Cigarette Smuggling

January 22, 2009 – News.gov.hk

The former chairman of a tobacco manufacturer, charged by the ICAC, was today convicted at the District Court in his absence of bribery and fraud in relation to cigarette-smuggling activities.

Lu Dayong – the 61-year-old former chairman of Nanyang Brothers Tobacco Company – absconded and failed to turn up for the trial last June, and the court issued a warrant for his arrest.

Lu, Hang Chun Trade Development’s director Ko Kit, 40, and sales manager Chan Kai-san, 41, were found guilty of one count of conspiracy to defraud Nanyang Brothers.

Lu and Ko were also convicted of conspiracy for accepting an advantage from cigarette trader Golden Leaf International Development (Hong Kong).

Judge Joseph Yau adjourned the case until February 20 for sentence, pending background reports. Ko and Chan were remanded in the Correctional Services Department’s custody.

The court heard Lu, then Nanyang Brothers chairman, approved Hang Chun and Golden Leaf as overseas distributors for Nanyang Brothers’ cigarettes.

Between November 2003 and February 2004, Lu, Ko and Chan concealed from Nanyang Brothers that Lu had interests in Hang Chun, and caused Nanyang Brothers to supply “Double Happiness” cigarettes to Hang Chun, knowing the cigarettes would be sold in the Mainland, in violation of contracts between Nangyang Brothers and Hang Chun.

Nanyang Brothers subsequently sold $48 million worth of cigarettes to Hang Chun.

Lu and Ko received more than $7.5 million in illegal commissions from two directors and shareholders of Golden Leaf between April 2003 and February 2004 as a reward for causing Nanyang Brothers to sell “Double Happiness” cigarettes worth $42 million to Golden Leaf.

The cigarettes sold to Hang Chun and Golden Leaf were prohibited from sale in the Mainland, but they had been smuggled there through other places including the Philippines and Vietnam.

www.chinaview.cn | 2008-10-22

GUANGZHOU, Oct. 21 (Xinhua) — Chinese police seized three people involved in a four-million yuan (585,265 U.S. dollar) cigarette smuggling operation on Tuesday.

A frontier police brigade at Yantian of Shenzhen, southern Guangdong Province, was tipped off Tuesday morning that two trucks loaded with smuggled cigarettes were heading for Hong Kong.

They pulled over two trucks, matching the description from the tipsters, on the Pinghu section of a highway around 10:00 a.m.. Three people tried to escape the scene but were caught.

The trucks were loaded with 1,000 boxes of brand-name cigarettes labeled as biscuits and toys. The drivers failed to provide required export documents.

An investigation is underway.

Chandra Wong – Updated on Jun 27, 2008 – SCMP

The trial of three company heads alleged to have pocketed HK$12.6 million in commissions from a cigarette-smuggling racket started yesterday after months of delay.

But it went ahead in the absence of one of the alleged conspirators, Lu Dayong, 60, former director of Hong Kong-based Nanyang Brothers Tobacco Company, manufacturer of Double Happiness cigarettes.

Lu, who has absconded, is said to have conspired with his girlfriend Ko Kit, 39, Chan Kai-san, 40, and other unknown conspirators who headed two companies, Hang Chun and Golden Leaf, which Lu approved as overseas distributors for his company’s products. The cigarettes are alleged to have been smuggled to the mainland from Hong Kong via other places including the Philippines, Cambodia and Vietnam.

In a 59-page document presented to open the case yesterday, the prosecution alleged the commissions were paid through various parties from the mainland in the form of deposits, cash and company or casino cheques to bank accounts controlled by unknown conspirators and Ko, who then received and held the funds on behalf of Lu in her bank accounts.

The trio were said to have received the substantial commissions during the 14 months from December 2002 to February 2004, when they were arrested by undercover agents.

The prosecution said anti-graft agents found Lu kept a diary on the commission payments and cigarette shipments.

Ko, a former restaurant receptionist, had no experience in business dealing and was financially dependent on Lu despite holding top positions in the two overseas distributors, the court heard.

The prosecution said the three were caught during covert surveillance discussing the cigarette shipments or commission payments.

All three denied a charge of conspiracy to defraud and another count of conspiracy to arrange for Lu to accept an advantage. Lu and Ko pleaded not guilty to another count of conspiracy to arrange for Lu to accept an advantage.

The trial continues today before Judge Joseph Yau Chi-lap.