In the early 1980s, unknown to the chief accountant, a cheque-kiting cycle was operated by an associate of a Hong Kong bank‘s managing director. In 1982, after the bank had itself purchased US dollar cheques in the cycle, a rumour caused a run on the bank; the managing director ordered the purchase of US$ cheques to stop; but the bank’s cheques then in circulation (in amounts in excess of the bank’s assets) were dishonoured.

The chief accountant didn’t report the cheques’ dishonour to the relevant authorities nor did he make the required entries in the bank’s computerised ledgers, thereby giving a false picture of the bank’s balances.  He was charged with conspiring with the managing director and others to defraud the bank; its existing and potential shareholders, creditors and depositors, by dishonestly concealing the bank’s true balances. His defence was that he’d acted in the best interests of the bank (avoiding a second run) and received no personal benefit.

He was convicted.  The Judge directed the jury that, in order to establish the mental element of conspiracy to defraud, the imperilling of an economic interest was sufficient to establish fraud, regardless of the accused’s motive.  He appealed all the way to the Privy Council (PC) who, in 1991 (Wai Yu-Tsang v R) in dismissing his appeal, reviewed mens rea in conspiracy to defraud as follows (head note):  

 Held – The question whether particular facts revealed a conspiracy to defraud depended on what the conspirators had dishonestly agreed to do, and in particular whether they had agreed to practice a fraud on somebody. It was sufficient that the conspirators dishonestly agreed to bring about a state of affairs which they realised would or might deceive the victim into so acting or failing to act that he would suffer economic loss or his economic interests would be put at risk….”

The conviction was upheld.  This is what I was hinting to our earnest D.P.P. (see God Can’t Save St Richard; September 29) when I wrote “There’s no magic to criminal intent and no burden on the prosecution to read anyone’s mind. If you consciously set out to break the law and do, in fact, break the law, that right there is criminal intent. Your motive (to benefit constituents) is irrelevant…

In the Wai Yu-Tsang case, one Law Lord specifically compared the situation to cases of persons performing public duties where, the Learned Law Lord opined, it’s not necessary to show an intention on the part of the deceiver to inflict pecuniary or economic harm before such a person can be convicted of an intention to defraud.  This was affirming Lord Radcliffe’s view in Welham v DPP [1960] 1 All ER 805, 808 and casting doubt on Lord Diplock’s contrary dictum in Scott v Metropolitan Police Commissioner [1974] 3 All ER 1032, 1040. 

Yet the DPP relied heavily on Scott’s case (1974) and only cited Wai Yu-Tsang in passing as if it simply affirmed Scott when in fact Wai Yu-Tsang cast doubt on Scott.  As a (PC decision, (Scott is a House of Lords case), we’re bound by Wai Yu-Tsang.  She also misquoted R v Allsop by leaving out a key word thus converting a general rule to one appearing all encompassing.  The correct quote is “generally, the primary objective of fraudsmen is…incidental”.  In her release, she omitted “generally”. In any event, Allsop was a (barely acceptable) UK Court of Appeal decision.  The DPP ought to be concentrating on the PC’s Wai Yu-Tsang.

Fraudster’s benefits are sometimes obscure but it’s doubtful a person who deliberately conspires to defraud another doesn’t have a hidden benefit somewhere.  Why should prosecutors have to rummage around for  it?

It’s the same in Canada.  In R v Theroux [1993] 2 SCR 5, the directing mind   of a Canadian residential construction company, was convicted of fraud after his company took deposits on a false representation they were insured. The company became insolvent; the project wasn’t completed; and most depositors lost their money.  He appealed to the Supreme Court who held :

“…The mens rea of fraud is established by proof of subjective knowledge of the prohibited act, and by proof of subjective knowledge that the prohibited act could deprive another…..

DPP, do these legal principles apply only to accountants and building contractors or are politicians also accountable?  Why won’t you ask a jury if Richard Azan has conspired to defraud the Parish Council based on the clear, undisputed facts established by the Contractor General’s investigation?                                  

Peace and Love


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