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IN RE LETTERS OF REQUEST FROM THE SUPREME COURT OF

May 10, 1993

IN RE: LETTERS OF REQUEST FROM THE SUPREME COURT OF HONG KONG

SWEET


The opinion of the court was delivered by: ROBERT W. SWEET

Sweet, D. J.

 Respondent Lorrain Esme Osman ("Osman") has again moved this Court for an order directing that transcript of depositions taken commencing on September 18, 1992, pursuant to Letters of Request issued by the Supreme Court of Hong Kong not be certified to that Court, and directing that United States Attorney, the United States Department of Justice ("DOJ"), and the Attorney General of Hong Kong not to transmit such deposition transcripts and any documents produced in connection with them to the Supreme Court of Hong Kong. For the following reasons, Osman's motion is granted subject to the conditions set forth below.

 Prior Proceedings

 Osman is the subject of criminal proceedings originally instituted in Hong Kong in November 1985, in which Hong Kong authorities alleged fraud and corruption by Osman and various others in their conduct of the affairs of a bank in Hong Kong. *fn1" In December 1985 Osman was arrested in London, where he was initially detained pending extradition proceedings to Hong Kong. He was extradited to Hong Kong in 1992, where he presently remains incarcerated pending trial.

 On June 15, 1989, Graham A. Harris ("Harris"), Senior Assistant Crown Prosecutor in the Attorney General's Chambers of Hong Kong, made an application to the Supreme Court of Hong Kong for the issuance of twelve Letters of Request (the "Letters") to obtain banking records and depositions in New York for use in the case against Osman. His application was duly granted first by the Supreme Court of Hong Kong and then received by the DOJ in this country. The Letters simply requested that witnesses be summoned and evidence taken, and did not specify what rules of procedure were to govern the depositions or the production of documents.

 Osman's Hong Kong counsel were allowed to inspect the Hong Kong court files relating to the Letters of Request and were allowed to make copies of the relevant documents filed in support of the application. Osman's Hong Kong counsel, Colin Cohen of Boase & Cohen ("Cohen") then requested of the Attorney General of Hong Kong that Osman be given notice of any discovery scheduled to be taken pursuant to the Letters of Request.

 In November 1989, Assistant United States Attorney Mark J. Stein ("Stein") of the Southern District of New York received copies of the Letters of Request issued by the Hong Kong court. On March 19, 1990, Stein presented the Letters before the Honorable Vincent L. Broderick, who signed an order pursuant to 28 U.S.C. § 1782 appointing Stein as a "Commissioner to take steps as are necessary, including issuance of subpoenas to appear and to produce documents and physical evidence pursuant to Rule 17(c), Fed. R. Cr. P., and to obtain testimony and other evidence in conformity with the captioned Letter of Request; to submit all evidence obtained in accordance herewith . . . to representatives of the Government of Hong Kong . . . ." In re Letter of Request from Hong Kong, No. M19-117 (S.D.N.Y. Mar. 19, 1990) ("the March Order"). Pursuant to the March Order, stein served Notices of Deposition in April, 1990, upon each of the banks designated in the Letters of Request (the "Banks"). These Notices stated that they were served "pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure." *fn2" Although the Notices directed that certain documents should be produced at the depositions, Stein requested that the Banks simply produce the documents and indicated that if any depositions were necessary they would be scheduled later. Neither Osman nor his Hong Kong counsel nor James Fornari and Richard Zuckerman ("Zuckerman"), Osman's U.S. counsel, were informed that any depositions were to take place.

 On September 18, 1990, the Honorable Peter K. Leisure issued an order appointing Harris and another representative from the Hong Kong Attorney General's Office, Graham C. Grant ("Grant"), as additional Commissioners under the Letters of Request, thereby authorizing them to conduct the depositions of the bank record-keepers. In re Letter of Request from Hong Kong, No. M19-117 (S.D.N.Y. Sept. 18, 1990) ("the September 1990 Order") As with the March Order, the September 1990 Order authorized the "issuance of subpoenas to appear and produce documents and physical evidence pursuant to Rule 17(c), Fed. R. Cr. P., and to obtain testimony and other evidence in conformity with the captioned Letter of Request."

