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Dec 2024Then substantial shareholder and chairman of listed company charged by ICAC guilty of conspiracy to defraud over ‘backdoor listing’, businessman wantedA then substantial shareholder of a listed company and its then chairman, charged by the ICAC, were today (December 9) convicted after trial at the District Court of conspiring with a businessman to defraud The Stock Exchange of Hong Kong Limited (SEHK), the listed company and its board of directors and shareholders by concealing a secret “backdoor listing” agreement in a capital raising exercise. A warrant for the arrest of the businessman, who failed to attend the court hearing, was earlier issued by the court.Chim Pui-chung, 78, then substantial shareholder of Asia Resources Holdings Limited (Asia Resources); and Ricky Chim Kim-lun, 55, then chairman of Asia Resources, were found guilty of two counts of conspiracy to defraud, contrary to the Common Law.Ma Zhonghong, 51, the businessman implicated, was charged with the abovementioned two counts of conspiracy to defraud, and one of dealing with property known or reasonably believed to represent proceeds of an indictable offence (commonly known as money laundering), contrary to section 25(1) of the Organized and Serious Crimes Ordinance.Wong Poe-lai, 68, then employee of Ma, was found guilty of one count of money laundering.In the reasons for verdict handed down today, Judge Mr Ernest Lin Kam-hung deplored the co-conspirators in the present case for their involvement in underhand dealings. Through financial shenanigans, the co-conspirators had sold a listed company like their private property for personal gain.The judge adjourned the case to January 8 next year for mitigation and sentence, as well as the hearing of the prosecution’s application for a confiscation order. Chim Pui-chung, Ricky Chim and Wong were remanded in the custody of the Correctional Services Department.The present case stemmed from a corruption complaint referred to the ICAC by the Securities and Futures Commission (SFC). Upon completion of the ICAC investigation, four individuals taking part in the secret “backdoor listing” scheme were charged with conspiracy to defraud and money laundering.An ICAC spokesperson notes that the Commission will continue its close collaboration with financial regulators to combat corruption and related crimes involving listed companies, and continue to enhance corporate governance of listed company through corruption prevention and education. The ICAC will strive to uphold integrity and fair operation of the Hong Kong financial market and to foster the confidence of stakeholders in the financial system.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 mid-October 2008, his son, Ricky Chim, was appointed as an executive director of Asia Resources on the following day, and served as chairman of its board of directors between December 19, 2008 and December 11, 2014.The court heard that in July 2013, Chim Pui-chung and Ricky Chim negotiated with Ma in private a “backdoor listing” agreement selling the control of Asia Resources to Ma. On the basis that the entire 100 per cent shareholding of Asia Resources would cost $300 million, the trio made an agreement for Ma to pay Chim Pui-chung a sum of about $210 million to control 70 to 75 per cent of the entire issued share capital of Asia Resources (the “backdoor listing” agreement).In order to execute the “backdoor listing” agreement, Ricky Chim, as the chairman of Asia Resources, chaired two board meetings in late July and early August 2013. At the meetings, directors of Asia Resources resolved and approved to proceed with the placing of new shares and the issuance of convertible notes to raise funds of over $550 million (capital-raising exercise). Ricky Chim, who voted on both occasions, declared that he did not have any interest in the capital-raising exercise and he had never disclosed the “backdoor listing” agreement to Asia Resources. The placing of new shares in the capital-raising exercise was completed in late July 2013.In mid-August and mid-September 2013, Asia Resources respectively published an announcement and a circular in relation to the issuance of convertible notes in the capital-raising exercise, stating that no directors and shareholders had a material interest in the issuance of convertible notes, and no shareholders were required to abstain from voting in the special general meeting concerned. At the special general meeting held on October 3, 2013, Chim Pui-chung voted for the issuance of convertible notes. The resolution was eventually passed by shareholders.…/3ICAC enquiries revealed that Chim Pui-chung received a total sum of $169 million from Ma pursuant to the “backdoor listing” agreement about a month after Asia Resources approved of the capital-raising exercise.Chim Pui-chung and Ricky Chim had concealed from the SEHK the purpose of the capital-raising exercise, which was to increase the entire issued share capital of Asia Resources, thereby facilitating the execution of the “backdoor listing” agreement, causing the SEHK to approve the publication of the announcements and circulars in relation to the capital-raising exercise by Asia Resources, the court heard.Between October 2013 and January 2014, co-defendant Wong followed the instruction of her employer, Ma, to deal with proceeds of indictable offence, namely convertible notes issued by Asia Resources in the principal amount of $42 million.The SEHK and the SFC rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by Senior Public Prosecutors Ivan Shiu and Derek Wong, assisted by ICAC officers Matthew Tong and Vivian Poon. 05
