Integrity Focus

The ICAC had earlier charged two then senior executives of a duty-free chain store, who had concealed their conflicting interest in companies set up by them, with conspiracy to defraud for purchasing and reselling bottled red wine sourced from a French supplier to the chain store for profit by inflating the prices by $12 million. Following the guilty plea of a then general manager implicated, a then director was today (February 26) convicted of the offence after trial at the District Court.

Au Tsz-kei, 70, then merchandising and buying director of Sky Connection Limited (Sky Connection), was found guilty of one count of conspiracy to defraud, contrary to the Common Law. In convicting Au, Judge Mr Clement Lee Hing-nin reprimanded the defendant for committing the serious offence out of greed.

Co-defendant Lau Shu-yin, 78, then general manager of Sky Connection, earlier pleaded guilty to the offence.

The judge adjourned the case to March 13 for mitigation and sentence. The two defendants were granted bail. Hearing on the application for a confiscation order filed by the prosecution was adjourned to a date to be fixed.

The present case arose from a corruption complaint received by the ICAC in mid-2019. At the material time, Sky Connection sold duty-free goods under the business name “Free Duty”. The merchandising and buying department, headed by Au, used to source bottled red wine from a winery in France directly for sale at “Free Duty” shops.

The court heard that since August 2004, the two defendants had arranged Sky Connection to place purchase orders with the French winery via Jetfair Development Limited (Jetfair) and Master Good Trading Limited (Master Good). Between August 2004 and May 2011, Sky Connection had placed 56 purchase orders incurring payments totalling over $26 million through Jetfair and Master Good. ICAC enquiries revealed that Jetfair and Master Good had actually sourced the 56 batches of bottled red wine from the French winery at over $14 million and resold them to Sky Connection at inflated prices, causing Sky Connection to make extra payments of over $12 million.

The ICAC investigation also revealed that Master Good and Jetfair were in fact funded by individuals including Au and Lau. Lau and his daughter were respectively the sole shareholder-cum-director of Master Good and Jetfair. Sky Connection required its staff to declare any conflict of interest and prohibited them from engaging in any business which might have a conflict with the company. But Au and Lau had never disclosed to Sky Connection their associations with Master Good and Jetfair.

In addition, Au and Lau each shared part of the generated profits in the scam under an agreement. Lau had earlier admitted that he had received $2 million in total.

Sky Connection rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by prosecuting counsel Alex Ng, assisted by ICAC officer May Lam.