SME director charged by ICAC admits $102m bank loans fraud
2022-3-7
A director of a Small and Medium Enterprise (SME), charged by the ICAC, today (March 7) admitted at the District Court that he had conspired with others to defraud four banks of 83 loans totalling over $102 million and banking facilities totalling $31 million, and to deceive a government department and a public body into acting as guarantors for loans and facilities totalling $11 million granted by the banks.
Chan Wing-fuk, 61, sole director and shareholder of now defunct Waty International Company Limited (WICL), pleaded guilty to 20 counts of conspiracy to defraud, contrary to Common Law.
Deputy Judge Ms Katherine Lo Kit-yee adjourned the case to September 9 for mitigation. The defendant was remanded in the custody of the Correctional Services Department.
The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the above offences took place between August 2010 and January 2015.
Between 2008 and 2011, the Trade and Industry Department (TID) and the Hong Kong Mortgage Corporation Limited (HKMC) respectively launched various schemes, namely SME Loan Guarantee Scheme (SGS), Special Loan Guarantee Scheme (SpGS) and SME Financing Guarantee Scheme (SFGS), to assist SMEs to obtain credit facilities from banks by providing guarantees to them.
The court heard that in mid-2010, the defendant became the sole director and shareholder of WICL upon the invitation of its de facto owner and received a monthly salary of $20,000.
WICL did not have any actual business and was set up solely for the purpose of applying for loans with various banks. The defendant was only required to sign on documents for making loan applications while WICL’s accounting and administrative matters were handled by a female associate of the de facto owner and a clerk of the company.
Acting on the instructions of WICL’s de facto owner, the defendant made various applications for credit facilities and loans with four banks, namely Citibank (Hong Kong) Limited, Dah Sing Bank Limited, DBS Bank (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation Limited.
The defendant admitted that he had conspired with the de facto owner, his female associate and the clerk (the trio) to submit false supporting documents, including bank statements, auditor’s reports, as well as invoices, delivery notes and packing lists purportedly in relation to transactions between WICL and its seven suppliers to defraud the above four banks.
As a result, the four banks were caused to grant banking facilities totalling $31 million and 83 loans totalling over $102 million to WICL, and to release the over $102 million directly to the seven suppliers concerned. ICAC enquiries revealed that the sums released to the seven suppliers were subsequently distributed to various bank accounts held by WICL and the trio.
The defendant also admitted having conspired with the trio to defraud the TID and the HKMC by falsely representing that all the information contained in five application forms for the SGS and the SpGS and two application forms for the SFGS was true, accurate and complete.
As a result, the TID was caused to issue five guarantees in favour of three of the above banks and to act as the guarantor for various types of loans and facilities totalling $7 million granted by the three banks to WICL.
Meanwhile, the HKMC was caused to issue two guarantees in favour of one of the four banks and to act as the guarantor for a term loan and an overdraft facility totalling $4 million granted by the bank to WICL.
The TID, the HKMC and the four banks concerned had rendered full assistance to the ICAC during its investigation into the case.
The prosecution was today represented by Senior Public Prosecutor Paggie Lee, assisted by ICAC officer Gary Li.
Chan Wing-fuk, 61, sole director and shareholder of now defunct Waty International Company Limited (WICL), pleaded guilty to 20 counts of conspiracy to defraud, contrary to Common Law.
Deputy Judge Ms Katherine Lo Kit-yee adjourned the case to September 9 for mitigation. The defendant was remanded in the custody of the Correctional Services Department.
The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the above offences took place between August 2010 and January 2015.
Between 2008 and 2011, the Trade and Industry Department (TID) and the Hong Kong Mortgage Corporation Limited (HKMC) respectively launched various schemes, namely SME Loan Guarantee Scheme (SGS), Special Loan Guarantee Scheme (SpGS) and SME Financing Guarantee Scheme (SFGS), to assist SMEs to obtain credit facilities from banks by providing guarantees to them.
The court heard that in mid-2010, the defendant became the sole director and shareholder of WICL upon the invitation of its de facto owner and received a monthly salary of $20,000.
WICL did not have any actual business and was set up solely for the purpose of applying for loans with various banks. The defendant was only required to sign on documents for making loan applications while WICL’s accounting and administrative matters were handled by a female associate of the de facto owner and a clerk of the company.
Acting on the instructions of WICL’s de facto owner, the defendant made various applications for credit facilities and loans with four banks, namely Citibank (Hong Kong) Limited, Dah Sing Bank Limited, DBS Bank (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation Limited.
The defendant admitted that he had conspired with the de facto owner, his female associate and the clerk (the trio) to submit false supporting documents, including bank statements, auditor’s reports, as well as invoices, delivery notes and packing lists purportedly in relation to transactions between WICL and its seven suppliers to defraud the above four banks.
As a result, the four banks were caused to grant banking facilities totalling $31 million and 83 loans totalling over $102 million to WICL, and to release the over $102 million directly to the seven suppliers concerned. ICAC enquiries revealed that the sums released to the seven suppliers were subsequently distributed to various bank accounts held by WICL and the trio.
The defendant also admitted having conspired with the trio to defraud the TID and the HKMC by falsely representing that all the information contained in five application forms for the SGS and the SpGS and two application forms for the SFGS was true, accurate and complete.
As a result, the TID was caused to issue five guarantees in favour of three of the above banks and to act as the guarantor for various types of loans and facilities totalling $7 million granted by the three banks to WICL.
Meanwhile, the HKMC was caused to issue two guarantees in favour of one of the four banks and to act as the guarantor for a term loan and an overdraft facility totalling $4 million granted by the bank to WICL.
The TID, the HKMC and the four banks concerned had rendered full assistance to the ICAC during its investigation into the case.
The prosecution was today represented by Senior Public Prosecutor Paggie Lee, assisted by ICAC officer Gary Li.