District Court acquits bank manager and remittance company director of conspiracy for an agent to accept advantages
In HKSAR v Cheung Ling Chu Sally and Another (DCCC 920/2019)  HKDC 188, the 1st Defendant (“D1”) and 2nd Defendant (“D2”) were respectively a bank branch manager and the director of a remittance service provider. The prosecution alleged that both Defendants conspired for D1 to accept advantages for referring the bank’s clients to D2’s company for remitting money from the PRC to Hong Kong.
His Honour Deputy District Judge Lo found that D1’s conduct was not done in relation to the bank’s affairs or business and, on this basis, acquitted both Defendants of the charge of “conspiracy for an agent to accept advantages”. Flora Lam acted as junior counsel for D1.
D1 was the manager of Leighton Road Branch of China CITIC Bank International Limited (“CCBIL”), while D2 served as the Director and General Manager of King Chi Trading Company (“KC”), a money exchange and remittance service provider. Both Defendants faced one joint charge of “Conspiracy for an agent to accept advantages”, contrary to s.9(1)(a) and s.12(1) of the Prevention of Bribery Ordinance, Cap. 201 (“POBO”) and s.159A and s. 159C of the Crimes Ordinance, Cap. 200.
The prosecution’s case is that D1 and D2 conspired for D1, being an agent of CCBIL, to accept advantages for doing acts in relation to her principal’s affairs or business without lawful authority or reasonable excuse. Specifically, D1 allegedly referred CCBIL’s clients to KC for remitting money from the PRC to Hong Kong on 27 occasions (“the 27 Remittances”) and received from D2 monies which represented the “advantages” for such referrals.
Under the Foreign Exchange Control (“FEC”) legislation in the PRC, no more than USD 50,000 (or equivalent) per year could be remitted through the banking system from the PRC to Hong Kong. Since CCBIL was subject to the FEC’s restrictions, it could not remit large sums for its clients. However, persons who wish to transfer and exchange currency into and out of the PRC could lawfully circumvent this restriction by using the services of registered remittance agents, such as KC.
Main issue: whether act relates to principal’s affairs or business
The learned Judge found that D1’s actions went beyond just referring clients to KC – she was running a side business/moonlighting to provide remittance services to clients. There was no dispute that D1 did not seek approval from CCBIL to conduct outside business and, in doing so, breached CCBIL’s code of conduct.
Ultimately, the issue remains whether D1’s referral of CCBIL clients to KC amounts to acts in relation to CCBIL’s affairs or business.
S.9(1)(a) of POBO stipulates that an agent’s conducts must be “in relation to the principal’s affairs or business”. The Court also referred to relevant case law Ch’ng Poh  HKLRD 652, where Lord Lloyd stated that the agent’s action or forbearance must be aimed at the principal.
The Court also referred to Secretary for Justice v Chan Chi Wan Stephen (2017) 20 HKCFAR 98, in which Riberio PJ stated at paragraph 70 that:
“In soliciting or accepting cases, the Prosecution must prove that the accused agent knew or believed that the advantage was provided as an inducement or reward or otherwise on account of his actual or contemplated act or forbearance as conduct aimed at or intended to influence or affect the principal’s affairs or business.” (emphasis added)
and where Tang PJ stated at paragraph 109 that:
“… And it would not so relate if the agent “should act on his own without involving his principal”. (emphasis added)
Reasons for verdict
On the available evidence, the Court found that D1’s conduct was not an act done “in relation to CCBIL’s affairs or business”:
• Due to the FEC’s restrictions, the 27 Remittances fell outside the ordinary business of CCBIL and could not have been executed by CCBIL; (Reasons for Verdict §122)
• After her dismissal by CCBIL, D1 carried on running this “side business” of remittance services in the same manner as she had done. This is clear evidence that D1’s “side business” was separate and distinct from the bank. In other words, she was acting on her own “without involving [her] principal”. (Reasons for Verdict §140)
Furthermore, the Court noted:
“While I find the conduct of D1 abhorring and deserves to be condemned, as observed by Lord Lloyd in [Commissioner of the Independent Commission Against Corruption v Ch’ng Poh  HKLRD 652] (at p 656B),
“Section 9(1)(a) criminialises corrupt transactions with agents: not dishonest acts by agents”.” (Reasons for Verdict §148)
In any event, the learned Judge was not satisfied that there was any agreement between the Defendants for D1 to profit from any of the remittance transactions. On that alone, the Court decided that both Defendants are entitled to be acquitted.
Flora Lam (led by Mr. Derek Chan SC and appearing with Mr. Joseph Lee) acted for the 1st Defendant.
|Flora joined Denis Chang’s Chambers in 2018 and is developing a broad civil and criminal practice. She has experience in areas such as company law, commercial disputes, criminal law, defamation, probate, trusts, adverse possession, personal injuries, and public law. She is also regularly instructed to handle legal aid appeals.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photograph which appears in this article is included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related.