Recent ICAC Cases


20
Oct 2021
Ex-manager of aircraft maintenance company charged by ICAC jailed for $1.5m order fraudA former manager of an aircraft maintenance company, charged by the ICAC, was today (October 20) sentenced to 27 months’ imprisonment at the District Court after being convicted of fraud over purchase orders for toolings which contained unnecessary technical drawings worth about $1.5 million.Wu Kwok-man, 65, former production engineering manager of Hong Kong Aircraft Engineering Company Limited (HAECO), was today found guilty of two counts of fraud, contrary to Section 16A(1) of the Theft Ordinance.In sentencing, Judge Stanley Chan Kwong-chi reprimanded the defendant for breaching the trust placed on him and abusing his power and position in HAECO. The defendant had also wasted the manpower and resources of the company, causing a loss to his former employer.The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the above offences.The court heard at the material time, HAECO provided aircraft maintenance, repair and overhaul services to its clients. As the head of the component repair team of HAECO, the defendant was responsible for developing, manufacturing and purchasing toolings used in its aircraft maintenance and repair services. Contractors supplying toolings to HAECO were required to manufacture the toolings and provide the relevant technical drawings.Between February 2015 and October 2016, the defendant had caused HAECO to place 69 purchase orders worth totalling about $2.5 million with two contractors for manufacturing 185 toolings and the supply of the relevant technical drawings.HAECO received all the toolings but the two contractors could only provide some of the technical drawings. However, the technical drawings of all 185 toolings were subsequently found in HAECO’s internal system.ICAC enquiries revealed that the defendant had concealed from HAECO that he had instructed his subordinate engineers to design and prepare those technical drawings. The technical drawings submitted by one of the contractors were copied from technical drawings in HAECO’s system provided by the defendant.HAECO purchased the toolings with the two contractors at prices which included the supply of technical drawings which were not required in the first place. The prices involved amounted to about $1.5 million.HAECO did not allow the defendant to instruct its engineers to prepare technical drawings for contractors and to supply contractors with the technical drawings which belonged to HAECO. Had HAECO known that the company was in possession of the technical drawings concerned, it would not have placed the orders with the two contractors or settled the relevant payments with them.HAECO reported the matter to the ICAC after it was revealed, and rendered full assistance to the Commission during its investigation into the case.The prosecution was today represented by prosecuting counsel Lisa Remedios, assisted by ICAC officers Frankie Chow and Francis Tsang.
19
Oct 2021
Plumbing subcontractors charged by ICAC with $1m wage fraudThe ICAC yesterday (October 18) charged two third-tier subcontractors of the construction projects of the Hong Kong Children’s Hospital and a private residential estate in Ma On Shan with defrauding two second-tier subcontractors of wage payments totalling about $1 million by overstating daily wages of eight plumbers.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 charging the two third-tier plumbing subcontractors.Sze Kin-chung, 48, and Chu Cheuk-wah, 58, jointly face two counts of conspiracy to defraud, contrary to Common Law. Sze alone further faces six counts of fraud, contrary to Section 16A of the Theft Ordinance. The offences took place between November 2016 and September 2018.The defendants were released on ICAC bail, pending their court appearance in the Eastern Magistrates’ Courts tomorrow (October 20) for the case to be transferred to the District Court for plea.At the material time, Kin Win Engineering Limited (Kin Win) and Onplus Plumbing Engineering Limited (Onplus) took part in two construction projects respectively involving the Hong Kong Children’s Hospital and a private residential estate in Ma On Shan as second-tier subcontractors. Operators of the two second-tier subcontractors subcontracted the plumbing work of the two projects to Sze and Chu.According to the subcontracting agreements, Sze and Chu were required to supply plumbers to Kin Win and Onplus for the two projects and report the exact daily wages of the plumbers for wage calculation.One of the charges alleges that Sze and Chu conspired together to defraud Kin Win and Onplus that a plumber had requested a daily wage of $1,500, thereby inducing Kin Win and Onplus to calculate and release wages to the plumber based on the requested daily wage.Another charge alleges that the two defendants conspired together to defraud Kin Win that another plumber had requested a daily wage of $1,150 by similar fraudulent means.Two other charges allege that Sze falsely represented to Kin Win and Onplus that another two plumbers had each requested a daily wage of $1,500 and with intent to defraud, induced Kin Win and Onplus to calculate and release wages to the two plumbers based on the requested daily wages which resulted in the benefit to Sze or in prejudice to Kin Win and Onplus.The four remaining charges allege that Sze falsely represented to Kin Win that another four plumbers had requested a daily wage of $1,400 and $1,500 respectively by similar fraudulent means.ICAC enquiries revealed that the actual daily wages requested by the eight plumbers in fact ranged from $750 to $1,100 but they were overstated by Sze and Chu to Kin Win and Onplus to a range from $1,150 to $1,500. The total wages were overstated by about $1 million.The Hospital Authority, Kin Win and Onplus have rendered full assistance to the ICAC during its investigation into the case.
