[1987] HKLR
CA
LEGAL DEPT 852-5-8690236
500 F06/14
Attorney General v. Mohamed Hashim Shamsudin (Cons, V.-P.)
829
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made by banks to approved financial institutions by way of short-term loans without security. The company designated to receive such loans was not an approved financial institution. The Bank was thus deliberately misled as to the true nature of the advances which, in consequence, were made without investigation of the status of the borrowing company or of its ability to repay. The respondent also agreed to accept post-dated cheques from the controlling director of the group so as to suggest to the auditors of the Finance Company that some security had been obtained. The cheques were in fact returned to the director and never presented for payment. Pursuant to this arrangement the US$97 million mentioned in the first count were released in seven tranches between 20th January and 17th February 1982 and of these monies the same director received US$3 million personally. In approving and allowing such advances to be made the respondent was party to a dishonest agreement to defraud the Finance Company and the Bank of the US$97 million.
On 6th October of the same year the group of companies announced to the public that it was experiencing liquidity problems and declared a moratorium on payment of its debis. A rescue scheme was proposed which required the controlling director to establish a HK$250 million fund from which the day to day operating expenses of the principal holding company might be met. He was unable, or unwilling, so to do and it was proposed as an alternative that the Finance Company should try to advance the HK$250 million by way of a money market loan to 1. Chinese bank, which in turn would advance an equivalent sum to one of the companies of the group; a transaction known as a “back to back" loan. The respondent was aware that the Finance Company was already owed over US$600 million by the group, and that a recently formed supervisory committee. of the Bank had specifically refused any further advances to the group. Nevertheless it was finally arranged that the Finance Company should make another simulated money market loan of US$38.5 million to the Bank of Communications, which would advance HK$250 million to one of the companies of the group. The respondent knew that the transaction. was a sham. The Bank of Communications acted merely as an agent of the Finance Company, albeit documentation was created at the instance of the respondent and others which disguised this fact from the Head Office of the Bank. On 9th February 1983 the transaction went through prior to the execution of the spurious documentation and G without security.
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Although US$38.5 million was the price of the HK$250 million required for the rescue scheme the controlling director of the group insisted on the advance of a further US$1.5 million to another of his companies n aking US$40 million in all. As the respondent was aware, this payment also was made without the knowledge or authority of the Bank.
Coming to counts three and four the respondent admitted corruptly receiving two sums of money from the group, namely HK513,726,680 in September 1981 and HK$2 million in May 1982. These payments were made to him as a director both of the Finance Company and of the Bank. The money was received without the knowledge or permission of either company and its receipt was contrary to the internal standing instructions of both and, of ! ! course, contrary to law.
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The sum of HK$13,726,680 was deposited on 8th September 1981 with Silver Present Ltd., a company incorporated in Hong Kong and beneficially owned and controlled by the respondent and his wife. Of this sum the respondent received beneficially HK$8,144,602.61. On 23rd April 1982 another of the group companies placed HK$2,079,907.77 on deposit with the Finance Company. During the following month, at the respondent's request, the controlling director authorised the exchange of HK$2 million thereof into US$346,620.45
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