The Carrian Group case in HK
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hahaha yeah. Don't forget pirated cds and ah long hehe
And i too need to put the same disclaimer as b00n's
And i too need to put the same disclaimer as b00n's
Thing is, the Chinese have a history of being slimy businessmen. They'll pretty much sell their souls to make a quick buck. Not scientific fact, just an observation.
We also have a former MCA president which almost make the Singapore exchange collapse in the mid 80s.....he has now free from jail and become a consultant in a big company, involving in many charities actitivities...no one remember his past....
the msian chinese in late 70s to mid 80s are really smart..
the msian chinese in late 70s to mid 80s are really smart..
not true, just some are slicker then others. i have a ex-gwai lo client who made "millions" by selling their stakes in a company which 6 years ago was a 1 person show travelling to-return japan selling some "****" waste products.si|verfish said:
yeah, we have the holloywood potrayal of "charlie", so that somehow remains a certain stigma for some.
nationalities i have come across (client(s)/ some as frineds), brits, japanese, italians, americans, malay, chinese & german.
while it true, there are certain chinese businessmen i dont like dealing with as oppose to my malay clients. the brits can be funny. most of the time they recognise you for your professionalism & they could be very gooood paying clients (to a point of course).
no need be afraid of being over sensitive. i'm chinese and i think most chinese are snakes or 'cunning' to put it mildly.
Something to do with culture. Runs in the veins.
The chinese do have the propensity to be very "cunning" (as Duke aptly puts it) individuals.
The chinese do have the propensity to be very "cunning" (as Duke aptly puts it) individuals.
- Nov 23, 2005
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some listed companies are bound to have these problems..corruption is the main issue in this business world.. have an uncle doing those petroleum stuff.. got another factory to sell petroleum to another country in higher price something like black market.. but the G is watching his financial tight.. bought 2 new car last year n they keep on question him.. on high demand average profit per month is more then 500k per month.. just imagine the income.. but if get catch by the G its going to be in big trouble.. from my point of view.. do business the right way not the illegal way..
cheers~!!
cheers~!!
that the reason why you can find chinese ppl all over the world including north pole... :) this is what i read from some site where he say you can find chinese ppl everywhere in the world....
let just say chinese is good in business but some chinese is a "little"bit more greedy... :)
let just say chinese is good in business but some chinese is a "little"bit more greedy... :)
- Nov 23, 2005
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got to agree with u evo3~!! chinese ppl are good in doing business.. due to greed they will do anything for it.. for instance china business market.. they even cheat their own business partners for the own banefit..cause i my self also in business line with china ppl so know all their dirty tricks..
but most of the chinese firms are not running efficiently...many bosses just run the company with their own "instinct" or management style.....
i been auditing many chinese firms in the past few years, many of them are lack of good system to control their efficiency, high level of waste generated and the bosses are using the cut in the employment benefit and cheap tricks to maintain their profit.The morale and responsibility level of the worker are relatively low and thats why the quality of china made is always below the average. In conclusion, Chinese bosses are short sight for fast profit and seldom consider the long term benefit when compared to the western countries.
i been auditing many chinese firms in the past few years, many of them are lack of good system to control their efficiency, high level of waste generated and the bosses are using the cut in the employment benefit and cheap tricks to maintain their profit.The morale and responsibility level of the worker are relatively low and thats why the quality of china made is always below the average. In conclusion, Chinese bosses are short sight for fast profit and seldom consider the long term benefit when compared to the western countries.
Yup, exactly. They are always in it for the quick buck. They ever really give much thought about the finer details of business. Which is why they need to be cheapskate and/or slimy to turn a profit, because they are inefficient.
It goes like this .. read on:
THIS IS A HIGH-LEVEL CASE WHICH INVOLVED HIGH STATUS AND FOR THOSE DONT KNOW ABOUT THIS PLEASE DONT TALK RUBBISH AND INTEREFERE AS CHILDISH.
Carrian (The Carrian Group of Companies) - a brand well known to the people of Hong Kong - went from birth to bust in four short years between 1979 and 1983. Through corruption and deception, the senior management of the Carrian Group painted a rosy yet completely imaginary picture of their company group and gave a short-lived but volatile stimulus to the Hong Kong stock market. The story began in 1972......
The making of a business empire
In 1972, a 37-year-old Singaporean civil engineer arrived in Hong Kong to work as a project manager in a subsidiary company of a land developer. Soon the engineer was the land developer's 'hotshot' and was even given the financial backing to establish a joint enterprise with the developer.
Following the stock market slump in 1973, signs of rapid recovery in the Hong Kong property market began to emerge in 1976. The engineer saw a window of opportunity and started to purchase land in the New Territories with the intention of becoming a major property player. Meanwhile, he set up the Carrian Pest Specialist Ltd., the first company carrying the 'Carrian' company brand. By the end of 1977, he established Carrian Holdings Ltd. (the so-called Carrian/Carrian Group), with himself as the group chairman (Carrian chairman), controlling other companies formed or acquired by himself, including the group's first listed company, Carrian Investments Limited (CIL). The proliferation of Carrian businesses was then incessant, in transport, shipping, tourism, insurance, real estate, finance, catering, hotels and even entertainment. The Group also spread its businesses tentacles from Hong Kong to other parts of the world, including Taiwan, Singapore, Malaysia, Thailand, The Philippines, Japan, Australia, New Zealand and the United States. Carrian had become a multi-faceted business conglomerate controlling more than 200 subsidiary companies.
The acquisition of Gammon House
With the Carrian empire fast expanding and its share price skyrocketing, many investors were eager to get their hands on Carrian stocks. But the single deal which really gave the Carrian chairman his legendary reputation was the 1980 acquisition of Gammon House.
In January 1980, through a company of which he had a 75% stake, the Carrian chairman acquired the ownership of Gammon House in Central at a price of HK$998 million. Then, after just a few months, it was announced that Gammon House had been sold to another consortium for HK$1.68 billion. The news staggered property and financial markets. News reports quoted the Carrian chairman as saying that the capital used for the acquisition came solely from the Carrian Group and a conglomerate which had long supported him behind the scenes. No bank loan was sought, he repeatedly said. At about the same time, Carrian struck another deal to purchase a listed company at a price of HK$300 million. This company, thus renamed Carrian Investments Limited (CIL), became the Carrian Group's first listed company. These two acquisitions not only lifted Carrian's profile in the Hong Kong property market, but also showed off its substantial financial strength. In November 1980, the Carrian share price hit a historic high of HK$17.9 per share.
The unmaking of a 'legend'
Throughout his meteoric rise to fame, the Carrian chairman had wrapped himself in mystery. In both his personal and public incarnations, he was portrayed as a big spender. He splashed out huge sums on recruiting financial stars and professionals to act as his right-hand men, he worked in an ornate office, lived in a luxurious mansion and drove expensive cars. When caught in the limelight, he exuded immense charisma and persuasive powers. However, he generally maintained a low profile, rarely giving media interviews or granting photo-opportunities. As a result, the aura of mystery surrounding his rise to fame became even more intense. What people did perceive was the continued expansion of his businesses thanks to seemingly limitless injection of capital. At the time, many speculative reports regarding his origin and sources of finance were published, none of them conclusive.
In 1982, Sino-British talks on the future of Hong Kong began to shroud the city in uncertainty. The property market was sluggish and property prices were drifting downward. The economy suffered and the Carrian Group could not remain unaffected. In September 1982, Carrian still managed to report a profit of HK$269 million for the previous six months. Soon, however, the company announced its cash-flow problem. Instantly, its share price tumbled and Carrian's primary bank creditors petitioned for the company to be put into liquidation. The Group tried every means and made desperate attempts to re-organise its debts but to no avail. On 3 January 1983, the doomsday of a business empire that once reigned supreme, the Stock Exchange suspended trading of Carrian stock, following which the subsidiary companies were wound up one after another.
A sluggish economy was just a catalytic factor leading to the collapse of the Carrian Group. The 'deadliest' blow in fact was struck by the Carrian chairman's own corrupt and fraudulent conduct in generating capital for himself and creating a fictitious profit bubble.
