Six arrested over alleged $110m L/C fraud
2000-8-22
The ICAC has arrested six persons, including an assistant account manageress of a subsidiary of a state enterprise owned by the Guangzhou Municipal Government, for an alleged $110 million Letters of Credit (L/Cs) fraud.
The remaining five are four directors and an account clerk of three other companies allegedly involved in the fraud.
The six persons, three men and three women, aged between 34 and 70, were netted in ICAC operation "Puma" which began yesterday.
The investigation arose from a corruption complaint, alleging that officers of two banks might have been bribed to connive at fraudulent L/C scams.
ICAC enquiries revealed that the six arrested had allegedly conspired to use false documents to apply for a total of 48 L/Cs from the Kwangtung Provincial Bank and the Hua Chiao Commercial Bank between 1996 and 1998.
Such bogus documents purportedly showed that there were business transactions between the state-owned enterprise's subsidiary and its sister company, and the three companies.
All of the bogus transactions allegedly concerned the sale and purchase of audio equipment and cars.
The three companies purported to be suppliers of these goods had registered with an identical address.
Under the scam, the two banks were deceived into issuing a total of 48 L/Cs worth $110 million.
Enquiries also revealed that all these L/C loans were drawn down by the three companies within a week after the L/Cs were issued by the banks. The L/C funds were then transferred back to the subsidiary of the Mainland enterprise and its sister company.
Under the fraudulent scheme, the L/C applicants –'96 the two companies under the Mainland enterprise –'96 allegedly charged a handling fee equivalent to two per cent of the L/C funds obtained if the funds were to be used by the beneficiaries, i.e. the suppliers.
When the funds were to be consumed by the applicants themselves, they would in turn offer a two per cent commission to the beneficiaries for facilitating the scam.
The Kwangtung Provincial Bank and the Hua Chiao Commercial Bank have rendered full assistance to the ICAC during its investigation.
The ICAC will continue its investigation into the corruption and L/C fraud allegations.
All the arrested persons have been released on ICAC bail.
The remaining five are four directors and an account clerk of three other companies allegedly involved in the fraud.
The six persons, three men and three women, aged between 34 and 70, were netted in ICAC operation "Puma" which began yesterday.
The investigation arose from a corruption complaint, alleging that officers of two banks might have been bribed to connive at fraudulent L/C scams.
ICAC enquiries revealed that the six arrested had allegedly conspired to use false documents to apply for a total of 48 L/Cs from the Kwangtung Provincial Bank and the Hua Chiao Commercial Bank between 1996 and 1998.
Such bogus documents purportedly showed that there were business transactions between the state-owned enterprise's subsidiary and its sister company, and the three companies.
All of the bogus transactions allegedly concerned the sale and purchase of audio equipment and cars.
The three companies purported to be suppliers of these goods had registered with an identical address.
Under the scam, the two banks were deceived into issuing a total of 48 L/Cs worth $110 million.
Enquiries also revealed that all these L/C loans were drawn down by the three companies within a week after the L/Cs were issued by the banks. The L/C funds were then transferred back to the subsidiary of the Mainland enterprise and its sister company.
Under the fraudulent scheme, the L/C applicants –'96 the two companies under the Mainland enterprise –'96 allegedly charged a handling fee equivalent to two per cent of the L/C funds obtained if the funds were to be used by the beneficiaries, i.e. the suppliers.
When the funds were to be consumed by the applicants themselves, they would in turn offer a two per cent commission to the beneficiaries for facilitating the scam.
The Kwangtung Provincial Bank and the Hua Chiao Commercial Bank have rendered full assistance to the ICAC during its investigation.
The ICAC will continue its investigation into the corruption and L/C fraud allegations.
All the arrested persons have been released on ICAC bail.