Dec 2024Then employee of insurer charged by ICAC for soliciting bribe from broker firm director over motor insurance of 600 new taxisA then employee of an insurance company was charged by the ICAC yesterday (December 4) for allegedly soliciting a bribe from a director of a broker firm for assisting a client to take out motor insurance policies for 600 new taxis, involving premiums totalling over $24 million. The solicitation was rejected.Wong Ka-wing, 39, then team head of Bank of China Group Insurance Company Limited (BOCGI), faces one count of agent soliciting an advantage, contrary to section 9(1)(a) of the Prevention of Bribery Ordinance. He was released on ICAC bail, pending his appearance at the Eastern Magistrates’ Courts tomorrow (December 6) for mention.At the material time, the defendant was the team head of the brokers and agency business marketing department of BOCGI, which was responsible for liaising with broker firms, including Pro Insurance & Financial Management Limited (Pro Insurance), for selling insurance products such as motor insurance.Pro Insurance would arrange its clients to take out motor insurance policies from BOCGI for new taxis, and receive 5 per cent of the yearly premium of each policy from BOCGI as commission.In mid-2022, a client of Pro Insurance planned to take out vehicle insurance policies for over 600 new taxis. During the negotiation with BOCGI, a director of Pro Insurance proposed to lower the annual premium per vehicle from $45,500 to $40,000, or to increase the commission payable to Pro Insurance to 7.5 per cent.It is alleged that between November 2022 and January 2023, the defendant solicited a bribe from the director of Pro Insurance for assisting Pro Insurance to secure BOCGI approval of the insurance policy agreement. The bribe solicited ranged from 1 to 3 per cent of the total yearly insurance premiums of the agreement.The director of Pro Insurance did not accede to the defendant’s solicitation. Should the defendant’s bribery scheme have materialised, the total yearly premiums for over 600 new taxis, each paying $40,000 per year, would amount to over $24 million. Meanwhile, the bribe concerned would amount to over $240,000.BOCGI rendered full assistance to the ICAC during its investigation into the case. 04
Dec 2024Ex-manager of electric motors company charged by ICAC gets 54 months’ jail at High Court for $70m purchase orders fraud over conflict of interestA former manager of an electric motors company, charged by the ICAC, was today (December 4) sentenced to 54 months’ imprisonment at the Court of First Instance of the High Court for deceiving the company into placing over 1,300 purchase orders of electronic parts worth totalling over $70 million with a supplier in six and a half years by concealing the interest of himself and his family member in the supplier.Seh Yat-wing, 60, former manager of Johnson Electric Group, earlier pleaded guilty to two counts of fraud, contrary to section 16A of the Theft Ordinance.In sentencing, Mr Justice Andrew Chan Hing-wai noted that the defendant had abused his position, breached the trust in him and made a profit of nearly $7.4 million out of the scheme secretly. Having taken various mitigating factors into account, a 54 months’ imprisonment was imposed on the defendant.The ICAC advises business organisations to establish clear guidelines and systems of declaration on conflict of interest. Staff members of business organisations are reminded to avoid conflict of interest situations and to make timely declaration to their employers. Concealing any conflict of interest in relation to one’s official duties to benefit himself or his associates may constitute a breach of the Prevention of Bribery Ordinance or other criminal law.The court heard that publicly listed Johnson Electric Holdings Limited and its subsidiaries (collectively referred to as Johnson Electric Group) engaged in the manufacturing and sale of motion systems. In accordance with the policy of Johnson Electric Group managing conflict of interest, its employees should not engage in any business of its suppliers or customers. In addition, its employees should disclose relationships that may present a possible conflict of interest.The defendant joined Johnson Electric Group in 2006 as assistant manager and was promoted to manager in 2015. He was responsible for selecting suitable suppliers for the group and procuring electric parts.The ICAC investigation arose from a corruption complaint. Enquiries revealed that in September 2010, the defendant approved the applications of Eaton Enterprise Limited (Eaton) for registering as supplier of Johnson