The truth was that Carrian was already deep in debt and the sale of Gammon House was in fact never actually completed. The profits claimed to have accrued from the deal were never actually accounted for. As ICAC Chief Investigator Danny Lo King-wing put it, the Carrian Group's financial position was like 'trying to cover ten tea-pots with nine lids'. Investigations revealed that the finance company offering the many sizeable loans to Carrian was Bumiputra Malaysia Finance Limited (BMFL), a deposit-taking company set up in Hong Kong by Bank Bumiputra Malaysia Berhad (BBMB). To facilitate the acquisition of Gammon House, BMFL alone held out a staggering US$292 million credit to a new 'two-dollar' company solely controlled by the Carrian chairman. Such a huge loan arrangement was as unprecedented as it was extraordinary.
The Carrian and Bumiputra affair
Bank Bumiputra Malaysia Berhad (BBMB) was originally set up by the Malaysian government to provide banking services and professional business advice to Malaysian farmers of various ethnic groups. Soon it extended its business to overseas markets. Banking regulations in Hong Kong, however, did not permit BBMB to set up a branch in the territory. BBMB therefore set up a subsidiary company, Bumiputra Malaysia Finance Limited (BMFL), which was to be managed and operated in Hong Kong by several of its senior executives.
As a new lending house, BMFL had to be aggressive in building up a strong clientele. Carrian meanwhile badly needed money to finance its many business expansion programmes. The two companies were a perfect fit. In mid-1979, BMFL released its first HK$5 million loan to Carrian. The Carrian chairman initially dealt only with the general manager of BMFL, but contacts were later established with other BMFL senior executives including its chairman, director and alternate director.
As revealed in ICAC investigations, although the credits Carrian obtained from BMFL were all substantial, most were approved without adequate guarantees or supporting documentation, nor was there evidence to suggest that the loans had been subjected to the prescribed credit procedures.
Dissecting the scam
As early as 1982, BBMB headquarters was suspicious about its Hong Kong subsidiary's credit-approval procedures. The bank therefore dispatched an internal auditor from its Kuala Lumpur headquarters to act as assistant general manager supervising BMFL accounting and credit matters, and with an unspoken task to examine BMFL's books from the inside. At the same time, BBMB also issued an order to BMFL halting any further loans to the Carrian Group of companies without prior headquarters' approval.
On 18 July 1983, the internal auditor was reported missing. Two days later he was found dead inside a banana grove in Tai Po, New Territories. The then Organised and Serious Crime Bureau (OSCB) of the Hong Kong Police Force was tasked with investigating the case.
As the police investigations progressed, the 'mysterious' finance company behind all Carrian deals was finally brought to light. But what was it that motivated BMFL to grant Carrian huge credits one after another? How many problem loans had already been released prior to BBMB headquarters becoming suspicious and taking action to curb BMFL's credit-approval authority? Had those loans ever been repaid? Who was involved? These were all questions to which BBMB urgently wanted answers.
The Noordin Committee
The death of the internal auditor suggested that serious irregularities had occurred in the loan arrangements between BMFL and the Carrian Group. In January 1984, the Malaysian government set up a three-man committee of enquiry, consisting of the country's Auditor-General, Mr Noordin, an accountant and a lawyer, to conduct a thorough investigation. The Noordin Committee spent several months interviewing BBMB staff and going through all the loan-related papers including the valuation report on Gammon House. The Committee was astonished to find that, from 1979 to 1983, BMFL had released a total of US$800 million (equivalent to HK$6 billion) in loans to the Carrian Group and to other companies controlled by the Carrian chairman. But the most staggering revelation was that most of these loans were approved without adequate security collateral or guarantees, and some were even released before assessment procedures had been completed. The Committee came to the conclusion that it was highly probable that senior executives of BMFL, including the chairman, the director and the alternate director, had accepted advantages from the Carrian chairman as rewards for approving the loans. However, by the end of October 1983, all three of these senior executives had resigned from BBMB and had fled Malaysia.
Since the alleged bribery took place in Hong Kong, it was considered proper for a Hong Kong law enforcement agency to investigate the matter. In April 1985, the Noordin Committee sent a representative to Hong Kong, with the assistance of the then Legal Department, to lodge a formal corruption complaint with the ICAC.
The BMFL scandal prompted the Malaysian government to set up the Noordin Committee to investigate the matter. After revealing that the scandal involved corruption and fraud, the government sent a Committee member to Hong Kong to lodge a corruption complaint. In April 1985, the Noordin Committee member arrived in Hong Kong to file a complaint.
Since most of the loans released involved corruption, the then Legal Department decided that the ICAC should handle the case.
(in Cantonese only)
CLICK BELOW LINK TO HEAR:
http://tv.icac.org.hk/other/eng/asx/main/cases/carrian/noordina.asx
On receiving the corruption complaint from the Noordin Committee, the ICAC realised that the investigation would be labourous and its scope was extensive due to its seriousness and complexity. A special Task Force was established to deal with the case. Nevertheless, no one would have predicted that, before it was completed in 2001, the case was to last 17 years - the longest ever handled by the ICAC.
Task Force 3 (TF3)
Home
The Birth and Rise of the Carrian Group
A Glossy Apple Rotten to the Core
ICAC Investigation
Legal wrestling with the main culprits
Irrefutable Evidence
Victims' parade
Mixed Feelings of the Investigators
Task Force 3 (TF3)
Collecting evidence overseas
Powerful evidence secured
Early legal input
Professional support
Criminal conduct exposed
Operations in Hong Kong and the UK
The challenging times ahead
On 23 May 1985, Principal Investigator Anthony Robey was appointed Head of Task Force 3 (TF3), leading the first batch of 12 investigators on the Carrian case. Ricky Chu Man-kin, then a senior investigator, was among this group of TF3 officers.
Although Chu considered himself strong in mathematics, he made a 'mistake' in estimating the length of the case since what was thought to be a one-year case dragged on for more than ten years. He recounted quite dramatic the way he was 'recruited' into TF3:
Recollection from Chu - CLICK BELOW TO HEAR:
http://tv.icac.org.hk/other/eng/asx/main/cases/carrian/recruita.asx
Collecting evidence overseas
The Noordin Committee had conducted very detailed research in Malaysia providing TF3 with much valuable information for investigation. However, ICAC investigators still had to cross-check the accuracy of the allegations made in the report by conducting their own investigations.
In November 1985, TF3 began its overseas evidence-collection mission. "Chu and I were mainly responsible for collecting evidence in Malaysia, and we were later joined by Chui", Lo recalled. "Our work in Malaysia involved checking through the related documents and accounts kept by BBMB and the relevant accounting firms, interviewing witnesses, and turning the information gathered and witness statements collected into legally admissible form so that they could be presented as evidence in court. Another colleague was responsible for evidence search in the United States since many of the improper loans were paid in US dollars and the related telegraphic transfers were handled by American banks."
Powerful evidence secured
The general manager of BMFL was the man behind the initial contacts between BMFL and the Carrian Group. For that reason, the ICAC believed that this man was the key investigation target, and that his evidence would be crucial in providing the missing links and sufficient evidence to prosecute.
TF3 Deputy Head Brian Carroll was specially assigned to take statements from this general manager. He said: "As the general manager of BMFL, this man was responsible for processing all the loan applications submitted by the former Carrian chairman and he must have had intimate knowledge of the loan payments. We then sought and obtained legal approval for him to give evidence under immunity from prosecution to ensure that the main culprits were brought to justice. I personally conducted well over 60 interviews with him. Over a thousand pages of statements were recorded and later, after further investigation and verification, this testimony became powerful evidence in court."
Early legal input
"In most corruption cases, the ICAC would normally begin by conducting investigations, interviewing witnesses, then arresting the suspects, etc. After collecting sufficient evidence, a case report would then be submitted to the Legal Department for Crown Counsel to consider whether or not to press charges and to set the right charges. However, due to the complexity of the Carrian case, its extent and magnitude were difficult to estimate. The Legal Department then assigned six Crown Counsels to work with TF3 to facilitate our legal briefs." Chu said: "Throughout my entire career as an investigator in the ICAC, that was the first and only time that the Legal Department got involved in a case as early as during the investigation stage."
Professional support
One thing is common in all commercial corruption fraud - the perpetrators utilise the accounts of different companies or individuals, or structure complex business transactions, to conceal their illicit deals or bribe payments via extremely complex routes. These corrupt deals are mostly hidden among reams of documents and accounting papers. The ICAC investigations would have been greatly facilitated by professional assistance in the analysis of the complex accounting procedures. The Government therefore approved contingency funds to appoint an international accounting firm to help with the investigation, and an international law firm to handle the legal procedures in other jurisdictions outside Hong Kong.
