• Sat
  • Dec 27, 2014
  • Updated: 2:58pm
PUBLISHED : Sunday, 24 March, 2013, 12:00am
UPDATED : Sunday, 24 March, 2013, 4:49am

Justice ill-served by prosecutions in money-laundering schemes

Philip Bowring says by coming down hard on the small cogs in alleged money laundering schemes, Hong Kong's public prosecutors hold the principle of justice in contempt


Philip Bowring has been based in Asia for 39 years writing on regional financial and political issues. He has been a columnist for the South China Morning Post since the mid-1990s and for the International Herald Tribune from 1992 to 2011. He also contributes regularly to the Wall Street Journal, www.asiasentinel.com, a website of which he is a founder, and elsewhere. Prior to 1992 he was with the weekly Far Eastern Economic Review, latterly as editor.

Hong Kong prides itself on its rule of law, but its crim-inal justice system should meet the test that "the punishment fit the crime", whether applied through the police, the public prosecutions branch of the justice department, or judges through sentencing. By those tests, it appears to be deteriorating, much blame for which must surely be laid at the door of the Department of Justice public prosecutors who set the tone.

It is a grotesque injustice that the small cogs in alleged money laundering schemes are now not only being prosecuted, but are given sentences greater than almost any ever imposed on the biggest fraudsters Hong Kong has ever known.

In the past few months, one 22-year-old man of modest background was given 10½ years for money laundering and a 61-year-old public housing tenant received 10 years for a separate but similar offence.

These prosecutions and sentences bring the justice system into contempt. They show that Director of Public Prosecution Kevin Zervos and the judges handing out the sentences live in that comfortable world of elite official lawyers who have little idea of how and why Hong Kong's economy works, or of its relationship to the mainland and Macau.

They are, however, keen to show zeal in prosecuting such alleged offences and thereby claim that Hong Kong is fighting money laundering, without having to go after the real sources of the money allegedly being laundered, or requiring that authorities on the mainland or Macau take steps to identify the crimes. They doubtless recognise that bureaucrats subject to appointment by politicians operate within circumscribed limits and it is easier to go after nobodies in Hong Kong than party members on the mainland.

Nothing seems to have changed here since the Department of Justice opted not to prosecute well-connected publisher Sally Aw Sian for fraud for spurious "public interest" reasons.

Zervos defended government actions on money laundering in this newspaper last Thursday, by arguing that the jury concluded that the defendants had reasonable grounds to believe that the money transferred was the proceeds of a serious criminal offence. But how can anyone come to such a conclusion without being given any indication of the nature of such alleged criminal activity? For sure, a large number of small transfers would indicate a desire to avoid mainland exchange controls. But those are evaded in billions of dollars every week by mainland individuals and corporations.

As for a belief that crimes other than evasion of foreign exchange controls are concerned, I believe - as do most of my interlocutors in journalism and the financial world - that a significant percentage of Chinese billionaires, including those who sit on the National People's Congress, acquired their wealth through corruption, fraud or theft of public assets. Most of them in turn have acquired assets overseas or in Hong Kong by evading exchange controls or bribing officials to sign off on transfers.

Banks are now being obliged to report suspicions of money laundering and huge amounts of bureaucracy are often now involved even in simple trans-actions. But, surprise, surprise, the main culprits turn out not to be the billionaires but the old ladies wanting to make a few dollars by acting as intermediaries.

It is bad enough when mules used in drug trafficking get long sentences while scant effort is made to trace the masterminds. But at least the crime is identifiable. No such identification exists in the case of the money laundering sentences because the underlying crime, if any, was on the mainland and has never been reported or prosecuted.

The whole global anti-money-laundering effort is a mountain of hypocrisy instigated in the first instance by the US in its so-called "war on terror" and now supposedly used against drug profits. As a few carefully selected banks, including HSBC and Standard Chartered, have found to their cost, it is hard to mount a defence against demands that you must identify the source of funds. But, clearly, these laws do nothing to stop the daily flow of drugs and money across US borders by cartels.

Another distortion of criminal justice also operates against the disadvantaged to the benefit of their higher-income employers. I refer to the almost total non- enforcement of laws supposed to provide foreign domestic helpers with minimum income, working hours and living conditions. Any helper who complains or even threatens to complain that they are deprived of their rights is likely to face dismissal.

Those still paying off exorbitant fees extracted by agents are especially vulnerable. It would be relatively simple for the justice and immigration departments to stamp out these abuses, but clearly they have no interest in doing so.

In all the above cases, it is Hong Kong's self-respect for its social values and the rule of justice which are at stake. Zervos is in contempt of the principle of justice. The community deserves much better from government officials and the bench - and more awareness among politicians that there is more to human rights than democracy and that justice is the object of the rule of law.

