plaintiff:
- "HKSAR"
defendant:
- "MAK KWONG YIU (麥光耀)"
- "CHAN LAI YEE (陳麗兒)"
- "WONG SHUK ON (黃淑安)"
- "LEE YICK MING (李易明)"
jurisdiction_code: "HKCFA"
jurisdiction_name: "Court of Final Appeal of the Hong Kong Special Administrative Region"
case_location:
- "Hong Kong Special Administrative Region"
case_reason: >
  HKSAR appeals against the Court of Appeal's decision (CACC No. 239 of 2021) which set aside the District Court convictions of four defendants for conspiracy to defraud. The defendants, including an executive director of Convoy Financial Holdings Ltd (CFHL) and senior employees, were originally convicted of dishonestly concealing that Convoy Investment Services Ltd (CISL), a connected person to CFHL, was the actual placing agent for bond placements by interposing Gransing Securities Co Ltd as a purported placing agent, thereby circumventing Stock Exchange Listing Rules on connected transactions and causing CISL to receive approximately HK$50 million in commissions. The appeal concerns whether the placement/sub-placement arrangements constituted connected transactions and whether conflict of interest concealment alone suffices for conspiracy to defraud.
case_object:
- "restoration of criminal convictions for conspiracy to defraud"
- "commission payments totaling HK$49,600,680"
judgment_result:
- charge: "Appeal against Court of Appeal's decision setting aside conspiracy to defraud convictions (liability issue)"
  result: "Appeal allowed. The Court held that the placement/sub-placement arrangements were connected transactions under the Listing Rules when viewed realistically as composite transactions, applying the Ramsay principle of statutory construction. The Court also held that dishonest concealment of conflicts of interest, coupled with breach of disclosure duties, provided sufficient foundation for conspiracy to defraud convictions even without proving connected transactions. Convictions of all four defendants restored."
judgment_summary: >
  Between July 2014 and January 2015, CFHL issued four batches of bonds. D1 (executive director of CFHL) initially proposed appointing CISL as placing agent, but CISL was a connected person to CFHL due to indirect interests held by three CFHL executive directors totaling 28.41%. To circumvent connected transaction requirements under Listing Rules, D1 arranged for CFHL to appoint Gransing as placing agent, with Gransing immediately entering sub-placement agreements with CISL. CISL placed all bonds through consultants and received HK$50.8 million (98.5% of total commission). The Board was never informed of CISL's involvement, and annual reports falsely declared no directors' conflicts of interest.


  The core issues were: (1) whether the placement/sub-placement arrangements constituted connected transactions under the Listing Rules; (2) whether conflict of interest concealment alone could support conspiracy to defraud convictions; and (3) whether each defendant's conduct established the requisite dishonesty and participation in the conspiracy.


  The Court of Final Appeal applied the Ramsay principle of statutory construction from Collector of Stamp Revenue v Arrowtown Assets Ltd, holding that "transaction" in the Listing Rules should be construed purposively and realistically. Viewing the placement and sub-placement agreements as a composite transaction or series of inter-related steps, the Court found they constituted connected transactions between CFHL and CISL. The insertion of Gransing served no commercial purpose other than avoiding connected transaction rules and could be disregarded or viewed as part of a three-party arrangement where all parties understood CISL would place all bonds. The Court rejected the Court of Appeal's narrow interpretation requiring contracts directly "between" the listed issuer and connected person, and its erroneous reliance on the Snook test for sham transactions. Additionally, the Court held that dishonest concealment of conflicts of interest by three CFHL directors who held indirect interests in CISL, coupled with breach of fiduciary disclosure duties, independently supported the convictions. The concealment impeded the Board's ability to protect CFHL's interests and exposed the company to risk of economic loss through the HK$50 million commission payment. WhatsApp messages between D2 and D3 referring to Gransing as a "buffer" and stating "it will constitute CT if the agent is [CISL]" demonstrated their knowledge of the scheme. The Court found all defendants acted dishonestly with knowledge of the concealment and its implications.