Criminal conduct exposed
As a result of the collective efforts by the investigators and the assisting professionals, TF3 basically deciphered the way in which the suspects conducted their crimes, and in six months had amassed and mastered solid evidence.
According to the information then gathered, the loan amounts involved hovered around US$600 million. However, the means by which the corrupt conducted their crimes were simple and direct, boiling down to amassing capital through corrupt means for a 'quick return' in business.
Since its establishment, the Carrian Group had persistently conveyed the impression of being a conglomerate with enormous financial clout. But the reality was quite the contrary. The Carrian chairman himself had in fact always been short of cash. His business empire was built by bribing the senior executives of BMFL and luring them into releasing sizeable but unsecured or non-guaranteed credits. With this enormous 'wealth', he was able to extend his business reach and at the same time create for himself a suave and multi-talented image. He also tried hard to make others believe that he was a successful businessman so as to impose his will on the financial world, among business corporations and even on the general public, all in an effort to push up the price of Carrian stock. On the other hand, the BMFL senior executives accepted huge bribes in return for abusing their authority in indiscriminately approving loans to Carrian. Throughout the entire process, BBMB headquarters was left in the dark.
In fact, the Carrian chairman had adopted similar corrupt means to borrow from other banks as well as from BMFL. In order to conceal the fact that the Carrian Group was the real 'beneficiary' behind the deals, the Carrian chairman made his staff set up various companies in their private capacities to act as loan applicants.
Operations in Hong Kong and the UK
In October 1983, the Carrian business empire crumbled. At the same time, the senior executives of BMFL involved in the case resigned from the bank and fled Malaysia. Malaysian immigration records showed that they had left for the UK and other European countries. TF3 had to seek help from Interpol to track down their whereabouts and request the countries where the suspects were in hiding to issue arrest warrants.
By early December 1985, the UK police advised that the former chairman of BMFL had been put under surveillance. The then Deputy Director of the Operations Department, Graham Stockwell, travelled to the UK to discuss extradition arrangements with New Scotland Yard. Meanwhile, Carroll was to stay in the UK to liaise with the police in mounting joint arrest operations simultaneously in the UK and Hong Kong to prevent possible communication between BMFL and Carrian suspects.
The arrest operations were originally planned for on 9 December. However, UK intelligence showed that the former chairman of BMFL might have realised that he was being monitored and was about to flee. The UK Police therefore decided to strike ahead of time. In Hong Kong, Robey was coordinating the arrest operations while maintaining close contact with Carroll in the UK. Chu was in command of the arrest teams at the Hong Kong end.
On the evening of 6 December 1985 (London time), the former chairman and former director of BMFL were arrested in London; simultaneously i.e. in the early morning of 7 December in Hong Kong, three other suspects, including the former chairman and two former directors of the Carrian Group, were arrested by the ICAC.
Operations Diary
Date Time Deployment
4 Dec
1515 Carroll calls Robey from London, saying that the UK police have in place the arrest warrants and can strike at any time; New Scotland Yard have also accepted the documents submitted by the ICAC thus permitting extradition procedures to proceed right after the arrests.
5 Dec
1645 UK police have put the former BMFL chairman under surveillance, while the search for the former director continues.
1900 The former chairman has acted, apparently planning to flee again; meanwhile the police have just located the residence of the former director's wife, and are trying to confirm whether the man himself is also there.
6 Dec
1000 The ICAC and the UK police agree to conduct simultaneous arrests at 0700 on 9 December (London time) i.e. 1500 Hong Kong time.
1800 Since there are indications that the former chairman is planning to flee, the UK police suggest an early strike, and ask the ICAC to act in concert.
2000 The two sides further confirm the action timetable on the phone.
7 Dec
(UK, 6 Dec) 0630 (London time, 2330) TF3 arrests the former chairman and two former directors of the Carrian Group; meanwhile, the UK police arrest the former chairman and the former director of BMFL.
The challenging times ahead
Although the successful arrests of the key suspects represented the successful conclusion of a significant stage of the investigation, even more challenging times were awaiting TF3 officers. As Chu rightly put it, the Hong Kong-UK joint operations on 7 December just marked the beginning of a protracted battle.
The main culprits exhausted every possible means to avoid trial. Nevertheless, the Task Force was undaunted and vowed to bring the corrupt to justice.
A seven-year fight
The high-profile Hong Kong-UK joint arrest operations inevitably alerted the former alternate director of BMFL and created more obstacles to his arrest. The fugitive managed to hide in Europe for two years before the French police could finally tracked him down in 1987.
Many legal hurdles had to be overcome in extraditing the suspects from overseas, and the procedures were complicated and labourous. In consultation with the local judicial authority, TF3 had to craft charges compatible with the laws of both places. And the suspect had a right to appeal to the local judiciary against extradition. As Chu explained: "France has no anti-corruption laws similar to those in Hong Kong, and consequently the French courts had to order the suspect's release. It was not until 1990 when we amended the charges to 'conspiracy to defraud' and 'theft' that the French police re-arrested the suspect."
However, the suspect did not yield and spent another four years fighting the extradition order. Although the French courts had ruled that the man should be extradited back to Hong Kong for trial, the French government considered extradition unnecessary and revoked the courts' ruling. Chu said: "It was only after repeated extradition applications through French lawyers that we were able to persuade the French Constitutional Court to grant leave to the Hong Kong Government to challenge the French government's refusal. Only then did we see light at the end of the tunnel, and it was not until February 1994 that we were able to extradite the suspect back to Hong Kong."
However, as Lo recalled, the extradition trip was not without hitches. Lo recounted the day he was tasked to escort the former alternate director of BMFL back from France: "I remember I was having dinner at home that night when the Head of Operations Jim Buckle called. He just told me to pack up straight away and travel to France that same night to escort a suspect back home......"
Delaying tactics
A seven-year fight
Delaying tactics
Unending delays
Another central figure in the case was the former chairman of BMFL who was a lawyer by profession. He had such extensive legal knowledge that he was far more sophisticated than the former alternate director in abusing the legal process. After his arrest, the former chairman tried every means to frustrate efforts to extradite him. His appeals and judicial review applications went through vitually all levels of the courts in Hong Kong and all the way up to the UK's Privy Council and the European Commission of Human Rights. He applied for a writ of habeas corpus no less than ten times in the English courts in challenging extradition orders.
However, knowledge of the law seemed to backfire on the former BMFL chairman because his resistance had effectively put him behind bars during the lengthy legal battle. In the seven years from his arrest in 1985 until the end of 1992 when the British courts refused for the tenth time to grant him a writ of habeas corpus, the courts had also been steadfast in refusing him bail. The former chairman remained 'in custody' throughout the period and became the 'longest-serving' suspect in UK history ahead of a trial and judgment by a court. On 16 December 1992, he was extradited back to Hong Kong to continue his custody at the ICAC Detention Centre. This time a trial in the Hong Kong court was awaiting him.
The extradition battle nagged by the former BMFL chairman:
1987 Apr He lodges an appeal against the extradition in England, on the grounds that he fears a retrial take place after 1997 and his sentence could be served in Mainland China.
Jun Applies for a writ of habeas corpus.
Oct Submits to the Hong Kong High Court that the Governor's order for his extradition is unlawful.
Nov Applies to the High Court for a judicial review of the extradition order but is rejected.
He then lodges an appeal to the Court of Appeal, and withdraws when the Court refuses his request to provide new documentary evidence to support his argument.
1988 Apr Lodges another appeal to the Hong Kong Court of Appeal to revoke the Governor's extradition order
Jun Applies for a writ of habeas corpus for the second time
Jul Appeals to the House of Lords objecting to extradition.
Files claims to the London court that he has been appointed Counsellor of the
Liberian Embassy in London since October 1984 and therefore enjoys diplomatic immunity.
Oct Lodges an appeal with the British Privy Council.Liberia revokes the diplomatic immunity that has been given to him.
