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Jake's View
PUBLISHED : Thursday, 28 March, 2013, 12:00am
UPDATED : Thursday, 28 March, 2013, 5:52am

The wrongs of the right-thinking approach to law

The conviction of a public housing tenant for money laundering raises worrying issues

BIO

Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.
 

A key ingredient of the [money laundering] offence, which the prosecutor has to prove beyond a reasonable doubt, is that there are facts and circumstances that would lead a right-thinking member of the community to believe that he or she is dealing in the proceeds of serious crime and that the accused knew these facts and circumstances.

Kevin P. Zervos, Director of Public Prosecutions
Letters to the Editor, March 21

Let's split a few hairs here. Note that Mr Zervos does not say the accused knew that he or she was dealing in the proceeds of serious crime, only that he or she knew the facts and circumstances that would lead a right-thinking member of the community to believe so.

I am certain he crafted that sentence very carefully. He had to navigate there around one or two legal rocks that could have wrecked his case on the spot.

The point here is that if the accused is not actually what others might deem a "right-thinking member of the community" then he or she could very well know the relevant facts and circumstances without believing that he or she was dealing in the proceeds of serious crime.

This is important because of a key principle of criminal law commonly referred to by its Latin tag of mens rea, a guilty mind. To convict someone in court of a criminal offence it is usually not only necessary to prove that he or she committed the offence but also that he or she knew it was criminal.

Do you now see Mr Zervos' careful feat of navigation? Read the sentence quickly and it seems to say the prosecution must prove that the accused knew there was serious crime involved. But, actually, it doesn't say this at all.

Let me emphasise this. The principle of mens rea is not just a technicality. It is the fundamental basis of criminal law and Mr Zervos squirmed around it in his letter to the editor. He almost, but not quite, conceded that the prosecution needs to prove criminal intent. Instead, he settled for something less.

I think he had to do it that way because, if he conceded the necessity of proving criminal intent, then he would have had no choice but to go to the chief justice and declare that there had been a miscarriage of justice in the conviction a 61-year-old public housing tenant who was recently sent to jail for 10 years for money laundering.

He would, in all decency, have had to do it because criminal intent was never proved against her. In fact, there was probably no underlying criminal offence anyway.

To any right-thinking member of the community with a more general knowledge of the circumstances, those circumstances would suggest that she was shuffling money back and forth across the border for the Shenzhen underground banking system, which is not a crime.

If Mr Zervos thought that she was actually laundering drug money, he already has a law at hand making it a crime to deal in the proceeds of drug trafficking. This law, however, would require that he prove drug trafficking had indeed taken place and that she knew she was dealing in the proceeds of it.

He had things much easier with the money laundering law. All he needed to do was spin the belief (or the illusion of it) that a serious crime was involved, whether or not there had actually been one. In Hong Kong it is a crime to be suspected of a crime.

In my opinion the definition of a "right-thinking member of the community" must in matters of commerce exclude lawyers, who, as a group, are generally deficient in commercial understanding. Yet it is lawyers who exclusively comprise these right thinkers in a courtroom.

But there is more here. If Mr Zervos were to concede in public that his money laundering law squirms around mens rea as much as his letter to the editor did, then we must not only free this woman from prison but immediately repeal the law as a mockery of criminal justice.

It is no small matter.

Hong Kong's economy crucially relies on rule of law as the foundation of the booming commerce that has made the city rich. This law subverts the rule of law.

