviction and sentence. The application was heard pursuant to s.83Y of the Criminal Procedure Ordinance, Cap.221. The application was dismissed, the learned judge's reasons being contained in a nine page judgment.

3. The applicant, however, as he was entitled, made a new application for the matter to be determined by the full Court of Appeal. In appearing before us, the applicant again sought leave to appeal against both his conviction and sentence. Having heard submissions, we dismissed the application. We now give our reasons.

Background

4. The applicant did not face the charge of conspiracy to launder money alone. He was jointly charged with one other, the first defendant at trial.

5. The evidence given at trial revealed that, in or about May 2001, before any involvement on the part of the applicant, the first defendant entered into a conspiracy with certain persons who he understood to be in the business of smuggling illegal immigrants. The purpose of the conspiracy was to launder the proceeds of that business. Over a number of meetings, various methods of money laundering were discussed. Unknown to the first defendant, the persons with whom he conspired were ICAC undercover officers.

6. At a meeting held on 15 May 2001, the first defendant proposed a method of money laundering in terms of which the unlawful moneys - said to total HK$5 million - would be taken to Macau in the form of cash or cashier orders and paid over to persons representing a company that operated casinos. The ostensible purpose would be to purchase gambling chips. In fact, there would be no such purchase; the cash or cashier orders would simply be exchanged for cheques issued by the casino operator. As the trial judge observed, to all appearances the unlawful moneys would by that simple device be transformed into the proceeds of gambling and thus 'laundered'. What the scheme required, of course, was a person who was sufficiently well known to the representatives of the casino operator to persuade one or more of them to effect the exchange.

7. After the meeting of 15 May 2001, the applicant was invited by the first defendant to meet the persons with whom the first defendant was conspiring. The applicant did so, the first meeting taking place on 23 May 2001.

8. The applicant at that time was acquainted with certain of the representatives of the casino operator in Macau. This was because he worked as a middleman in the sale of particular types of gambling chips known as lai ma or clay chips.

9. Clay chips, once purchased, must be used to gamble. They cannot be cashed in except as winnings. The benefit to be obtained from their purchase, however, is that their sale comes together with such perks as free ferry rides, hotel lodging, meals, entertainment and the like. Evidence given at trial, which the judge accepted, is that a purchase of clay chips to the value of HK$50,000 attracts the maximum package of benefits. No purpose is therefore served in purchasing clay chips on any one occasion to any higher value.

10. In the days following his first meeting held on 23 May 2001, the applicant attended more meetings with the first defendant and one or more of the undercover officers. The applicant was arrested on 31 May 2001 when he went with two of the undercover officers to a Hong Kong bank in order to buy a cashier order to the value of US$15,000, a sum in excess of HK$100,000.

11. At trial, while the applicant accepted that he had agreed to assist the undercover officers in purchasing clay chips, he testified that he had at all times acted in the honest belief that the clay chips were required for gambling. The applicant did accept that he had been told by the undercover officers that they had a sum of HK$5 million with which they wished to gamble and that the money represented the proceeds of smuggling illegal immigrants. He testified, however, that he believed at the time that they were joking. In his application for leave to appeal he expanded on this, saying : "it is logical that all punters generally intend to disguise their identity and most of them are bluffers."

12. The issue before the trial judge, therefore, was whether the prosecution had proved beyond reasonable doubt that the applicant had conspired to launder what he believed to be the proceeds of smuggling illegal immigrants or whether the applicant's actions may have amounted to an innocent attempt on his part to assist in the purchase of clay chips.

13. The trial judge came to the finding that the only reasonable inference to be drawn from the evidence he found proved was that the applicant had joined the conspiracy to launder money, that money, to the applicant's belief, being the proceeds of an illegal enterprise.

Specific findings of the trial judge

14. The evidence at trial revealed that the ICAC undercover officers had been successful in tape recording most of the meetings. Transcripts of these recordings were admitted into evidence pursuant to s.65B and 65C of the Criminal Procedure Ordinance, Cap.221, and formed the basis of the prosecution case against both the first defendant and the applicant.