1989 Mar He seeks assistance from the European Commission of Human Rights but is rejected.
Jun Applies for a writ of habeas corpus for the third time
1990 Feb Applies for a writ of habeas corpus for the fourth time
1991 Feb Applies for a writ of habeas corpus for the fifth time
Nov Applies for a writ of habeas corpus for the sixth time
1992 Jan Applies for a writ of habeas corpus for the seventh time
Jul Applies for a writ of habeas corpus for the eighth time
Oct Applies for a writ of habeas corpus for the ninth time
Dec Applies for a writ of habeas corpus for the tenth time
The Task Force was given less a hardtime from the former BMFL director who was rather cooperative in the subsequent extradition hearing after his arrest in England. He agreed to return to Hong Kong for trial and also pleaded guilty as charged to the offences. He was escorted back to Hong Kong in late 1986.
Unending delays
After his arrest, the former Carrian chairman was allowed bail of HK$50 million in cash and a surety of HK$2 million. He was also ordered to surrender his travel documents to the court. By that time the Carrian Group had collapsed; but how wealthy the former Carrian chairman actually was or the whereabouts of the loans obtained from BMFL remained unknown. The prosecution's worries were not alleviated despite the huge bail amount. The Legal Department's Principal Crown Counsel raised objections to his bail application on the following grounds: firstly, his foreign nationality and his weak family links in Hong Kong might lead him to abscond; and, secondly, he was so wealthy that he might jump bail to escape trial. The judge, however, insisted on releasing him on bail.
In serving the public interest and for the purposes of minimising prosecution costs, the prosecution requested a joint trial of the former Carrian chairman and the former BMFL chairman, pending the latter's extradition. The judge granted the prosecution's wish and, over the following seven years, repeatedly adjourned the former Carrian chairman's hearing. In 1992, the former Carrian chairman had a mild stroke and later, he submitted a medical report to prove that he had serious heart and ear problems and was not fit for trial. In 1996, he invited three medical experts from England to prove that he was under great pressure and that his health had been deteriorating because of depression.
In his judgment on 27 September 1996, the High Court Judge reproached the former Carrian chairman for choosing to play 'delaying games' with the legal system. He also pointed out that each of the defendants had sought every legal and technical means at their disposal to push back the trial.
Cases against the former Carrian chairman
Year of arrest Offences Case summary :
1983 Conspiracy to defraud Charged with conspiracy to defraud by providing false information and Carrian performance records to mislead shareholders.
The presiding judge acquitted all the defendants in the case in view of duplicate charges and doubtful evidence. They were not required to make a plea.
1985 Conspiracy to defraud and bribery Charged with nine offences of conspiracy to defraud BMFL and 14 counts of offences of bribing BMFL senior executives as a reward for obtaining credits without adequate security or guarantees.
Allowed bail pending trial
Pleaded guilty to two offences and was sentenced to three years' imprisonment.
1988 Offering bribes Charged with four counts of offering HK$2.37 million to the manager of a European bank and two counts of offering HK$2.43 million to the bank director as rewards for giving favours to the Carrian Group.
The prosecution withdrew the charges.
1989 Offering bribes Charged with two offences of offering HK$888,000 and 668,000 Carrian shares to a former executive director of an international bank as rewards for giving favours to the Carrian Group.
The prosecution withdrew the charges.
Almost twenty years on, core members of the Task Force still have vivid memories of the case, and the 'irrefutable evidence' they have unearthed in exposing this astounding corruption and fraud case.
Prisoner at last
The pre-trial of the case against the former Carrian chairman began in early 1996. In March, the High Court Judge decided to revoke his bail and had him remanded in prison pending trial about six months later. However, as he claimed to be seriously ill, the judge permitted him to forward his health and medication reports for a Correctional Services Department medical officer to consider whether he should instead be transferred to the custodial ward. Whatever happened, this was the first time that he lost his freedom after more than 10 years of being out on bail. Shortly afterwards, through his lawyer, he expressed his willingness to plead guilty to two charges. On 27 September 1996, while everyone was celebrating the Mid-Autumn Festival, the former Carrian chairman was sentenced to three years' imprisonment.
Justice served
Defendant Guilty as charged Sentence
Former Carrian chairman Two counts of conspiracy to defraud
Between August 1980 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly causing BMFL to make loans totalling US$238 million Three years' imprisonment; prohibited for a period of five years from taking up a post of director or in administrative management or from holding any assets of a company
Former BMFL chairman One count of conspiracy to defraud
Between December 1979 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly permitting BMFL to make inadequately secured or guaranteed loans totalling US$292 million to companies associated with the former chairman of Carrian. One year's imprisonment (seven years' custody in the UK prison before extradition)
Former BMFL director Two counts of conspiracy to defraud
Between January 1982 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly permitting BMFL to make inadequately secured or guaranteed loans totalling US$137 million to companies associated with the former chairman of Carrian.
Two counts of accepting advantages
Between September 1981 and May 1982, he accepted HK$15,726,880 from the former chairman of Carrian in return for facilitating the advance of monies to companies associated with him.
10 years' imprisonment
Alternate director of BMFL Two counts of conspiracy to defraud
Between August 1980 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly permitting BMFL to make inadequately secured or guaranteed loans totalling US$238 million to companies associated with the former chairman of Carrian. 5 years' imprisonment
Manager of a European Bank Four counts of accepting bribes
Without the permission of his employer, he accepted HK$2.37 million from the former Carrian chairman in return for giving favours to the Carrian Group in business matters 3 years' imprisonment; returned the bribes to the liquidator of Carrian
Former executive director of an international bank Two counts of accepting bribes
Without the permission of his employer, he accepted HK$888,000 and 668,000 Carrian shares from the former Carrian chairman in return for giving favours to the Carrian Group in business matters 18 months' imprisonment; returned the bribes to the Carrian liquidator and also paid $300,000 to the Government.
By the close of the trial, the criminals certainly had to pay their price, mitigated to some extent the grief of countless number of people affected in the case.
Minor shareholders
The explosive growth of Carrian pushed its stock price up more than tenfold over the space of just one year. Many ordinary people were attracted and became minor shareholders in the Group.
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Following the collapse of the Group, a press report quoted a stockbroker, who on behalf a wealthy merchant had speculated in Carrian shares, as saying: "Carrian shares were talked up as shares, the share price of which would only rise and would never fall. The wealthy client initially held between 200,000 and 300,000 shares of the Group and in 1982, when the share price dropped, he purchased a few million more thinking it would be wise to purchase more at a lower price. Who could have predicted that the share price would plunge and that trading would finally be suspended! In the wink of the eye the massive investment had gone into smoke!"
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Mr Lam, another victim, still felt aggrieved when recalling the incident."Carrian succeeded in creating a smoke screen to convince the public that it was a financially robust company. Many people unreservedly invested in its shares. Who could have known that the shares in no time could become worthless."The incident cost him confidence in the stock market and he shunned from investing in stocks for a long time afterwards.
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Mr Wu, whose father was a stockbroker, said, "I was young and not interested in speculation at that time. But because of my father, I knew something about the Carrian case. The whole case was a swindle. According to my father, even people inside the trade could not see through their tricks or figure out how they managed to keep all the others in the dark. Numerous people fell victim but they could blame it on bad luck and see it an expensive lesson."
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Mr Ho, a fund manager, said, "I started to work in the stock market just before the collapse of Carrian. I was lucky to have escaped an touch. When Carrian suspended trading, everybody was aghast! Many had lost their life-long savings yet there was nothing they could do except to sigh in anguish. The Carrian share certificates were used as wallpaper."
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The evil of corruption
The Carrian minority shareholders were not the only victims in this case. Hong Kong taxpayers also had to foot the cost and the image of Hong Kong was tarnished.
The judge pointed out in his judgment that the illegal acts of this small group of defendants had seriously tarnished the hard-earned reputation of Hong Kong as a financial and commercial hub.
According to information provided by the court, prosecution costs amounted to HK$210 million, all paid from the public purse and that the ICAC's expenditure alone exceeded HK$28 million. However, many voices in society considered it worthwhile to spend as much as was required to uphold justice. The then Hong Kong Attorney General also indicated that Hong Kong would not tolerate commercial fraud and that it was essential for law-enforcement agencies to spare no effort in the fight against crime and to commit all possible resources into investigations and prosecutions. Justice should not be given a price tag.
"No matter how rich one is, no matter how shrewd the team of defence lawyers are, and no matter how well one knows how to abuse the legal process to play for time, one will eventually face sanction by the court for breaching the laws of Hong Kong. The effort and money spent over these 13 years serve to bring out this point."
