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Nov 2021SME director charged by ICAC jailed for $19m banking facilities fraudA director of a Small and Medium Enterprise (SME), charged by the ICAC, was today (November 25) sentenced to six years’ imprisonment at the District Court for 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 earlier convicted of five counts of using copies of false instruments, contrary to Section 74 of the Crimes Ordinance.In sentencing, Judge Fred Sham Siu-man noted that a custodial sentence was meted out to the defendant, who directly benefited from the scam. The judge added that the defendant was undoubtedly the main culprit of the premeditated fraud, causing a loss totalling over $15 million to the two banks.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. 24
Nov 2021Ex-security guard charged by ICAC with bribing supervisorsThe ICAC yesterday (November 23) charged a former security guard with offering bribes totalling $8,000 to his supervisors on three occasions over a period of about 18 months for arranging him to act as and get promoted to an assistant supervisor.The investigation arose from a corruption complaint. Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charges be laid against the former security guard.Tang Kam-ngau, 57, former security guard of Hong Kong Guards Limited (HKGL), faces three counts of offering an advantage to an agent, contrary to Section 9(2)(a) of the Prevention of Bribery Ordinance.The defendant was released on ICAC bail, pending his court appearance in the Shatin Magistrates’ Courts tomorrow (November 25) for plea.At the material time, the defendant was a security guard of HKGL posted to Shui Chuen O Estate, a public housing estate in Shatin. A total of about 40 security guards posted to the estate worked under the supervision of a supervisor and several assistant supervisors.When an assistant supervisor was absent from duty, the supervisor had the discretion to appoint a security guard to act for the post. The acting appointment involved a daily acting allowance.Two of the charges allege that on or about April 4, 2019 and between January 1 and April 7, 2020, the defendant, without lawful authority or reasonable excuse, offered two bribes totalling $6,000 to the aforesaid supervisor of HKGL, as an inducement to or reward for arranging him to act as assistant supervisor.The remaining charge alleges that between November 1 and 30, 2020, the defendant, without lawful authority or reasonable excuse, offered a bribe of $2,000 to an assistant supervisor of HKGL, as an inducement to or reward for facilitating himself to get promoted to assistant supervisor.HKGL, which prohibited its staff members from soliciting and accepting advantages in relation to their official duties, has rendered full assistance to the ICAC during its investigation into the case. 23
Nov 2021Duo charged by ICAC with fraud over $6.3m loansA then director and a then part-time employee of a trading company were charged by the ICAC yesterday (November 22) with defrauding a bank and two licensed money lenders of loans totalling over $6.3 million by making false representations on the employment and monthly income of the employee in various loan applications.The ICAC investigation arose from a corruption complaint. Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised laying six charges against the duo.Lai Mei-tan, 54, former part-time employee of Wenxin.Xinyangmaojian Investment (HK) Limited (Wenxin, now defunct, also known as Xenin.Xinyangmaojian Investment (HK) Limited and Wenxin.Xinyangmaojian Investment Limited); and Ling Yuen-mei (formerly known as Ling Chun-mui), 59, sole director-cum-shareholder of Wenxin, jointly face one count of conspiracy to defraud, contrary to Common Law.Lai alone further faces four counts of fraud, contrary to Section 16A of the Theft Ordinance; while Ling alone faces one count of forgery, contrary to Section 71 of the Crimes Ordinance.The defendants were released on ICAC bail, pending their appearance in the Eastern Magistrates’ Courts tomorrow (November 24) for the case to be transferred to the District Court for plea.At the material time, Ling was the sole director-sum shareholder of Wenxin. Lai was a part-time employee of Wenxin.The alleged offences took place between May 2016 and May 2018.One of the charges alleges that Lai falsely represented to Hang Seng Bank Limited (Hang Seng Bank) that she was employed by Wenxin as a sales manager and earned a monthly income of $50,000 and with intent to defraud, induced Hang Seng Bank to grant the mortgage loan application of Lai and her husband, which resulted in benefit to the couple or in prejudice to Hang Seng Bank.Three other charges allege that Lai falsely represented to Promise (Hong Kong) Co., Limited (Promise HK) and Easy One Finance Limited (Easy One Finance) on three occasions that she was employed by Wenxin and earned a monthly income of $48,500 or $50,000 and with intent to defraud, induced Promise HK and Easy One Finance to grant the loan applications of Lai which resulted in benefit to her or in prejudice