Minutes of the Fifth Meeting of the Bills Committee to study
the Prevention of Bribery (Miscellaneous Provisions)(No.2) Bill 1995

Internal discussion

Members noted the actual number of requests for access to tax records made under the provisions of the Drug Trafficking (Recovery of Proceeds) Ordinance (DTO) and the Organised and Serious Crimes Ordinance (OSCO), which had been issued vide LegCo Paper No. HB361/95-96.

2. ICAC had prepared a speaking note for Commissioner of ICAC on points raised by Members during the third meeting on 1 December 1995 and an explanatory note on the interpretation of "closeness of relationship and other circumstances" in section 10 of Prevention of Bribery Ordinance (POBO). They were tabled at the meeting for Members’ reference and subsequently issued to Members not present vide LegCo Paper No. HB 385/95-96.

Meeting with the Administration

Legal Adviser’s note (LegCo Paper No. LS50/95-96)

3. Legal Adviser (LA) had undertaken to study the two charts prepared by ICAC, which compared the existing powers given to ICAC under the POBO and the ICACO respectively with those given to the Inland Revenue Department (IRD) under the provisions of the IRO. He had subsequently set out his views on these two charts in the note to Members (issued vide LegCo Paper No. LS50/95-96) which was then tabled for reference of the representatives of the AGC and ICAC at the meeting. Acting LA highlighted that there were two powers which the Commissioner of Inland Revenue had which were not listed in the charts, powers which the ICAC had not been asked to cite. The powers were : (a) requiring returns (section 51(1) and (3) of the IRO) and (b) requiring relevant third parties to furnish information/documents concerning a taxpayer (section 51(4) of the IRO).

4. The Chairman asked why it was necessary for the ICAC to gain access to tax records since it already possessed a power to obtain such information under the provisions of section 14 of POBO. Mr R ALLCOCK gave the following possible reasons :

1. ICAC could cross-check the information obtained under section 14 with the tax records;
2. ICAC might not be able to contact the relevant third party or to identify the third party at the early stage of the investigation;
3. ICAC might not want to alert anybody of the investigation; and
4. the third party might have forgotten the information or might not possess such information anymore.

Necessity for ICAC to make access to IRD tax records

5. Mr C J KERSHAW briefed Members on the necessity of ICAC having access to IRD tax records, as set out in the speaking note mentioned in para. 2 above. He pointed out the singularity of corruption investigations which was to establish money and pursue as trail, and this required access to records. Mr B E D de SPEVILLE also drew Members’ attention to the fact that that there had been 22 corruption complaints against IRD staff over the past five years and such cases could not be competently pursued without access to IRD records.

6. Mrs Selina CHOW suggested that it would be more desirable if the Commissioner of Inland Revenue (CIR) was appointed to approve or disapprove the ICAC’s request to have access to the tax records. Mr J E BUCKLE remarked that it would not be proper for ICAC to reveal information to the CIR. It was possible too that CIR might not approve unless the offence being investigated was related to possible losses to revenue. Mr KERSHAW further pointed out that the accused could cite the secrecy provision of section 4 of the IRO to prevent the presentation of tax records as evidence against him in court.

Statutory guidelines to protect the confidentiality of tax records

7. Mr Eric LI maintained that the privacy right of innocent tax-payers and the confidentiality of tax records, particularly those relating to commercial secrets, which were protected by the secrecy provision, should not be infringed. Mr Buckle however pointed out that innocent parties might also be affected in all criminal investigations. Mr Andrew CHENG supported this view. Mr Buckle then said that only material of evidential value would be presented in court.

8. Mr ALLCOCK reiterated that the High Court had to have reasonable grounds for believing that granting ICAC access to tax records would be in the public interest. The importance of tax confidentiality would be considered and there would be only few such applications per year. In this connection, Mrs Selina CHOW and Mr Albert HO suggested that, in the light of the secrecy provision (section 4 of the IRO), statutory guidelines should be set down to circumscribe the situations under which the Court could make an Order to the IRD to produce tax records to the ICAC or to enable access of such records by the ICAC. Mr Eric LI shared their view and added that there should be a closed court session for the innocent tax-payers or the affected parties to present their case against the production of information as evidence publicly. Mr ALLCOCK agreed to consider Members’ suggestions.

