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Following is the speech by the Secretary for Justice, Ms Elsie Leung in moving the Resumption of the Second Reading of the Theft (Amendment) Bill 1998 in the Legislative Council today (Wednesday):

Madam President,

On 2 December 1998, I introduced the Theft (Amendment) Bill 1998 into this Council. The Bill aims to improve the existing law in respect of fraud-related crimes by creating a new statutory offence of fraud. The Bill also provides for the retention of the existing common law offence of conspiracy to defraud.

The new offence to be created will be committed when a person by deceit induces another to act or to make an omission resulting either in prejudice or a substantial risk of prejudice to another, or benefit to the fraudster or another. The sentence for the new offence of fraud is 14 years imprisonment, which is the same as that for the existing common law offence of conspiracy to defraud.

I am most grateful to members of the Bills Committee and its Chairman - the Honourable Miriam Lau - for studying the Bill with expedition and care.

Before I deal with certain questions arising out of the Bill, I would like to reiterate the Administration's position in relation to the Legislative Council Rules of Procedure. The Administration has reservations on the Legislative Council Rules of Procedure with regard to the application of certain Basic Law provisions in the operation of this Council. Without prejudice to the Administration's position on this issue, we have decided to resume the Second Reading and Debate of this Bill in order not to delay the implementation of the proposals made under the Bill.

Scope of the Offence

Let me now turn to the major concerns addressed in the meetings of the Bills Committee. As proposed under the Bill, the new offence will cover both proprietary or financial gain or loss and non-proprietary or non-financial gain or loss. After detailed deliberations, the Bills Committee has suggested that the new offence of fraud be restricted to proprietary or financial gain or loss. The Bills Committee holds strongly the view that it would be rare that a deceit under the new offence of fraud would not involve a proprietary or financial gain or loss. It would therefore not be necessary to create an offence which would cover proprietary or financial gain or loss as well as non-proprietary or non-financial gain or loss. We accept that the views of the Bills Committee and agree with the proposal to restrict the new offence of fraud to proprietary or financial gain or loss only. I shall move an amendment to Clause 3 of the Bill accordingly.

Retention of Conspiracy to Defraud

The Bills Committee has also expressed concern about the proposed retention of the common law offence of conspiracy to defraud. The Administration is of the view that the law of fraud would be defective if the common law offence of conspiracy to defraud were repealed since the new offence of fraud would not cover cases where no deceit is involved, for example, directors of a company put the company funds at risk by making a loan other than on a commercial basis and hence prejudicing the company's interest. After careful consideration, the Bills Committee has accepted that the common law offence of conspiracy to defraud should be retained as proposed under the Bill.

Definition of "Deceit"

One of the principal elements of the new offence is that the offending act is committed by deceit which is defined in the Bill. The Bills Committee holds a different view on the definition of "deceit" as proposed in the Bill. While the Bills Committee agrees that the words "relating to the past, the present or the future" should be included in the definition of "deceit" under the Bill, it disagrees with the Administration that the words "or opinions" should also be included, notwithstanding the fact that the same are provided for in a similar definition of "deception" under section 17 of the Theft Ordinance. Members of the Bills Committee do not see the need or merit of covering those situations in which a person expresses an opinion merely as "traders puff". The Bills Committee also notes the view of the Law Reform Commission that opinions expressed in the context of commercial activities are matters better left to consumer protection measures.

As explained in the Bills Committee meetings, the Administration holds the view that the words "or opinions" should be retained in the definition of "deceit". In an international commercial centre such as Hong Kong, opinions of experts in a particular field are essential for the satisfactory transaction of business. It is considered that persons making such opinions knowing that they were false should be criminally liable.

Furthermore, the Theft Ordinance contains offences of deception, under which "deception" covers deception relating to opinions. These offences have operated most effectively since their inception. The proposed new offence of fraud essentially shares the same elements as other deception offences in the Theft Ordinance and it is important to ensure consistency between the definition of "deceit" and the definition of "deception" within the same Ordinance.

Regarding mere "traders puff" or casual opinions about which the Bills Committee expresses concern, the Administration considers that if they are made in good faith, they would not be caught by the new offence of fraud since the onus would be on the Prosecution to prove beyond a reasonable doubt that the erroneous opinion was intentionally made in the knowledge that it was false.

We consider that it is necessary to criminalise false opinions made knowingly and it is important to ensure consistency between the definition of "deceit" and the definition of "deception" within the Theft Ordinance. For these reasons, the Administration remains opposed to the deletion of the words "or opinions" which will be the subject matter of a Committee Stage Amendment to be moved by the Honourable Miriam Lau.

As I said in my speech introducing the Bill into this Council, we would be able to deal more effectively with all types of fraud and hence to help enhance Hong Kong's position as the leading financial centre in the region once the new offence is created.

Madam President, with these remarks and subject to the amendments that I shall move, I commend the Bill to Honourable Members.

End/Wednesday, July 7, 1999

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