Four charged with bribery facilitated HK$75m L/C fraud and money laundering
Four persons, including a senior executive of a listed company subsidiary and two directors of two construction companies, have been charged by the ICAC today (June 5) for their alleged roles in a HK$75.3 million letters of credit (L/Cs) fraud scam involving over HK$1.7 million bribes, and money laundering.
The defendants are Wang Xiaoshan, 51, deputy general manager of China Railway Construction (HK) Limited (CRCL), a subsidiary of publicly listed China Railway Construction Corporation Limited (CRCC); Lau Hing-lung, 56, director of now defunct King Tai Construction Limited (KTCL) and chief administrative officer of now defunct Top Famous Construction Engineering Limited (TFCL); Lo Pui-yu, 69, director of TFCL; and Chan Ka-ho, 33, son-in-law of Lo and director of Azure Industrial Limited (AIL). They face a total of 16 charges.
Wang, Lau and Lo face a joint charge of conspiracy to defraud, contrary to Common Law.
Wang and Lo further face two joint charges of conspiracy for an agent to accept advantages, contrary to Section 9(1)(a) of the Prevention of Bribery Ordinance and Section 159A of the Crimes Ordinance.
Lau also faces one count of dealing with property known or believed to represent proceeds of indictable offence, contrary to Section 25(1) of the Organized and Serious Crimes Ordinance. Lo further faces 12 similar offences, one of which was jointly charged with Chan.
All defendants will appear at the Eastern Magistrates’ Courts next Tuesday (June 9) for mention.
CRCL, a construction company in Hong Kong, is a wholly owned subsidiary of publicly listed 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 related companies.
At the material time, Wang was a deputy general manager of CRCL responsible for business development. Lau and Lo were respectively the chief administrative officer and director of TFCL. Lau was also the sole shareholder-cum-director of KTCL while Lo was also in control of 11 other companies, including AIL. Lo’s son-in-law, Chan, was the sole director of AIL.
In September 2016, CRCL and TFCL signed a memorandum of understanding for forming joint ventures to take up certain construction projects. In December 2016, CRITL and TFCL further entered into three trade agreements in which CRITL would act as TFCL’s purchasing agent for procuring construction materials from KTCL for three other projects, with payments to be settled by L/Cs.
The conspiracy to defraud charge alleges that between the June 1, 2016 and March 16, 2017, Wang, Lau and Lo conspired together and with other persons to defraud DBS Bank Limited (DBS Bank) and cause it to make payment totalling over HK$75.3 million to KTCL.
The charge alleges that the three aforesaid defendants 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.
One of the bribery charges alleges that between June 1 and November 15, 2016, Wang and Lo conspired together for Wang, without lawful authority or reasonable excuse, to accept a total sum of over US$148,000 (over HK$1.15 million) as an inducement to or reward for referring TFCL to CRCL for business cooperation.
Another bribery charge alleges that between December 13, 2016 and June 7, 2017, Wang and Lo conspired together for Wang, without lawful authority or reasonable excuse, to accept a total sum of over US$61,000 (over HK$475,000) and HK$125,000 as an inducement to or reward for causing CRITL to provide financial assistance to TFCL.
The remaining 13 charges allege that between January 24 and September 25, 2017, Lau, Lo and Chan dealt with over HK$75.3 million, named in the aforesaid conspiracy to defraud charge, in various bank accounts of KTCL, AIL and other companies controlled by Lo, knowing or having reasonable grounds to believe that they in whole or in part directly or indirectly represented proceeds of an indictable offence.
CRCC, CRCL, CRITL and DBS Bank have rendered full assistance to the ICAC during its investigation.
All defendants have been released on ICAC bail, pending their court appearance next Tuesday.