Ex-CEO of medical device firm charged as ICAC probe reveals $3.1m project payments fraud

A former CEO of a medical device firm will appear at the Eastern Magistrates’ Courts after being charged with one count of fraud on Thursday for defrauding the medical device firm of payments of over HK$3.1 million for a research and development (R&D) and production project by making a false representation. 

In 2018, Francis Fung Chung-hung, 73, former chief operations officer of Flussig Medtech Limited (Flussig) invited an investor to invest in the R&D and production project of a medical device. 

The investor subsequently set up Flussig to run the project and employed the defendant as its chief operations officer, but due to the slow progress of the project, the defendant recommended the investor invest in another R&D and production project of a coffee machine to make profit to fund the medical device project.

The investor agreed to invest in the coffee machine project through Flussig and accepted the defendant’s recommendation to engage BM Technology Design Limited (BM Tech) and Wargames Factory Limited (Wargames Factory) for software development, manufacturing plastic parts and supplying prototypes.

The ICAC investigation arose from a corruption complaint. Enquiries revealed that the international beverage corporation had never entered into any business negotiation or agreement with Flussig.

It is alleged that between October 2019 and April 2020, the defendant, with intent to defraud, induced Flussig to settle payments totalling over $3.1 million with BM Tech and Wargames Factory by falsely representing that an international beverage corporation would purchase the coffee machine project from Flussig.

After investigation, Chung was charged with one count of fraud but was released on bail, pending his appearance at the Eastern Magistrates’ Courts next Tuesday (Jan 30), when the case will be transferred to the District Court for plea.