The businessmen involved in the case struck a deal with the OTB management to sell US dollar cheques to the bank. The businessman orchestrated a cheque-kiting scheme to raise funds through OTB for speculation in gold and investment in casino business.
The cheque-kiting scheme gradually fell apart and the face value of “dishonoured” cheques held by OTB snowballed to US$66.8 million.
In view of the businessman’s inability to honour the cheques, the management of OTB conspired with the businessman to fabricate loans and accounts to cover up the losses suffered by the bank.
The OTB board of directors declared that the bank was suffering from liquidity problem and was on the brink of insolvency.
The government formally took over OTB whose bad debts totalled about US$90 million at that time.
The government injected HK$3 billion into OTB to keep it afloat and ordered the Commercial Crime Bureau of the Police to join hands with professional accountants to investigate the causes of OTB’s downfall.
As investigation revealed that the case involved serious allegations of corruption and fraud, the ICAC was brought into the investigation. An ICAC-Police Joint Task Force was formed to take over the case.
In a joint operation mounted by the task force and the FBI of the United States, the businessman and the former OTB chairman were arrested in San Francisco and Los Angeles respectively.
The businessman was extradited to HK for trial.
Former OTB managing director pleaded guilty, sentenced to three years’ imprisonment and became a tainted witness afterwards.
Former OTB chief general manager pleaded guilty, jailed for three years and reduced to two after appeal.
Former OTB senior general manager pleaded guilty and jailed for four years.
The businessman pleaded guilty, jailed for eight years and reduced to six after appeal; and the last defendant in the case, former OTB chairman was extradited to Hong Kong. He pleaded guilty and jailed for two years. File closed.