3 March, 2013

 

An Evening With The Director Of Public Prosecutions.

 
I was lucky enough to snag an invite for a cocktail evening hosted by Oldham, Li &Nie at the Hong Kong Club. Their guest speaker was Kevin P. Zervos, who has served as the Director of Public Prosecutions in Hong Kong (DPP) under the Department of Justice since 2011.  His timely topic was entitled “Compliance and Corruption Across Asia”.

 

Zervos, a compelling speaker, began his talk by emphasizing the importance of independence, both in his role and in the Department of Justice as a whole.  Having worked in a number of jurisdictions, Zervos believes our Independent Commission Against Corruption (ICAC) to be amongst the best, if not the best agency in the world for fighting corruption, as it is independent from the Hong Kong Civil Service and a specialist anti-corruption agency which deals with the criminality of corruption as well as the social problem.

 

Zervos is not in favour of combining investigatory and prosecutorial responsibilities – he sees the decision to prosecute as one that should solely to be made by the prosecution authority. Zervos often receives requests from Napoleonic code countries to investigate matters and continues to believe it is not appropriate for a prosecution service to conduct investigations.

 

Sadly Zervos also reveals the reality of the “all mighty State” as a myth.  In truth he is limited by budgets, resources and having to handle a voluminous 300-500 cases per year (with only 120 lawyers on staff) whilst he sees defendants often having unlimited resources at their disposal with a dedicated team of lawyers. 

 

The definition of white collar crime has been crystallized by the US Federal Bureau of Investigation (FBI) as “lying, cheating or stealing” and includes both the public and private sectors. He referred to the offence of Misconduct in Public Office which has a a broad based definition and could include, for example, cases of non-bribery.  Zervos can remember in particular a drug testing case with respect to officials who used their own urine for convenience purposes rather than actually testing the urine of the subjects they were supposed to test.

 

In respect of combating money laundering and terrorist financing, the Financial Action Task Force (the FATF) is the inter-governmental body that issues policies and recommendations. In Hong Kong a criminal conviction must precede the confiscation of assets.  This is unlike most other jurisdictions where there is only a civil standard to overcome.

 

In Hong Kong the three key pieces of anti-corruption legislation are The Prevention of Bribery Ordinance Cap 201 (1971), the Independent Commission Against Corruption Ordinance Cap 204 (1974) and The Elections (Corrupt and Illegal Conduct) Ordinance Cap 554 (2000).  

 

In respect of anti-money laundering, the predominant obligation is on customer due diligence when dealing with suspicious or substantial of funds. Under legislation enacted in 2012, Schedule 2 of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance Cap 614 (2012) (AMLO) specifies that record keeping and customer due diligence requirements cover all financial institutions including securities companies, insurance companies, money exchangers/remittance agents and banks.

 

Section 25A of the AMLO details the offence of failing to disclose and report any knowledge or even suspicion that property in Hong Kong may be connected with an indictable offence.  The substance of the evidence is only the state of mind of the person who failed to disclose suspicious proceeds.  There is no link between actual proceeds of crime and a successful prosecution under Section 25A. 

 

For example, Zervos described a sting operation whereby a US Treasury agent disguised himself as a Russian mobster in Hong Kong.  Even though there was never any Russian mob money, there did exist a conspiracy an inchoate crime, (HKSAR v Wong, Ping Shui Adam [2001] 1 HKC 600), which was enough to proceed with a conviction (HKSAR v Wong, Ping Shui Adam [2001] 1 HKC 600). 

 

In another case described by Zervos, a Hong Kong soccer team travelled to Bangkok to compete and whilst there, some of the Hong Kong soccer players made bets and deliberately threw the game.  The players could not be prosecuted in Hong Kong for gambling as the betting was done in Bangkok.  Instead the AMLO was used to prosecute for the offence of money laundering when they brought back to Hong Kong the proceeds of their crime. 

 

Zervos ended his talk by concluding that the world’s criminals are becoming more savvy and more international with respect to technical and electronic matters.  As a result, specialists with special skills working within an international body are required to combat corruption.  (Unfortunately the International Criminal Court focuses only on war crimes and the US is not a signatory.)

 

Increasing global cooperation is the only effective way to combat corruption, particularly through organizations such as FATF which publishes a list of blacklisted countries.  This in itself is an effective deterrent against complacency.

 

In that regard the DPP has hosted a number of outreach programs where professionals from counterpart agencies around the world have trained in Hong Kong within the DPP’s office. Zervos believes that such mutual assistance is the only way forward in an increasingly complex criminal world.

 

Zervos noted the irony that white collar criminals also wish to entrust their assets in established financial institutions within stable jurisdictions, where financial systems are secure.  Criminals also desire financial security and Hong Kong is one of the most desirable jurisdictions in the world in that regard.

 

Zervos ended the evening by stating once again the DPP welcomes feedback from the Hong Kong public and wants to hear the public’s concerns.

 

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This article was supplied by Helena Hu

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