Scammers rolled up after padding payrolls to take out Covid loans

Eighteen suspects have been arrested in a crackdown on syndicates suspected of using fake documents to take out HK$193 million government-guaranteed bank loans that were launched to support businesses hit by Covid.

The suspects - 12 men and six women - were arrested for conspiracy to defraud and money laundering, police said yesterday.

Superintendent Yip Wing-lam of police's fraud division said some companies exaggerated their number of employees and their salaries when applying for loans.

In one case, a company with only two staff that had a monthly revenue of HK$10,000 claimed it had to pay HK$6 million in wages annually - indicating each worker earned as much as HK$250,000 per month.

"A cha chaan teng also claimed that each of its staff could earn HK$80,000 to HK$90,000 per month," Yip said. "The exaggerated salaries alone might not have alerted us, but some of the companies submitted fake documents and evidence, which made us suspicious and start to investigate."

Some companies used the personal information of former employees who left Hong Kong to open new MPF accounts, in order to exaggerate the number of employees and get more loans.

Senior inspector Mak Wai-kwong of the Commercial Crime Bureau's fraud division said the syndicates used shell companies by using fake documents including fake payroll records and operation reports.

During the investigation, police found directors of shell companies did not use the loans for company operations and instead transferred the money to their own personal accounts to buy luxury goods, Mak said.

He added that one company received HK$5 million in loans and used half to buy luxury watches, which was against the loan's aim to help Covid-hit businesses.

Yip said police have launched four rounds of operations since last year and arrested a total of 127 people - 92 men and 35 women - in 11 cases, including masterminds of syndicates, company directors and employees and bank staff. A total of HK$1.4 billion loans were involved in the crime, Yip said.

Under the scheme operated by the Hong Kong Mortgage Corporation, more than 53,000 loans have been approved so far, involving HK$99 billion, with 32,000 enterprises benefiting.

wallis.wang@singtaonewscorp.com