Article

Note:Two officers of the beneficiary, Philip Sy Contracting and Building and Materials Supply Co., Ltd., procured three letters of credit from the same issuer, Nedcor Asia Ltd., in connection with transactions for amounts of HK$ 9,375,415 and HK$ 1,193,723. The LCs were represented to be for the sale of "water pumps, cooling towers, heat extractors, and the like" to the applicant, Mansion Fire Engineering Co., Ltd. The underlying transactions were not genuine and the officers were charged and convicted of procuring the making of a debit entry in the records of a bank by deception in violation of Hong Kong law by the Deputy High Court, Whaley, J., and by a jury in the Court of First Instance. The evidence showed that the funds were paid to the beneficiary, that it did not trade in the goods, that the goods were not supplied, and that the funds paid were recycled to the applicant.

On appeal, the High Court of the Hong Kong Special Administrative Region Court of Appeal, Stock, J., refused to overturn the verdict against the chairman of the company. The chairman had argued that the jury was not adequately instructed as to the fact that the chairman of a large company was not normally engaged in the day to day running of the company. The court noted that there was evidence to that effect and that the defense attorneys raised the point but that there was no harm in the failure of the trial judge to remind the jury of the role of the chairman in view of the evidence and the presence of the chairman's signature on the application for the LC and the check to the applicant.

The appellate court also rejected the argument of the other defendant that he was prejudiced by the failure of the trial judge to his good character other than to state that he had a clear criminal record whereas he was 45 years old and the finance director of a large company. Since the appellate court concluded that the case against the defendant was "overwhelming", in that he signed the invoices, that there were no goods, that he signed the checks to the applicant, the bills of exchange, and the collection instructions, the court concluded that any failure did not result in a miscarriage of justice.

COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE

The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.