Ming Pao Editorial (21.9.1996)
"This has been a case in which defendants systematically sought to manipulate the legal process for their own ends. They failed because the Government was determined to see that the offenders were brought to justice, regardless of cost. That was the correct decision, no matter who ultimately pays the bill."
SCMP (24.9.1996)
The Carrian Task Force comprised a team of some 40 members. Some of them stayed for a short time and were transferred, but some carried through to the end. It is hard to imagine the bitterness and weariness as well as the satisfaction experienced by the investigators at the achievements generated by this complicated case which lasted well over a decade.
Bitter-sweet Conclusion
1985, when Chu was appointed a member of the Task Force, he thought the task would only last for about a year. In the twinkling of an eye, the year was 1988 and he got a chance to get promoted. However, since the promotion board considered him less exposed than the other candidates, having been engaged in only one case in all those years, he was out in the race. At the time Chu felt rather bitter about it. He recalled, "All along, I had felt honoured to have been involved in an investigation of such a major case. But in the end it was also because of this case I missed a promotion." Chu staged a comeback in the promotion exercise held the following year and his candid reply to an examiner's tricky question led to an unexpected result.
The examiner asked, "Which would you choose? To get promoted but have to leave the investigation you are working on, or to continue with the investigation but get no promotion?" I said, "In that case, I prefer finishing the investigation to getting a promotion. I have become more and more interested in this case, so I don't mind finishing the case first before getting a promotion." Who would have thought that finally I got both a promotion and a transfer.
(in Cantonese only)
CLICK BELOW LINK TO HEAR THE AUDIO:
http://tv.icac.org.hk/other/eng/asx/main/cases/carrian/promotea.asx
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THIS IS A HIGH-LEVEL CASE WHICH INVOLVED HIGH STATUS AND FOR THOSE DONT KNOW ABOUT THIS PLEASE DONT TALK RUBBISH AND INTEREFERE AS CHILDISH.
Carrian (The Carrian Group of Companies) - a brand well known to the people of Hong Kong - went from birth to bust in four short years between 1979 and 1983. Through corruption and deception, the senior management of the Carrian Group painted a rosy yet completely imaginary picture of their company group and gave a short-lived but volatile stimulus to the Hong Kong stock market. The story began in 1972......
The making of a business empire
In 1972, a 37-year-old Singaporean civil engineer arrived in Hong Kong to work as a project manager in a subsidiary company of a land developer. Soon the engineer was the land developer's 'hotshot' and was even given the financial backing to establish a joint enterprise with the developer.
Following the stock market slump in 1973, signs of rapid recovery in the Hong Kong property market began to emerge in 1976. The engineer saw a window of opportunity and started to purchase land in the New Territories with the intention of becoming a major property player. Meanwhile, he set up the Carrian Pest Specialist Ltd., the first company carrying the 'Carrian' company brand. By the end of 1977, he established Carrian Holdings Ltd. (the so-called Carrian/Carrian Group), with himself as the group chairman (Carrian chairman), controlling other companies formed or acquired by himself, including the group's first listed company, Carrian Investments Limited (CIL). The proliferation of Carrian businesses was then incessant, in transport, shipping, tourism, insurance, real estate, finance, catering, hotels and even entertainment. The Group also spread its businesses tentacles from Hong Kong to other parts of the world, including Taiwan, Singapore, Malaysia, Thailand, The Philippines, Japan, Australia, New Zealand and the United States. Carrian had become a multi-faceted business conglomerate controlling more than 200 subsidiary companies.
The acquisition of Gammon House
With the Carrian empire fast expanding and its share price skyrocketing, many investors were eager to get their hands on Carrian stocks. But the single deal which really gave the Carrian chairman his legendary reputation was the 1980 acquisition of Gammon House.
In January 1980, through a company of which he had a 75% stake, the Carrian chairman acquired the ownership of Gammon House in Central at a price of HK$998 million. Then, after just a few months, it was announced that Gammon House had been sold to another consortium for HK$1.68 billion. The news staggered property and financial markets. News reports quoted the Carrian chairman as saying that the capital used for the acquisition came solely from the Carrian Group and a conglomerate which had long supported him behind the scenes. No bank loan was sought, he repeatedly said. At about the same time, Carrian struck another deal to purchase a listed company at a price of HK$300 million. This company, thus renamed Carrian Investments Limited (CIL), became the Carrian Group's first listed company. These two acquisitions not only lifted Carrian's profile in the Hong Kong property market, but also showed off its substantial financial strength. In November 1980, the Carrian share price hit a historic high of HK$17.9 per share.
The unmaking of a 'legend'
Throughout his meteoric rise to fame, the Carrian chairman had wrapped himself in mystery. In both his personal and public incarnations, he was portrayed as a big spender. He splashed out huge sums on recruiting financial stars and professionals to act as his right-hand men, he worked in an ornate office, lived in a luxurious mansion and drove expensive cars. When caught in the limelight, he exuded immense charisma and persuasive powers. However, he generally maintained a low profile, rarely giving media interviews or granting photo-opportunities. As a result, the aura of mystery surrounding his rise to fame became even more intense. What people did perceive was the continued expansion of his businesses thanks to seemingly limitless injection of capital. At the time, many speculative reports regarding his origin and sources of finance were published, none of them conclusive.
In 1982, Sino-British talks on the future of Hong Kong began to shroud the city in uncertainty. The property market was sluggish and property prices were drifting downward. The economy suffered and the Carrian Group could not remain unaffected. In September 1982, Carrian still managed to report a profit of HK$269 million for the previous six months. Soon, however, the company announced its cash-flow problem. Instantly, its share price tumbled and Carrian's primary bank creditors petitioned for the company to be put into liquidation. The Group tried every means and made desperate attempts to re-organise its debts but to no avail. On 3 January 1983, the doomsday of a business empire that once reigned supreme, the Stock Exchange suspended trading of Carrian stock, following which the subsidiary companies were wound up one after another.
A sluggish economy was just a catalytic factor leading to the collapse of the Carrian Group. The 'deadliest' blow in fact was struck by the Carrian chairman's own corrupt and fraudulent conduct in generating capital for himself and creating a fictitious profit bubble.
The truth was that Carrian was already deep in debt and the sale of Gammon House was in fact never actually completed. The profits claimed to have accrued from the deal were never actually accounted for. As ICAC Chief Investigator Danny Lo King-wing put it, the Carrian Group's financial position was like 'trying to cover ten tea-pots with nine lids'. Investigations revealed that the finance company offering the many sizeable loans to Carrian was Bumiputra Malaysia Finance Limited (BMFL), a deposit-taking company set up in Hong Kong by Bank Bumiputra Malaysia Berhad (BBMB). To facilitate the acquisition of Gammon House, BMFL alone held out a staggering US$292 million credit to a new 'two-dollar' company solely controlled by the Carrian chairman. Such a huge loan arrangement was as unprecedented as it was extraordinary.
The Carrian and Bumiputra affair
Bank Bumiputra Malaysia Berhad (BBMB) was originally set up by the Malaysian government to provide banking services and professional business advice to Malaysian farmers of various ethnic groups. Soon it extended its business to overseas markets. Banking regulations in Hong Kong, however, did not permit BBMB to set up a branch in the territory. BBMB therefore set up a subsidiary company, Bumiputra Malaysia Finance Limited (BMFL), which was to be managed and operated in Hong Kong by several of its senior executives.
As a new lending house, BMFL had to be aggressive in building up a strong clientele. Carrian meanwhile badly needed money to finance its many business expansion programmes. The two companies were a perfect fit. In mid-1979, BMFL released its first HK$5 million loan to Carrian. The Carrian chairman initially dealt only with the general manager of BMFL, but contacts were later established with other BMFL senior executives including its chairman, director and alternate director.
As revealed in ICAC investigations, although the credits Carrian obtained from BMFL were all substantial, most were approved without adequate guarantees or supporting documentation, nor was there evidence to suggest that the loans had been subjected to the prescribed credit procedures.
Dissecting the scam
As early as 1982, BBMB headquarters was suspicious about its Hong Kong subsidiary's credit-approval procedures. The bank therefore dispatched an internal auditor from its Kuala Lumpur headquarters to act as assistant general manager supervising BMFL accounting and credit matters, and with an unspoken task to examine BMFL's books from the inside. At the same time, BBMB also issued an order to BMFL halting any further loans to the Carrian Group of companies without prior headquarters' approval.
