Live blog: Rafael Hui portrayed as Kwoks' 'inside man' as prosecution sets out case in graft trial

Prosecutor illustrates how real estate executives funnelled money to the former chief secretary even before he came to power

PUBLISHED : Thursday, 05 June, 2014, 10:13am
UPDATED : Thursday, 05 June, 2014, 6:29pm

The trial of two of the city's wealthiest tycoons and Hong Kong's former No 2 government official resumes today after a shaky start last week.

A second jury, composed of three men and six women, was empanelled yesterday, by Mr Justice Andrew Macrae.

The first nine-member panel had been discharged last week after a juror, wishing to avoid serving that day, complained about health issues. He was excused. Then, a female juror raised concerns about an impending trip to South Korea, which led to the decision to discharge the entire jury.

Rafael Hui Si-yan, 66, faces eight charges related to bribery and misconduct in public office.

Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong, 62, faces one charge of conspiracy to offer an advantage to Hui and two counts of conspiracy to commit misconduct in public office. Raymond Kwok Ping-luen, 61, also co-chairman, faces four charges, including one with Hui of furnishing false information.

SHKP executive director Thomas Chan Kui-yuen and former Hong Kong stock exchange official Francis Kwan Hung-sang each face two charges. All have pleaded not guilty.

4.47pm: The hearing is adjourned. 

4.33pm: Tung resigned on March 10, 2005, and was succeeded by Tsang.

Perry says Thomas Kwok issued a cheque for Hui for HK$5 million from SHKP subsidiary Fidelity Finance. Hui deposits this in his Standard Chartered account, but does not declare it in his tax return, the lawyer says.

This money, the prosecutor alleges, was so Hui would be the property conglomerate's inside man, their "eye and ear in the government". 

4.27pm: Perry guides the jury through Hui and his wife's move from their long-time government quarters in Tai Hang to two luxurious flats in Leighton Hill, courtesy of SHKP. 

When [Chan] was paying millions of dollars to [Hui], he didn’t pop down 19 floors ... to hand over the cheques to his neighbor. He routed it through a series of companies
David Perry QC on the alleged secret payments

While the apartments were being decorated, and while Hui was leaving his job at the Mandatory Provident Fund Schemes Authority, Hui was in talks with the Kwoks about a consultancy agreement and was securing a HK$3 million loan from Sun Hung Kai's finance company, the lawyer says. 

Hui was also allegedly given an office - also rent-free - at the One IFC tower by SHKP before the loan was granted.

Perry then talks about the spring of 2005, a time when speculation was rife that Donald Tsang would replace then-Chief Executive Tung Chee-hwa, and that Tsang would ask Hui to be his chief secretary.

Amid this speculation, Hui terminates his consultancy contract with SHKP.

3.57pm: Perry says Hui, a civil servant for 30 years and awardee of the prestigious Grand Bauhinia Medal for service, had a stint with the anti-graft watchdog ICAC, and thus would be familiar with rules against corruption. Yet Perry emphasises how Hui hid the largesse he received from the property firm.

3.45pm: The prosecutor says that Thomas Chan, who joined SHKP in 1973, was Rafael Hui's neighbour, living in the same building but on a different floor. 

But "when [Chan] was paying millions of dollars to [Hui], he didn’t pop down 19 floors ... to hand over the cheques to his neighbor. He routed it through a series of companies" in his control, Perry says, explaining the complex maneouvres and "indirect routes" used to conceal the alleged transactions.

Perry says the same complicated method was previously used by the Kwoks and Chan in depositing millions of dollars in "bonuses" to Chan himself.

"By using [Chan], the loyal SHKP executive, [Thomas and Raymond Kwok] were able to melt into the background," the prosecutor says.

But in all this, Kwan was the middle man. For his efforts, Kwan was allegedly "rewarded handsomely": HK$2 million for the 2005 transfer and around HK$1 million for the 2007 payment. "It is not bad for simply passing some money to an old friend," the prosecutor says. 

3.43pm: Francis Kwan Hung-sang is described as the "middle man" by the prosecutor.

Kwan, a "lifelong and childhood friend" of Hui, allegedly transferred the money from Thomas Chan - split into smaller transfers and funnelled to 10 different bank accounts and an offshore company - to Hui.

