The ICAC today and yesterday arrested four businessmen suspected to have conspired to deceive 20 banks and financial institutions of $1.4 billion Letters of Credit (L/Cs) facilities.

The four arrested, aged between 45 and 74, are directors and a sole proprietor of two trading companies.

The arrests were an extension of an earlier ICAC operation codenamed “Pelican” which had already unveiled an alleged graft-facilitated $80 million credit scam involving an employee of the Nanyang Commercial Bank.

It was suspected that the four arrested in the operation which commenced yesterday had allegedly conspired to bribe some bank officers for facilitating the L/C fraud.

They also allegedly conspired to use false documents, purportedly showing that the two companies involved were engaged in the sale and purchase of over 500,000 tons of steel materials, to apply for L/C facilities.

Under the scam, 20 banks and financial institutions in Hong Kong were deceived into issuing 400 L/Cs worth $1.4 billion in total between 1995 and 1998. The majority of the L/Cs were issued by the Bank of China and the Hongkong and Shanghai Banking Corpor ation.

Enquiries also revealed that the scam had resulted in at least $140 million bad debts for the victimised banks and financial institutions.

Investigations into the corruption and fraud allegations will continue. All the arrested persons have been released on ICAC bail.

Three other persons - a former deputy branch manager of the Nanyang Commercial Bank and a couple who are two proprietors of another trading firm - were arrested by the ICAC in early August.

The manager was alleged to have accepted $1 million in bribes for granting the credit facilities to the trading firm.