Duo jailed for $9m L/C fraud
2008-2-28
Two operators of two companies, charged by the ICAC, were today (Thursday) sentenced at the District Court for their roles in a $9 million Letters of Credit (L/Cs) fraud based on bogus business transactions.
Cheung Hing-man, 62, shareholder-cum-director of Harbour Best Development Limited (Harbour Best), received a jail term of four years and three months, while Kong Lai-wah, 52, proprietress of the defunct Chi Shing Industrial Investment Development Company (Chi Shing), was jailed for four years and six months.
The defendants were earlier found guilty of eight counts of fraud.
In sentencing, Deputy Judge Merinda Chow Yin-chu said the fraud had seriously compromised the integrity of the banking system which relied on applicants to submit genuine transaction documents in support of applications for L/C facilities.
The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the fraud offences.
The court heard that Harbour Best was a manufacturer of VCDs, while Chi Shing was a trading company.
Between November 28 and December 31, 2002, Cheung had caused eight L/Cs totalling $9.36 million to be issued by the Bank of China (Hong Kong) Limited (BOCHK) in favour of Chi Shing.
On each occasion, the defendants had furnished BOCHK with false documents including cargo receipts signed by Cheung and commercial invoices signed by Kong, purporting to show that Chi Shing had supplied substantial quantities of raw materials to Harbour B est. In fact, there were no such genuine transactions.
As a result of the fraudulent scam, BOCHK had released a total of $9.36 million to Chi Shing.
After receiving the L/C funds, Kong transferred the funds from Chi Shing to Focus Developments Limited (Focus), a company controlled by Cheung.
ICAC investigations revealed that Cheung then channelled the funds from Focus to Harbour Best or other companies connected with him.
Had BOCHK known that the transactions were fictitious and the supporting documents were false, it would not have issued the L/Cs and released the funds, the court was told.
The prosecution was today represented by prosecuting counsel Flora Cheng, assisted by ICAC officer Martin Tse.
Cheung Hing-man, 62, shareholder-cum-director of Harbour Best Development Limited (Harbour Best), received a jail term of four years and three months, while Kong Lai-wah, 52, proprietress of the defunct Chi Shing Industrial Investment Development Company (Chi Shing), was jailed for four years and six months.
The defendants were earlier found guilty of eight counts of fraud.
In sentencing, Deputy Judge Merinda Chow Yin-chu said the fraud had seriously compromised the integrity of the banking system which relied on applicants to submit genuine transaction documents in support of applications for L/C facilities.
The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the fraud offences.
The court heard that Harbour Best was a manufacturer of VCDs, while Chi Shing was a trading company.
Between November 28 and December 31, 2002, Cheung had caused eight L/Cs totalling $9.36 million to be issued by the Bank of China (Hong Kong) Limited (BOCHK) in favour of Chi Shing.
On each occasion, the defendants had furnished BOCHK with false documents including cargo receipts signed by Cheung and commercial invoices signed by Kong, purporting to show that Chi Shing had supplied substantial quantities of raw materials to Harbour B est. In fact, there were no such genuine transactions.
As a result of the fraudulent scam, BOCHK had released a total of $9.36 million to Chi Shing.
After receiving the L/C funds, Kong transferred the funds from Chi Shing to Focus Developments Limited (Focus), a company controlled by Cheung.
ICAC investigations revealed that Cheung then channelled the funds from Focus to Harbour Best or other companies connected with him.
Had BOCHK known that the transactions were fictitious and the supporting documents were false, it would not have issued the L/Cs and released the funds, the court was told.
The prosecution was today represented by prosecuting counsel Flora Cheng, assisted by ICAC officer Martin Tse.