jake.vanderkamp@scmp.com

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caractacus
P.S. Forgive me for going on, but Kevin Zervos did not make the law, nor did he pass the sentences on the accused; he simply did his job according to the criminal law as it is written and enacted by Legco. As he is near retirement, we had all better hope that his successor also applies the law without fear or favour. The great threat to our freedoms, as is apparent from the rotten system of ministerial appointments, is that Hong Kong may get a political crony DPP who will apply the law selectively according to how wealthy or influential the suspect is or his/her friends are. That is the real danger.
caractacus
There are many, many laws which enable conviction without proof beyond reasonable doubt of every element of an offence, among the most notable being the presumptions against a defendant under the Dangerous Drugs Ordinance. Get real; anyone who facilitates the smuggling of billions of dollars in cash from the PRC, in itself a serious offence against the foreign exchange laws of that country, commits a clear crime. All that is necessary for someone in that position to avoid prosecution is to report the handling of the property or money to the authorities. Those who don't make a report can merely give an explanation for the source of the money to demonstrate it isn't the proceeds of crime. How do you suppose the authorities would be able to discover the origin of drug money or the proceeds of other crimes when all there exists is a vast pile of cash? Any legitimate or honest transaction for such huge sums would be by bank transfer. Long gone are the days when large business deals were paid for by the delivery of gold or cash.
To be sure, the 10 year prison sentences were harsh and one wonders why the big players never seem to be in the dock, but you confuse me because you actually appear to be close to suggesting that the laundering of money which is the proceeds of crime is ok and good for Hong Kong's economy. Is that really part of your point?
Please stop being naive and get off your hobby horse; you really don't know what you are talking about.
mskelly
Handling cash from PRC is not the crime under OSCO unless the cash is proceeds of a crime which, if committed in HK, would be an indictable offence ( one carrying a gaol sentence). So, you need reason to believe the defendant reasonably knew the type of crime committed in PRC and knew that, if committed in HK, it would be an indictable offence. In HK we don't have exchange controls so aiding and abetting others in such matters ( which is in part why we have so many banks in HK over the past century) is what we have been good and successful at and upon which many would say our economy was successful these past 50 years. Around Asia, who else is in this business with a legal system in the past almost like Switzerlands. Our property and insurance markets do very well from taking in suitcases of cash from PRC with no questions asked. HK is simply good at accommodating things, sending down a few minnows now and then. The US recently fined ( some might say extorted) HSBS and others billions for the same accommodating services. The art of spinning and fudging and hot air blowing and indignancy is strong in HK.
John Adams
I agree with Jake. The law is nonesense
mskelly
Surely with all this we have to ask when are the 'whales' going to be tried?
impala
(2) Secondly, and more to the point: you still owe us an explanation how it would be conceivable that we let people like the convicted lady in this case who shuffled around 6.4 billion HKD (!) go unpunished.

It would make Hong Kong a magnet for unsavoury business if you or I could start a service that accepted anonymous suitcases filled with cash that we'd shuffle through a bunch of bank accounts, skimming off our fee in the process, and then deposit in a bank account of our clients' choosing. We'd profit nicely, and yet have no knowledge of any criminal source or destination of the funds, so our hands stay clean. The authorities would have to prove that those particular banknotes that we just found on our doorstep were the proceeds of a particular crime such-and-so, and that we fully knew that too (mens rea right?). Seems absurd to me, and to prevent such practices the law is worded the way it is.

So moving on, your defence of the convicted lady seems to rest on the kind assumption that the HKD 6.4bn she moved around was definitely not the proceeds of a crime, but merely innocent money that for a perfectly good reason (allergy perhaps?) could not stand the daylight on the mainland. A little unlikely, I would say, and so did the judge.

I do admit that the 10-year sentence seemed heavy given worse or similar cases. Probably a low/mid-range single digit number of years would have sufficed. But let's have some faith in the presiding judges and the rule of law.
impala
(1) Jake, you are going to have to make up your mind whether your beef is with the law itself, or with this particular verdict.

If the former, you need to point your arrows first and foremost at the legislative powers, and suggest they amend or revoke the relevant ordinance, which has been working just fine for nearly 20 years.

If on the other hand, you find that this particular case is a miscarriage of justice, then indeed your beef is with Mr Zervos and, even more so, the judges that sided with him. Blaming Mr Zervos for the existence of the law, or for doing his job in prosecuting an offender of it is largely besides the point. Even if you find that he is doing this in the wrong way or in pursuit of the wrong kind of offenders, that remains primarily a matter for the court to decide. If you disagree with the court too, that is fine, but then it is still more sensible to criticise the judge(s) for their interpretation and application of the ordinance than it is to go on and on about Mr Zervos.

