Singapore: MAS withdraws second merchant bank status in AML push

In line with its increased commitment to combat money laundering and terrorist financing in Singapore, the Monetary Authority of Singapore (MAS) has ordered the closure of Falcon Private Bank Ltd, Singapore Branch (Falcon Bank).

On 11 October 2016, the MAS stated that it was withdrawing the merchant bank status of Falcon Bank for serious failures in anti-money laundering (AML) controls and improper conduct by senior management both at Falcon Bank’s Head Office in Switzerland and its Singapore Branch. This was further to the closure of the Singapore branch of an international bank for serious breaches of AML requirements earlier this year (see our e-bulletin of 25 May 2016), and the MAS’s announcement in July 2016 that it was investigating numerous other banks for lapses in AML controls.

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Property tycoon and former Chief Secretary to appeal to Court of Final Appeal in Hong Kong’s high profile corruption case

Former Chief Secretary, Rafael Hui, former Sun Hung Kai chairman, Thomas Kwok, and two others have today been given permission to appeal to Hong Kong's Court of Final Appeal.  The Court of Appeal granted permission for the further appeal in light of public interest and the legal issues involved.

In February, the Court of Appeal dismissed the defendants' appeals against conviction. The court's ruling today means the Court of Final Appeal will review whether the offence of conspiracy to commit misconduct in public office is made out on proof that the defendant conspirators intended and agreed that, in return for a payment, Hui would be favourably disposed to them.

For more information on the Court of Appeal's judgment rejecting the Defendants' appeal in February, see here.

 

Property tycoon and former Chief Secretary lose appeal in Hong Kong’s highest-profile corruption case

Hong Kong property tycoon Thomas Kwok and ex-deputy leader Rafael Hui saw their appeals against conviction and sentence dismissed before the Hong Kong Court of Appeal. In a detailed judgment, the Court of Appeal unanimously rejected the appeals brought by Kwok, Hui and two others. The judgment confirms the well-established principle that benefits offered to develop or retain goodwill may also fall foul of Hong Kong’s bribery laws.

Hui is the highest-ranking official in Hong Kong’s history to be found guilty of taking bribes. He was convicted in late 2014 of misconduct in public office and conspiracy and jailed for seven and a half years. Kwok was found guilty of conspiracy to commit misconduct in public office (ie, bribing an official) and sentenced to five years. Francis Kwan and Thomas Chan were sentenced to five and six years respectively for acting as middlemen for the payments. For further details on the trial court’s conviction and sentencing in December 2014, see our earlier ebulletin here.

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New guide to anti-corruption regulation in Asia Pacific launched

Over the past two years we have witnessed an exponential increase in global efforts to combat corruption. Nowhere is this more visible than Asia, where a number of countries have recently passed new anti-corruption legislation or taken steps to strengthen their existing anti-corruption frameworks. Local anti-corruption laws should now be the main compliance concern for companies doing business or investing in Asia Pacific.

Our updated Guide to Anti-corruption Regulation in Asia Pacific navigates the complexities of both extra-territorial statutes and domestic laws to provide a practical guide to applicable anti-bribery legislation and enforcement regimes. As well as including new chapters on Australia and Myanmar, we have introduced a checklist at the end of each chapter. This gives readers an at a glance summary of the ‘need to know’ legal and enforcement issues. Continue reading

Hong Kong’s top court clarifies mental element in money laundering offence

In the recent case of HKSAR v Pang Hung Fai (FACC 8/2013), the Court of Final Appeal (the CFA) offered, for the first time, authoritative guidance on the mental element of “having reasonable grounds to believe” under section 25(1) of the Organized and Serious Crimes Ordinance (Cap 455) (the OSCO).

Section 25(1) makes it an offence for anyone to deal with any property while “knowing or having reasonable grounds to believe” that such property in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence. The CFA’s judgment in effect overturns previous Court of Appeal (the CA) jurisprudence and offered much-welcomed clarity on the subject.

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Property tycoon and former Chief Secretary jailed in Hong Kong’s highest-level corruption trial

Thomas Kwok, chairman of Sun Hung Kai Properties, Rafael Hui Si-yan, former Government number two, and two businessmen have been found guilty and sentenced to jail terms in Hong Kong’s HK$34 million (US$4.3 million) graft “trial of the century”.

The convictions arise out of charges for eight offences, including misconduct in public office at common law, conspiracy to commit misconduct in public office at common law, and conspiracy to offer advantages to a public servant in violation of section 4(1)(a) of the Prevention of Bribery Ordinance and section 159A of the Crimes Ordinance.