Electric Group. Between September 2010 and March 2017, Johnson Electric Group placed over 1,300 orders of electric parts with Eaton and settled payments amounted to over $70 million.ICAC enquiries revealed that the defendant concealed from Johnson Electric Group his or his family member’s interests in Eaton. At the material time, the defendant and the registered sole director cum shareholder of Eaton gave birth to a girl, but the defendant had never declared to Johnson Electric Group their relationship and his interest in Eaton. Had Johnson Electric Group known the relationship between the defendant and Eaton, it would not have registered Eaton as its supplier and placed orders with it.Enquiries also revealed that the defendant received from Eaton around $7.4 million out of the payments settled by Johnson Electric Group totalling over $70 million.Johnson Electric Group rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by Senior Public Prosecutor Audrey Parwani, assisted by ICAC officer Kenneth Chan. 03
Dec 2024Thirty-eight months’ jail for SME proprietor charged by ICAC over $3.8m loan fraud by overstating payroll expensesA proprietor of a Small and Medium Enterprise (SME), charged by the ICAC, was today (December 3) sentenced to 38 months’ imprisonment at the District Court for deceiving a bank into approving a loan of over $3.8 million under the Special 100% Loan Guarantee (SLG) scheme by overstating the number of staff employed by the company and its payroll expenses.Tony Fung Kam-fai, 45, proprietor of Dragon Win Motors China Company Limited (Dragon Win Motors), earlier pleaded guilty to one count of fraud, contrary to section 16A(1) of the Theft Ordinance.In sentencing, Judge Mrs Adriana Noelle Tse Ching remarked that the present case was serious in nature, and reprimanded the defendant for committing a fraud offence involving a substantial amount of money premeditatedly. The scheme would have continued if the defendant’s misdeeds were not detected.The court took a starting point of 45 months’ imprisonment. The defendant’s jail term was only reduced by 15 per cent as his guilty plea was entered after the trial commenced. Having considered other mitigating factors, the defendant was sentenced to 38 months’ imprisonment. The Judge added that the defendant had only himself to blame for his conviction and jail term received.The ICAC investigation arose from a corruption complaint, which subsequently revealed the above illicit SLG loans fraud. A total of six SME proprietors were charged in separate cases involving loans totalling about $19 million. Apart from Fung, two other defendants were earlier sentenced to 24 months’ and 22 months’ imprisonment respectively, following their guilty pleas. Another three defendants had their cases adjourned to February to May next year for plea, trial and verdict.The ICAC has been committed to maintaining a clean business environment in Hong Kong and providing integrity training for different industries. Business operators are reminded not to commit bribery or engage in illegal activities. For more information about the corruption prevention resources, please visit the webpage of "SMEs and Start-ups" under Hong Kong Business Ethics Development Centre.The court heard that in April 2020, HKMC Insurance Limited (HKMCI) launched the SLG under the SME Financing Guarantee Scheme to ease SMEs’ cash flow pressure under the pandemic. Loans approved by lenders were fully guaranteed by the government, of which the maximum facility amount was an SME’s total amount of wages paid to employees and rental payments for six months, or $4 million, whichever was the lower. Applicants were required to provide the lenders with the relevant proofs.Standard Chartered Bank (Hong Kong) Limited (Standard Chartered Bank) was one of the participating lenders under the scheme. After confirming an application received was legitimate, Standard Chartered Bank would forward the application to HKMCI for final review and approval to grant a guarantee.In August 2020, the defendant submitted an SLG application to Standard Chartered Bank, supported by two Mandatory Provident Fund (MPF) statements and records of contributions showing that Dragon Win Motors had made MPF contributions for nine employees in July 2020. In various relevant documents, the defendant confirmed that all the information which he provided was true and correct. Standard Chartered Bank subsequently granted a loan of over $3.8 million, which was granted a guarantee by HKMCI, to Dragon Win Motors.The ICAC investigation revealed that the defendant had made false representations about the salaries of himself and other employees in the two MPF statements submitted to Standard Chartered Bank. One of the employees concerned received a monthly salary of about $20,000, but the defendant falsely represented that the amount was $91,000.The defendant also admitted that he was not acquainted with the persons claimed to be his employees in the statements. ICAC enquiries also revealed that two days before the loan application submission, the defendant prepared an MPF employee registration form claiming that the employees joined the company in either April or May 2020 so as to produce false records of MPF contributions.After the loan was approved, the defendant reported to the MPF trustee that the employees concerned had resigned within the first 60 days of their employment. Dragon Win Motors was hence refunded all the relevant MPF contributions.The HKMCI and Standard Chartered Bank rendered full assistance to the ICAC during its investigation into the cases.The prosecution was today represented by Senior Public Prosecutor Ivan Shiu, assisted by ICAC officer Jasmine Chan. 28