15. Although the recordings contained no direct admission by the applicant, the trial judge was nevertheless satisfied from the 'overall tenor' of the recorded conversations that the applicant had been 'part and parcel of the money laundering scheme'. In this regard, he said the following in his Reasons for Verdict :

" The overall effect of the evidence on the tape transcripts ... was that the [applicant] was brought in by the first defendant to launder money representing illegal proceeds. From the overall tenor of the conversations that the [ICAC] agents had with the [applicant], I am sure that the [applicant] was part and parcel of the money laundering scheme which he had sought to explain to the agents on 24 May 2001."

16. As to the essential nature of the scheme, the judge said :

"The scheme was about using illegal proceeds to buy cashier order from a bank of Hong Kong. Then someone could take the cashier order to a gambling hall in Macau to have the same exchanged with a cheque at the same amount. In the meantime, the agent would have to pay separately an amount equivalent to 13 per cent of the money so laundered. Ten per cent would go to the entertainment company or its agent, 2 per cent would be shared by the [applicant], while 1 per cent would go to the first defendant. The share of the entertainment company and that of the defendant, i.e., the 12 per cent of the overall 13 per cent would have to be put into a designated account."

17. The trial judge rejected the applicant's testimony that he had done no more than innocently assist in what he believed to be the purchase of clay chips. In doing so, the judge noted

(i) That (in one recorded conversation) mention had been made of sending someone with a cashier order to Macau to exchange the order for a cheque from the casino operator : a method of operation at odds with the legitimate purchase of clay chips but 'highly indicative', as the judge put it, of money laundering.
(ii) That a reference in the recorded conversations to what the applicant testified was payment of a standard ten percent tip for any winnings was, in fact, when read in context, clearly an integral part of the 13 percent 'processing fee or service charge' that would have to be paid into an account in Hong Kong as part of the money laundering exercise.
(iii) That, having regard to the limited benefits to be obtained from the purchase of clay chips, there was no purpose served in spending such potentially large sums to do so.
(iv) That (in the recorded conversations) the applicant had himself made a suggestion to the undercover officers, or to one of them, that money could be laundered by hiring a lawyer's firm to draw up false property transactions.

Grounds of appeal against conviction

18. The grounds of appeal pursued before us by the applicant may be summarised as follows :

(i) That the lawfulness of his conviction was vitiated by the fact that he was the victim of entrapment by agents provocateur.
(ii) That the ICAC had (or may have) edited the tape-recorded conversations to ensure his conviction.
(iii) That the trial judge had erred in rejecting his testimony that, although he had been informed that the HK$5 million available to the undercover officers came from the smuggling of illegal immigrants, he had categorised that information as 'bluff' or 'big talk'.
(iv) That there was no evidence, or insufficient evidence, to prove that the crime of which he was convicted had, in fact, been committed.

Entrapment

19. This ground was unsuccessfully argued by the applicant before Woo JA. Nothing was added to it in the submissions made to us.

20. We agree with Woo JA that the applicable principle is stated by the English Court of Appeal in Attorney General's Reference No.3 of 2000, The Times, 27 June 2001. The principle is stated in the following terms :

"In most cases the principal question to be considered by the court would be whether the officers did no more, whether by active or passive means, than to afford the accused the opportunity to offend of which he freely took advantage in circumstances where it appeared that he would have behaved in a similar way if offered the opportunity by someone else; or whether, on the other hand, by means of unworthy or shameful conduct, they had persuaded him to commit an offence of a kind which otherwise he would not have committed."

21. The trial judge ruled specifically on the issue of entrapment. He found on the evidence that the undercover officers had done no more than present the first defendant and, through him, the applicant with an 'unexceptional opportunity to commit a crime'.

