The District Court has jailed two company operators for a $9-million letters-of-credit fraud based on bogus business transactions.

Cheung Hing-man, 62, Harbour Best Development shareholder and director, was jailed four years and three months today. Kong Lai-wah, 52, proprietor of the defunct Chi Shing Industrial Investment Development Company was jailed four years and six months.

Harbour Best was a VCD manufacturer while Chi Shing was a trading company. Between November 28 and December 31, 2002, Cheung caused eight letters of credit totalling $9.36 million to be issued by the Bank of China (Hong Kong) in favour of Chi Shing. On each occasion the defendants furnished the bank with false documents purporting to show Chi Shing supplied substantial quantities of raw materials to Harbour Best. However, there were no such transactions.

After receiving the letters-of-credit funds, Kong transferred the money from Chi Shing to Focus Developments, a company controlled by Cheung. Cheung then channelled the funds from Focus to Harbour Best or other firm connected with him.