to Promise HK and Easy One Finance.Another charge alleges that Lai and Ling conspired together to defraud Promise HK by dishonestly falsely represented that Lai was employed by Wenxin and earned a monthly income of $48,500 thereby inducing Promise HK to grant the loan application of Lai.The remaining charge alleges that Ling made a false instrument, namely a letter issued in the name of Wenxin stating that Lai was employed as the sales manager of Wenxin at a monthly salary of $50,000, with the intention that Lai should use it to induce somebody to accept it as genuine.ICAC enquiries revealed that five loans totalling over $6.3 million were allegedly granted by Hang Seng Bank, Promise HK and Easy One Finance to Lai as a result of the false representations made by the defendants.Hang Seng Bank, Promise HK and Easy One Finance have rendered full assistance to the ICAC during its investigation into the case. 22
Nov 2021Three accountants among nine arrested by ICAC for alleged bribery over listing of Macao construction firmIn a joint operation mounted last week, codenamed “Snipper”, the ICAC and the Financial Reporting Council (FRC) searched the office of a certified public accountant (CPA) firm and its sister company. The address is also the local registered business address of a Macao construction firm listed in Hong Kong.During the operation, the ICAC arrested nine persons, including three CPAs and two audit staff of the CPA firm and its sister company. Two of the CPAs were appointed as chief financial officer of the construction firm at different times.The five CPAs and auditing staff have allegedly accepted bribes totalling over HK$1 million from the chairman of the construction firm for compiling a false accountants’ report for the construction firm’s submission to the Hong Kong Exchanges & Clearing Limited in relation to its listing on the Main Board. The ICAC suspects that part of the businesses mentioned in the accountants’ report does not exist and the report might have concealed some connected transactions.The Macao Commission Against Corruption is also conducting an investigation into possible offences committed by the relevant persons in Macao and searched a number of premises, including the office of the construction firm.The ICAC also interviewed a number of persons and searched various premises during the operation.All arrestees have been released on ICAC bail. While enquiries are continuing, it is not appropriate for the ICAC to make further comments.The ICAC and the FRC entered into a Memorandum of Understanding in September this year to enhance collaboration in fighting against corruption, illicit activities and malpractices. The two organisations will continue to maintain close collaboration to foster the audit quality and integrity of financial reporting by listed entities and their auditors and the integrity of the financial market. 19
Nov 2021Trio charged by ICAC with conspiracy to defraud over ‘backdoor listing’ of listed company and money launderingThree persons, including a then chairman and a then substantial shareholder of a listed company, were charged by the ICAC today (November 19) with conspiracy to defraud The Stock Exchange of Hong Kong Limited (SEHK), the listed company and its board of directors and shareholders by concealing a “backdoor listing” agreement when placing convertible notes to increase the share capital of the listed company and dealing with crime proceeds of $42 million.The ICAC investigation arose from a corruption complaint referred by the Securities and Futures Commission (SFC). Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charges be laid against the defendants.The defendants are Chim Pui-chung, 75, then substantial shareholder of Asia Resources Holdings Limited (Asia Resources); Ricky Chim Kim-lun, 52, then chairman of Asia Resources; and Wong Poe-lai, 65, associate of a merchant named in the charge.Chim Pui-chung and Ricky Chim jointly face two counts of conspiracy to defraud, contrary to Common Law. Wong also faces one count of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to Section 25(1) of the Organized and Serious Crimes Ordinance.The defendants were released on ICAC bail. They will appear before the Shatin Magistrates’ Courts this afternoon for mention, pending the case to be transferred to the District Court for plea.At the material time, Asia Resources was listed on the Main Board of the SEHK. After Chim Pui-chung became a substantial shareholder of Asia Resources in October 2008, Ricky Chim was appointed as an executive director of the company. Between December 19, 2008 and December 11, 2014, Ricky Chim was the chairman of the board of directors of Asia Resources.One of the charges alleges that between July 1, 2013 and November 15, 2015, Chim Pui-chung, Ricky Chim and the above merchant conspired together and with other persons to defraud Asia Resources, its board of directors and shareholders by dishonestly:(i) concealing or failing to disclose that the merchant had reached an agreement with Chim Pui-chung and Ricky Chim that the merchant would pay a total