Loretta Fong – Feb 25, 2009 – SCMP
The former chairman of Hong Kong-based Nanyang Brothers Tobacco Co and two employees from another company were jailed yesterday for pocketing commissions and smuggling cigarettes to the mainland.
Nanyang Brothers, a subsidiary of publicly listed Shanghai Industrial Holdings, made the Double Happiness brand of cigarettes, the brand smuggled to the mainland.
In the District Court, Lu Dayong, 60, who has fled the city, was sentenced to 4-1/2 years in jail, and his lover, Ko Kit, 40, was jailed for 3-1/2 years. Ko was director of Hang Chun Trade Development.
The pair was found guilty of a joint charge of conspiracy to accept an advantage from a cigarette trader, Golden Leaf International Development. They received more than HK$7.5 million.
Chan Kai-san, 41, a Hang Chun sales manager, who was convicted of a count of conspiracy to defraud Nanyang Brothers, was jailed for two years.
In sentencing, Judge Joseph Yau Chi-lap said “corruption struck at the heart of commercial and public life”.
He said Hong Kong had become one of the most corruption-free places in the world, and unscrupulous individuals would not be allowed to ruin the hard work of officials over the past 35 years by offering or accepting bribes.
The court had heard that the offences happened between December 2002 and February 2004. The trio were caught on covert surveillance discussing the cigarette shipments or commission payments. Anti-graft agents found Lu kept a diary of the transactions.
In sentencing Ko, Judge Yau rejected the claim of her defence counsel, Joseph Tse Wah-yuen, who argued she did not benefit from the payments.
Judge Yau said that Lu, as the former chairman of Nanyang Brothers, seriously breached his fiduciary duty by defrauding the company. He said the amount of cigarettes smuggled was substantial because evidence showed there was a price war over cigarettes due to oversupply in Guangdong.
Judge Yau said the scheme was well-planned and highly sophisticated, which added gravity to the offence.