Integrity Focus

A property buyer, charged by the ICAC, was today (October 10) sentenced to 10 months’ imprisonment at the District Court for deceiving a bank and the HKMC Insurance Limited (HKMCI) into granting a mortgage loan with a loan-to-value (LTV) ratio of 80 per cent, amounting to about $7.8 million, by making false representations that a flat was purchased for self-use. The offences were revealed in the course of a corruption investigation by the ICAC.

Hui Chi-fung, 39, Senior Station Officer of the Fire Services Department, was earlier convicted of two counts of fraud, contrary to section 16A of the Theft Ordinance.

In sentencing, Deputy Judge Mr Kenneth Chan Ping-chau remarked that the LTV ratio of 80 per cent set for banks in granting mortgage loans was a property cooling measure implemented by the Government. The defendant’s act had undermined the mechanism and harmed the public interest. The court must mete out a deterrent custodial sentence in order to convey the right message to the public.

The Deputy Judge took a starting point of 12 months’ imprisonment and reduced the jail term by two months having considered various mitigating factors.

The Deputy Judge had also approved the prosecution’s application for a confiscation order and scheduled the relevant hearing for November 27.

According to the guidelines issued by the Hong Kong Monetary Authority, banks are required to comply with the LTV ratio requirement for property mortgage lending. Banks participating in the mortgage insurance programme of the HKMCI (the Programme) can provide a mortgage loan with an LTV ratio of up to 80 per cent for a self-used private residential property valued between $6 million and $10 million. Industrial and Commercial Bank of China (Asia) Limited (ICBC Asia) is a participating bank.

In April 2020, the defendant purchased a residential property in San Po Kong at $9.65 million and applied for a mortgage loan with an LTV ratio of 80 per cent with ICBC Asia under the Programme.

The court heard that between April and July 2020, the defendant made false representations to ICBC Asia and the HKMCI that the above residential property would be occupied for his self-use after completion of the purchase. The HKMCI eventually approved the application for mortgage loan insurance cover in respect of the mortgage loan.

On July 6, 2020, ICBC Asia approved the mortgage loan application and granted the defendant a loan of about $7.8 million. The defendant completed the sale and purchase of the property on the same day.

The ICAC investigation arose from a corruption complaint. Enquiries revealed that on the same day when the mortgage loan application was approved by ICBC Asia, the defendant entrusted an estate agency to lease out the property, which was successfully leased out at a monthly rental of over $21,000 two days later. The defendant and his family in fact had never resided in the property.

Had ICBC Asia and the HKMCI known that the property was not for the defendant’s self-occupancy, they would not have approved the defendant’s applications for the mortgage loan and the mortgage loan insurance cover respectively.

ICBC Asia and the HKMCI had rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by prosecuting counsel Susanna Ku, assisted by ICAC officer Christine Chiu.