18
Oct 2021
Ex-employee of vehicle distributor charged by ICAC jailed for Euro 50,000 warranty claim fraudA former employee of a vehicle distributor, charged by the ICAC, was today (October 18) sentenced to 18 months’ imprisonment at the Fanling Magistrates’ Courts for defrauding a vehicle manufacturer of warranty claims for repair works totalling over Euro 50,000.Leung Pak-lim, 35, former technical officer of Regal Motors Limited (Regal Motors) was earlier found guilty of two charges – one of conspiracy to defraud, contrary to Common Law; and one of conspiracy to use a false instrument, contrary to Sections 73 and 159A of the Crimes Ordinance.In sentencing, Magistrate Mr Kenneth Chan Ping-chau said the case involved an overseas victim. The offences committed by the defendant had harmed the interest of honest business operators and undermined Hong Kong’s image as a clean and level playing field for businesses. Hence, there was no justification for any reduction in the defendant’s jail term.The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the above offences.The court heard that between 1970 and 2019, Regal Motors was the sole distributor of products of German vehicle manufacturer MAN Truck & Bus SE (MAN Truck & Bus) in Hong Kong. MAN Truck & Bus provided a two-year warranty for chassis of vehicles sold by Regal Motors. Where repairs conducted by Regal Motors for its customers were covered by warranties, it was required to submit warranty claims to MAN Truck & Bus.At the material time, the defendant was a technical officer posted to Regal Motors’ technical team. The team was responsible for assisting customers to activate their warranties, and submit warranty claims for repair works covered by warranty.In May 2018, the defendant conspired with a technical trainee of Regal Motors to activate the warranty of a customer’s vehicle by submitting a false vehicle registration document to MAN Truck & Bus.ICAC enquiries revealed that the first registration date was amended by the defendant to a later date as the deadline for activating the warranty had passed. Thus, MAN Truck & Bus was induced to approve the application for activating the warranty.Regal Motors subsequently conducted repairs for the vehicle on four occasions and the repair costs, totalling over Euro 6,900, were borne by MAN Truck & Bus under the warranty.The court also heard that in June 2018, the defendant found that some vehicles repaired by Regal Motors were not covered by warranty. He then conspired with the assistant technical manager of the technical team and the aforesaid technical trainee to submit 53 false warranty claims to MAN Truck & Bus between June and November 2018. They falsely represented that the warranty claims involved vehicles of similar models covered by warranty. As a result, MAN Truck & Bus was induced to settle warranty claims totalling over Euro 43,000.Regal Motors and MAN Truck & Bus had rendered full assistance to the ICAC during its investigation into the case.The prosecution was today represented by prosecuting counsel Stephen Ma, assisted by ICAC officer Tom Li.
16
Oct 2021
Four charged by ICAC sentenced for conspiracy to defraud over bonds placement of listed company2021-10-16 Four persons, including two former senior executives of a then listed company, charged by the ICAC, were today (October 16) sentenced to jail terms up to seven months at the District Court for conspiracy to defraud the company and its board of directors and shareholders as well as The Stock Exchange of Hong Kong Limited (SEHK) over the placement of bonds issued by the listed company.Mak Kwong-yiu, 47, former executive director of Convoy Financial Services Holdings Limited (Convoy Financial Services) was jailed for seven months, while Lee Yick-ming, 51, former general manager of Gransing Securities Co., Limited (Gransing), received a jail term of five months.Co-defendants Chan Lai-yee, 49, former financial controller of Convoy Financial Services (later promoted to chief financial officer) and Wong Shuk-on, 42, former manager of Convoy Financial Services, were respectively sentenced to five months’ and four months’ imprisonment, both suspended for 18 months.In addition, Mak and Chan were respectively disqualified from being company directors for three years and two years.In sentencing, Deputy Judge Mr Newman Wong said the court had considered the adverse impacts of the case on the society and the financial system. He also reprimanded Mak for not following the listing rules and not declaring his conflict of interests. Failure to observe the law was unacceptable in Hong Kong.The four defendants were earlier convicted of one count of conspiracy to defraud, contrary to Common Law. Mak, Chan and Wong were further found guilty of another similar offence.The court heard that at the material time, Convoy Financial Services, later renamed as Convoy Financial Holdings Limited, was listed (publicly listed Convoy) on the Main Board of the SEHK. Gransing and Convoy Investment Services Limited (CIS), which was not a subsidiary of publicly listed Convoy, both provided dealing in securities regulated activity, such as bonds placement.Mak and two other former executive directors of publicly listed Convoy held substantial shares of CIS. The annual report of publicly listed Convoy