Investment company chairman and 17 others arrested over HK$1.8 billion credit scam
2001-6-18
Eighteen persons, including a chairman of an investment company and a bank's branch senior manager, were arrested by the ICAC last week for their suspected involvement in a HK$1.8 billion credit scam allegedly facilitated by corruption.
The ICAC investigation arose from a corruption complaint alleging the company chairman had offered bribes to senior bank officers for increasing credit limits and granting sizable credit facilities supported by bogus documents.
Also arrested in the ICAC operation, code-named "Pacifier", were the chairman's wife, a former deputy general manager of the bank, six directors and seven staff members of various subsidiaries of the investment company, and an employee of a freight compan y.
A total of 37 home and office premises were searched under warrants, with evidential documents seized.
ICAC investigations revealed that despite adverse appraisals on the investment company's financial status by the bank's credit department, the company's applications for increase in credit limits were approved over the years.
It was revealed that between November 1998 and April 1999, the bank had approved a total of 25 Letters of Credit (L/Cs) applied by the company and its subsidiaries, purportedly for the purchase of copper and aluminium worth totalling US$28.9 million, some of which was from Singapore.
Such L/C dealings were suspected to be bogus and transactions of goods involved non-existent.
Inquiries revealed that the vessels for transporting the goods stated in the Bills of Lading for some of the transactions were unsuitable to haul the goods because of their nature and insufficient tonnage capacity.
Investigations also revealed that after the benefiting companies received the L/C payments, they remitted the funds to the accounts of the investment company and its subsidiaries held with the same bank.
It was also believed that with the knowledge of bank officers, such L/C funds were used to settle outstanding loans the investment company owed to the bank.
As at February 1998, the total credit facilities extended to the company amounted to HK$1.827 billion.
During the investigation, the ICAC received full assistance from the bank and the Singaporean authorities.
All the arrestess have been released on bail. Inquiries are continuing.
The ICAC investigation arose from a corruption complaint alleging the company chairman had offered bribes to senior bank officers for increasing credit limits and granting sizable credit facilities supported by bogus documents.
Also arrested in the ICAC operation, code-named "Pacifier", were the chairman's wife, a former deputy general manager of the bank, six directors and seven staff members of various subsidiaries of the investment company, and an employee of a freight compan y.
A total of 37 home and office premises were searched under warrants, with evidential documents seized.
ICAC investigations revealed that despite adverse appraisals on the investment company's financial status by the bank's credit department, the company's applications for increase in credit limits were approved over the years.
It was revealed that between November 1998 and April 1999, the bank had approved a total of 25 Letters of Credit (L/Cs) applied by the company and its subsidiaries, purportedly for the purchase of copper and aluminium worth totalling US$28.9 million, some of which was from Singapore.
Such L/C dealings were suspected to be bogus and transactions of goods involved non-existent.
Inquiries revealed that the vessels for transporting the goods stated in the Bills of Lading for some of the transactions were unsuitable to haul the goods because of their nature and insufficient tonnage capacity.
Investigations also revealed that after the benefiting companies received the L/C payments, they remitted the funds to the accounts of the investment company and its subsidiaries held with the same bank.
It was also believed that with the knowledge of bank officers, such L/C funds were used to settle outstanding loans the investment company owed to the bank.
As at February 1998, the total credit facilities extended to the company amounted to HK$1.827 billion.
During the investigation, the ICAC received full assistance from the bank and the Singaporean authorities.
All the arrestess have been released on bail. Inquiries are continuing.