A merchant, charged by the ICAC, was today (Thursday) convicted at the District Court of his role in a $260 million Letters of Credit fraud based on non-existent commercial transactions.

Chen Xun, 75, was found guilty of five counts of conspiracy to defraud.

Deputy Judge Johnny Chan adjourned the case until December 8, 2008 for sentence, and remanded the defendant in the custody of the Correctional Services Department.

The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the above conspiracy offences.

The court heard that between August 1994 and March 1996, the defendant conspired with other persons to defraud three banks –'96 then Kincheng Banking Corporation Hong Kong Branch, Kwangtung Provincial Bank Hong Kong Branch, and Bank of China Hong Kong Branch.

The defendant dishonestly caused Senox Investment Limited, Group Yield Enterprises Limited and Go On Yue Fung Industry Limited (collectively the three companies) to apply to those banks for the issue of a total of 50 L/Cs payable to Max Rise Industrial Li mited (Max Rise).

In order to support the L/C applications, the defendant submitted false documents to the banks, purporting to evidence genuine underlying commercial transactions of various goods between the three companies and Max Rise. In fact, there were no such genui ne transactions.

As a result, the banks were deceived into releasing a total of over $265 million to Max Rise under the L/Cs, the court was told.

Co-defendant Lau Ka-ping, 53, a marketing manager, had earlier pleaded guilty to two similar conspiracy offences. He was also remanded in jail custody, and will be sentenced on December 8, 2008.

The prosecution was today represented by prosecuting counsel John Marray, assisted by ICAC officers Magdalen Tsai and Angel Ng.