On 18 July 1983, the internal auditor was reported missing. Two days later he was found dead inside a banana grove in Tai Po, New Territories. The then Organised and Serious Crime Bureau (OSCB) of the Hong Kong Police Force was tasked with investigating the case.
As the police investigations progressed, the 'mysterious' finance company behind all Carrian deals was finally brought to light. But what was it that motivated BMFL to grant Carrian huge credits one after another? How many problem loans had already been released prior to BBMB headquarters becoming suspicious and taking action to curb BMFL's credit-approval authority? Had those loans ever been repaid? Who was involved? These were all questions to which BBMB urgently wanted answers.
The Noordin Committee
The death of the internal auditor suggested that serious irregularities had occurred in the loan arrangements between BMFL and the Carrian Group. In January 1984, the Malaysian government set up a three-man committee of enquiry, consisting of the country's Auditor-General, Mr Noordin, an accountant and a lawyer, to conduct a thorough investigation. The Noordin Committee spent several months interviewing BBMB staff and going through all the loan-related papers including the valuation report on Gammon House. The Committee was astonished to find that, from 1979 to 1983, BMFL had released a total of US$800 million (equivalent to HK$6 billion) in loans to the Carrian Group and to other companies controlled by the Carrian chairman. But the most staggering revelation was that most of these loans were approved without adequate security collateral or guarantees, and some were even released before assessment procedures had been completed. The Committee came to the conclusion that it was highly probable that senior executives of BMFL, including the chairman, the director and the alternate director, had accepted advantages from the Carrian chairman as rewards for approving the loans. However, by the end of October 1983, all three of these senior executives had resigned from BBMB and had fled Malaysia.
Since the alleged bribery took place in Hong Kong, it was considered proper for a Hong Kong law enforcement agency to investigate the matter. In April 1985, the Noordin Committee sent a representative to Hong Kong, with the assistance of the then Legal Department, to lodge a formal corruption complaint with the ICAC.
The BMFL scandal prompted the Malaysian government to set up the Noordin Committee to investigate the matter. After revealing that the scandal involved corruption and fraud, the government sent a Committee member to Hong Kong to lodge a corruption complaint. In April 1985, the Noordin Committee member arrived in Hong Kong to file a complaint.
Since most of the loans released involved corruption, the then Legal Department decided that the ICAC should handle the case.
(in Cantonese only)
CLICK BELOW LINK TO HEAR:
http://tv.icac.org.hk/other/eng/asx/main/cases/carrian/noordina.asx
On receiving the corruption complaint from the Noordin Committee, the ICAC realised that the investigation would be labourous and its scope was extensive due to its seriousness and complexity. A special Task Force was established to deal with the case. Nevertheless, no one would have predicted that, before it was completed in 2001, the case was to last 17 years - the longest ever handled by the ICAC.
Task Force 3 (TF3)
Home
The Birth and Rise of the Carrian Group
A Glossy Apple Rotten to the Core
ICAC Investigation
Legal wrestling with the main culprits
Irrefutable Evidence
Victims' parade
Mixed Feelings of the Investigators
Task Force 3 (TF3)
Collecting evidence overseas
Powerful evidence secured
Early legal input
Professional support
Criminal conduct exposed
Operations in Hong Kong and the UK
The challenging times ahead
On 23 May 1985, Principal Investigator Anthony Robey was appointed Head of Task Force 3 (TF3), leading the first batch of 12 investigators on the Carrian case. Ricky Chu Man-kin, then a senior investigator, was among this group of TF3 officers.
Although Chu considered himself strong in mathematics, he made a 'mistake' in estimating the length of the case since what was thought to be a one-year case dragged on for more than ten years. He recounted quite dramatic the way he was 'recruited' into TF3:
Recollection from Chu - CLICK BELOW TO HEAR:
http://tv.icac.org.hk/other/eng/asx/main/cases/carrian/recruita.asx
Collecting evidence overseas
The Noordin Committee had conducted very detailed research in Malaysia providing TF3 with much valuable information for investigation. However, ICAC investigators still had to cross-check the accuracy of the allegations made in the report by conducting their own investigations.
In November 1985, TF3 began its overseas evidence-collection mission. "Chu and I were mainly responsible for collecting evidence in Malaysia, and we were later joined by Chui", Lo recalled. "Our work in Malaysia involved checking through the related documents and accounts kept by BBMB and the relevant accounting firms, interviewing witnesses, and turning the information gathered and witness statements collected into legally admissible form so that they could be presented as evidence in court. Another colleague was responsible for evidence search in the United States since many of the improper loans were paid in US dollars and the related telegraphic transfers were handled by American banks."
Powerful evidence secured
The general manager of BMFL was the man behind the initial contacts between BMFL and the Carrian Group. For that reason, the ICAC believed that this man was the key investigation target, and that his evidence would be crucial in providing the missing links and sufficient evidence to prosecute.
TF3 Deputy Head Brian Carroll was specially assigned to take statements from this general manager. He said: "As the general manager of BMFL, this man was responsible for processing all the loan applications submitted by the former Carrian chairman and he must have had intimate knowledge of the loan payments. We then sought and obtained legal approval for him to give evidence under immunity from prosecution to ensure that the main culprits were brought to justice. I personally conducted well over 60 interviews with him. Over a thousand pages of statements were recorded and later, after further investigation and verification, this testimony became powerful evidence in court."
Early legal input
"In most corruption cases, the ICAC would normally begin by conducting investigations, interviewing witnesses, then arresting the suspects, etc. After collecting sufficient evidence, a case report would then be submitted to the Legal Department for Crown Counsel to consider whether or not to press charges and to set the right charges. However, due to the complexity of the Carrian case, its extent and magnitude were difficult to estimate. The Legal Department then assigned six Crown Counsels to work with TF3 to facilitate our legal briefs." Chu said: "Throughout my entire career as an investigator in the ICAC, that was the first and only time that the Legal Department got involved in a case as early as during the investigation stage."
Professional support
One thing is common in all commercial corruption fraud - the perpetrators utilise the accounts of different companies or individuals, or structure complex business transactions, to conceal their illicit deals or bribe payments via extremely complex routes. These corrupt deals are mostly hidden among reams of documents and accounting papers. The ICAC investigations would have been greatly facilitated by professional assistance in the analysis of the complex accounting procedures. The Government therefore approved contingency funds to appoint an international accounting firm to help with the investigation, and an international law firm to handle the legal procedures in other jurisdictions outside Hong Kong.
Criminal conduct exposed
As a result of the collective efforts by the investigators and the assisting professionals, TF3 basically deciphered the way in which the suspects conducted their crimes, and in six months had amassed and mastered solid evidence.
According to the information then gathered, the loan amounts involved hovered around US$600 million. However, the means by which the corrupt conducted their crimes were simple and direct, boiling down to amassing capital through corrupt means for a 'quick return' in business.
Since its establishment, the Carrian Group had persistently conveyed the impression of being a conglomerate with enormous financial clout. But the reality was quite the contrary. The Carrian chairman himself had in fact always been short of cash. His business empire was built by bribing the senior executives of BMFL and luring them into releasing sizeable but unsecured or non-guaranteed credits. With this enormous 'wealth', he was able to extend his business reach and at the same time create for himself a suave and multi-talented image. He also tried hard to make others believe that he was a successful businessman so as to impose his will on the financial world, among business corporations and even on the general public, all in an effort to push up the price of Carrian stock. On the other hand, the BMFL senior executives accepted huge bribes in return for abusing their authority in indiscriminately approving loans to Carrian. Throughout the entire process, BBMB headquarters was left in the dark.
In fact, the Carrian chairman had adopted similar corrupt means to borrow from other banks as well as from BMFL. In order to conceal the fact that the Carrian Group was the real 'beneficiary' behind the deals, the Carrian chairman made his staff set up various companies in their private capacities to act as loan applicants.
Operations in Hong Kong and the UK
In October 1983, the Carrian business empire crumbled. At the same time, the senior executives of BMFL involved in the case resigned from the bank and fled Malaysia. Malaysian immigration records showed that they had left for the UK and other European countries. TF3 had to seek help from Interpol to track down their whereabouts and request the countries where the suspects were in hiding to issue arrest warrants.
