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Hksar v Zheng Zhi Long

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date24 January 2020
Neutral Citation[2020] HKCA 105
Judgement NumberCACC167/2018
Subject MatterCriminal Appeal
CourtCourt of Appeal (Hong Kong)
CACC167/2018 HKSAR v. ZHENG ZHI LONG

CACC 167/2018

[2020] HKCA 105

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 167 OF 2018

(ON APPEAL FROM DCCC 971 OF 2017)

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BETWEEN
HKSAR Respondent

and
ZHENG ZHI LONG Applicant

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Before: Hon McWalters JA in Court

Dates of Hearing: 22 October 2019 and 16 January 2020

Date of Judgment: 16 January 2020

Date of Reasons for Judgment: 24 January 2020

__________________________

REASONS FOR JUDGMENT

__________________________

1. On 29 May 2018, the applicant was convicted after trial before Deputy District Court Judge R Wong (“the judge”) of the offence of dealing with the proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 in respect of a sum of US$5,000,000. He was subsequently sentenced to 5 years and 3 months’ imprisonment on 4 June 2018.

2. The applicant filed a Notice of Application for Leave to Appeal against both conviction and sentence. At the hearing of the application I refused it and said I would hand down my reasons for doing so at a later date. These are my reasons.

The charge

3. The charge alleged that the applicant had between 2 February 2016 and 9 March 2016 in Hong Kong, knowing or having reasonable grounds to believe that a sum of US$5M in an HSBC account 048-866834-838 held in the name of Excellent Century Holdings Limited (“Excellent Century”), in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with this sum of money.

4. It was not disputed that the applicant was the sole director and shareholder of Excellent Century, and that he, having received the money, dealt with it by making various withdrawals and transfers.

5. The issues at trial were whether the prosecution could prove that the US$5M represented the proceeds of an indictable offence, and whether the applicant knew or had reasonable grounds to believe that the money he dealt with represented the proceeds of an indictable offence.

The prosecution case

6. The prosecution case was that the US$5M transferred into Excellent Century’s HSBC account on 2 February 2016 represented the proceeds of a fraud but one to which the applicant could not be linked or in respect of which he could not be proven to have any knowledge. The case against him was based on “reasonable grounds to believe”.

7. The underlying fraud was proven by PW1, Dr Frederick William De Jacma Jr, who was the director of two Hong Kong companies specialising in matching overseas investors to business opportunities in Mainland China. On 18 December 2015, he received an email from a Peterjohn Boshoff detailing an investment opportunity offered by a Met Bawi. Under the terms of that investment, the investor would provide US$5M and at the end of 45 days the investor would be repaid US$40M.

8. PW1, being a middleman, referred this investment to one of his investors who agreed to put in funds. An agreement was signed in respect of this deal. It was specified in the agreement that the US$5M was to be credited to Excellent Century’s bank account for the benefit of “Met Bawi and assigns”[1]and the investment would be fully protected by an insurance wrap. This agreement between PW1 and his investor became Exhibit P5 and was dated 29 January 2016. In it the investor was stated as being “John C Nock”.

9. At this time PW2, a Joe Nip, lived in Hong Kong and ran a business assisting non-residents to establish companies here of which he would then become company secretary. One of the companies he set up was called Wealth Mark International Investment Limited (“Wealth Mark”). PW2 was a director and an authorised signatory for the corporate bank account of Wealth Mark. He had also been asked by another person, a Mr Alexander Ituma, to set up a company called Smart Jobs Limited (“Smart Jobs”). PW2 became the company secretary and Chief Financial Officer and was also an authorised signatory of its bank account.

10. On 11 December 2015, 10 million Euros were remitted from the United Kingdom to the bank account of Wealth Mark. These monies were held with Hang Seng Bank pursuant to a separate funding agreement, Exhibit P8. It was the prosecution case that this transfer was the proceeds of PW1’s overseas investor but there was no evidence from PW1 to this effect except that he found out later that the money came from Europe. The link to PW1 came only from circumstantial evidence.

11. On 30 January 2016, PW2 attempted to transfer US$5M of the 10 million Euros from the Hang Seng Bank account of Wealth Mark to Excellent Century’s bank account. The transfer was rejected by the bank as there was no connection between the two companies.

