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HK graft buster arrests six over credit fraud

HONG KONG: Hong Kong's anti-graft agency said on Wednesday it had arrested six people, including a director and a financial controller of a China-backed investment firm, for alleged fraud facilitated by bribery.

The Independent Commission Against Corruption (ICAC) said in a statement that the case involved fraudulent letters of credit amounting to HK$92 million (US$11.8 million).

An accounting clerk of the Chinese "window company" -- a firm set up in Hong Kong by a Chinese regional government to act as an investment conduit for that area -- was also arrested.

The other three arrested were a financial officer and a director of a local investment company, and the proprietor of a chemicals company, the ICAC said.

It did not identify the window company or the local investment firm.

The ICAC said the six had allegedly conspired to use false documents to apply for a total of 20 letters of credit from three banks between 1997 and 1998.

It did not reveal the name of the banks.

The "bogus transactions" allegedly related to the sale and purchase of a total of 80,000 tonnes of steel bars for construction use, the anti-corruption police said.

"Under the scam, three banks in Hong Kong were deceived into issuing L/Cs worth HK$92 million in total, about half of the amounts had turned bad debts," it said.

It was also alleged that the funds obtained from the banks had been used by the directors of the window company for speculation in the property and stock markets.

The arrested have all been released on bail, the ICAC said.

The anti-graft watchdog said it would continue its investigation into "corruption allegations regarding banking staff". -Reuters