Nov 2024Investment entrant fraud: Immigration consultant charged by ICAC faces 10 additional charges, four clients and an employee indictedThe ICAC had earlier charged a former proprietor of an immigration consultancy for allegedly conspiring with a client to deceive the Immigration Department (ImmD) into granting an investment entrant application by making false representation about the latter’s investment of HK$10 million in Hong Kong. Ten additional charges were laid against the proprietor yesterday (November 27) as enquiries by the Commission revealed that he was also implicated in other similar schemes. Meanwhile, four investment entrant applicants and an employee of the immigration consultancy concerned were also charged.Tam Chi-ming, 50, former sole director-cum-shareholder of Wealth Concepts Consultancy (Greater China) Limited (Wealth Concepts), was charged in June this year with one count of conspiracy to defraud, contrary to the Common Law. Upon receipt of further legal advice from the Department of Justice, Tam was charged with another 10 counts of similar offences yesterday.Four investment entrant applicants, aged between 44 and 51, namely Li Ju, Wei Xinwen, Lu Junkai and Cao Hongguang; and an immigration consultant of Wealth Concepts, Su Dajie, 38, were each charged with one count or two counts of conspiracy to defraud.The six defendants were released on ICAC bail, pending their appearance at the Kowloon City Magistrates’ Courts tomorrow (November 29) for mention. The prosecution will later make an application for transferring the case to the District Court for plea.In 2003, the Hong Kong Government implemented the Capital Investment Entrant Scheme (the Scheme) to facilitate the entry for residence by capital investment entrants. The ImmD was responsible for processing the relevant applications. An applicant to be granted a permission to stay in Hong Kong for two years must have net assets of a market value not less than HK$10 million throughout the two years preceding the application; and remain invested not less than HK$10 million in specific permissible investment asset classes within six months after the granting of approval-in-principle by the ImmD (the remain-invested requirement). Applicants may apply for permanent residency of Hong Kong or unconditional stay in Hong Kong respectively upon continuous ordinary residence of or investment in Hong Kong for not less than seven years.Applicants were prohibited from borrowing money for holding specified financial assets. In accordance with the remain-invested requirement, applicants were also not allowed to assign any interest in favour of others in the financial assets concerned. The Scheme was suspended in 2015.At the material time, Tam was the sole director-cum-shareholder of Wealth Concepts, which provided consultancy services to individuals for immigration to Hong Kong. Su was an immigration consultant of the company. At that time, a number of applicants of the Scheme engaged Wealth Concepts to handle their applications.Eight of the additional charges allege that between April 2016 and July 2024, Tam had conspired with eight applicants, including four co-defendants, Li, Wei, Lu and Cao, to defraud the ImmD, inducing the ImmD to grant their applications for immigration to Hong Kong and the subsequent extensions of stay in Hong Kong.False applications purporting to show that the eight applicants had met the investment requirement were allegedly submitted to falsely represent that they had each invested a total sum of HK$10 million in the bonds issued by a listed company in Hong Kong and remained the absolute beneficial owners of the investments.Another two additional charges allege that Tam and Su, a staff member of his company, conspired with another two applicants to defraud the ImmD, inducing the ImmD to grant their applications for immigration to Hong Kong and the subsequent extensions of stay in Hong Kong by similar means.The ICAC investigation arose from a corruption complaint. Enquiries revealed that the applicant did not have sufficient funds for meeting the relevant requirements on investment.Tam was earlier charged with one count of conspiracy to defraud. The case is scheduled for mention at the Kowloon City Magistrates’ Courts on February 13, 2025.An ICAC spokesperson noted that the Commission had kept reviewing various investment entrant and talent admission schemes with the relevant government departments so as to strengthen regulating the schemes to stamp out corruption or other malpractices. The ImmD had rendered full assistance to the ICAC during its investigation into the case.
