The former chairman of a de-listed company has been jailed four and a half years at the District Court over his involvement in a $94.6 million letters of credit fraud based on bogus business transactions.

Lee Wing-kan, 50, former chairman of Yue Fung International Group Holding Limited, was found guilty of three counts of conspiracy to defraud.

In sentencing, Deputy Judge David Dufton said letters-of- credit frauds were serious offences.

From December 1998 to January 2002, Lee conspired with others to defraud a number of banks by dishonestly causing Yue Fung to apply for 37 letters of credit and six import loans in favour of a number of companies.

Companies set up as fronts

They submitted false documents to the banks, purportedly as evidence for genuine underlying transactions for the purchase and resale of electronic parts between Yue Fung and those companies.

Some of those companies were either set up only for the arrangement of bogus transactions, or had no business dealings with Yue Fung.

As a result of the scam, the banks released more than $94.6 million to those companies under the letters of credit and import loans. The funds then reverted to Yue Fung.