 Depositions of the representatives from each of the Banks were conducted by Harris and Grant as Commissioners between September 18 and September 27, 1990 (the "September, 1990 Depositions"). Osman was not notified of these depositions. At the completion of the depositions, Stein received the transcripts from the court reporters, sent them to be signed by the deponents, and forwarded the signed depositions and accompanying exhibits to the Hong Kong Attorney General.

 In December 1990, Osman and his Hong Kong counsel first learned that discovery pursuant to the twelve Letters of Request had taken place in December 1990, when the Hong Kong Attorney General referred to the Letters in open court and stated that he had obtained some of the evidence sought in the Letters. Osman then applied to this Court requesting that the Attorney General, H.K., be required to return the transcripts of the depositions and accompanying documents and that transcripts and documents not yet sent to Hong Kong be suppressed.

 On July 2, 1991, in In re Letter of Request from the Supreme Court of Hong Kong, 138 F.R.D. 27 (S.D.N.Y. July 2, 1991), this Court held that under 28 U.S.C. § 1782 and the terms of the Letters, the taking of evidence in Osman's case must be conducted in accordance with the Federal Rules of civil Procedure. Since Osman had received neither notice of the depositions nor an opportunity to attend and participate or cross examine the deponents, the September 1990 Depositions violated § 1782 and the March and September 1990 Orders. Accordingly the Court ordered the deposition transcripts still in this country to be suppressed and such transcripts sent to Hong Kong to be returned. On July 29, this Court ordered the depositions to be renoticed provided Osman was given an opportunity to review the deposition transcripts and to cross examine pursuant to F. R. Civ. P., Rule 15, (the "July 1991 Order").

 In August 1991, counsel for Osman were provided with the depositions and accompanying exhibits by the Attorney General of Hong Kong and informed that witnesses would be produced for their cross examination. Osman was also informed about similar depositions of representatives of the Banks which were scheduled to take place in San Francisco, California. On October 15, 1991, counsel for Osman requested leave to cross-examine the witnesses in both jurisdictions. In March, 1992, the parties settled on the time between September 14th and 25th as an acceptable time for the deposition of witnesses.

 All of the witnesses in New York were scheduled to be deposed between September 18 and September 25, 1992 at the New York office of Clifford Chance, a British law firm with a branch in Hong Kong retained by the Hong Kong Attorney General's office in connection with this matter ("Clifford Chance"). All of the witnesses in San Francisco were scheduled for deposition from September 14th to September 17th.

 On September 15, 1992, Stein, acting on the advice of Clifford Chance, made an ex parte application to this Court to appoint the Honorable Marvin E. Frankel ("Frankel" or the "New York Commissioner") as a new Commissioner to preside over the evidence gathering proceedings. *fn3" Frankel informed all parties that his law firm currently represented one of the deponent Banks (The Bank of New York) and previously had represented three other deponent Banks. Frankel himself had not been involved with any of the matters handled by his law firm for the Banks. The application by Stein for the order appointing Frankel made no mention of Frankel's law firm's involvement with the Bank of New York.

 The Honorable Pierre N. Leval in his capacity as Part I judge granted the application, appointed Frankel as a Commissioner and signed an order (the "September 1992 Order") prepared by Stein on behalf of the Attorney General of Hong Kong providing that depositions were to be conducted according to the Letters of Request under Federal Rules of Criminal Procedure, Rule 15:

 
IT IS FURTHER ORDERED that the taking of statements of witnesses before Judge Frankel, be conducted pursuant to the provision of Rule 15 of the Federal Rules of Criminal Procedure.

 The September 1992 Order was transmitted to Clifford Chance on the afternoon of September 17, 1992. Cohen alleges that it was first provided to him and to Osman when Cohen appeared on September 18, ...


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