George William Huntley v The Queen

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CRIMINAL APPEAL NO.572 OF 1967

(On appeal from Central Magistracy Case No.42 of 1967)

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JUDGMENT

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1. This is a complicated and difficult case but we have had the benefit of very competent advocacy on both sides advocacy which has been marked by the vigour and thoroughness with which Mr. Ming Huang has argued the matter on behalf of his client. The following is the judgment of the majority of the court.

2. The appellant, an employee of the Hongkong & Shanghai Banking Corporation and at all material times employed as a supervisor in the Savings Bank Department, was convicted upon three out of seven charges preferred against him involving fraudulent acts of some magnitude. The first two charges upon which he was convicted averred that on the 22nd and 26th of March 1966, respectively, he, with intent to defraud, obtained $75,000 and $70,000 from the Hongkong & Shanghai Banking Corporation to the debit of Savings Account No.51588, by falsely pretending that such savings account was a genuine account; the third count upon which he was convicted averred that he, on the 19th May 1966, being a clerk or servant in the Bank, with intent to defraud, made a false entry in the ledger card of Savings Account No.51588, belonging to the Hongkong & Shanghai Bank, against his employer, purporting to show that on the 19th of May 1966 the sum of $14,000 had been withdrawn from the said account.

3. It was the case for the prosecution that Savings Account No.51588 was a fictitious account established in the name of a man YAM Bo-wah. YAM Bo-wah was in fact very much in existence; he was called as a witness for the prosecution. He gave evidence, however, that he had never himself opened this account; that he had never paid any money into it, and had never drawn any money from it. It is said that the account was fictitious in the sense that a former existing Account No.51588 which had been closed by a former client, had been ...(illegible) and had been put in funds by the ingenious but apparently relatively simple process of milking other existing accounts by debiting those accounts, according their ledger card records as retained by the Bank, with fictitious withdrawals on specified dates and crediting the equivalent amount of those withdrawals to the bogus account. It was the case for the prosecution that a fellow-supervisor named Da Luz was the prime mover in this ingenious but apparently simple fraud and that the appellant aided and abetted him with knowledge of the fraud.

4. For the purpose of appreciating the evidence upon which the prosecution relied, it is necessary to refer in some detail to the procedure relating to savings bank accounts and to the function and duties of the supervisors in that department. When a prospective customer wishes to open a savings account with the Hongkong & Shanghai Bank, to which we will hereafter refer as "the Bank", he goes to the Bank. There he is given a blank ledger card for his signature. This is then completed by the Bank with that person's name, and a number is allotted to the account and typed on the ledger card. The Bank also keeps a book entitled "The Register of Opened and Closed Accounts" and when an account is opened or closed this fact is recorded in that register. The ledger card and Register of Opened and Closed Accounts are part of the Bank's books, but the account holder is given a pass-book bearing the same number. When further deposits are made by the customer he is required, first, to produce his pass-book, and, secondly, to make out a credit slip showing the amount he is depositing. The pass-book and the credit slip are handed over the counter and these two documents, together with the customer's ledger card - which is, of course, already with, and permanently retained in, the custody of the Bank - are clipped or placed together in an accounting machine which records the amount of the transaction on both the pass-book and the ledger card. This machine also contains a long roll of paper, known as the Audit Roll, which records on the roll the amount of the transaction - being a debit or credit transaction - at the same time as the transaction is recorded in both the customer's ledger card and his pass-book. This work is done by machinists, who are employees of the Bank. The pass-book, ledger card and credit slip are then passed to a supervisor for checking. It is the duty of the supervisor to check the signature on the credit slip to see that it corresponds with the signature on the pass-book and on the ledger card and also to see that the final credit figure shown in the customer's pass-book corresponds with that shown on the ledger card. He verifies the fact that he has complied with these duties by initialling the ledger card and also initialling the deposit slip in a special "box" on the slip itself marked "Posted". The pass-book is then returned to the customer. The same procedure is followed in the case of withdrawals, although obviously a higher degree of care and responsibility must rest upon the supervisor to ensure that the signature on the withdrawal slip corresponds with that in both the pass-book and the ledger card and the account is in funds, both as shown in the pass-book and on the ledger card, to enable such a withdrawal. Furthermore, in the case of withdrawal slips the supervisor puts his name and not simply his initials in the box marked "Posted".

5. The daily auditing system was of a three-fold nature. First, all credit and withdrawal slips of the day or previous day are collected and totalled in what is called "The Control Journal". Secondly, at the same time and as a separate procedure, the record of withdrawals and deposits printed on the Audit Roll are totalled. Thirdly, the day's alterations made on the individual ledger cards - whether they were debit or credit alterations - are totalled. Although such balance would indicate any discrepancy in the day's total figures, whether plus or minus, they would not, of course, show the individual position of each Ledger Card Account, nor would they show any transfer of credit from one savings account to another where such transfer is effected simply by a book entry. However, periodical Sectional Balances were carried out. The method adopted for this purpose was to divide the ledger cards into batches of one thousand in strict numerical order. The credit balance of each account was then checked against the total amount of the deposits less the amount of the withdrawals shown in the Control Journal. The result would show the aggregate position of the savings accounts as revealed on the ledger cards, in the light of any deposits or withdrawals, at the end of the relevant period.

6. A further factor of significance was that if the entries on the Audit Roll and the Control Journal and on the ledger cards taken into account did not balance at the and of each day's work, attention would necessarily and inevitably, if everybody did their duty, be called to the error and steps taken to trace its origin.

7. According to the ledger card, Account No.51588 was opened with a cash deposit of $350,000 on the 16th March 1966 in the name of YAM Bo-wah. Evidence was adduced, in the form of the production of the Register of Opened and Closed Accounts, that the original Account No.51588 in the name of a totally different person had been closed on the 15th March, and there was nothing to show that it has ever been reopened. Of further significance was the fact that the records of the Bank contain no supporting deposit slip for any such payment on that day, and the Audit Roll for that day was missing. The ledger card shows that the next deposit was made on the 12th April with a further payment of ...(illegible) Here again no supporting deposit slip was available for production from the Bank's records, nor was there any record of any such payment on the Audit Roll for that day. A further factor of vital signif cance was that in respect of both the initial and later deposits the Audit Roll and the Control Journal balanced at the end of the day's work. If genuine deposits had been made the day's work could not have balanced and the total of balances reflected by the three-fold check of the Audit Roll, Control Journal, and daily alterations of the individual ledger card accounts would not have tallied. The inference would seem irresistible that the newly constituted Account No.51588 was made up of credit transfers from some other existing savings account ledger card or cards. The case for the prosecution was that that account was constituted from credit transfers made from two genuine existing accounts No.51800 and 51998, belonging respectively to a Mr. Tang and a Mrs. Lee. During March and April, Mr. Tang had $198,614.75 in his card. In March Mrs. Lee had $216,333.65 in her account, but on the 1st April she withdrew $25,000 leaving a balance of $191,333.65. On the 12th April the combined total in the two accounts of Mr. Tang and Mrs. Lee was $389,948.40; that was the exact figure of the total of $350,000 and $39,948.40 purportedly debited into Account No.51588 by the initial deposit made on the 16th March and the further deposit on the 12th April. Furthermore, the 2 ledger cards for Accounts Nos.51500 and 51998 were found to be missing from the Bank's records. Finally, by reference to the entries on the monthly balance for this section which was held on 12th April, the balances for these two accounts had completely disappeared whereas the...