Dec 2024Then substantial shareholder and chairman of listed company charged by ICAC guilty of conspiracy to defraud over ‘backdoor listing’, businessman wantedA then substantial shareholder of a listed company and its then chairman, charged by the ICAC, were today (December 9) convicted after trial at the District Court of conspiring with a businessman to defraud The Stock Exchange of Hong Kong Limited (SEHK), the listed company and its board of directors and shareholders by concealing a secret “backdoor listing” agreement in a capital raising exercise. A warrant for the arrest of the businessman, who failed to attend the court hearing, was earlier issued by the court.Chim Pui-chung, 78, then substantial shareholder of Asia Resources Holdings Limited (Asia Resources); and Ricky Chim Kim-lun, 55, then chairman of Asia Resources, were found guilty of two counts of conspiracy to defraud, contrary to the Common Law.Ma Zhonghong, 51, the businessman implicated, was charged with the abovementioned two counts of conspiracy to defraud, and one of dealing with property known or reasonably believed to represent proceeds of an indictable offence (commonly known as money laundering), contrary to section 25(1) of the Organized and Serious Crimes Ordinance.Wong Poe-lai, 68, then employee of Ma, was found guilty of one count of money laundering.In the reasons for verdict handed down today, Judge Mr Ernest Lin Kam-hung deplored the co-conspirators in the present case for their involvement in underhand dealings. Through financial shenanigans, the co-conspirators had sold a listed company like their private property for personal gain.The judge adjourned the case to January 8 next year for mitigation and sentence, as well as the hearing of the prosecution’s application for a confiscation order. Chim Pui-chung, Ricky Chim and Wong were remanded in the custody of the Correctional Services Department.The present case stemmed from a corruption complaint referred to the ICAC by the Securities and Futures Commission (SFC). Upon completion of the ICAC investigation, four individuals taking part in the secret “backdoor listing” scheme were charged with conspiracy to defraud and money laundering.An ICAC spokesperson notes that the Commission will continue its close collaboration with financial regulators to combat corruption and related crimes involving listed companies, and continue to enhance corporate governance of listed company through corruption prevention and education. The ICAC will strive to uphold integrity and fair operation of the Hong Kong financial market and to foster the confidence of stakeholders in the financial system.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 mid-October 2008, his son, Ricky Chim, was appointed as an executive director of Asia Resources on the following day, and served as chairman of its board of directors between December 19, 2008 and December 11, 2014.The court heard that in July 2013, Chim Pui-chung and Ricky Chim negotiated with Ma in private a “backdoor listing” agreement selling the control of Asia Resources to Ma. On the basis that the entire 100 per cent shareholding of Asia Resources would cost $300 million, the trio made an agreement for Ma to pay Chim Pui-chung a sum of about $210 million to control 70 to 75 per cent of the entire issued share capital of Asia Resources (the “backdoor listing” agreement).In order to execute the “backdoor listing” agreement, Ricky Chim, as the chairman of Asia Resources, chaired two board meetings in late July and early August 2013. At the meetings, directors of Asia Resources resolved and approved to proceed with the placing of new shares and the issuance of convertible notes to raise funds of over $550 million (capital-raising exercise). Ricky Chim, who voted on both occasions, declared that he did not have any interest in the capital-raising exercise and he had never disclosed the “backdoor listing” agreement to Asia Resources. The placing of new shares in the capital-raising exercise was completed in late July 2013.In mid-August and mid-September 2013, Asia Resources respectively published an announcement and a circular in relation to the issuance of convertible notes in the capital-raising exercise, stating that no directors and shareholders had a material interest in the issuance of convertible notes, and no shareholders were required to abstain from voting in the special general meeting concerned. At the special general meeting held on October 3, 2013, Chim Pui-chung voted for the issuance of convertible notes. The resolution was eventually passed by shareholders.…/3ICAC enquiries revealed that Chim Pui-chung received a total sum of $169 million from Ma pursuant to the “backdoor listing” agreement about a month after Asia Resources approved of the capital-raising exercise.Chim Pui-chung and Ricky Chim had concealed from the SEHK the purpose of the capital-raising exercise, which was to increase the entire issued share capital of Asia Resources, thereby facilitating the execution of the “backdoor listing” agreement, causing the SEHK to approve the publication of the announcements and circulars in relation to the capital-raising exercise by Asia Resources, the court heard.Between October 2013 and January 2014, co-defendant Wong followed the instruction of her employer, Ma, to deal with proceeds of indictable offence, namely convertible notes issued by Asia Resources in the principal amount of $42 million.The SEHK and the SFC rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by Senior Public Prosecutors Ivan Shiu and Derek Wong, assisted by ICAC officers Matthew Tong and Vivian Poon. 05