at the material time disclosed that CIS was its connected person.On four occasions between July 8, 2014 and January 21, 2015, publicly listed Convoy engaged Gransing as the placing agent of four bond placing exercises of the publicly listed Convoy.The court heard that the defendants conspired together to arrange Gransing to further engage CIS as the sub-placing agent of the four exercises. One of the sub-placing letters was issued two weeks before Gransing was engaged by the publicly listed Convoy as a placing agent.CIS subsequently received around $49.6 million as sub-placing commission from publicly listed Convoy via Gransing and $1.2 million as bonus from Gransing under the sub-placing arrangements. In fact, Gransing did not place any bonds with any investor and CIS was the actual placing agent.The court heard that it was never disclosed to publicly listed Convoy and its board of directors and shareholders as well as the SEHK that CIS was the actual placing agent of the four bonds.Failure of the disclosure would have deprived shareholders of publicly listed Convoy of the right to vote for or against the sub-placing arrangements, and hindered SEHK’s enforcement of the Rules Governing the Listing of Securities on the SEHK.ICAC’s investigation commenced upon receiving complaints in 2017 which alleged breaches of the Prevention of Bribery Ordinance and the Securities and Futures Ordinance. The ICAC and the Securities and Futures Commission (SFC) jointly mounted an operation in December 2017. The SFC, SEHK and the then publicly listed Convoy have rendered full assistance to the ICAC during its investigation.The ICAC will continue to collaborate with relevant regulatory bodies, including the SFC, to combat corrupt and illicit activities in the financial market so as to uphold the integrity of the market, maintain a level playing field for businesses, and sustain Hong Kong’s status as an international financial centre.The ICAC has made continuous and proactive efforts in assisting listed companies in enhancing their corporate governance. The ICAC has developed and publicised on its website a practical guide to assist listed companies to put in place good corporate governance systems and effective internal control measures; and has also been offering free and tailor-made service to assist listed companies in enhancing their corporate governance upon request.The ICAC attaches great importance to the integrity standard of listed companies. Through the Ethics Promotion Programme for listed companies and continuous professional development courses, messages of ethical leadership and good corporate governance have been promulgated to directors, senior executives and governance professionals of listed companies for safeguarding the interest of different stakeholders. The Commission also approaches all newly listed companies proactively to promote our corruption prevention services, including training for all levels of staff to enhance their understanding of the anti-corruption law and remind them to comply with relevant laws and regulations.The prosecution was today represented by Acting Deputy Director of Public Prosecutions Jonathan Man, Senior Assistant Director of Public Prosecutions Alice Chan and Senior Public Prosecutor Human Lam, assisted by ICAC officers Esther Poon and Neville Wong.
06
Oct 2021
ICAC charges ex-employee of vehicle distributor with $100,000 fraud over warranty claimsThe ICAC today (October 6) charged a former assistant technical manager of a vehicle distributor with defrauding a vehicle manufacturer of warranty claims for repair works totalling about $100,000.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 charges be laid against the former assistant technical manager.Samuel-mark Leung Pak-hong, 51, former assistant technical manager of Regal Motors Limited (Regal Motors), faces two counts of conspiracy to defraud, contrary to Common Law.The defendant was released on ICAC bail, pending his appearance in the Fanling Magistrates’ Courts on Friday (October 8) for plea.Between 1970 and 2019, Regal Motors was the sole distributor of products of German vehicle manufacturer MAN Truck & Bus SE (MAN Truck & Bus) in Hong Kong. MAN Truck & Bus provided a two-year warranty for chassis of vehicles sold by Regal Motors. Where repairs conducted by Regal Motors for its customers were covered by warranties, it would submit warranty claims to MAN Truck & Bus.At the material time, the defendant was an assistant technical manager of Regal Motors’ technical team which was responsible for assisting customers to activate their warranties. The defendant’s subordinates included a technical trainee and a technical officer.The alleged offences took place between May 1, 2017 and January 30, 2018.The charges allege that the defendant conspired with the aforesaid technical trainee and technical officer respectively to defraud MAN Truck & Bus by dishonestly falsely representing in 18 warranty claims for repair of vehicles that the vehicles were covered by a valid warranty, thereby causing and inducing MAN Truck & Bus to settle warranty claims totalling about $100,000.Regal Motors and MAN Truck & Bus have rendered full assistance to the ICAC during its investigation into the case.

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