Justice ill-served by money laundering prosecutions

SCMP March 24 2013

Hong Kong prides itself on its rule of law, but its criminal justice system should meet the test that "the punishment fit the crime", whether applied through the police, the public prosecutions branch of the justice department, or judges through sentencing. By those tests, it appears to be deteriorating, much blame for which must surely be laid at the door of the Department of Justice public prosecutors who set the tone.

It is a grotesque injustice that the small cogs in alleged money laundering schemes are now not only being prosecuted, but are given sentences greater than almost any ever imposed on the biggest fraudsters Hong Kong has ever known.

In the past few months, one 22-year-old man of modest background was given 10½ years for money laundering and a 61-year-old public housing tenant received 10 years for a separate but similar offence.

These prosecutions and sentences bring the justice system into contempt. They show that Director of Public Prosecution Kevin Zervos and the judges handing out the sentences live in that comfortable world of elite official lawyers who have little idea of how and why Hong Kong's economy works, or of its relationship to the mainland and Macau.

They are, however, keen to show zeal in prosecuting such alleged offences and thereby claim that Hong Kong is fighting money laundering, without having to go after the real sources of the money allegedly being laundered, or requiring that authorities on the mainland or Macau take steps to identify the crimes. They doubtless recognise that bureaucrats subject to appointment by politicians operate within circumscribed limits and it is easier to go after nobodies in Hong Kong than party members on the mainland.

Nothing seems to have changed here since the Department of Justice opted not to prosecute well-connected publisher Sally Aw Sian for fraud for spurious "public interest" reasons.

Zervos defended government actions on money laundering in this newspaper last Thursday, by arguing that the jury concluded that the defendants had reasonable grounds to believe that the money transferred was the proceeds of a serious criminal offence. But how can anyone come to such a conclusion without being given any indication of the nature of such alleged criminal activity? For sure, a large number of small transfers would indicate a desire to avoid mainland exchange controls. But those are evaded in billions of dollars every week by mainland individuals and corporations.

As for a belief that crimes other than evasion of foreign exchange controls are concerned, I believe - as do most of my interlocutors in journalism and the financial world - that a significant percentage of Chinese billionaires, including those who sit on the National People's Congress, acquired their wealth through corruption, fraud or theft of public assets. Most of them in turn have acquired assets overseas or in Hong Kong by evading exchange controls or bribing officials to sign off on transfers.

Banks are now being obliged to report suspicions of money laundering and huge amounts of bureaucracy are often now involved even in simple trans-actions. But, surprise, surprise, the main culprits turn out not to be the billionaires but the old ladies wanting to make a few dollars by acting as intermediaries.

It is bad enough when mules used in drug trafficking get long sentences while scant effort is made to trace the masterminds. But at least the crime is identifiable. No such identification exists in the case of the money laundering sentences because the underlying crime, if any, was on the mainland and has never been reported or prosecuted.

The whole global anti-money-laundering effort is a mountain of hypocrisy instigated in the first instance by the US in its so-called "war on terror" and now supposedly used against drug profits. As a few carefully selected banks, including HSBC and Standard Chartered, have found to their cost, it is hard to mount a defence against demands that you must identify the source of funds. But, clearly, these laws do nothing to stop the daily flow of drugs and money across US borders by cartels.

Another distortion of criminal justice also operates against the disadvantaged to the benefit of their higher-income employers. I refer to the almost total non- enforcement of laws supposed to provide foreign domestic helpers with minimum income, working hours and living conditions. Any helper who complains or even threatens to complain that they are deprived of their rights is likely to face dismissal.

Those still paying off exorbitant fees extracted by agents are especially vulnerable. It would be relatively simple for the justice and immigration departments to stamp out these abuses, but clearly they have no interest in doing so.

In all the above cases, it is Hong Kong's self-respect for its social values and the rule of justice which are at stake. Zervos is in contempt of the principle of justice. The community deserves much better from government officials and the bench - and more awareness among politicians that there is more to human rights than democracy and that justice is the object of the rule of law.




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