HONG KONG SAR, CHINA Law and Practice Contributed by: George Lamplough, Vanessa Cheng and Curtis Pak, Holman Fenwick Willan
Holman Fenwick Willan 22nd Floor Alexandra House 18 Chater Road, Central Hong Kong SAR Tel: +852 3983 7788 Fax: +852 3983 7766 Email: reception.hongkong@hfw.com Web: www.hfw.com
1. Fraud Claims 1.1 General Characteristics of Fraud Claims It has been said that the many forms of fraud are as diverse as man’s infinite capacity to invent them (Grossman, 1993). Perhaps that is why in Hong Kong there is no overarching definition of “fraud” . The High Court of Hong Kong has described fraud as “a concept rather than a specific cause of action” , adding, “that is why one finds the word used in many and diverse cases, albeit as a shorthand expression, to refer to the different types of behaviour which are under scrutiny in each case” . Fraudulent activity may include deception, though that is not essential. There is usually financial loss to the victim, but not always. The elements of fraud are set out (though not specifi - cally defined) in the Theft Ordinance (Cap 210), which makes it a criminal offence to induce another person by deception and “with intent to defraud” to do anything that results in either a benefit or a prejudice to another person.
In the criminal jurisdiction, the legal concept of dishonesty is complex because it is analysed from both subjective and objective standards: R v Ghosh [1982] QB 1053. It is subjective in the sense that the question is asked whether the defendant realised at the time they were being dishonest, and objective in the sense that the question is asked whether they were acting dis - honestly according to the ordinary standards of reasonable behaviour. However, in the civil juris - diction, the test is largely objective – see Royal Brunei Airlines v Tan [1995] 2 AC 378. Fraud in Hong Kong In Hong Kong, fraud commonly involves the fab - rication or falsification of financial statements, which are either misrepresented or edited to omit key information. The goal is often to make a business appear more profitable than it is. To be convincing, the fraudster usually imple - ments a fake paper trail of underlying contracts, invoices and payment receipts. This may involve setting up a series of supposedly unrelated com - panies which act as the “suppliers” and “cus- tomers” of the company, giving the impression that funds are flowing through the business. Funds can even be recycled in “round-robin”
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