sum of about $210 million to Chim Pui-chung in order to control 70 per cent to 75 per cent of the entire issued share capital of Asia Resources (the Illicit Agreement);(ii) causing the board of directors of Asia Resources to approve, and causing Asia Resources to proceed with the placing of its new shares and the placing of convertible notes of which the convertible shares, upon exercise of the conversion rights, represented approximately 566.67 per cent of the then existing issued share capital of the company (the CN Agreement) with a view to increase the entire issued share capital of the company thereby facilitating the execution of the Illicit Agreement;(iii) falsely representing in the announcements and circulars of Asia Resources that no director or shareholder of the company had a material interest in the CN Agreement and no shareholder of the company was required to abstain from voting at the special general meeting of the company for the approval of the CN Agreement (the SGM);(iv) causing the shareholders of Asia Resources to pass the resolution in relation to the CN Agreement at the SGM.Another charge alleges that between July 1, 2013 and November 15, 2015, Chim Pui-chung, Ricky Chim and the above merchant conspired together and with other persons to defraud the SEHK by dishonestly:(i) concealing or failing to disclose that Chim Pui-chung, Ricky Chim and the above merchant had reached the Illicit Agreement;(ii) concealing or failing to disclose the purpose of the CN Agreement was to increase the entire issued share capital of Asia Resources thereby facilitating the execution of the Illicit Agreement;(iii) falsely representing in the announcements and circulars of Asia Resources that no director or shareholder of the company had a material interest in the CN Agreement and no shareholder of the company was required to abstain from voting at the SGM;(iv) causing the SEHK not to take prompt action to seek clarification with Asia Resources on the CN Agreement, and/or causing the SEHK to approve the publication by the company of the announcements and circulars in relation to the CN Agreement.The remaining charge alleges that between October 24, 2013 and January 24, 2014, Wong and the above merchant, knowing or having reasonable grounds to believe that convertible notes issued by Asia Resources in the principal amount of $42 million, in whole or in part, directly or indirectly represented the proceeds of indictable offence, dealt with the said property.The SEHK and the SFC have rendered full assistance to the ICAC during its investigation.
Nov 2021SME director charged by ICAC jailed for $19m banking facilities fraudA director of a Small and Medium Enterprise (SME), charged by the ICAC, was today (November 25) sentenced to six years’ imprisonment at the District Court for 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 earlier convicted of five counts of using copies of false instruments, contrary to Section 74 of the Crimes Ordinance.In sentencing, Judge Fred Sham Siu-man noted that a custodial sentence was meted out to the defendant, who directly benefited from the scam. The judge added that the defendant was undoubtedly the main culprit of the premeditated fraud, causing a loss totalling over $15 million to the two banks.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. 24
Nov 2021Ex-security guard charged by ICAC with bribing supervisorsThe ICAC yesterday (November 23) charged a former security guard with offering bribes totalling $8,000 to his supervisors on three occasions over a period of about 18 months for arranging him to act as and get promoted to an assistant supervisor.The investigation arose from a corruption complaint. Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charges be laid against the former security guard.Tang Kam-ngau, 57, former security guard of Hong Kong Guards Limited (HKGL), faces three counts of offering an advantage to an agent, contrary to Section 9(2)(a) of the Prevention of Bribery Ordinance.The defendant was released on ICAC bail, pending his court appearance in the Shatin Magistrates’ Courts tomorrow (November 25) for plea.At the material time, the defendant was a security guard of HKGL posted to Shui Chuen O Estate, a public housing estate in Shatin. A total of about 40 security guards posted to the estate worked under the supervision of a supervisor and several assistant supervisors.When an assistant supervisor was absent from duty, the supervisor had the discretion to appoint a security guard to act for the post. The acting appointment involved a daily acting allowance.Two of the charges allege that on or about April 4, 2019 and between January 1 and April 7, 2020, the defendant, without lawful authority or reasonable excuse, offered two bribes totalling $6,000 to the aforesaid supervisor of HKGL, as an inducement to or reward for arranging him to act as assistant supervisor.The remaining charge alleges that between November 1 and 30, 2020, the defendant, without lawful authority or reasonable excuse, offered a bribe of $2,000 to an assistant supervisor of HKGL, as an inducement to or reward for facilitating himself to get promoted to assistant supervisor.HKGL, which prohibited its staff members from soliciting and accepting advantages in relation to their official duties, has rendered full assistance to the ICAC during its investigation into the case. 23