Dec 2024Then employee of insurer charged by ICAC for soliciting bribe from broker firm director over motor insurance of 600 new taxisA then employee of an insurance company was charged by the ICAC yesterday (December 4) for allegedly soliciting a bribe from a director of a broker firm for assisting a client to take out motor insurance policies for 600 new taxis, involving premiums totalling over $24 million. The solicitation was rejected.Wong Ka-wing, 39, then team head of Bank of China Group Insurance Company Limited (BOCGI), faces one count of agent soliciting an advantage, contrary to section 9(1)(a) of the Prevention of Bribery Ordinance. He was released on ICAC bail, pending his appearance at the Eastern Magistrates’ Courts tomorrow (December 6) for mention.At the material time, the defendant was the team head of the brokers and agency business marketing department of BOCGI, which was responsible for liaising with broker firms, including Pro Insurance & Financial Management Limited (Pro Insurance), for selling insurance products such as motor insurance.Pro Insurance would arrange its clients to take out motor insurance policies from BOCGI for new taxis, and receive 5 per cent of the yearly premium of each policy from BOCGI as commission.In mid-2022, a client of Pro Insurance planned to take out vehicle insurance policies for over 600 new taxis. During the negotiation with BOCGI, a director of Pro Insurance proposed to lower the annual premium per vehicle from $45,500 to $40,000, or to increase the commission payable to Pro Insurance to 7.5 per cent.It is alleged that between November 2022 and January 2023, the defendant solicited a bribe from the director of Pro Insurance for assisting Pro Insurance to secure BOCGI approval of the insurance policy agreement. The bribe solicited ranged from 1 to 3 per cent of the total yearly insurance premiums of the agreement.The director of Pro Insurance did not accede to the defendant’s solicitation. Should the defendant’s bribery scheme have materialised, the total yearly premiums for over 600 new taxis, each paying $40,000 per year, would amount to over $24 million. Meanwhile, the bribe concerned would amount to over $240,000.BOCGI rendered full assistance to the ICAC during its investigation into the case. 04
Dec 2024Ex-manager of electric motors company charged by ICAC gets 54 months’ jail at High Court for $70m purchase orders fraud over conflict of interestA former manager of an electric motors company, charged by the ICAC, was today (December 4) sentenced to 54 months’ imprisonment at the Court of First Instance of the High Court for deceiving the company into placing over 1,300 purchase orders of electronic parts worth totalling over $70 million with a supplier in six and a half years by concealing the interest of himself and his family member in the supplier.Seh Yat-wing, 60, former manager of Johnson Electric Group, earlier pleaded guilty to two counts of fraud, contrary to section 16A of the Theft Ordinance.In sentencing, Mr Justice Andrew Chan Hing-wai noted that the defendant had abused his position, breached the trust in him and made a profit of nearly $7.4 million out of the scheme secretly. Having taken various mitigating factors into account, a 54 months’ imprisonment was imposed on the defendant.The ICAC advises business organisations to establish clear guidelines and systems of declaration on conflict of interest. Staff members of business organisations are reminded to avoid conflict of interest situations and to make timely declaration to their employers. Concealing any conflict of interest in relation to one’s official duties to benefit himself or his associates may constitute a breach of the Prevention of Bribery Ordinance or other criminal law.The court heard that publicly listed Johnson Electric Holdings Limited and its subsidiaries (collectively referred to as Johnson Electric Group) engaged in the manufacturing and sale of motion systems. In accordance with the policy of Johnson Electric Group managing conflict of interest, its employees should not engage in any business of its suppliers or customers. In addition, its employees should disclose relationships that may present a possible conflict of interest.The defendant joined Johnson Electric Group in 2006 as assistant manager and was promoted to manager in 2015. He was responsible for selecting suitable suppliers for the group and procuring electric parts.The ICAC investigation arose from a corruption complaint. Enquiries revealed that in September 2010, the defendant approved the applications of Eaton Enterprise Limited (Eaton) for registering as supplier of Johnson Electric Group. Between