HKSAR (香港特別行政區) v Rahman & Ors

(2 September 2008)

In a very complex criminal trial of a number of very high profile professionals in Hong Kong, including partners of two prominent firms, Deacons and Koo & Partners, relating to the takeover of more than one company listed in Hong Kong by Chau Ching Ngai (周正毅) (one of the richest men in China before he was arrested in China in May 2003).

The case illustrates how even highly experienced advisors could step too close to the transaction in trying to help their clients.

The defendants are, inter alios, Vivien Fan (范楚文) (5th defendant), Donald Koo (顧愷仁) (7th defendant) and Simon Lai (黎壽昌) (6th defendant). The first two were the then partners of Koo & Partners and the latter Deacons. The 3rd and 4th defendants were respectively a managing director and vice president of BOCI (Asia) Ltd.

The trial lasted for some 95 court days, between 7 January and 30 June 2008 and handwritten notes of the district court judge, MacKintosh J, total about 4,000 pages. The reasons for the verdict run to nearly 90,000 words and it took the judge two days to read them out. The judgment is 301 pages long and the case involved 6 QCs/SCs (Thompson, Pow, Lawson, King, Blanchflower, Bruce) and 10 junior barristers/advocates.

Under charge 1, a number of the defendants were charged with conspiracy to defraud relating to certain representations made in a joint announcement on 3 May 2002 by two companies about a proposed mandatory general offer and in the composite offer and response document dated 22 June 2002.

Charge 2, another allegation of conspiracy to defraud, was laid against D5 to D7. The charge relates to certain representations made about the establishment of an executive committee in the announcement published on 16 July 2002 and a circular dated 22 July 2002.

Charge 5 relates to a false statement contrary to section 21 of the Theft Ordinance.

The judge found the 2nd to 6th defendants guilty of charge 1, 5th to 7th defendants guilty of charge 2 and 5th and 7th defendants guilty of charge 5.

One of the main issues the judge had to decide was whether certain defendants knew that there was a specific plan to inject assets into a company owned by Chau and dishonestly participate in a plan to conceal it and make false representations in public disclosure documents. The judge ruled that the evidence established that there were specific plans for the injection of assets at the date of public disclosure documents. (para. 286)

Extracts from the judgment

The "Common Understanding"

The term "common understanding" seems to have acquired a significance of its own during the trial; but it is only a label for what Gong says was the tacit agreement between all those that she named to avoid mention of the asset injection plan so as to minimise the risk of the regulators becoming of it. It was, in effect, the route by which the alleged conspiracy to defraud was, in practice, to be achieved: by keeping quiet as to the true position, to allow the false representations to go forward as the truth. I am sure this was the case. The asset injection plan which existed was removed from all documentation. (para. 469)

Angela Gong said that the common understanding did not need to be mentioned all the time: it was, according to her, understood by the parties to it at all times after the decision was made to remove the asset injection plan from the loan agreement. (para. 470)

A Complaint from the Bench

I hope I can be indulged if I insert this complaint: this piece of evidence is an illustration of a particular problem in this trial, for which I blame myself, as the judge in charge of it (though with mitigation) and the parties, particularly, but not exclusively, the prosecution. Time and again, the same documents have been referred to under different numbers in different bundles, witnesses have been examined on the same documents under different numbers, the defence have produce the same documents that are already in the prosecution bundle under different numbers, sometimes without any apparent justification at all. The exhibits have not been bundled in chronological order but, apparently, by reference to where they were seized. The result, has often been a chase around the bundles looking for this document or that and sometimes taking some considerable time to realise that a document referred to in one part of the evidence is the same as a differently numbered document referred to elsewhere. No effort has been made to combine e-mail threads into single documents so that there sense can be readily understood. My mitigation as the trial judge in the District Court is that I did not get the documents until the trial started or until it is part way through. I am at a disadvantage and by the time the problem is apparent, it is too late. The parties, particularly the prosecution, know the problem in advance and should address it or seek directions. The handling of documents in this case has sometimes been woefully inadequate. At times, I have found it to be grossly misleading to my understanding of the evidence. I have not allowed it to affect my judgment of any defendant's case; but if ever I see a case again in which the ICAC presents documents in this unstructured form, I shall simply decline to try it (until it is put into order). If that is regarded by anybody as arrogant nonsense, they should have regard to the many, many hours I have spent, and I daresay others too, chasing documents from file, to file, to file. I suggest the DPP sets up a working party to establish a proper protocol on document management for fraud trials. If he has done so already, its results, if any, are inadequate or are not being applied. (para. 458)

Click here to read further extracts from the judgment of MacKintosh J