Nov 2021Duo charged by ICAC with fraud over $6.3m loansA then director and a then part-time employee of a trading company were charged by the ICAC yesterday (November 22) with defrauding a bank and two licensed money lenders of loans totalling over $6.3 million by making false representations on the employment and monthly income of the employee in various loan applications.The ICAC investigation arose from a corruption complaint. Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised laying six charges against the duo.Lai Mei-tan, 54, former part-time employee of Wenxin.Xinyangmaojian Investment (HK) Limited (Wenxin, now defunct, also known as Xenin.Xinyangmaojian Investment (HK) Limited and Wenxin.Xinyangmaojian Investment Limited); and Ling Yuen-mei (formerly known as Ling Chun-mui), 59, sole director-cum-shareholder of Wenxin, jointly face one count of conspiracy to defraud, contrary to Common Law.Lai alone further faces four counts of fraud, contrary to Section 16A of the Theft Ordinance; while Ling alone faces one count of forgery, contrary to Section 71 of the Crimes Ordinance.The defendants were released on ICAC bail, pending their appearance in the Eastern Magistrates’ Courts tomorrow (November 24) for the case to be transferred to the District Court for plea.At the material time, Ling was the sole director-sum shareholder of Wenxin. Lai was a part-time employee of Wenxin.The alleged offences took place between May 2016 and May 2018.One of the charges alleges that Lai falsely represented to Hang Seng Bank Limited (Hang Seng Bank) that she was employed by Wenxin as a sales manager and earned a monthly income of $50,000 and with intent to defraud, induced Hang Seng Bank to grant the mortgage loan application of Lai and her husband, which resulted in benefit to the couple or in prejudice to Hang Seng Bank.Three other charges allege that Lai falsely represented to Promise (Hong Kong) Co., Limited (Promise HK) and Easy One Finance Limited (Easy One Finance) on three occasions that she was employed by Wenxin and earned a monthly income of $48,500 or $50,000 and with intent to defraud, induced Promise HK and Easy One Finance to grant the loan applications of Lai which resulted in benefit to her or in prejudice to Promise HK and Easy One Finance.Another charge alleges that Lai and Ling conspired together to defraud Promise HK by dishonestly falsely represented that Lai was employed by Wenxin and earned a monthly income of $48,500 thereby inducing Promise HK to grant the loan application of Lai.The remaining charge alleges that Ling made a false instrument, namely a letter issued in the name of Wenxin stating that Lai was employed as the sales manager of Wenxin at a monthly salary of $50,000, with the intention that Lai should use it to induce somebody to accept it as genuine.ICAC enquiries revealed that five loans totalling over $6.3 million were allegedly granted by Hang Seng Bank, Promise HK and Easy One Finance to Lai as a result of the false representations made by the defendants.Hang Seng Bank, Promise HK and Easy One Finance have rendered full assistance to the ICAC during its investigation into the case. 22
Nov 2021Three accountants among nine arrested by ICAC for alleged bribery over listing of Macao construction firmIn a joint operation mounted last week, codenamed “Snipper”, the ICAC and the Financial Reporting Council (FRC) searched the office of a certified public accountant (CPA) firm and its sister company. The address is also the local registered business address of a Macao construction firm listed in Hong Kong.During the operation, the ICAC arrested nine persons, including three CPAs and two audit staff of the CPA firm and its sister company. Two of the CPAs were appointed as chief financial officer of the construction firm at different times.The five CPAs and auditing staff have allegedly accepted bribes totalling over HK$1 million from the chairman of the construction firm for compiling a false accountants’ report for the construction firm’s submission to the Hong Kong Exchanges & Clearing Limited in relation to its listing on the Main Board. The ICAC suspects that part of the businesses mentioned in the accountants’ report does not exist and the report might have concealed some connected transactions.The Macao Commission Against Corruption is also conducting an investigation into possible offences committed by the relevant persons in Macao and searched a number of premises, including the office of the construction firm.The ICAC also interviewed a number of persons and searched various premises during the operation.All arrestees have been released on ICAC bail. While enquiries are continuing, it is not appropriate for the ICAC to make further comments.The ICAC and the FRC entered into a Memorandum of Understanding in September this year to enhance collaboration in fighting against corruption, illicit activities and malpractices. The two organisations will continue to maintain close collaboration to foster the audit quality and integrity of financial reporting by listed entities and their auditors and the integrity of the financial market. 19