9. Mr Andrew CHENG then cautioned the meeting that it might be against the principle of fairness if it was proposed to protect the interest of tax-payers by way of setting down such statutory guidelines. Mr Ambrose LAU also opined that section 13A had already built in sufficient protection to avoid the rights of innocent third party being infringed. The court should therefore be entrusted and have the discretion to perform such balancing act.

Adm

10. Mr Buckle added that restrictions on the admissibility of IRD information would affect the defendant as well and could be an impediment to the defence or reason for claiming there had not been a fair trial. Acting LA also drew Members’ attention to the fact that rules of evidence relating to the admissibility of information or material applicable to court proceedings were well defined in the Evidence Ordinance and the common law.

Internal guidelines for ICAC on application under section 13A

11. In response to Mr Eric LI’ suggestion, the Administration agreed to consider whether ICAC would draw up written internal guidelines to circumscribe the situations in respect of which their officers could apply to the Court for an Order for IRD to release tax records to them. In this regard, the Chairman also asked the Administration to consider the practice of some overseas countries which was that access to tax records was allowed only when all other avenues to obtain such information had failed.

Adm

Adm

Interpretation on "closeness of relationship and other circumstances"

12. The Chairman invited and Mr KERSHAW highlighted that there was no exhaustive definition of the term "closeness of relationship" which would stretch beyond blood or martial relationship. The same applied to "other circumstances". It would be up to the court to decide whether a relationship could be established and to conclude whether the assets were under the control of the suspect.

13. The Chairman asked and Mr ALLCOCK agreed to revert to the Bills Committee, after discussion with the Prosecutions Division of AGC, as to whether the court would allow a two-stage approach in respect of section 10(2) presumption cases in which both the prosecution and the accused could address the court.

Adm

14. The Chairman then expressed his concern that the burden might be too heavy on the accused to rebut the presumption if the wealth of his relative was amassed from illegal activities. Also, the accused had no investigative power as possessed by ICAC. Mr ALLCOCK responded that the proposed amendment had already relieved the defendant of the burden of proof. Under the amendment, the presumption would be rebutted by ‘evidence to the contrary’. Mr ALLCOCK also drew Members’ attention to the Court of Appeal’s judgement in the case of Attorney General v HUI Kin-hong which emphasised the value and fairness of section 10(1) of POBO. A copy of the judgement would be provided for Members’ reference. The Chairman held the view that there should be a comprehensive review of section 10 despite the proposed amendment. However, Mr Andrew CHENG opined that he was satisfied with the proposed amendment as the defendant’s burden to prove the contrary had been relieved.

Adm

15. Mr Albert HO queried whether the proposed amendment would render section 10 meaningless if any evidence provided by the accused would be accepted as evidence to the contrary. In this connection, Mrs Selina CHOW asked and Mr Buckle confirmed that evidence could still be judged on its own even if the presumption did not stand.

16. At the Chairman’s request, the Administration would confirm whether the period for section 10(1) cases to be traced back was limited to 7 years. Mr Buckle also undertook to provide details of past conviction cases arising from section 10(1)(b).

Adm
ICAC

17. At Members’ request, the Administration would respond to the following points in writing :

1. the judicial interpretation of the terms "in the absence of evidence to the contrary" and "until the contrary is proved";
2. whether the proposed amendment would shift the burden of proof from the defendant to the prosecution; and
3. whether the proposed amendment would make any actual differences?

Adm

18. The meeting ended at 10:40 a.m..

19. The next meeting would be held on 5 January 1996 at 8:30 a.m. as previously scheduled.

LegCo Secretariat
22 January 1996