Kwan's methods included paying in cash, through a bank cashier, personal cheque and bank cashier order, Perry said. This is how Hui received HK$8.5 million in June 2005 and HK$11 million in November and December 2007, the prosecutor says.

3.06pm: Moving on to the next defendant, Perry unveils an entry in the diary of Raymond Kwok from 2005 - the year the secret payments were allegedly made.

Perry cites a box in the journal, scribbled with the name "Rafael Hui". There are also references in the last page of the diary to various SHKP-linked projects such as the West Kowloon cultural project and developments in Ma Wan.

In an entry dated May 2005, Perry says Kwok wrote down a money transfer under "TK [Thomas Kwok] for Rafael Hui package". The lawyer says the fund indicated here pre-dated the HK$4.125 million and HK$8.5 million payments to Hui (see below for detailed charges).

2.45pm: The prosecutor poses the question: Why would a successful businessman like Thomas Kwok who is part of a massive conglomerate - "In fact [it has] more than 900 companies and employs many thousands people" - make "payments of this size and nature" to a man who will become chief secretary?

Imagine you have someone who is your man with the government. ... You have in fact a man on the inside
Prosecutor David Perry QC on Thomas Kwok's alleged payments to Rafael Hui

Perry argues that it was because Hui had an "important and influential role" in the development and implementation of government policies. And as SHKP was the government's "adversary on the other side of the negotiation table", Kwok stood to gain from having an "inside man".

"Imagine you have someone who is your man with the government. Imagine you have a man who can tell you what's going on. You have in fact a man on the inside," Perry says.

2.37pm: The trial resumes. After unfolding the case against Rafael Hui, prosecutor David Perry QC now trains the court's attention on Thomas Kwok.

1pm: The court adjourns until 2.30pm.

12.55pm: Perry establishes just how closely linked the defendants are. Perry says Hui claims to have known the Kwok brothers for more than 20 years. He quotes Raymond Kwok as saying Hui was a close and good friend of the family. 

Thomas Chan has worked for the Kwoks for more than 40 years and is "a very very loyal, trustworthy subordinate", Perry says, adding that all the defendants played a part in making the secret payments.

But the funds are just one aspect of the case, Perry says. He gives blow-by-blow details of every fund, loan or gift from SHKP that Hui failed to disclose while he was in government.

12.53pm: The prosecutor says the case against Hui can be summarised in one sentence: "It is about the abuse by him of his public duty."

Perry says that in the four days leading up to Hui's appointment as chief secretary, he received a secret payment of HK$8.5 million. On the day of Hui's oath-taking, HK$4.7 million had already been deposited into his bank accounts, the lawyer alleged.

By the time Hui stepped down as chief secretary in June 2007 and became a non-executive council member (which he held until January 2009), Hui remained a "powerful and influential man". Hui received HK$11 million in secretly wired funds during this time, Perry says.

12.42pm: Perry narrates Hui's career, as chief secretary and Executive Council member, and the jury members are asked to peruse Chinese-language newspaper clippings and other supporting documents.

What the Chief Executive did not know was that ... [Hui] received millions of dollars in secret payments
David Perry QC, prosecutor

The prosecutor singles out a letter to Hui written by then-chief executive Donald Tsang when Hui was stepping down from the council. In it, Tsang expresses gratitude for Hui's "wise" and "sound" advice on controversial issues such as constitutional development and the West Kowloon cultural project.

"What the Chief Executive did not know was that during [Hui's] time as a member of the Executive Council, the first defendant [Hui] received millions of dollars in secret payments," Perry says.

The prosecutor stresses the weight of responsibility carried by public servants: “It’s not to serve yourself. It's to serve the public; not about self-interest."

Read: Donald Tsang's Letter to Rafael Hui

12.19pm: Perry, the prosecutor, says his opening address will last several days until next week, but promised to make it "interesting and easy to follow".

"[The case] is about the standard of integrity ... [and] about secret and disguised payments made to a very senior public officer of Hong Kong," he says, before turning the jury's attention to Rafael Hui.

It must be a little intimidating because there are so many papers, so many new things to absorb ... Please don't worry

12.09pm: Prosecutor David Perry QC, wearing a wig and a black gown, speaking slowly in a mellow voice, offers reassurances to the jury about what might seem like an overwhelming task ahead. He tries to explain the case in simple language.

