FURTHER DEVELOPMENT IN LANDMARK CORRUPTION TRIAL IN HONG KONG

Prosecutors completed their case in the graft trial involving former government 'number two' Rafael Hui Si-yan. The High Court adjourned the case until next week. The HK$34 million corruption trial involved (among others) Rafael Hui Si-yan, and chairmen of Sun Hung Kai Properties, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen.

There has been an interesting interlocutory ruling from the Court of First Instance in relation to the ongoing trial – the procedural issue at hand is however not specific to bribery cases.  The Court of First Instance was asked to consider a request by Bloomberg to obtain copies of two fund flow charts, which were prepared by the prosecution to assist the jury in understanding the evidence being adduced.  Hon Macrae JA refused the request.  Among other things, the open justice principle was considered.

The ruling was posted on the Judiciary website and can be accessed here.

ICAC RAID JIMMY LAI'S HOUSE

Officials from the Independent Commission Against Corruption raided the home of media tycoon Jimmy Lai, founder of Next Media Ltd. The home of Mark Simon, Jimmy Lai's top aide was also raided as well as the homes of pro-democracy politicians in Hong Kong who had received donation from Jimmy Lai.   The ICAC stated that upon receipt of corruption complaints alleging that some Legislative Council members of accepted advantages in breach of the Prevention of Bribery Ordinance (POBO), the ICAC has commenced an investigation. After gathering evidence and seeking legal advice from the Department of Justice, the ICAC applied to the Court of First Instance for search warrants and a statutory notice under the POBO.

The ICAC stated that no arrest was made and the investigation would continue.  It denied that the investigation was motivated by any political consideration, saying it was prompted by complaints that some lawmakers had received unfair advantages.

SOLICITOR AND WIFE OF FORMER DAIRY FIRM DIRECTOR CONVICTED OF MONEY LAUNDERING FOR MISHANDLING FUNDS FOR NZ DAIRY TAKEOVER

A partner of a solicitors firm and the wife of a former executive director of Natural Dairy Holdings were convicted at the District Court of laundering about HK$230 million in crime proceeds.

Between December 2009 and February 2010, Natural Dairy - formerly known as China Jin Hui Mining Corporation - had raised HK$790 million through the issue of convertible bonds to acquire 22 dairy farms in New Zealand.  The deal prompted a complaint of fraud to be filed to the Stock Exchange of Hong Kong.  Out of the HK$790 million, HK$693 million was remitted to a lawyer acting for Natural Dairy Holdings in New Zealand and part of that money was paid to the company to be acquired in February 2010. The owner of the company being acquired then remitted HK$73.7 million back to a company owned by the Chen Keen, a director of Natural Dairy Holdings, in Hong Kong.

On March 11, 2010, Chen Keen issued a cheque for HK$68.95 million out of the HK$73.7 million in favour of the solicitors firm.  Knowing the background of Chen Keen and the allegations of fraud relating to the acquisition, the partner of the solicitors firm transferred the HK$68.95 million to the bank account of the wife of Chen Keen on the following day without complying with the Practice Direction of the Law Society of Hong Kong to conduct enhanced due diligence when handling certain U-Turn" transactions as in the instant case.

Chen Keen and two other officials from Natural Dairy were charged with conspiracy to defraud over the purchase.  The wife of the Chen Keen was also charged with money laundering.  Between March 12, 2010 and October 26, 2011, the wife dealt with the above HK$68.95 million and a further HK$161 million, totalling about HK$230 million, deposited into her bank account, knowing or having reasonable grounds to believe that the sums of money were crime proceeds.