September 2010 and March 2017, Johnson Electric Group placed over 1,300 orders of electric parts with Eaton and settled payments amounted to over $70 million.ICAC enquiries revealed that the defendant concealed from Johnson Electric Group his or his family member’s interests in Eaton. At the material time, the defendant and the registered sole director cum shareholder of Eaton gave birth to a girl, but the defendant had never declared to Johnson Electric Group their relationship and his interest in Eaton. Had Johnson Electric Group known the relationship between the defendant and Eaton, it would not have registered Eaton as its supplier and placed orders with it.Enquiries also revealed that the defendant received from Eaton around $7.4 million out of the payments settled by Johnson Electric Group totalling over $70 million.Johnson Electric Group rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by Senior Public Prosecutor Audrey Parwani, assisted by ICAC officer Kenneth Chan. 03
Dec 2024Thirty-eight months’ jail for SME proprietor charged by ICAC over $3.8m loan fraud by overstating payroll expensesA proprietor of a Small and Medium Enterprise (SME), charged by the ICAC, was today (December 3) sentenced to 38 months’ imprisonment at the District Court for deceiving a bank into approving a loan of over $3.8 million under the Special 100% Loan Guarantee (SLG) scheme by overstating the number of staff employed by the company and its payroll expenses.Tony Fung Kam-fai, 45, proprietor of Dragon Win Motors China Company Limited (Dragon Win Motors), earlier pleaded guilty to one count of fraud, contrary to section 16A(1) of the Theft Ordinance.In sentencing, Judge Mrs Adriana Noelle Tse Ching remarked that the present case was serious in nature, and reprimanded the defendant for committing a fraud offence involving a substantial amount of money premeditatedly. The scheme would have continued if the defendant’s misdeeds were not detected.The court took a starting point of 45 months’ imprisonment. The defendant’s jail term was only reduced by 15 per cent as his guilty plea was entered after the trial commenced. Having considered other mitigating factors, the defendant was sentenced to 38 months’ imprisonment. The Judge added that the defendant had only himself to blame for his conviction and jail term received.The ICAC investigation arose from a corruption complaint, which subsequently revealed the above illicit SLG loans fraud. A total of six SME proprietors were charged in separate cases involving loans totalling about $19 million. Apart from Fung, two other defendants were earlier sentenced to 24 months’ and 22 months’ imprisonment respectively, following their guilty pleas. Another three defendants had their cases adjourned to February to May next year for plea, trial and verdict.The ICAC has been committed to maintaining a clean business environment in Hong Kong and providing integrity training for different industries. Business operators are reminded not to commit bribery or engage in illegal activities. For more information about the corruption prevention resources, please visit the webpage of "SMEs and Start-ups" under Hong Kong Business Ethics Development Centre.The court heard that in April 2020, HKMC Insurance Limited (HKMCI) launched the SLG under the SME Financing Guarantee Scheme to ease SMEs’ cash flow pressure under the pandemic. Loans approved by lenders were fully guaranteed by the government, of which the maximum facility amount was an SME’s total amount of wages paid to employees and rental payments for six months, or $4 million, whichever was the lower. Applicants were required to provide the lenders with the relevant proofs.Standard Chartered Bank (Hong Kong) Limited (Standard Chartered Bank) was one of the participating lenders under the scheme. After confirming an application received was legitimate, Standard Chartered Bank would forward the application to HKMCI for final review and approval to grant a guarantee.In August 2020, the defendant submitted an SLG application to Standard Chartered Bank, supported by two Mandatory Provident Fund (MPF) statements and records of contributions showing that Dragon Win Motors had made MPF contributions for nine employees in July 2020. In various relevant documents, the defendant confirmed that all the information which he provided was true and correct. Standard Chartered Bank subsequently granted a loan of over $3.8 million, which was granted a guarantee by HKMCI, to Dragon Win Motors.The ICAC investigation revealed that the defendant had made false representations about the salaries of himself and other employees in the two MPF statements submitted to Standard Chartered Bank. One of the employees concerned received a monthly salary of about $20,000, but the defendant falsely represented that the amount was $91,000.The defendant also admitted that he was not acquainted with the persons claimed to be his employees in the statements. ICAC enquiries also revealed that two days before the loan application submission, the defendant prepared an MPF employee registration form claiming that the employees joined the company in either April or May 2020 so as to produce false records of MPF contributions.After the loan was approved, the defendant reported to the MPF trustee that the employees concerned had resigned within the first 60 days of their employment. Dragon Win Motors was hence refunded all the relevant MPF contributions.The HKMCI and Standard Chartered Bank rendered full assistance to the ICAC during its investigation into the cases.The prosecution was today represented by Senior Public Prosecutor Ivan Shiu, assisted by ICAC officer Jasmine Chan. 28
