The director of audit said lack of controls leaves the system open to abuse, as the medicines may be sold locally, posing a risk to public health.

Benjamin Tang's audit report said a series of incidents early this year involving unsafe and unregistered medicines have "shaken Hong Kong people's confidence in local medicines."

Audits in November last year found that the Department of Health issued 3,251 import licenses, of which 424 were for the importation of medicines for re-export.

But only two of the 424 licenses had been included in the 18 licenses weekly referred to the Customs and Excise Department for consignment checking.

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When the 424 licenses were scrutinized, some of the medicines were large in quantity and value, including 240 kilograms of a virility product worth HK$93.6 million to be re-exported to Australia.

On verifying the licenses to see if the medicines were re-exported, 10 were found to have irregularities including selling the imported medicines locally.

Inadequacies in the director of health's control of Chinese medicine were also reported. MARY ANN BENITEZ