Ex-director of construction company charged by ICAC over $75.3m L/C fraud
2023-2-23
A former director of a construction company was arrested and charged by the ICAC today (February 23) upon his arrival in Hong Kong following the prosecution of two former senior executives of construction companies and others for defrauding a bank of $75.3 million letters of credit (L/Cs).
Zheng Zhong, 65, former director of China Railway Construction (HK) Limited (CRCL), faces one count of conspiracy to defraud, contrary to Common Law.
The ICAC investigation arose from a corruption complaint, resulting in the prosecution of a number of people. As Zheng was not in Hong Kong at that time, a warrant for the arrest of him subsequently issued upon the application made by the ICAC with a magistrate court. Zheng was arrested upon his arrival in Hong Kong today. He will be brought to the Eastern Magistrates’ Courts tomorrow (February 24) for mention, pending the prosecution’s application for transferring the case to the District Court.
CRCL is a subsidiary of publicly listed China Railway Construction Corporation Limited (CRCC). China Railway International Trading (HK) Limited (CRITL) is another wholly owned subsidiary of CRCC, which is run by staff members of CRCL to source construction materials for CRCL and its associated companies.
At the material time, Zheng was a director of CRCL responsible for submitting tenders and following up construction projects of CRCL and CRITL.
In September 2016, CRCL signed a memorandum of understanding with Top Famous Construction Engineering Limited (TFCL), a construction company in Hong Kong, to form joint ventures to take up certain construction projects. In December 2016, TFCL further entered into three trade agreements with CRITL for the latter to act as TFCL’s purchasing agent to procure construction materials from King Tai Construction Limited (KTCL) for three other projects, with payments to be settled by L/Cs.
Between June 2016 and March 2017, Zheng was alleged to have conspired with deputy general manager of CRCL Wang Xiaoshan, shareholder-cum-director of TFCL Lau Chung-hoi and other persons to defraud DBS Bank Limited (DBS Bank), causing it to make payments totalling over $75.3 million to KTCL.
It is alleged that Zheng and the abovementioned persons dishonestly applied to DBS Bank for issuing three L/Cs in favour of KTCL, knowing that there was no genuine underlying transaction for those L/Cs; and produced false documentation, including invoices, packing lists and cargo receipts, to support the applications.
Wang and Lau were earlier charged in the case with conspiracy to defraud. They were each sentenced to four years’ imprisonment following their conviction after trial.
CRCC, CRCL, CRITL and DBS Bank have rendered full assistance to the ICAC during its investigation.
Zheng Zhong, 65, former director of China Railway Construction (HK) Limited (CRCL), faces one count of conspiracy to defraud, contrary to Common Law.
The ICAC investigation arose from a corruption complaint, resulting in the prosecution of a number of people. As Zheng was not in Hong Kong at that time, a warrant for the arrest of him subsequently issued upon the application made by the ICAC with a magistrate court. Zheng was arrested upon his arrival in Hong Kong today. He will be brought to the Eastern Magistrates’ Courts tomorrow (February 24) for mention, pending the prosecution’s application for transferring the case to the District Court.
CRCL is a subsidiary of publicly listed China Railway Construction Corporation Limited (CRCC). China Railway International Trading (HK) Limited (CRITL) is another wholly owned subsidiary of CRCC, which is run by staff members of CRCL to source construction materials for CRCL and its associated companies.
At the material time, Zheng was a director of CRCL responsible for submitting tenders and following up construction projects of CRCL and CRITL.
In September 2016, CRCL signed a memorandum of understanding with Top Famous Construction Engineering Limited (TFCL), a construction company in Hong Kong, to form joint ventures to take up certain construction projects. In December 2016, TFCL further entered into three trade agreements with CRITL for the latter to act as TFCL’s purchasing agent to procure construction materials from King Tai Construction Limited (KTCL) for three other projects, with payments to be settled by L/Cs.
Between June 2016 and March 2017, Zheng was alleged to have conspired with deputy general manager of CRCL Wang Xiaoshan, shareholder-cum-director of TFCL Lau Chung-hoi and other persons to defraud DBS Bank Limited (DBS Bank), causing it to make payments totalling over $75.3 million to KTCL.
It is alleged that Zheng and the abovementioned persons dishonestly applied to DBS Bank for issuing three L/Cs in favour of KTCL, knowing that there was no genuine underlying transaction for those L/Cs; and produced false documentation, including invoices, packing lists and cargo receipts, to support the applications.
Wang and Lau were earlier charged in the case with conspiracy to defraud. They were each sentenced to four years’ imprisonment following their conviction after trial.
CRCC, CRCL, CRITL and DBS Bank have rendered full assistance to the ICAC during its investigation.