22. In his submissions before us, the applicant said that he had, after his conviction, discovered that the first defendant had been lured into a course of criminal conduct by an old friend who had become an informer. Whether that is so or not, nothing was placed before the trial judge, nor has anything been placed before us, to suggest that the undercover officers acted in an unworthy or shameful way in order to persuade the first defendant and, through him, the applicant, to commit an offence which the applicant would otherwise not have committed.

23. We were satisfied that there was no merit in this ground.

Editing of recorded conversations

24. At trial, the tape recordings and the written transcripts drawn from them were placed into evidence by agreement as being accurate records. Nothing was said to suggest that investigating officers may have attempted to pervert the course of public justice by editing the recordings in such a way as to ensure the applicant's conviction.

25. The applicant himself, in his submissions to us, did no more than theorise that it must have happened. There was nothing to support that theory. It was entirely without substance and we rejected it.

The applicant's belief that the undercover officers were 'joking' or 'bluffing'

26. The trial judge was alive to the applicant's contention that he believed the undercover officers had been joking or bluffing when they said that they had HK$5 million which constituted the proceeds of smuggling illegal immigrants. In analysing the applicant's testimony, the judge made mention of it on two occasions. The judge, however, rejected the applicant's evidence in this regard. He came to a finding of fact that, on all the evidence, the prosecution had proved that the applicant had conspired to launder money in the belief that it did represent the proceeds of the smuggling illegal immigrants.

27. Nothing has been put before us to suggest that, in the factual circumstances of the case, the judge erred in coming to that finding of fact.

No evidence of the commission of a crime

28. This ground was pursued by the applicant under the mistaken belief that, as no money laundering exercise had been completed and as no financial loss or gain had been shown to have actually occurred, there was therefore no evidence of the commission of a crime. But the crime of which the applicant was convicted was that of the inchoate offence of conspiracy. We are satisfied that there was sufficient evidence upon which the trial judge could come to the conclusion, as he did, that the applicant was guilty of that offence.

Sentence

29. The applicant sought leave to appeal his sentence before Woo JA. His application was dismissed. Before us, the applicant pursued his application on two new grounds. First, that no actual harm was occasioned to any third party and, second, that, when compared with sentences imposed in other cases, his sentence was excessive.

30. The contention that no actual harm was occasioned to third parties is misconceived. The applicant's culpability lay in the act of conspiracy itself; that is, in agreeing with one or more other persons to commit an offence, and in the limited acts committed by him in furtherance of that conspiracy. It was on that basis that the applicant was sentenced.

31. The applicant's submission that, when compared with sentences imposed in other cases, the sentence imposed upon him was manifestly excessive was founded on newspaper reports of sentences imposed in the District Court in other money laundering cases. In respect of those cases, the relevant case files were obtained but were of limited assistance.

32. There are no guidelines for offences of this nature. As Mayo VP said in HKSAR v. Mak Shing (unreported) CA 322/2001, this is because the circumstances of each case may vary almost infinitely.

33. We observe, however, that in HKSAR v. Mak Shing, a starting point of four years imprisonment was held to be appropriate in circumstances in which the applicant, believing the funds to be the proceeds of cigarette smuggling, had done no more than allow his account to be used as a conduit for the through movement of those funds to the value of some HK$1.5 million.

34. In the present case, in determining a starting point of three years, the trial judge took into account that, although simple enough in execution, the scheme that arose out of the conspiracy was sophisticated and difficult to detect. He also took into account that the scheme contained an inter-jurisdictional element. In the result, he took as his starting point a sentence of three years and from that starting point deducted three months in recognition of the applicant's ill health and clear record.

35. In our view, the sentence cannot be criticised. While the value of the money which was the subject of the conspiracy may not have been as great as in other cases, value is not the sole yardstick by which sentence is to be assessed in cases of this kind. It must be remembered that in the present case the applicant was to play a pivotal role in the execution of the scheme, one which, to repeat the observations of the trial judge, was sophisticated in its nature, difficult to detect and inter-jurisdictional.

36. We were satisfied therefore that the sentence imposed by the trial judge was neither wrong in principle nor manifestly excessive.