Nov 2021Trio charged by ICAC with conspiracy to defraud over ‘backdoor listing’ of listed company and money launderingThree persons, including a then chairman and a then substantial shareholder of a listed company, were charged by the ICAC today (November 19) with conspiracy to defraud The Stock Exchange of Hong Kong Limited (SEHK), the listed company and its board of directors and shareholders by concealing a “backdoor listing” agreement when placing convertible notes to increase the share capital of the listed company and dealing with crime proceeds of $42 million.The ICAC investigation arose from a corruption complaint referred by the Securities and Futures Commission (SFC). Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charges be laid against the defendants.The defendants are Chim Pui-chung, 75, then substantial shareholder of Asia Resources Holdings Limited (Asia Resources); Ricky Chim Kim-lun, 52, then chairman of Asia Resources; and Wong Poe-lai, 65, associate of a merchant named in the charge.Chim Pui-chung and Ricky Chim jointly face two counts of conspiracy to defraud, contrary to Common Law. Wong also faces one count of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to Section 25(1) of the Organized and Serious Crimes Ordinance.The defendants were released on ICAC bail. They will appear before the Shatin Magistrates’ Courts this afternoon for mention, pending the case to be transferred to the District Court for plea.At the material time, Asia Resources was listed on the Main Board of the SEHK. After Chim Pui-chung became a substantial shareholder of Asia Resources in October 2008, Ricky Chim was appointed as an executive director of the company. Between December 19, 2008 and December 11, 2014, Ricky Chim was the chairman of the board of directors of Asia Resources.One of the charges alleges that between July 1, 2013 and November 15, 2015, Chim Pui-chung, Ricky Chim and the above merchant conspired together and with other persons to defraud Asia Resources, its board of directors and shareholders by dishonestly:(i) concealing or failing to disclose that the merchant had reached an agreement with Chim Pui-chung and Ricky Chim that the merchant would pay a total sum of about $210 million to Chim Pui-chung in order to control 70 per cent to 75 per cent of the entire issued share capital of Asia Resources (the Illicit Agreement);(ii) causing the board of directors of Asia Resources to approve, and causing Asia Resources to proceed with the placing of its new shares and the placing of convertible notes of which the convertible shares, upon exercise of the conversion rights, represented approximately 566.67 per cent of the then existing issued share capital of the company (the CN Agreement) with a view to increase the entire issued share capital of the company thereby facilitating the execution of the Illicit Agreement;(iii) falsely representing in the announcements and circulars of Asia Resources that no director or shareholder of the company had a material interest in the CN Agreement and no shareholder of the company was required to abstain from voting at the special general meeting of the company for the approval of the CN Agreement (the SGM);(iv) causing the shareholders of Asia Resources to pass the resolution in relation to the CN Agreement at the SGM.Another charge alleges that between July 1, 2013 and November 15, 2015, Chim Pui-chung, Ricky Chim and the above merchant conspired together and with other persons to defraud the SEHK by dishonestly:(i) concealing or failing to disclose that Chim Pui-chung, Ricky Chim and the above merchant had reached the Illicit Agreement;(ii) concealing or failing to disclose the purpose of the CN Agreement was to increase the entire issued share capital of Asia Resources thereby facilitating the execution of the Illicit Agreement;(iii) falsely representing in the announcements and circulars of Asia Resources that no director or shareholder of the company had a material interest in the CN Agreement and no shareholder of the company was required to abstain from voting at the SGM;(iv) causing the SEHK not to take prompt action to seek clarification with Asia Resources on the CN Agreement, and/or causing the SEHK to approve the publication by the company of the announcements and circulars in relation to the CN Agreement.The remaining charge alleges that between October 24, 2013 and January 24, 2014, Wong and the above merchant, knowing or having reasonable grounds to believe that convertible notes issued by Asia Resources in the principal amount of $42 million, in whole or in part, directly or indirectly represented the proceeds of indictable offence, dealt with the said property.The SEHK and the SFC have rendered full assistance to the ICAC during its investigation.