By early December 1985, the UK police advised that the former chairman of BMFL had been put under surveillance. The then Deputy Director of the Operations Department, Graham Stockwell, travelled to the UK to discuss extradition arrangements with New Scotland Yard. Meanwhile, Carroll was to stay in the UK to liaise with the police in mounting joint arrest operations simultaneously in the UK and Hong Kong to prevent possible communication between BMFL and Carrian suspects.
The arrest operations were originally planned for on 9 December. However, UK intelligence showed that the former chairman of BMFL might have realised that he was being monitored and was about to flee. The UK Police therefore decided to strike ahead of time. In Hong Kong, Robey was coordinating the arrest operations while maintaining close contact with Carroll in the UK. Chu was in command of the arrest teams at the Hong Kong end.
On the evening of 6 December 1985 (London time), the former chairman and former director of BMFL were arrested in London; simultaneously i.e. in the early morning of 7 December in Hong Kong, three other suspects, including the former chairman and two former directors of the Carrian Group, were arrested by the ICAC.
Operations Diary
Date Time Deployment
4 Dec
1515 Carroll calls Robey from London, saying that the UK police have in place the arrest warrants and can strike at any time; New Scotland Yard have also accepted the documents submitted by the ICAC thus permitting extradition procedures to proceed right after the arrests.
5 Dec
1645 UK police have put the former BMFL chairman under surveillance, while the search for the former director continues.
1900 The former chairman has acted, apparently planning to flee again; meanwhile the police have just located the residence of the former director's wife, and are trying to confirm whether the man himself is also there.
6 Dec
1000 The ICAC and the UK police agree to conduct simultaneous arrests at 0700 on 9 December (London time) i.e. 1500 Hong Kong time.
1800 Since there are indications that the former chairman is planning to flee, the UK police suggest an early strike, and ask the ICAC to act in concert.
2000 The two sides further confirm the action timetable on the phone.
7 Dec
(UK, 6 Dec) 0630 (London time, 2330) TF3 arrests the former chairman and two former directors of the Carrian Group; meanwhile, the UK police arrest the former chairman and the former director of BMFL.
The challenging times ahead
Although the successful arrests of the key suspects represented the successful conclusion of a significant stage of the investigation, even more challenging times were awaiting TF3 officers. As Chu rightly put it, the Hong Kong-UK joint operations on 7 December just marked the beginning of a protracted battle.
The main culprits exhausted every possible means to avoid trial. Nevertheless, the Task Force was undaunted and vowed to bring the corrupt to justice.
A seven-year fight
The high-profile Hong Kong-UK joint arrest operations inevitably alerted the former alternate director of BMFL and created more obstacles to his arrest. The fugitive managed to hide in Europe for two years before the French police could finally tracked him down in 1987.
Many legal hurdles had to be overcome in extraditing the suspects from overseas, and the procedures were complicated and labourous. In consultation with the local judicial authority, TF3 had to craft charges compatible with the laws of both places. And the suspect had a right to appeal to the local judiciary against extradition. As Chu explained: "France has no anti-corruption laws similar to those in Hong Kong, and consequently the French courts had to order the suspect's release. It was not until 1990 when we amended the charges to 'conspiracy to defraud' and 'theft' that the French police re-arrested the suspect."
However, the suspect did not yield and spent another four years fighting the extradition order. Although the French courts had ruled that the man should be extradited back to Hong Kong for trial, the French government considered extradition unnecessary and revoked the courts' ruling. Chu said: "It was only after repeated extradition applications through French lawyers that we were able to persuade the French Constitutional Court to grant leave to the Hong Kong Government to challenge the French government's refusal. Only then did we see light at the end of the tunnel, and it was not until February 1994 that we were able to extradite the suspect back to Hong Kong."
However, as Lo recalled, the extradition trip was not without hitches. Lo recounted the day he was tasked to escort the former alternate director of BMFL back from France: "I remember I was having dinner at home that night when the Head of Operations Jim Buckle called. He just told me to pack up straight away and travel to France that same night to escort a suspect back home......"
Delaying tactics
A seven-year fight
Delaying tactics
Unending delays
Another central figure in the case was the former chairman of BMFL who was a lawyer by profession. He had such extensive legal knowledge that he was far more sophisticated than the former alternate director in abusing the legal process. After his arrest, the former chairman tried every means to frustrate efforts to extradite him. His appeals and judicial review applications went through vitually all levels of the courts in Hong Kong and all the way up to the UK's Privy Council and the European Commission of Human Rights. He applied for a writ of habeas corpus no less than ten times in the English courts in challenging extradition orders.
However, knowledge of the law seemed to backfire on the former BMFL chairman because his resistance had effectively put him behind bars during the lengthy legal battle. In the seven years from his arrest in 1985 until the end of 1992 when the British courts refused for the tenth time to grant him a writ of habeas corpus, the courts had also been steadfast in refusing him bail. The former chairman remained 'in custody' throughout the period and became the 'longest-serving' suspect in UK history ahead of a trial and judgment by a court. On 16 December 1992, he was extradited back to Hong Kong to continue his custody at the ICAC Detention Centre. This time a trial in the Hong Kong court was awaiting him.
The extradition battle nagged by the former BMFL chairman:
1987 Apr He lodges an appeal against the extradition in England, on the grounds that he fears a retrial take place after 1997 and his sentence could be served in Mainland China.
Jun Applies for a writ of habeas corpus.
Oct Submits to the Hong Kong High Court that the Governor's order for his extradition is unlawful.
Nov Applies to the High Court for a judicial review of the extradition order but is rejected.
He then lodges an appeal to the Court of Appeal, and withdraws when the Court refuses his request to provide new documentary evidence to support his argument.
1988 Apr Lodges another appeal to the Hong Kong Court of Appeal to revoke the Governor's extradition order
Jun Applies for a writ of habeas corpus for the second time
Jul Appeals to the House of Lords objecting to extradition.
Files claims to the London court that he has been appointed Counsellor of the
Liberian Embassy in London since October 1984 and therefore enjoys diplomatic immunity.
Oct Lodges an appeal with the British Privy Council.Liberia revokes the diplomatic immunity that has been given to him.
1989 Mar He seeks assistance from the European Commission of Human Rights but is rejected.
Jun Applies for a writ of habeas corpus for the third time
1990 Feb Applies for a writ of habeas corpus for the fourth time
1991 Feb Applies for a writ of habeas corpus for the fifth time
Nov Applies for a writ of habeas corpus for the sixth time
1992 Jan Applies for a writ of habeas corpus for the seventh time
Jul Applies for a writ of habeas corpus for the eighth time
Oct Applies for a writ of habeas corpus for the ninth time
Dec Applies for a writ of habeas corpus for the tenth time
The Task Force was given less a hardtime from the former BMFL director who was rather cooperative in the subsequent extradition hearing after his arrest in England. He agreed to return to Hong Kong for trial and also pleaded guilty as charged to the offences. He was escorted back to Hong Kong in late 1986.
Unending delays
After his arrest, the former Carrian chairman was allowed bail of HK$50 million in cash and a surety of HK$2 million. He was also ordered to surrender his travel documents to the court. By that time the Carrian Group had collapsed; but how wealthy the former Carrian chairman actually was or the whereabouts of the loans obtained from BMFL remained unknown. The prosecution's worries were not alleviated despite the huge bail amount. The Legal Department's Principal Crown Counsel raised objections to his bail application on the following grounds: firstly, his foreign nationality and his weak family links in Hong Kong might lead him to abscond; and, secondly, he was so wealthy that he might jump bail to escape trial. The judge, however, insisted on releasing him on bail.
In serving the public interest and for the purposes of minimising prosecution costs, the prosecution requested a joint trial of the former Carrian chairman and the former BMFL chairman, pending the latter's extradition. The judge granted the prosecution's wish and, over the following seven years, repeatedly adjourned the former Carrian chairman's hearing. In 1992, the former Carrian chairman had a mild stroke and later, he submitted a medical report to prove that he had serious heart and ear problems and was not fit for trial. In 1996, he invited three medical experts from England to prove that he was under great pressure and that his health had been deteriorating because of depression.
In his judgment on 27 September 1996, the High Court Judge reproached the former Carrian chairman for choosing to play 'delaying games' with the legal system. He also pointed out that each of the defendants had sought every legal and technical means at their disposal to push back the trial.