Nov 2024Investment entrant fraud: Immigration consultant charged by ICAC faces 10 additional charges, four clients and an employee indictedThe ICAC had earlier charged a former proprietor of an immigration consultancy for allegedly conspiring with a client to deceive the Immigration Department (ImmD) into granting an investment entrant application by making false representation about the latter’s investment of HK$10 million in Hong Kong. Ten additional charges were laid against the proprietor yesterday (November 27) as enquiries by the Commission revealed that he was also implicated in other similar schemes. Meanwhile, four investment entrant applicants and an employee of the immigration consultancy concerned were also charged.Tam Chi-ming, 50, former sole director-cum-shareholder of Wealth Concepts Consultancy (Greater China) Limited (Wealth Concepts), was charged in June this year with one count of conspiracy to defraud, contrary to the Common Law. Upon receipt of further legal advice from the Department of Justice, Tam was charged with another 10 counts of similar offences yesterday.Four investment entrant applicants, aged between 44 and 51, namely Li Ju, Wei Xinwen, Lu Junkai and Cao Hongguang; and an immigration consultant of Wealth Concepts, Su Dajie, 38, were each charged with one count or two counts of conspiracy to defraud.The six defendants were released on ICAC bail, pending their appearance at the Kowloon City Magistrates’ Courts tomorrow (November 29) for mention. The prosecution will later make an application for transferring the case to the District Court for plea.In 2003, the Hong Kong Government implemented the Capital Investment Entrant Scheme (the Scheme) to facilitate the entry for residence by capital investment entrants. The ImmD was responsible for processing the relevant applications. An applicant to be granted a permission to stay in Hong Kong for two years must have net assets of a market value not less than HK$10 million throughout the two years preceding the application; and remain invested not less than HK$10 million in specific permissible investment asset classes within six months after the granting of approval-in-principle by the ImmD (the remain-invested requirement). Applicants may apply for permanent residency of Hong Kong or unconditional stay in Hong Kong respectively upon continuous ordinary residence of or investment in Hong Kong for not less than seven years.Applicants were prohibited from borrowing money for holding specified financial assets. In accordance with the remain-invested requirement, applicants were also not allowed to assign any interest in favour of others in the financial assets concerned. The Scheme was suspended in 2015.At the material time, Tam was the sole director-cum-shareholder of Wealth Concepts, which provided consultancy services to individuals for immigration to Hong Kong. Su was an immigration consultant of the company. At that time, a number of applicants of the Scheme engaged Wealth Concepts to handle their applications.Eight of the additional charges allege that between April 2016 and July 2024, Tam had conspired with eight applicants, including four co-defendants, Li, Wei, Lu and Cao, to defraud the ImmD, inducing the ImmD to grant their applications for immigration to Hong Kong and the subsequent extensions of stay in Hong Kong.False applications purporting to show that the eight applicants had met the investment requirement were allegedly submitted to falsely represent that they had each invested a total sum of HK$10 million in the bonds issued by a listed company in Hong Kong and remained the absolute beneficial owners of the investments.Another two additional charges allege that Tam and Su, a staff member of his company, conspired with another two applicants to defraud the ImmD, inducing the ImmD to grant their applications for immigration to Hong Kong and the subsequent extensions of stay in Hong Kong by similar means.The ICAC investigation arose from a corruption complaint. Enquiries revealed that the applicant did not have sufficient funds for meeting the relevant requirements on investment.Tam was earlier charged with one count of conspiracy to defraud. The case is scheduled for mention at the Kowloon City Magistrates’ Courts on February 13, 2025.An ICAC spokesperson noted that the Commission had kept reviewing various investment entrant and talent admission schemes with the relevant government departments so as to strengthen regulating the schemes to stamp out corruption or other malpractices. The ImmD had rendered full assistance to the ICAC during its investigation into the case.