Duo jailed for $350,000 fraud over reinstatement project

2021-8-20


A former employee of a renovation contractor and a former manager of an art finance service provider, charged by the ICAC, were today (August 20) sentenced to jail terms up to seven and a half months at the District Court for conspiracy to defraud the art finance service provider over reinstatement works worth $350,000.

Johnson Kwok Cheng-son, 45, former employee of Bigred Design Company (Bigred), was sentenced to seven and a half months imprisonment. He was earlier found guilty of one count of conspiracy to defraud, contrary to Common Law.

Co-defendant Lam Cheuk-ho, 33, former event project and operation manager of China Art Financial Holdings Limited (China Art Financial), who earlier pleaded guilty to the aforesaid charge, received a jail term of six months.

In sentencing, Deputy District Judge Miss Lily Wong Sze-lai remarked that the defendants deserved immediate custodial sentences since their conduct breached the trust placed on them and impaired fair competitions in the commercial world.

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

The court heard that at the material time, Lam was the event project and operation manager of China Art Financial, which was an art finance service provider engaged in art auction business. Artfund International (Hong Kong) Auction Company Limited (Artfund) was a subsidiary of China Art Financial. Kwok was an employee of Bigred, a renovation contractor of Artfund.

In early 2018, Artfund rented an office at a commercial building in Wan Chai and engaged Bigred to renovate it as a showroom. A few months later, China Art Financial decided to abort the renovation project and disputed the termination fee with Bigred.

Lam was instructed by China Art Financial to look for another contractor to reinstate the half renovated showroom before terminating the leasing contract. Bigred wanted to bid for the reinstatement project but was not allowed to do so.

The court heard that Lam and Kwok then conspired together to defraud Artfund by dishonestly using a small renovation project contractor owned by an associate of Kwok’s brother as a vehicle to bid for the reinstatement project.

On August 8, 2018, Lam submitted six quotations to China Art Financial for the reinstatement project. One of the quotations at $368,000, which was personally handled by Kwok, was from the small renovation project contractor.

A few days later, Lam asked Kwok to lower his bid by $20,000 to $350,000 as the quoting price of another bidder was very close to that of the small renovation project contractor’s.

Kwok agreed to lower the bidding price and the reinstatement project was eventually awarded to the small renovation project contractor at $350,000. But the project was in fact conducted by Bigred.

Had China Art Financial known that the reinstatement project was conducted by Bigred, it would not have awarded the project to the small renovation project contractor, the court heard.

China Art Financial had rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by prosecuting counsel Newman Wong, assisted by ICAC officer Rosita Lee.
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