Court told of Annells debts and attempted fraud

Tax consultant Deborah Annells a former president of Rotary and who once chaired the finance committee of the British Chamber of Commerce, yesterday appeared in the district court on charges of fraud and perverting the course of justice.

In a written opening statement prosecutor John Marray described how Annells attempted to secure office premises and to vary the terms of her bail in early 2014 by using a false memorandum of understanding which stated that Hong Kong based Zetland Fiduciary Group had agreed to buy her business, AzureTax for a sum of US$1 million. Subsequent police investigations, according to the prosecution, revealed that Zetland had agreed to pay HK$1 million for her business.

The 56 year old Annells yesterday pleaded not guilty before judge Eddie Yip Chor-man to one count of committing an act intended to pervert the course of justice, one of attempted fraud and one of possessing a false instrument.

The court heard how in November 2013 the landlord of AzureTax’s office premises in the Lippo Centre terminated the lease for non payment of rent, and secured a court judgment for vacant possession in March 2014. Marray’s statement said that Azure Tax still owes the landlord HK$392,501.

Around the same time she entered into discussions to secure new premises on the fifth floor of Sea Bird House at 22-28 Wyndham Street. According to the prosecution statement, Annells signed a provisional tenancy agreement on March 31 and signed a cheque for HK$65,000 drawn on an account with the Bank of East Asia in the name of AzureTax Services.

However four days later the landlord received a letter from HSBC stating that the cheque had been dishonoured since the AxureTax account had been closed. Annells apologized saying she had used a wrong cheque and made a cash deposit of HK$55,000. The prosecution said that in view of the dishonoured cheque and the smaller than required deposit, the landlord said Annells’s company should secure a Bank guarantee. Annells proposed that instead of a bank guarantee, the landlord should accept a guarantee from AzureTax’s proposed new owners Zetland and sent a purported copy of the MOU she had signed with Zetland for US$1 million. However the landlord’s solicitor declined the proposal saying in a letter of April 11, 2014 that the MOU did not help ease his client’s confidence in her company.

Meanwhile on the same day, according to the prosecution statement, Annells appeared in Eastern Magistracy and applied to vary the terms of her bail conditions which prevented her from traveling outside Hong Kong. She was on bail in respect of a separate case involving charges of fraud and theft involving millions of Hong Kong dollars.

The prosecution objected to changing the terms of her bail noting that she had failed to pay rent on her premises in Lippo Towers and that she was about to cease her business and therefore there was a high risk she would abscond. Marray’s statement said that Annells’ counsel Kevin Egan, who was instructed by Christopher Morley of Haldanes, had told the court that “the prosecution allegation that the defendant was in financial trouble is nonsense.” By way of support Egan submitted various documents which included the provisional tenancy agreement for office premises in Sea Bird House, and the MOU signed with Zetland for a purported US$1 million. Egan said that purpose of selling AzureTax was to raise funds for her legal fees to defend herself in the High Court. Bail was granted and Annells was given permission to collect her passport from the police on April 11.

Marray’s statement said the police immediately launched an investigation into the documents submitted to the court. They spoke to Zetland and confirmed that the sum mentioned in the MOU was for HK$1 million. The police arrested Annells on April 14th – two days before she was due to travel. A search of her office revealed two MOUs which Annells had purportedly signed with Zetland. One found on her desk was for US$1 million while another, was found in her safe for HK$1 million.

Marray’s statement also describes the details of Annells’ dealing with Zetland. James Sutherland, the chairman of Zetland, realising Annells was in financial difficulties, thought there might be an opportunity to acquire her business which would be a good fit for Zetland. He agreed to lend Annells HK$800,000 in December 2013 while Zetland completed due diligence. This sum was secured on a pledge of her shares in AzureTax and would be offset against the future purchase price. This was paid directly into her landlord’s account to pay rent arrears.

On January 30, 2014 Sutherland lent Annells HK$400,000 in cash and on February 4, 2014, Sutherland transferred HK$200,000 for AzureTax to pay salaries and bonus. On March 8, 2014, Sutherland told Annells he would acquire AzureTax for HK$1 million and on March 24, signed an MOU for this amount.

Marray’s statement says that after signing the MOU, Annells was lent a further HK$200,000.

On April 4th Annells asked Sutherland to borrow a further HK$75,000 ‘urgently,” and her gave her a personal cheque. The statement notes that Annells still owes Sutherland HK$675,000. It also says that when Zetland acquired AzureTax she did not receive any of the HK$1 million of the sale since this was offset against her debt with the company. The falsified MOU submitted to the landlord of Sea Bird House and the magistrates court, “grossly exaggerated the defendant’s financial position and her ties to Hong Kong,” Marray’s statement said.

The trial continues today.

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