"[It] must be a little intimidating because [there are] so many papers and so many new things to absorb on the first day or the second day of the proceedings," he tells them. "Please don’t worry," he says, adding that the details would likely be repeated at least four times in court.

11.53: Justice Macrae, while explaining the trial procedures, has instructed the jurors to tune out any news or discussions about the trial and the defendants in the press and social media. 

"Things you have seen or read or heard in the media may well have been ... slandered by the author," he told them. He says reports might also "stir up emotions or provoke people or prejudice".

The jurors were asked not to discuss the case on Facebook.

11.30: A break is announced.

10:35: The court clerk reads out the charges. The defendants appear relaxed as their alleged crimes are listed one by one.

Count 1 is read against Hui for misconduct in public office. He is accused of accepting two adjacent, luxurious flats from Sun Hung Kai Properties in Leighton Hill, Happy Valley, in which he could live rent-free.

When he was managing director of the Mandatory Provident Fund Schemes Authority from 2000 to 2003, Hui allegedly accepted the offer of rent-free flats along with two unsecured loans from Honour Finance - of HK$1.5 million and HK$900,000  - to negotiate a consultancy contract with SHKP. Hui did not disclose these to the MPF authority.

Count 2 is the conspiracy to commit misconduct in public office, against Hui and Thomas Kwok, in the period between March 1, 2005 and June 30, 2007. Hui, then chief secretary, allegedly received a HK$5 million cheque from Kwok, through Fidelity Finance Company, in return for being "favourably disposed" to Sun Hung Kai Properties or its subsidiaries.

Count 3 is conspiracy to commit misconduct, against then-chief secretary Hui for allegedly accepting HK$4.125 million from SHKP in exchange for being "favourably disposed" to the property firm.

Count 4, laid against Rafael Hui and Raymond Kwok Ping-luen, is furnishing false information.

It centres on an invoice purportedly made out to Hui for a payment of HK$4.12 million, in recognition of his "excellent" civil service performance between April 2005 and February 2006. They are accused of making the invoice "dishonestly and with a view to gain for themselves".

Count 5 is against all five defendants for conspiracy to commit misconduct in public office. Hui allegedly received HK$8.5 million in a series of payments between March 2005 and June 2007 from the Kwok brothers, Thomas Chan and Francis Kwan.

Count 6 is misconduct in public office, against Hui, for failing to declare or concealing from the government that he was given an unsecured loan of HK$3 million from Honour Finance Company.

Count 7 laid against all five defendants is the conspiracy to offer an advantage to a public servant. Hui, as chief secretary and an Executive Council member, is accused of pocketing HK$11.182 million from the Kwoks, Chan and Kwan as a "reward" for his public service.

Count 8 alleges misconduct in public office against Hui when he was a non-official member of the Executive Council between July 1, 2007 and January 20, 2009, in which he failed to disclose the HK$11.182 million payment.

10.30am: The jury members are sworn in one by one.

10.28am: A female juror asks the judge if she is allowed to sit on the jury if her husband works in the police force. After looking up the rules, Mr Justice Andrew Macrae says there is nothing stated in the law to exempt her. He says she would only be exempted if she is the wife of the Chief Justice or judge, or if she is married to someone in the People's Liberation Army.

The judge asks her if she can try the case impartially and fairly. She answers in affirmation.

10:23am: The judge enters the courtroom. The nine jurors are seated. The jury selection took six hours yesterday, in a session peppered with banter between Mr Justice Macrae and prospective jurors who raised various excuses to avoid serving.

Turning down a woman's plea for release because of her four medical appointments, Macrae jested that he could ring up a hospital to ask doctors to see a patient immediately. "I am not without influence," he said. Even a bride-to-be failed to win exemption. After saying she was scheduled to get married next month, the judge indicated she could be released for her big day.

The trial is expected to last several months.

10am: The five defendants, all dressed in suits and ties, file into the courtroom and take their seats as they await the judge. They are seated behind a glass panel.

9.50am: Good morning and welcome to SCMP's live blog. Atmosphere is buzzing at the High Court today as observers and the press pack into the lobby, waiting for the hearing.