Seven people have been charged in two separate cases in Hong Kong for their parts in alleged frauds. The charges follow investigations by Hong Kong's Independent Commission Against Corruption (ICAC).

Both cases involve letters of credit (L/Cs) and both involve companies listed on the Hong Kong stock exchange.

HK$89 million L/Cs

In the first case, the defendants are Ho Wing-cheong, chairman of publicly listed Fu Cheong International Holdings Limited; Albert Chan Wing-kui, former financial controller of Fu Cheong; Li Wing-kei, a certified public accountant, and Kwok Shuk-wah, a former director of Fu Cheong.

The four face a total of four counts of conspiracy to defraud in relation to the listing of Fu Cheong and applications for L/C facilities worth more than HK$89 million. One charge alleges the defendants conspired with others to defraud the Hong Kong Stock Exchange (HKSE).

Falsified accounts

In one charge, the defendants are alleged to have falsified sales invoices and accounting records to inflate the sales turnover and profit figures of Fu Cheong and its subsidiaries for the three years from 1998 to 2000 to satisfy HKSE listing requirements.

The charge alleges that the defendants misrepresented the financial position of Fu Cheong and its subsidiary for those three years in Fu Cheong's prospectus. By submitting documents showing inflated sales turnover and profit figures, they allegedly induced HKSE to approve Fu Cheong's application for listing. A second charge relates to alleged misrepresentation in the company's 2001 annual report.

More L/C frauds

Ho faces a further charge for allegedly conspiring to defraud a number of banks by dishonestly causing a subsidiary of publicly listed Yue Fung International Group Holding Limited to apply for L/Cs and trust receipts in favour of a Fu Cheong subsidiary and an associated company.

These frauds allegedly involved the submission of false documents to the banks that purportedly showed genuine underlying commercial transactions between Yue Fung and the beneficiary companies, causing the banks to release over HK$88 million under the L/Cs to the beneficiary companies.

Yet another charge alleges that Ho and Chan conspired to defraud over HK$1 million under a L/C in a similar fraud. The alleged offences took place between December 1998 and April 2002.

Separate case

In the second case, Lee Wing-kan, former chairman of Yue Fung International Group Holding Limited; Lee Wing-chan, former vice-chairman of Yue Fung, and Chu Mei-yee, a former clerk of Yue Fung, have been charged for their alleged roles in L/C frauds involving over HK$174 million.

The three defendants face a total of three counts of conspiracy to defraud. One of the charges alleges they conspired to defraud a number of banks of over US$88 million under L/Cs and trust receipts.

Lee Wing-kan and Lee Wing-chan are jointly charged with two other similar offences involving over $86 million in total. The alleged offences took place between December 1998 and January 2002.

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