12. PW2 then transferred US$5M from the Hang Seng Bank account of Wealth Mark to the HSBC account of Smart Jobs and from this account the money was transferred to Excellent Century’s bank account. This latter transfer, being an intra-bank transfer, was accepted by the bank on 2 February 2016.

13. PW1 lost contact with Met Bawi from mid-February 2016 and never received any payment from him under the agreement. It was an admitted fact that Exhibit P6, the insurance wrap, was a fraudulent document and had never been issued.

14. The police investigation revealed that Excellent Century was in fact a BVI company incorporated by the applicant on 8 August 2011. The applicantwas the only director and sole shareholder of the company, and its bank account was a multicurrency account, to which he was the sole signatory and which was opened by him on 26 September 2011.

15. Bank records showed that since the opening of Excellent Century’s bank account the transactions on the account were normally of no more than a few thousand Hong Kong dollars until the second half of 2014 when transactions of larger amounts started to appear more frequently but by the end of 2014 the balance was only HK$20,633.67. Thereafter, the transactions remained rather insignificant and the balance in January 2016 was only HK$883.24 until in February 2016 significant deposits were made to this account, including the US$5M remitted from Smart Jobs.

16. Out of the US$5M deposited into the account on 2 February 2016, the applicanttransferred US$3,200,000 to a law firm in the USA, US$435,000 to accounts of his personal creditors and US$328,000 to his personal bank account. In addition, between 2 February and 9 March 2016, the applicant made 9 cash withdrawals totalling US$408,598.53 from the account.

17. The total amount of money with which he dealt was US$4,397,378.87.

18. On 5 July 2017, the applicant was intercepted and arrested at Lo Wu Control Point. On the same day a video record of interview[2]was conducted with him in which he said:

(1) he was born in Mainland China and had migrated to Australia in 1990. He was a middleman for the import and export of commodities and he profited from the difference in prices;

(2) he was the only member of Excellent Century. Its bank account was opened by him in Hong Kong and he was the only person who had access to it;

(3) on 2 February 2016, US$5M was deposited into this account but he did not know by whom this was done. He exercised his right of silence regarding the purpose of the transfer;

(4) on his mobile phone he received from Met Bawi the photo of a receipt regarding the US$5M deposit showing that the money did not come from Smart Jobs but from another company;

(5) he admitted knowing the name of Met Bawi and had previously contacted him on Skype, but he could no longer be reached. When asked how he had come to meet Met Bawi he exercised his right of silence;

(6) he did not know PW1, John Nock or Peterjohn Boshoff;

(7) he did not know Smart Jobs or anybody in it, but admitted that he had conducted a check on the company that sent him US$5M (which was not Smart Jobs) and was aware that PW2 was the director of that particular company. He was aware that the transfer came from the Hang Seng Bank account of that company;

(8) payment was made from Excellent Century’s account to a lawyer in United States. However he did not actually know that firm. He exercised his right of silence when asked about the purpose of the transfer;

(9) he held a savings account in his own name with HSBC and he was the only person who operated it. He agreed that he had transferred money from Excellent Century’s account to his own personal account in February and March 2016 and he saw “no difference” in them as both accounts were held by him and he had used the money in his personal account;

(10) payment was also made from the account to one Huang Guoshen as he was repaying a personal debt owed to Huang, details of which he refused to disclose. He said Huang was his classmate from junior secondary school in China;

(11) payment was also made from the account to one Elena Salikova for the translation service provided by her as he wanted to start some “oil business”.

19. The police found in the applicant’s phone a photo of a record of the unsuccessful attempted transfer of US$5M made by PW2 on 30 January 2016 which included a message “for the attention of Met Bawi being the ultimate beneficiary”.

The defence case

20. The defence took issue with PW1’s credibility but the evidence of PW2 was not disputed.

21. A no case to answer submission was unsuccessfully made after the close of prosecution case, after which the applicant chose not to testify and not to call any witness.

Verdict

22. The judge found PW1 and PW2 to be honest and credible witnesses and he accepted and relied on their evidence. He also attached full weight to the contents of the applicant’s video record of interview.

23. The judge made a finding that the US$5 million...

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