A man has pleaded guilty to one count of conspiracy to use a copy of a false instrument in a fraudulent scheme to swindle money with bogus standby letters of credit (L/Cs)

Andy Chan Man-chun is one of seven people to have been charged by Hong Kong's Independent Commission Against Corruption (ICAC) in connection with a conspiracy that allegedly took place earlier this year.

Criminal syndicate

The case arose out of a corruption complaint involving a solicitor, a law clerk and a criminal syndicate. They allegedly swindled money from merchants in mainland China with bogus standby L/Cs.

Subsequent ICAC inquiries revealed the conspiracy offence.

Stake money

The court heard that on 14 January 2005, a syndicate member told the defendant that a mainland company was seeking to obtain a standby L/C for US$3 million.

The defendant was asked to identify a company that would purport to issue the L/C, and a firm of solicitors that would keep the stake money, which amounted to five per cent of the face value of the L/C or HK$1,170,000.

The syndicate agreed to involve a Hong Kong investment company and a firm of solicitors in the scheme.

Rewards

The court heard that an agreement was signed at the solicitors by the proprietor of the Hong Kong investment company and the mainland company for the former to arrange the issue of a US$3 million standby L/C.

It was agreed that the defendant and another syndicate member would each obtain about HK$92,500 in reward, whereas the solicitor and his clerk would share about HK$290,000 for their alleged roles in the scheme.

Cheque cashed

The court heard that on 20 January 2005, the defendant passed a false standby L/C, purportedly issued by JP Morgan Chase Bank, New York, to the solicitors firm.The proprietor of the Hong Kong investment company turned up at the solicitors firm and collected a cash cheque for HK$1,170,000 - the stake money for the standby L/C. He then cashed the cheque at a bank, while other syndicate members waited outside.

When arrested by the ICAC, the stake money of HK$1,170,000 was recovered from two of the syndicate members.

More charges

The other defendants in this case are Chan Nai-keung, proprietor of Paul Chan & Co Solicitors; Chiang Pak-yeung, a law clerk of Paul Chan & Co; Zhong Pei-hong, proprietor of Wah Shun Investment Enterprise; Lam Chun, a merchant, and two unemployed men, Albert Lee Tai-sang and Lui Chung-yee.

They all face one joint charge of conspiracy to use a copy of a false instrument.

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