(Geoffrey Ma)	(T.M. Gall)	(M.J. Hartmann)
Chief Judge, High Court	Judge of the Court of First Instance	Judge of the Court of First Instance

Representation:

Mr Vincent Wong of Department of Justice, for the Respondent

The Applicant, in person, present

CACC000015/2003

CACC 15/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 15 OF 2003

(ON APPEAL FROM DCCC NO. 224 OF 2002)

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BETWEEN
	HKSAR	Respondent

	AND

	CHEUNG KAM LUN	Applicant

--------------------

Coram: Hon Woo JA in Court

Date of Hearing: 17 April 2003

Date of Judgment: 17 April 2003

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J U D G M E N T

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Hon Woo JA:

1. This is an application for leave to appeal against conviction and sentence.

Background

2. On 23 December 2002, the applicant was convicted after trial before Deputy Judge Tong in the District Court of a single charge of conspiracy to deal with property known or believed to represent proceeds of an indictable offence, contrary to section 159A(1) of the Crimes Ordinance, Cap 200 and section 25(1) of the Organized and Serious Crimes Ordinance, Cap 455. He was sentenced by the judge to a term of imprisonment of two years and nine months.

3. The applicant did not face the charge alone. He was the 2nd defendant before the judge. The 1st defendant was jointly charged with the offence of which the applicant was convicted, but the 1st defendant had pleaded guilty to an alternative charge and other charges with which the applicant was unconnected.

4. The offence on which the applicant was found guilty was commonly known as money laundering. The prosecution's evidence mainly consisted of taped conversations between the 1st defendant and ICAC undercover officers and later on taped conversations amongst these officers, the 1st defendant and the applicant. These conversations showed that ICAC undercover officers first met with the 1st defendant, who indicated that he would help to launder money. After meetings and discussions for several months, the 1st defendant brought in the applicant for that purpose. Finally, on 31 May 20001, both the 1st defendant and the applicant were arrested when two such officers went to the bank with the applicant to make a deposit or to use US$15,000 to buy a cashier order.

5. The applicant gave evidence before the judge, to claim that he did not know that the US$15,000 or the HK$5 million mentioned in the conversations represented proceeds from illegal immigrant smuggling. He told the court that his role was a middleman in the sale of "Lai Ma", or clay chips, for gambling in Macau. He also explained that the reference to illegal immigrant smuggling in the conversations in which he took part was believed by him to be only jokes mentioned by the officer.

6. The judge identified the issue in the case before him as whether the applicant knew that he was helping the officers, who represented themselves to be illegal immigrant smugglers or persons related to the same, to launder money, or what he had done were just innocent acts, helping the officers whom he thought were punters to take money to Macau for the purpose of gambling.

The grounds of appeal

7. In his Form XI, the defendant stated his grounds of appeal to be that since there was an entrapment of him by agent provocateur, the verdict should not have been guilty. He also stated that the sentence was too heavy.

8. However, before me today, after he withdrew his application for an adjournment, he has raised four grounds of appeal against conviction. They are as follows:

(1) There was no evidence of any agreement between the first defendant and the applicant to launder money.
(2) While the judge accepted DW2 Lau's evidence that clay chips could not be changed into cash, he came to the wrong conclusion that the applicant could change the chips into cash with STDM, the Macau casino organisation.
(3) The evidence of the ICAC officer who testified in court is different from what he stated in his statement, but the judge still wrongly accepted his evidence.
(4) The ICAC undercover officers enticed the 1st defendant to launder money, and the 1st defendant mentioned many ways to do that. What the applicant did was only acting as an intermediary to introduce the others to buy chips and the cashier order was only payable to STDM directly.

Conviction

9. As to ground (1), which is that there was no evidence of an agreement between the 1st defendant and the applicant, the judge was fully aware that there was no direct evidence of such an agreement. He pointed out that

"It is of course trite law that acts and declarations made in furtherance of a conspiracy is admissible against all in that conspiracy to show the extent and design of the same." (Transcript p 20J)

10. The existence of a conspiracy, which is an agreement, can be proved by inference from circumstantial evidence that is accepted by the fact-finding court or jury, as normally there is no direct evidence as to the agreement.

