Recent ICAC Cases

12
Nov 2021
SME director charged by ICAC guilty of $19m banking facilities fraud

A director of a Small and Medium Enterprise (SME), charged by the ICAC, was today (November 12) convicted at the District Court of using copies of false audited reports and bank statements of the company to support its applications for banking facilities totalling $19 million with two banks.

Fong Kam-sang, 50, sole director and shareholder of now defunct Hong Kong Lotte International Trading Co. Limited (HKLIT), was found guilty of five counts of using copies of false instruments, contrary to Section 74 of the Crimes Ordinance.

Judge Fred Sham Siu-man adjourned the case to November 25 for sentence. The defendant was remanded in the custody of the Correctional Services Department.

The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the offences.

The court heard that in August 2010, the defendant became the sole director and shareholder of HKLIT, purportedly a giftware trading company, upon the request of his twin brother and the de facto owner of HKLIT. The offence took place between November 2013 and June 2015, during which HKLIT applied for banking facilities from two banks.

In order to support the applications, the defendant submitted to the two banks copies of audited reports and financial statements of HKLIT purportedly issued by an accounting firm for the two financial years of 2011/12 and 2012/13, and copies of false bank statements of the company. Believing the documents were genuine, the banks concerned respectively granted banking facilities of $13 million and $6 million to HKLIT.

After the banking facilities were granted to HKLIT, the two banks would conduct annual reviews to assess whether the banking facilities would be extended or suspended, or that legal actions would be taken for chasing full settlement of the outstanding loans.

At the annual reviews, the defendant submitted to the two banks copies of audited reports and financial statements of HKLIT purportedly issued by the above accounting firm for the financial year of 2013/14 and false bank statements of the company. As a result, extension of the two banking facilities were approved.

Had the two banks known that the aforesaid supporting documents were false, they would not have granted and extended the banking facilities to HKLIT.

ICAC enquiries revealed that the defendant had also used copies of false bank statements of HKLIT to apply with one of the aforesaid banks for a temporary increase of $3 million credit limit. The application was subsequently withdrawn.

The two banks and the accounting firm concerned have rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by prosecuting counsel Bernard Chung, assisted by ICAC officer Benjamin Ho.

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