mskelly
FYI the law was there for a long time before it was used which is probably only the last 7 years with a number of convictions of 'minnows' / scapegoats. In one case the defendant said to the judge he understood the money was mainland tax evasion money ( in fact it was bank robbery proceeds) and he didn't think that was a problem in HK so he agreed to bank and pass on the money for a small fee. That put him square to be convicted even though he did not really understand the relevant law. He got 3 years and I seem to recall he was a young chap ...a factory worker? It seems the DPP has been enforcing this law since FATF really got going about 7 years ago.
mskelly
Section 25 A is the section under which Banks in HK flood HKMA with suspicious transactions reports...I believe so many that it takes an army to review them.
An authorised officer includes the policeman walking the beat...and no one (in HK) is exempt from the necessity to comply with S. 25A ......see
(7) A person who contravenes subsection (1) commits an offence and is liable on conviction to a fine at level 5 and to imprisonment for 3 months.
As I understand it, the thrust of the law is the same in most jurisdictions and shortcomings puts that jurisdiction on FATF's (Financial Action Task Force) 'naughty' list.
jenniepc
Answer to Mr. or Ms. wtssim Mar 28th 2013,11:35am,
The constitutional law does not have a fair or an unfair argument. the Constitutional law which is consonant to, and agrees with, the constitution. Constitution law is legal enactments as tested by the criterion of conformity to fundamental law. If the law is unconstitutional, then, it should be challenged by citizens.
Jennie PC Chiang/江佩珍 03/27/13 美國
mskelly
Section: 25A Heading: Disclosure of knowledge or suspicion that property represents proceeds, etc. of indictable offence Version Date: 07/01/2005
(1) Where a person knows or suspects that any property-
(a) in whole or in part directly or indirectly represents any person's proceeds of;
(b) was used in connection with; or
(c) is intended to be used in connection with,
an indictable offence, he shall as soon as it is reasonable for him to do so disclose that knowledge or suspicion, together with any matter on which that knowledge or suspicion is based, to an authorized officer.
(2) If a person who has made a disclosure referred to in subsection (1) does any act in contravention of section 25(1) (whether before or after such disclosure), and the disclosure relates to that act, he does not commit an offence under that section if-
(a) that disclosure is made before he does that act and he does that act with the consent of an authorized officer; or
(b) that disclosure is made-
(i) after he does that act;
(ii) on his initiative; and
(iii) as soon as it is reasonable for him to make it.
(3) A disclosure referred to in subsection (1)-
(a) shall not be treated as a breach of any restriction upon the disclosure of information imposed by contract or by any enactment, rule of conduct or other provision;
(b)
for the rest see ****www.legislation.gov.hk/eng/home.htm
mskelly
in case there is interest, here is the law Cap455 Organised & Serious Crimes Ordinance-
Section: 25 Heading: Dealing with property known or believed to represent proceeds of indictable offence Version Date: 30/06/1997
(1) Subject to section 25A, a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence, he deals with that property.
(2) In proceedings against a person for an offence under subsection (1), it is a defence to prove that-
(a) he intended to disclose to an authorized officer such knowledge, suspicion or matter as is mentioned in section 25A(1) in relation to the act in contravention of subsection (1) concerned; and
(b) there is reasonable excuse for his failure to make disclosure in accordance with section 25A(2).
(3) A person who commits an offence under subsection (1) is liable-
(a) on conviction upon indictment to a fine of $5000000 and to imprisonment for 14 years; or
(b) on summary conviction to a fine of $500000 and to imprisonment for 3 years.
(4) In this section and section 25A, references to an indictable offence include a reference to conduct which would constitute an indictable offence if it had occurred in Hong Kong.
(Enacted 1994. Replaced 90 of 1995 s. 22)
more to follow....
jenniepc
Mr. Jake van der Kamp,
The prosecutor, Mr. Zervos, doesn’t have to prove that defendant knew it was criminal. The prosecutors must prove that the defendant has conducted or attempted to conduct a financial transaction, knowing that the property involved in the financial transaction represents the proceeds of some unlawful activity. Yes, the prosecutor must prove that the defendant knew that the property was illegally derived in some way.
Under The US money laundering laws. Prosecutors must prove one of the following:
A) Defendant intents to promote the carrying on of specified unlawful activity;
B) Defendant knows that the transaction was designed to avoid reporting requirements under the laws, such as intent to engage in tax evasion ;
C) Defendant knows that the transaction was designed to conceal or control of proceeds of the specified unlawful activity.
Hong Kong's anti-money laundering law likely will vary with the United States.
Jennie PC Chiang/江佩珍 03/27/13 美國
Will.I.Am
Who cares about US? We are talking about HK here!
The main point is, as you mentioned, "The prosecutor, Mr. Zervos, doesn’t have to prove that defendant knew it was criminal."
And that's what Jake was trying to point out that is it a very unfair law. Geddit?
chaz_hen
For some unknown reason, this jenniepc always has to drag the US into any comment she makes. Maybe because she feels it a duty to do so since they let her migrate there?
Will.I.Am
What Jake said is probably right. The woman was definitely shuffling money for underground money changer.
Just go to any money changer and tell them you want to remit certain amount of RMB to somewhere in China and they will do it for you.
If its less than 20k they will not ask for ID. If its a million or two, everything is negotiable, this is HK after all.
Business in China, used these underground money changer/ banking facilities all the time. It is not always because they want to avoid tax but they are fast, simple and efficient compared to the banks!
Jake mentioned:
"In Hong Kong it is a crime to be suspected of a crime." Really? I am not a lawyer, but why?
ianson
(1) It's not, as you put it, Zervos' law, he's just doing his job in prosecuting where the facts fit the legal requirements enacted over a decade ago; (2) Zervos' statement is merely a perfectly crafted statement of the law as it stands, not his personal view. So attack our law, not Zervos for pursuing what it defines as criminal acts.
impala
Well said. Mr van der Kamp's mouth is full of how we must respect the Rule of Law in Hong Kong above all else, but conveniently, that does not seem to include him. Of course it is his prerogative as a journalist to criticise the law and those who apply it, but his incessant campaign against a public prosecutor smack of an attitude that implies he thinks he is a better position to interpret the law than the courts are. Respecting the Rule of Law includes that sometimes the court hands down verdicts you may disagree with.
 
 
 
 
 

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