  The Court allowed the appeal, set aside the Court of Appeal's judgment, and restored the District Court convictions of all four defendants for conspiracy to defraud CFHL, its Board, shareholders and potential investors (Charge 1), and conspiracy to defraud the Stock Exchange (Charge 3, D1-D3 only).
involved_entities:
- entity_name: "Convoy Financial Holdings Ltd (CFHL)"
  reason: "Listed company victim of the conspiracy, whose shares were listed on the Stock Exchange; entered into placement agreements with Gransing for bond issuances"
- entity_name: "Convoy Investment Services Ltd (CISL)"
  reason: "Connected person to CFHL; actual placing agent whose role was concealed; received HK$50.8 million in commissions; three CFHL executive directors held 28.41% indirect interest"
- entity_name: "Gransing Securities Co Ltd (Gransing)"
  reason: "Securities company interposed as purported placing agent to act as buffer and disguise CISL's actual role; received HK$51.5 million but paid 98.5% to CISL"
- entity_name: "Stock Exchange of Hong Kong Limited"
  reason: "Regulatory body and victim of Charge 3; responsible for administering Listing Rules on connected transactions; was impeded from performing supervisory duties due to concealment"
- entity_name: "Quincy Wong"
  reason: "Executive director of CFHL who held indirect interest in CISL; his shareholding made CISL a connected person to CFHL under Listing Rule 14A.07(4)"
- entity_name: "Rosetta Fong"
  reason: "Executive director of CFHL who held indirect interest in CISL along with Quincy Wong and D1"
- entity_name: "Mr Justice Ribeiro PJ"
  reason: "Permanent Judge of the Court of Final Appeal who agreed with the judgment; previously articulated in HKSAR v Cheng Chee Tock Theodore (No.2) that connected transaction rules aim to prevent insiders from causing companies to enter deals benefiting themselves to shareholders' detriment"
- entity_name: "Mr Justice Fok PJ"
  reason: "Permanent Judge of the Court of Final Appeal who agreed with the judgment"
- entity_name: "Mr Justice Lam PJ"
  reason: "Permanent Judge of the Court of Final Appeal who provided concurring judgment; held that the proper approach is to ask whether CISL's appointment as placing agent would be a connected transaction, and that concealment of CISL's role was unlawful regardless of whether the disguise arrangement itself constituted a connected transaction"
- entity_name: "Mr Justice Stock NPJ"
  reason: "Non-Permanent Judge of the Court of Final Appeal who provided concurring judgment; held that the agreements between CFHL, Gransing and CISL constituted one composite arrangement which, viewed realistically, was appointment of CISL as sole placing agent and therefore a connected transaction"
- entity_name: "Sir William Young NPJ"
  reason: "Non-Permanent Judge of the Court of Final Appeal who delivered the main judgment; analyzed the Listing Rules, applied the Ramsay principle from Arrowtown, and held that the placement/sub-placement arrangements were connected transactions when viewed realistically as composite transactions"
- entity_name: "Diplock LJ"
  reason: "Served as Lord Justice in Snook v London and West Riding Investments Ltd [1967] 2 QB 786, articulated the test for sham transactions; the Court of Final Appeal held the Court of Appeal erred in applying this test to the present case"
- entity_name: "Lord Jauncey of Tullichettle"
  reason: "Served as Law Lord in Adams v The Queen [1995] 1 WLR 52 (PC), responded to submission that breach of fiduciary duty does not constitute crime by distinguishing non-disclosure per se from dishonest concealment; judgment cited at paragraph 15"
- entity_name: "Chan PJ"
  reason: "Served as Chief Justice in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46, explained the Ramsay principle of statutory construction requiring purposive interpretation and realistic view of composite transactions; judgment cited at paragraph 6 of Arrowtown and applied in present case"
- entity_name: "Lewison J"
  reason: "Served as Judge in Berry v Revenue and Customs Commissioners [2011] UKUT 81 (TCC), articulated principles for viewing series of transactions as composite transaction including realistic view of facts; judgment cited at paragraph 30 and principles applied to present case"
- entity_name: "Sir Anthony Mason NPJ"
  reason: "Served as Non-Permanent Judge in Mo Yuk Ping v HKSAR (2000) 3 HKCFAR 390, described elements of conspiracy to defraud offence including dishonest means causing economic loss or impeding public duty; judgment cited at paragraph on conspiracy elements"
- entity_name: "Lord Leggatt"
  reason: "Served as Justice of the Supreme Court of the United Kingdom in R v Hayes; R v Palombo [2023] UKSC 30, discussed when conspiracy to defraud requires criminal means; judgment distinguished by the Court as not apposite to present case involving dishonest concealment"
