Hong Kong's graft-busters, the Independent Commission Against Corruption (ICAC) has notched up yet another set of convictions for letter of credit (L/C) frauds.

Three company directors were on 5 July convicted by a jury of conspiracy to defraud Hang Seng Bank Limited in relation to L/C facilities totalling HK$900 million.

Sentences

The defendants were Ho Siu-hoi, a director of Au Kiang International Company Limited and Dero Enterprises Limited; Tam Kei-kwong, a director of Pure Guard Industrial Limited and Sparkco International Limited, and another director of Pure Guard, Leung Chi-por.

They were found guilty on several counts of conspiracy to defraud Hang Seng. The convicted directors were remanded in custody to await sentencing on 9 July.

False documents

Au Kiang was a property investment company owned by Ho and his father Ho Chi-chun, while Dero was a sister company in their control. The court heard that the defendants caused Au Kiang and Dero to apply for and utilise credit facilities from Hang Seng in the form of L/Cs.

The L/Cs were obtained on the basis of false documents submitted to the bank that showed apparently genuine commercial transactions between these two companies and other companies. The offences took place between June 1995 and January 1998.

258 L/Cs

As a result of the scam, Hang Seng released HK$932 million in total to four companies - Star Regent International Limited Pure Guard, Sparkco and Sunmex Limited - under a staggering 258 L/Cs. Star Regent and Sunmex were shelf companies set up by the defendants and co-conspirators for the scheme.

The court also heard that the shelf companies remitted the funds to Au Kiang and Dero after deducting 'handling charges' amounting to two to three per cent of each L/C's face value.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.