Philip Bowring is a Hong Kong-based journalist and commentator


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This article is now closed to comments

If you just lock up all HSBC directors for ten years....... this naughtiness would probably stop.
Meanwhile , nothing's really changed........................... two weeks ago I had to wait nearly 15 minutes in line in HSBC while two "gentlemen" (no tattoos on their arms) deposited a huge stack of crisp $1000 notes. There were divided into bricks each containing $100,000, and there were ten of these............ I know because I had to wait while they were counted. These were accepted by the teller without even a raised eyebrow...... no questions asked!
According to press report the public housing tenant transferred billions of dollars in over 17,000 transactions through nine local banks,I wonder why the government cannot trace the incoming and outgoing of these funds and could only made mere assumption that these transfers were connected with crime.Where is the money from,where it goes,for what purpose?I am wondering the government is for the sake of "creating" statistics connected with anti-money-laundering combat so that certain bureaus of the government are not disposed of,or considered redundant,or to create more posts to deal with unknown fund transfer.
Anyway,to prosecute a public housing woman is easier,than the men behind the scene.
If bank,or banks fail us,we don't want the authority to fail us.
You're right, 22,000 deposit and 17,000 withdrawal and none could be trace?
The mules should be prosecuted, but the sentences were unreasonably harsh and should be reserved for those controlling the mules. The sentences were imposed by Judges, not prosecutors. The criminals controlling the money laundering, however, appear to be getting off Scot free. One wonders why? Huge sums of cash have been smuggled into HK in holdall bags and invested in property yet the traffic has not even been discouraged, let alone controlled. Why? Why have no bankers or property executives been in the dock? One might suspect that landlords and property developers who have benefitted most from the resulting, outrageously inflated property market do not wish it to stop, and that our administration goes along with them because Hong Kong is no longer governed by the civil service but by unaccountable, often ethically questionable, political appointees who have discredited our system of government by cronyism, lack of transparency and the whiff of corruption.
The DoJ does not select the individuals to prosecute. Kevin Zervos' staff act on evidence supplied by the police and the other disciplined services. So if you are looking for someone to blame for the choice of whom to prosecute, look at the law enforcement agencies and those with influence over them.
By the way, ignore "whymak", who is transparently a mad dog racist who seeks to pluck the splinter out of the "foreigners' eyes while ignoring the log in his own.
I respect Mr. Philip Bowring journalist works, but if he is not familiar with the topic, then he should do is to research the subject, he intends to write. Related to the topic of the law is complex, it must have a local constitutional law background to the preparation of the subject matter of the correct argument.
Every crime has a sentence guideline, I am sure that money laundering has the guidelines to penalize the conduct which is based on the offense levels. Mr. Bowring, you are comparing apples and oranges. This is not the defendant's background, but every crime and the degree of the offense.
Now, Hong Kong’s prosecutors or Judges bring up any suits against defendants, he or she must be aware of if the Hong Kong court has a territorial jurisdiction over the events or persons within it, then the court can bind the defendant to an obligation or adjudicate any rights involving them. The Hong Kong court may have subject a matter jurisdiction, but may not have a territorial jurisdiction over the persons to bind the defendant to an obligation or adjudicate.
My argument is based on US Federal and most US local constitutional laws. The procedural law may vary from Hong Kong.
Jennie PC Chiang/江佩珍 03/24/13 美國
What about the so-called democratic system that fosters and facilitates money laundering in the first place?
If you want some big fish to fry, you are better off targeting the Murdochs who manipulate the politicians no less than Tony Blair like marionettes. The whole system is rotten to the core.
I still don't know what constitutes the Han race, which is a melting pot through many Turkic, Mongolian and Manchu rulers, or what it stands for in your previous columns.
You seem to bear a personal grudge against the PRC -- and perhaps our SAR government? -- for its meritocratic authoritarians. Sure, they are a far cry from your ancestors, the slave traders and opium peddlers.
It's time for you to retire your poisoned pen against this personal nemesis. Better yet, retrain it and refocus your writings on crony capitalism and media driven politics. Yes, our banking system is just one of many vehicles at the roots of many social problems.
A fair disclosure. Like many Hong Kongers, I own meaningful amount of HSBC shares in my portfolio despite its past racist employment policy. I can talk about the firm today without the irrelevant evil part of its history. Perhaps it's time for you to shed your hate passion on China too.
You seem to want to argue along the lines of socio-economic position. In which case, you will no doubt have at your fingertips the statistics of crimes committed by those in different strata of society. I am sure you will find that a sizeable proportion of crimes were committed by those who are less well off and who would like to improve their economic position.
Everyone agrees that we should go after the masterminds, but to simply ignore those from less well off backgrounds who commit crimes would lead to anarchy in society. Are you a closet anarchist?
Justice, Mr. Bowring, is supposed to apply equally to everyone.
I look forward to seeing those statisitics and also the accounts and tax records of the offenders showing clearly where they obtained the money that they willingly allowed to pass through their accounts. Failure to keep proper accounting records and paying tax thereon is a criminal offence. Unless of course you are proposing that someone from a less well off family be exempted.
You happen to be perfectly correct. Those scumbag lawyers of Civic Party who used the little ignorant old lady as a stalking horse had gone unpunished. But it doesn't mean she should go unpunished. Mr. Bowring has a point too. The punishment must fit the crime.
Are you Zervos?
I know and knew that I would be very unpopular for saying what I said, but I have no regrets. The gist of the arguments put forward are that if you are a public housing tenent or a little old lady then you should be above the law. This can never be acceptable.


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