Cases against the former Carrian chairman
Year of arrest Offences Case summary :
1983 Conspiracy to defraud Charged with conspiracy to defraud by providing false information and Carrian performance records to mislead shareholders.
The presiding judge acquitted all the defendants in the case in view of duplicate charges and doubtful evidence. They were not required to make a plea.
1985 Conspiracy to defraud and bribery Charged with nine offences of conspiracy to defraud BMFL and 14 counts of offences of bribing BMFL senior executives as a reward for obtaining credits without adequate security or guarantees.
Allowed bail pending trial
Pleaded guilty to two offences and was sentenced to three years' imprisonment.
1988 Offering bribes Charged with four counts of offering HK$2.37 million to the manager of a European bank and two counts of offering HK$2.43 million to the bank director as rewards for giving favours to the Carrian Group.
The prosecution withdrew the charges.
1989 Offering bribes Charged with two offences of offering HK$888,000 and 668,000 Carrian shares to a former executive director of an international bank as rewards for giving favours to the Carrian Group.
The prosecution withdrew the charges.
Almost twenty years on, core members of the Task Force still have vivid memories of the case, and the 'irrefutable evidence' they have unearthed in exposing this astounding corruption and fraud case.
Prisoner at last
The pre-trial of the case against the former Carrian chairman began in early 1996. In March, the High Court Judge decided to revoke his bail and had him remanded in prison pending trial about six months later. However, as he claimed to be seriously ill, the judge permitted him to forward his health and medication reports for a Correctional Services Department medical officer to consider whether he should instead be transferred to the custodial ward. Whatever happened, this was the first time that he lost his freedom after more than 10 years of being out on bail. Shortly afterwards, through his lawyer, he expressed his willingness to plead guilty to two charges. On 27 September 1996, while everyone was celebrating the Mid-Autumn Festival, the former Carrian chairman was sentenced to three years' imprisonment.
Justice served
Defendant Guilty as charged Sentence
Former Carrian chairman Two counts of conspiracy to defraud
Between August 1980 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly causing BMFL to make loans totalling US$238 million Three years' imprisonment; prohibited for a period of five years from taking up a post of director or in administrative management or from holding any assets of a company
Former BMFL chairman One count of conspiracy to defraud
Between December 1979 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly permitting BMFL to make inadequately secured or guaranteed loans totalling US$292 million to companies associated with the former chairman of Carrian. One year's imprisonment (seven years' custody in the UK prison before extradition)
Former BMFL director Two counts of conspiracy to defraud
Between January 1982 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly permitting BMFL to make inadequately secured or guaranteed loans totalling US$137 million to companies associated with the former chairman of Carrian.
Two counts of accepting advantages
Between September 1981 and May 1982, he accepted HK$15,726,880 from the former chairman of Carrian in return for facilitating the advance of monies to companies associated with him.
10 years' imprisonment
Alternate director of BMFL Two counts of conspiracy to defraud
Between August 1980 and October 1983, he conspired to defraud BBMB and BMFL by dishonestly permitting BMFL to make inadequately secured or guaranteed loans totalling US$238 million to companies associated with the former chairman of Carrian. 5 years' imprisonment
Manager of a European Bank Four counts of accepting bribes
Without the permission of his employer, he accepted HK$2.37 million from the former Carrian chairman in return for giving favours to the Carrian Group in business matters 3 years' imprisonment; returned the bribes to the liquidator of Carrian
Former executive director of an international bank Two counts of accepting bribes
Without the permission of his employer, he accepted HK$888,000 and 668,000 Carrian shares from the former Carrian chairman in return for giving favours to the Carrian Group in business matters 18 months' imprisonment; returned the bribes to the Carrian liquidator and also paid $300,000 to the Government.
By the close of the trial, the criminals certainly had to pay their price, mitigated to some extent the grief of countless number of people affected in the case.
Minor shareholders
The explosive growth of Carrian pushed its stock price up more than tenfold over the space of just one year. Many ordinary people were attracted and became minor shareholders in the Group.
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Following the collapse of the Group, a press report quoted a stockbroker, who on behalf a wealthy merchant had speculated in Carrian shares, as saying: "Carrian shares were talked up as shares, the share price of which would only rise and would never fall. The wealthy client initially held between 200,000 and 300,000 shares of the Group and in 1982, when the share price dropped, he purchased a few million more thinking it would be wise to purchase more at a lower price. Who could have predicted that the share price would plunge and that trading would finally be suspended! In the wink of the eye the massive investment had gone into smoke!"
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Mr Lam, another victim, still felt aggrieved when recalling the incident."Carrian succeeded in creating a smoke screen to convince the public that it was a financially robust company. Many people unreservedly invested in its shares. Who could have known that the shares in no time could become worthless."The incident cost him confidence in the stock market and he shunned from investing in stocks for a long time afterwards.
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Mr Wu, whose father was a stockbroker, said, "I was young and not interested in speculation at that time. But because of my father, I knew something about the Carrian case. The whole case was a swindle. According to my father, even people inside the trade could not see through their tricks or figure out how they managed to keep all the others in the dark. Numerous people fell victim but they could blame it on bad luck and see it an expensive lesson."
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Mr Ho, a fund manager, said, "I started to work in the stock market just before the collapse of Carrian. I was lucky to have escaped an touch. When Carrian suspended trading, everybody was aghast! Many had lost their life-long savings yet there was nothing they could do except to sigh in anguish. The Carrian share certificates were used as wallpaper."
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The evil of corruption
The Carrian minority shareholders were not the only victims in this case. Hong Kong taxpayers also had to foot the cost and the image of Hong Kong was tarnished.
The judge pointed out in his judgment that the illegal acts of this small group of defendants had seriously tarnished the hard-earned reputation of Hong Kong as a financial and commercial hub.
According to information provided by the court, prosecution costs amounted to HK$210 million, all paid from the public purse and that the ICAC's expenditure alone exceeded HK$28 million. However, many voices in society considered it worthwhile to spend as much as was required to uphold justice. The then Hong Kong Attorney General also indicated that Hong Kong would not tolerate commercial fraud and that it was essential for law-enforcement agencies to spare no effort in the fight against crime and to commit all possible resources into investigations and prosecutions. Justice should not be given a price tag.
"No matter how rich one is, no matter how shrewd the team of defence lawyers are, and no matter how well one knows how to abuse the legal process to play for time, one will eventually face sanction by the court for breaching the laws of Hong Kong. The effort and money spent over these 13 years serve to bring out this point."
Ming Pao Editorial (21.9.1996)
"This has been a case in which defendants systematically sought to manipulate the legal process for their own ends. They failed because the Government was determined to see that the offenders were brought to justice, regardless of cost. That was the correct decision, no matter who ultimately pays the bill."
SCMP (24.9.1996)
The Carrian Task Force comprised a team of some 40 members. Some of them stayed for a short time and were transferred, but some carried through to the end. It is hard to imagine the bitterness and weariness as well as the satisfaction experienced by the investigators at the achievements generated by this complicated case which lasted well over a decade.
Bitter-sweet Conclusion
1985, when Chu was appointed a member of the Task Force, he thought the task would only last for about a year. In the twinkling of an eye, the year was 1988 and he got a chance to get promoted. However, since the promotion board considered him less exposed than the other candidates, having been engaged in only one case in all those years, he was out in the race. At the time Chu felt rather bitter about it. He recalled, "All along, I had felt honoured to have been involved in an investigation of such a major case. But in the end it was also because of this case I missed a promotion." Chu staged a comeback in the promotion exercise held the following year and his candid reply to an examiner's tricky question led to an unexpected result.
The examiner asked, "Which would you choose? To get promoted but have to leave the investigation you are working on, or to continue with the investigation but get no promotion?" I said, "In that case, I prefer finishing the investigation to getting a promotion. I have become more and more interested in this case, so I don't mind finishing the case first before getting a promotion." Who would have thought that finally I got both a promotion and a transfer.
(in Cantonese only)
CLICK BELOW LINK TO HEAR THE AUDIO:
http://tv.icac.org.hk/other/eng/asx/main/cases/carrian/promotea.asx
(c) 2006 All materials are collected by. SakuraGuy
Property of articles and audios owned by. ICAC Organisation HONG KONG.
No Unauthorised duplication, replubishing or alterations are allowed without written permission from ICAC Organisation HONG KONG.
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