XN000022-1996-11-20 — Page 19

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An additional problem is that the common law offence of conspiracy to defraud is so wide that it may cover almost every offence in the Theft Ordinance, and conduct which perhaps ought not to be criminal at all. The width of the offence has also been criticised insofar as it enables the prosecution to charge a person with conspiracy instead of with a substantive offence. This can materially affect the way the trial is conducted.

The Law Reform Commission noted in their report on the "Creation of a Substantive Offence of Fraud" that a number of jurisdictions, including Canada, Scotland and South Africa, have had a general offence of fraud for many years. Their experience is that it works well, and can readily be understood by laymen and lawyers alike. The Law Reform Commission report concluded that a general offence of fraud should be enacted in Hong Kong.

The Commission further recommended that once a general offence of fraud is created, any prosecution for conspiracy to defraud should be a prosecution for conspiracy to commit that general offence and the existing common law offence should be abolished.

Before the Law Reform Commission published its report, a consultation exercise was conducted. The overwhelming majority of those who responded to the Commission's consultation paper agreed with the recommendations. Following the publication of the Commission's report, the Bar Association and the Law Society have been consulted. Both support the recommendations.

The Administration also accepts the Law Reform Commission's recommendations. A new offence of fraud would remedy the deficiencies and shortcomings in the existing law, would correspond to what most people believe should be the law, would be a welcome addition in the fight against crime and would add to Hong Kong's reputation as an international financial centre.

Let me now turn to the Bill. Clause 2 creates the offence of fraud. The offence will be committed when a person by deceit induces another to act or to make an omission resulting either in prejudice, or a substantial risk of prejudice, to another, or benefit to the fraudster or another. The advantage of the new offence is that it would enable conduct to be properly charged as a substantive offence against an individual acting alone, without the necessity of involving another participant. The new offence would also avoid the artificiality of charging a person with conspiracy to defraud where the fraud has actually been committed and the fraudster has achieved his ends. The new offence would place fraudulent conduct within more precise bounds by tying it to deceit rather than dishonesty.