11. I have read the Reasons for Verdict given by the judge very carefully. He said he had read all the tape transcripts in detail. He first referred to the conversations between the 1st defendant and the ICAC officers. It clearly showed that the 1st defendant was trying to help the officers to launder several millions of illegal proceeds by designing various ways. Eventually the 1st defendant proposed to launder money by using STDM. On 23 May 2001, the applicant was brought into the picture by his attending a meeting with the 1st defendant and an ICAC officer. There were subsequent meetings between the 1st defendant, the applicant and ICAC officers. The judge gave a description of what took place in the conversations. He said:

"The overall effect of the evidence on the tape transcripts recorded in the subsequent days was that the defendant [applicant] was brought in by D1 to launder money representing illegal proceeds. From the overall tenor of the conversations that the agent had with the defendant [applicant], I am sure that the defendant [applicant] was part and parcel of the money laundering scheme which he had sought to explain to the agents on 24 May 2001. The scheme was about using illegal proceeds to buy cashier order from a bank of Hong Kong. Then someone could take the cashier order to a gambling hall in Macau to have the same exchanged with a cheque at the same amount. In the meantime, the agent would have to pay separately an amount equivalent to 13 per cent of the money so laundered. Ten per cent would go to the entertainment company or its agent, 2 per cent would be shared by the defendant [applicant], while 1 per cent would go to D1. The share of the entertainment company and that of the defendant [applicant], i.e., the 12 per cent of the overall 13 per cent would have to be put into a designated account." (Transcript p 21E-P)

12. The judge also commented that there was no ring of truth in the applicant's evidence. The judge gave no less than six reasons for reaching his conclusion. Two reasons are of particular importance, in my view. The first was that in the conversation on 24 May 2001, reference was made in sending someone with an identity card to bring a cashier order to Macau to collect a cheque from the entertainment company. The judge's view was, and I think correctly, that this was hardly consistent with a punter making winnings but was highly indicative of money laundering. Secondly, while the applicant said that the 10 per cent payable to the entertainment company referred to in the conversation related to winning tips to be awarded by the punters, the judge discerned that if one looks at the relevant conversation in its context, it was apparent that such an amount was part of the 13 per cent processing fee or service charge that the officer would have to pay into a separate account in Hong Kong. This again, in my view, is clearly demonstrative of the involvement of the applicant in the proposed laundering of illegal money and inconsistent with a gambling escapade. Ground (1) has no merit.

13. On ground (2), while it is true that the judge accepted the evidence of DW2 that clay chips could not be changed into cash without going through the gambling process, yet he also accepted DW2's evidence that the purpose of a punter buying clay chips was to obtain some benefits such as free ferry passage, free meals, free hotel lodging and free entertainment, but buying $50,000 worth of clay chips would be no different from buying $2 million worth of such chips in obtaining such benefits. This was one of the reasons why the judge did not believe the applicant's story. The judge said:

"No one would change several million dollars into 'Lai Ma' which could not be changed back to cash again. It is because according to the evidence of DW2, if a person purchases HK$50,000 worth of 'Lai Ma', he would already get the full package of free gifts. It makes no difference so far as the free gifts are concerned even if he buys more." (Transcript p 22F-I)

14. Ground (2) is without substance.

15. Regarding ground (3), the discrepancy between the evidence of the ICAC undercover officer who gave evidence in rebuttal, Tom, was noted by the judge. The judge said:

"Under cross-examination, this witness first disagreed with the suggestion that the defendant [applicant] had explained to him the procedure of buying a cashier order and to bring the same to Macau. However, when he was shown his own prior statement, he admitted that had been discussed. Yet, the witness still insisted that he had never told the defendant [applicant] that the money came from illegal immigrants nor had the defendant [applicant] stood up and tried to leave." (Transcript p 19N-R)