The verdicts, delivered by the jury on Friday 19 December, and sentences, handed down by Mr Justice Andrew Macrae on 23 December, are as follows:

Rafael Hui (former Chief Secretary of Hong Kong, former Managing Director of the Mandatory Provident Fund Schemes Authority (MPFA) and former non-official member of the Executive Council):

  • Guilty on three counts of misconduct in public office, one count of conspiracy to commit misconduct in public office and one count of conspiracy to offer an advantage to a public servant
  • Sentenced to a seven and a half year jail term and a HK$11.18 million fine (equivalent to the bribe he was found guilty of taking)

Thomas Kwok Ping-kwong (Joint Chairman and Managing Director of Sun Hung Kai Properties Limited – now resigned):

  • Guilty on one count of conspiracy for Hui to wilfully misconduct himself in the course of his public office
  • Sentenced to a five year jail term and HK$500,000 fine

Thomas Chan Kui-yuen (Executive Director of Sun Hung Kai Properties Limited – now resigned):

  • Guilty on one count of conspiracy for Hui to wilfully misconduct himself in the course of his public office and one count of conspiracy to offer an advantage to a public servant
  • Sentenced to a six year jail term and HK$500,000 fine

Francis Kwan Hung-seng (businessman):

  • Guilty on one count of conspiracy for Hui to wilfully misconduct himself in the course of his public office and one count of conspiracy to offer an advantage to a public servant
  • Sentenced to a five year jail term

Raymond Kwok Ping-luen (Joint Chairman and Managing Director of Sun Hung Kai Properties Limited):

  • Acquitted on all counts

Background

Following their arrest in March 2012, the defendants were formally charged by the ICAC in July 2012. The trial in Hong Kong’s Court of First Instance started in May 2014 and lasted 72 days.

The convictions concern activity between June 2000 and January 2009, when Hui was the Managing Director of MPFA, Chief Secretary for Administration and Chairman of the Steering Committee of the West Kowloon Culture District Project. It was alleged that the Kwok brothers made payments and unsecured loans to Hui in excess of HK$34 million, in return for confidential information used to obtain construction contracts. Hui was also accused of accepting rent-free use of two apartments owned by companies in which Sun Hung Kai holds shares.

The defendants all pleaded “not guilty” but only Raymond Kwok was acquitted. He walks free whilst the other four men embark on lengthy jail terms. The outcome in this case highlights Hong Kong’s tough stance on bribery, and the Department of Justice’s increased willingness to prosecute both passive (demand side) and active (supply side) acts of corruption. These recent high profile prosecutions on the supply side indicate that private individuals who offer bribes are at risk of being prosecuted, not just (typically) their public sector recipients.

For more information, see the ICAC’s press release.

 

UK Court of Appeal allows private LIBOR claims to proceed

An issue which has in recent years been on the agenda of financial regulators globally is the potential manipulation or fixing of the London InterBank Offered Rate (“LIBOR”) and similar rates, by financial institutions.  Given that the LIBOR and similar rates are used as interest rate benchmarks for a broad range of financial instruments, the rate-fixing phenomenon has sparked widespread investigation and regulatory action, as well as litigation.

On the litigation front, the UK Court of Appeal has recently allowed parties in two actions to amend their pleadings to include allegations that their opposing parties, being LIBOR panel banks, had made implied representations as to the integrity of the LIBOR.  The parties had sought to amend their pleadings following alleged regulatory investigation and (in one case) findings by regulators in relation to the panel banks’ alleged manipulation of the LIBOR.

Although the decision relates to a preliminary matter (amendment of pleadings before trial), it is not a welcome decision for the panel banks in question.  The panel bank in one of the actions has since applied for permission to further appeal the decision to the Supreme Court (the final appeal court in the UK).  Hence, the legal position remains to be confirmed. Continue reading

Hong Kong Court of Final Appeal rules on privilege against self-incrimination in anti- corruption investigations

In the decision in A v The Commissioner of the Independant Commission Against Corruption [2012] HKCFA 79 handed down on 13 November 2012 the Court of Final Appeal in Hong Kong (CFA) held that a non-suspect party which was required to provide information and documentation in the course of an investigation conducted under the Prevention of Bribery Ordinance (the POBO) could not invoke the privilege against self-incrimination. However, the CFA also set out the very limited use to which material obtained under a compulsory POBO notice may be put. This judgment provides important clarification in an evolving area of law which will be of concern to individuals subjected to or involved in investigations by the Independent Commission Against Corruption (the ICAC) under the POBO and is likely to have wider implications for investigations more generally and the important questions as to the extent to which privilege (including legal professional privilege) may be invoked in investigations and how material obtained by compulsion may be used. Kyle Wombolt and Tim Mak  analyse the decision below. Continue reading

Court of Appeal rules partial waiver of privilege recognised in Hong Kong

In Citic Pacific Limited v Secretary for Justice (unrep, CACV 60/2011), the Court of Appeal considered the legal principles relating to the nature and extent of legal professional privilege, and held that the concept of partial waiver of privilege is recognised under Hong Kong law. In the regulatory context, this important decision is a reminder that when handing over documents to regulators in regulatory investigations, it must be clearly stated in writing that any waiver of privilege is limited to the purposes of the investigation alone. This step should prevent any inadvertent waiver of privilege where documents in question are sought by third parties for some other purpose such as a criminal investigation. Mark Johnson, Gavin Lewis and Gareth Thomas analyse the decision below. Continue reading