In overruling the findings of the lower courts, Mr Justice Spigelman dutifully clarifies the meaning of ‘having reasonable grounds to believe’
The Court of Final Appeal has considerably tightened up the circumstances in which a loosely worded piece of legislation can be used to send people to jail.
Thank God for the Court of Final Appeal. When lower courts consider it their duty to turn themselves into conviction machines, it is the CFA that time and again sets the proper limits to what the law will allow them to do.
It has done so once more in a just-delivered decision overturning a lower court conviction of a garment manufacturer for money laundering. In the process, it has considerably tightened up the circumstances in which a loosely worded piece of legislation can be used to send people to jail for up to 14 years.
It also means that tens of people now behind bars for money laundering may have grounds to claim that they were unjustly convicted and should be set free forthwith.
The circumstances of the case, HKSAR and Pang Hung Fai, were just what were needed to point up the weakness at the heart of the legislation, which makes it a criminal offence for people to deal in property that they have reasonable grounds to believe are the proceeds of an indictable offence.
Mr Pang arranged for two deposits totalling HK$14 million to be paid into one of his company accounts in Hong Kong through a close friend and business associate with whom he had had past dealings in short-term loans. He then paid out the money to one of this friend’s companies. It turned out the money was fraudulently obtained.
Guilty of money laundering, said a High Court jury. Yes indeed, said the Appeal Court. No, says Mr Justice James Spigelman of the CFA with three of his colleagues backing him.
Mr Justice Spigelman’s argument hangs on the meaning of the words “having reasonable grounds to believe”, which he says are perfectly understandable but were made subject to “unnecessarily elaborate analysis”.
He then restored the importance of the accused’s own state of mind in agreeing to a transaction later deemed to be money laundering, in this case accepting that Mr Pang believed the transaction to be above board and quashing his conviction.
It is an important decision as there has been a tendency in recent money-laundering convictions to take the “reasonable grounds” as meaning little more than reasonable grounds to any supposedly reasonable person, irrespective of what the person charged with the offence thought.
As a result, and this is my opinion, not Mr Justice Spigelman’s, a number of people are now in jail because they handled money in ways that looked like money laundering although no evidence of an underlying indictable offence was ever presented to the courts.
In many of these cases, there may have been no underlying indictable offences.
All that these people may have done is transfer money from mainland sources to Hong Kong accounts against the wishes of mainland authorities, who only allow selective leakage of money.
Superficially, it looks like money laundering but there is no Hong Kong law against sneaking money out of the mainland and these cash couriers are actually helping provide an essential service in greasing the wheels of commerce between Hong Kong and Guangdong.
A high rate of money-laundering convictions, however, puts Hong Kong in a good light with the Financial Action Task Force, a Paris-based quasi-government entity that acts as a watchdog of international money laundering and puts emphasis on imprisonment statistics.
FATF can make life difficult for banks in financial jurisdictions that don’t meet its approval ratings and FATF’s next big review of Hong Kong comes next year. There is reason just now for Hong Kong authorities to want lots of people sent to jail for money laundering.
That’s a cold-hearted accusation to make against our government but I think the facts allow me at least the suspicion that it’s true. Now, however, it no longer matters so much. Our Court of Final Appeal has put a stop to easy convictions. The standards for conviction have been significantly tightened.
And now a good number of people sitting in jail, still puzzled as to why they were sent there, have some hope that justice will set them free again. Thank you, Mr Justice Spigelman.
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