16. The judge further dealt with Tom's evidence and said:

"On 23 May 2001, the defendant [applicant] was brought into the picture by his attending a meeting with D1 and Tom. Tom gave rebuttal evidence on the fact that on that occasion he never mentioned to the defendant [applicant] that the money came from illegal immigrant nor had the defendant [applicant] walked away on hearing that. Although Tom had wrongly remembered that there was no discussion on how money should be sent to Macau to buy chips, I accept that was only a lapse of memory on his part." (Transcript p 21A-E)

17. It is obvious that the judge relied heavily on the evidence borne out by the transcripts of the taped conversations (see para 11 above). I do not see how the discrepancy now relied on by the applicant can affect the conviction so as to make it unsafe or unsatisfactory. Ground (3) is again unhelpful.

18. Ground (4) raises the point that the applicant was entrapped by an agent provocateur and therefore he should not be found guilty.

19. In fact, the judge had dealt with this when the applicant applied before the judge to have the proceedings against him stayed permanently. The judge had ruled that what the ICAC officers had done in the case was no more than presenting the defendants with an "unexceptional opportunity to commit a crime". The application was refused.

20. In Attorney General's Reference No. 3 of 2000, The Times, June 27, 2001, the English Court of Appeal held that it was wrong for the court to apply in this sort of case the only test "whether the officer was acting as an agent provocateur in the sense that he was enticing the accused to commit that particular offence which he did". It stated the proper rule as follows:

"In most cases the principal question to be considered by the court would be whether the officers did no more, whether by active or passive means, than to afford the accused the opportunity to offend of which he freely took advantage in circumstances where it appeared that he would have behaved in a similar way if offered the opportunity by someone else; or whether, on the other hand, by means of unworthy or shameful conduct, they had persuaded him to commit an offence of a kind which otherwise he would not have committed."

21. I do not see any merit in this ground of appeal.

Sentence

22. The judge mentioned "entrapment" when he was passing sentence on the applicant. He referred to HKSAR v Kai Chi-chung and Anr, Cr App No. 259 of 1997, where the Court of Appeal clearly distinguished entrapment by an agent who lured the defendant into committing a crime from a case where the agent was only posing as an ordinary customer patronizing the illegal trade held out by the defendant.

23. In HKSAR v Cheung Yun-kei [2001] 4 HKC 52, the Court of Appeal also held that a reduction of sentence should be made where the defendant committed the offences as a result of the encouragement by an agent which the accused would not otherwise have committed. The judge stated that he was satisfied that the applicant was not encouraged to commit an offence and sentenced the applicant on that basis.

24. Now the applicant relies on two grounds of appeal against sentence, namely, his illness and clear record.

25. The judge adopted a starting point of three years, having taken into account that the scheme advanced by the 1st defendant and the applicant was sophisticated, hard to detect, and possessed an inter-jurisdictional element involving Macau, and opined that a deterrent sentence must be considered. Out of the three-year starting point, the judge took into account that the applicant was suffering from diabetes and hypertension and gave him a discount of three months. Regarding the clear record, the judge said:

"His clear previous record could help him little in this sort of non-violent white collar crime." (Transcript p 28J)

I agree. I do not consider the sentence of two years and nine months passed by the judge is in any way manifestly excessive or wrong in principle.

Conclusion

26. For the above reasons, I dismiss the application for leave to appeal against conviction and sentence.

27. I have already told the applicant that he is entitled to make a new application to the Court of Appeal for leave within 14 days, but I will warn him that if that court takes the view that his application is unmeritorious, he risks an order for loss of time, which would lengthen the period of his custody in jail. I also warn him that the Court of Appeal may increase his sentence on his application for leave to appeal against sentence.

	(K. H. Woo)
	Justice of Appeal

Representation:

Mr Marco Li, Government Counsel, of the Department of Justice, for the HKSAR.

The applicant, in person.

HKSAR v. CHEUNG KAM LUN

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