DS kept up his resistance in the hope that he could escape a jail term by exhausting all appeal procedures. His defence lawyer made a further appeal to the Court of Appeal on 8 November 1977, arguing this time that the words in Section 10 of PBO “any person, who having been a government employee” were intended to apply only to a person who became a government employee “after the Ordinance came into force”. The law should not have a retrospective effect.
On 23 November, the three trial judges unanimously rejected the appeal. The burden of their judgement was that the intent of the provision was to permit employees to be pursued under the law even though they had by then left Government employment. The wording of the ordinance was very clear and the clause in question included the word “before” as well as the word “after”. A police officer was evidently a “government employee” and therefore DS was bound by Section 10 of the PBO. Faced with this setback, DS persisted. He took the appeal to the Privy Council*. In November 1978, the Privy Council rejected the appeal, reaffirmed that the appellant was indeed bound by Section 10 of the PBO.
On 17 October 1978, the Department of Justice agreed to prosecute DS in the light of the ICAC investigation report. He was immediately arrested by the ICAC, and appeared before a magistrate the same day on charges that between 1951 and 15 May 1971, his wealth was disproportionate to his official emoluments under Section 10 of the PBO. He denied the charges.
Taking into account the seriousness of the case and the possibility that he might flee Hong Kong, he was allowed out pending trial only after a huge sum of bail had been set. The bail consisted of $1 million in cash, a surety of $2 million from his brother, and property in his wife’s name forming a guarantee worth $12.95 million.
*Today, this has been replaced by the Court of Final Appeal.
The case was tried at the district court in March 1979. Now at the end of his tether, the detective sergeant, through his defence lawyer, twice told the court that he was willing to surrender $16 million in exchange for a suspended sentence.
The ICAC officers were however well prepared for the fierce court battle. “As it eventually turned out to be impossible to either prove or disprove that he had earned big money from his wartime ventures,” says the case officer, “we took a different tack, looking instead into the prevailing exchange rates.”
The prosecution asked financial and academic experts, including the bills department manager of Hang Lung Bank, who had worked in the banking sector both during and after the war, and a professor at the Centre of Asian Studies at the University of Hong Kong, to give testimonies in court as expert witnesses.
According to these experts, between 1942 and 1945, i.e. from the Japanese occupation of Hong Kong till the Japanese surrender, the exchange rate between silver dollars and Hong Kong dollars was subject to such fluctuations that no banks would operate any exchange department. Currency could thus be exchanged only at local money changers and no official exchange rate was ever quoted. For example, in September and October of 1945, 10,000 silver dollars could be exchanged for anything between HK$15 and HK$16. By the experts’ estimation, if the accused had held 13.4 million silver dollars in 1945, they could have been exchanged for at most some HK$21,000.
The experts agreed that in 1949 it was possible to purchase land using Gold Yuan. Land costing 50 million Gold Yuan would have been worth around HK$150,000 according to the then prevailing conversion rate-nowhere near the HK$500,000 claimed by the defence.
After weighing the expert evidence concerning exchange values, the court found it impossible to believe that the accused could have earned such prodigious wealth from his wartime exploits. The judge opined that in order to maintain social justice, DS should be imprisoned if he were convicted. His defence lawyer immediately rescinded the offer of $16 million that had been made in exchange for a suspended sentence.
In May 1979, he was allowed out again on a huge court bail. This time it consisted of $1 million in cash, a surety of $2 million and a guarantee of $13 million from his wife, $12 million of which had to be deposited with a bank. Changes could only be made with the court’s consent.
According to statements provided by DS, he and his wife kept on investing and accumulating wealth after earning their first pot of gold. The trial judge asked why he returned to the police force if he already possessed such considerable wealth. Even if he was really interested in police work, fond of firearms and wished to serve the community as claimed, he had not explained why as a wealthy man he would choose to accept a police constable’s meagre salary of around $50 per month.
A meticulous analysis of the information furnished by DS showed that the largest single investment he made between 1946 and 1960 amounted to only HK$80,000 and that the total sum he invested over those years was under HK$400,000. It was hard to believe that his rapidly increasing wealth could have been purely the result of investments.
He had told the Anti-Corruption Branch in 1968 that he had sold four or five vehicles to obtain cash during the war. In 1977, however, he had told the ICAC that he had traded only two vehicles. Such inconsistency caused the court to cast doubt on his integrity.
Another key defence point was his claim that his wife had amassed the assets under her name through her own investments. The assets belonged to her and should therefore not be included in his assets. The ICAC countered that the role of his wife was merely to conceal the true nature of the accounts; the assets were in fact being controlled backstage by DS himself, and in the end his wife’s bank deposits were fully transferred to him.
A will produced in court as evidence stated that DS’s wife would obtain one sixth of his assets upon his death, but that he would obtain 55 percent of his wife’s assets upon her death, with 30 percent of her assets going eventually to the two children he had fathered on his girlfriend. Although his wife admitted in court that her husband’s extramarital affair had destroyed her relationship with him, the judge believed that the apparently extraordinary provisions of the will would make sense only if the property allegedly owned by her was not actually hers.
On 29 June 1979, judgement was handed down. The judge took the view that DS’s explanation of his wealth was untrustworthy and refused to accept the defence claim that he possessed assets of only around $3.2 million.
According to the evidence submitted by the prosecution, as at 15 May 1971, his official emoluments including his pension amounted to some $228,000 while the total value of assets controlled by him was over $9 million in 1978 money, most of which were held under the name of his wife and children. The prosecution reckoned that the value of the liquid assets that he owned had risen to approximately $30 million by the time the case came to judgement. Even if the estimated value was to be discounted by 15 percent the defendant possessed assets worth around $25.5 million. After deductions of some still mortgaged properties worth around $4 million, he possessed around $21.5 million in liquid assets.
Under Section 10 of the PBO, DS was convicted of the offence of, being a Government employee, possessing unexplained wealth. He was sentenced to two years’ immediate imprisonment and confiscation of $16 million, $12 million of which had to be paid at once with the remaining $4 million to be paid within nine months after sentencing. He lodged an appeal upon hearing the sentence but this was rejected and the original sentence was upheld.
He paid the required immediate fine of $12 million at one go by cash cheque, proving his ready access to very real wealth. This huge sum was a record among similar cases.
For some three years, ICAC officers had worked on this case night and day in search of clues, poring over minutely detailed and even trivial records and sorting out complex information suitable for submission to the courts. Their professionalism won praise from the court.
The ICAC used Section 10 of the PBO to successfully have this corrupt detective sergeant sent to jail. Yet not all corrupt officials were brought to justice.
Although a few fish had managed to escape the net, the ICAC continued to charge ahead with its prescribed duties, demonstrating to the public that corruption crime would be vigorously pursued.
In 2006, the ICAC recovered $140 million of corruptly derived estate, through civil proceedings lasting for six years, of a deceased staff sergeant—yet another landmark of ICAC’s versatility, perseverance and professionalism.