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Note: In order to secure the release of goods that Sin Hua Bank (Bank) held under trust receipts and to reduce the Keen Lloyd Group's liability, Defendants applied for false twenty-five LCs naming the Group's subsidiary companies as both Applicant and Beneficiary.

Chow Wai Choi (Defendant) controlled the Group and the Defendants who were its officials. The other Defendants were officers at the Bank.

The Hong Kong District Court, Pang J., entered judgment on a jury verdict against the Defendants. Defendants appealed, claiming that the trial judge erred when he did not summarize the points of the Defense's case. The Court of Final Appeal of the Hong Kong Special Administrative Region, Bokhary, Chan, and Riberio, JJ., refused leave to appeal.

At trial, the prosecution sought to prove the role of the Defendants, to prove that the documents used were false, and to prove that the underlying transactions were non-existent. The Defense stressed that the Group's indebtedness to the Bank was not increased and that the plan was proposed and agreed to by officials at the Bank and the Group. The plan intended to keep the Group in business and to hide the Bank's relationship with the Group from the Hong Kong Monetary Authority. The appellate court noted that as a result of the scheme, the Bank was left with an unsecured debt.

Comments by James E. BYRNE:

1. The court calls the LCs "bogus", but states that there were proceeds, leading to the conclusion that the LCs were real but fraudulent indeed through collusion between issuer and applicant with the connivance of bank officials.

[JEB/rlf]

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