Introduction

Mr Wong Ying-kit (“Mr Wong”), a former merchandiser and Mr Kwok Chi-kin (“Mr Kwok”) a former contractor of K-Swiss (Hong Kong) Limited (“K-Swiss”), a sportswear company, were charged by the Hong Kong Independent Commission Against Corruption (“ICAC”) and were recently prosecuted for their respective roles in bribery and fraud by pocketing price differences totalling about HK$220,000 from approximately HK$1.5 million worth of visual advertising contracts.

Mr Wong was charged with (i) fraud, contrary to section 16A(1) of the Theft Ordinance (Cap.210), and (ii) using a copy of a false instrument, contrary to section 74 of the Crimes Ordinance (Cap.200); while Mr Kwok was charged with offering an advantage to an agent, contrary to section 9(2)(a) of the Prevention of Bribery Ordinance (Cap.201) (“POBO”).

The relevant laws

Section 16A(1) of the Theft Ordinance provides that:

If any person by any deceit (whether or not the deceit is the sole or main inducement) and with intent to defraud induces another person to commit an act or make an omission, which results either –

(a)  In benefit to any person other than the second-mentioned person; or

(b)  In prejudice or a substantial risk of prejudice to any person other than the first-mentioned person,

The first-mentioned person commits the offence of fraud and is liable on conviction upon indictment to imprisonment for 14 years.

Section 74 of the Crimes Ordinance provides that:

A person who uses a copy of an instrument which is, and which he knows or believes to be, a false instrument, with the intention of inducing somebody to accept it as a copy of a genuine instrument, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice, commits an offence and is liable on conviction on indictment to imprisonment for 14 years.

Section 9(2)(a) of the POBO provides that:

Any person who, without lawful authority or reasonable excuse, offers any advantage to any agent as an inducement to or reward for or otherwise on account of the agent’s doing or forbearing to do, or having done or forborne to do, any act in relation to his principal’s affairs or business shall be guilty of an offence.

Facts of the case

In August 2012, Mr Wong applied for the position of visual merchandiser at K-Swiss and in support of his application, presented a copy of a false reference letter issued by Vocargo Advertising Company (“VAC”), an advertising production company of which Mr Wong is the sole proprietor. K-Swiss accepted it as a copy of genuine instrument and employed Mr Wong. Between 3 September 2012 and 3 September 2015, Mr Wong was responsible for designing and coordinating K-Swiss’ visual advertising works, during which he recommended and induced K-Swiss to award contract works to VAC, while failing to disclose to K-Swiss his interests in VAC. As a result, 184 visual advertising contracts worth over HK$1.5 million were awarded to VAC, in which Mr Wong pocketed price differences totalling HK$220,000 by subcontracting the works to third parties.

Of the 184 visual advertising projects, one installation work was carried out by Mr Kwok at a wholesale store of K-Swiss in Macau in November 2014. Mr Wong, acting as an employee of K-Swiss, also went to Macau to provide support. On 5 December 2014, Mr Kwok inflated the project price by HK$7,000, which was the sum reserved to cover hotel and other expenses incurred by Mr Wong during his duty visit to Macau.

The District Court’s decision

According to case law, for general fraudulent behaviour based upon breach of trust involving monetary value of less than HK$250,000, sentencing should be imprisonment for two years or less; the maximum penalty for using a copy of a false instrument is imprisonment for 14 years; and although there is no sentencing guideline for offering an advantage to an agent, it is considered a serious offence and should be deterred.

Mr Wong and Mr Kwok both pleaded guilty to their charge(s). Taking into account various factors such as Mr Wong having repaid the price difference he obtained by fraud to K-Swiss, Mr Kwok’s family matters, the one-off nature of the fraud and a delay in prosecution (they were apprehended by the ICAC in February 2016, but were officially charged two years and three months later in May 2018), Mr Wong and Mr Kwok were sentenced to imprisonment for 10 months and community service for 200 hours, respectively.

Conclusion

From the above case, we can see how the Theft Ordinance, the Crimes Ordinance and the POBO may interlink and operate together to be applied by the ICAC to combat corruption transactions that involve fraud and use of deceiving false documents. Under the Independent Commission Against Corruption Ordinance (Cap.204), the ICAC may also investigate and exercise its powers with respect to other offences such as theft, fraud and use of false documents during its investigation of a bribery and corruption offence under the POBO. Depending on the circumstances of the case, such as the monetary amount involved, whether the defendant voluntarily repaid the amount of any advantage received and whether there has been a serious delay in prosecution, the penalty for such offences could range from serving community service to custodial sentence.