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A solicitor and a solicitor’s clerk are among seven people arrested for allegedly swindling money with bogus standby letters of credit (LCs) in Hong Kong. Paul Chan & Co Solicitors proprietor Chan Nai-keung, the firm’s law clerk Chiang Pak-yeung, Wah Shun Investment Enterprise proprietor Zhong Peihong, merchant Lam Chun, Andy Chan, Albert Lee, and Lui Chung-yee, have appeared in Eastern Magistracy facing one joint charge of conspiracy to use a copy of a false instrument.

The case arose from a corruption complaint involving a solicitor, a law clerk and a criminal syndicate alleged to have swindled money from China mainland merchants with bogus standby letters of credit.

The defendants are alleged to have conspired together to use a false document purported to be a standby letter of credit issued by JPMorgan Chase Bank in New York. The alleged offence took place in January.
This follows the recent arrest by Chinese authorities of dozens of government officials and others accused in a scheme to steal Rmb7.4bn (US$900mn) from a state bank through fraudulent loans.

Prosecutors intend to file charges against 69 people including former employees of the Industrial and Commercial Bank of China, one of the country’s four main state-owned commercial banks.

The government has dismissed 80 officials accused of colluding in the scheme and some of them are among those being prosecuted.
China’s major state-owned banks are undergoing intensive audits in an effort to tighten their controls before they try to raise capital by selling shares on foreign stock exchanges.

According to investigators, the scheme at ICBC was led by businessman Feng Mingchang, who was found to have defrauded the bank’s branch in Foshan, a city in Guangdong province near Hong Kong.

Dozens of bank and government officials are accused of forging false letters of credit and proof of land and property in order for Feng to receive loans.
More than Rmb2bn (US$240mn) still has not been recovered, according to reports.
The case adds to a string of multimillion-dollar bank frauds uncovered at Chinese state banks in recent years.