Merchant funding firm 'not on database'

PUBLISHED : Friday, 25 May, 2012, 12:00am
UPDATED : Friday, 25 May, 2012, 12:00am


A director of a company accused of unlicensed moneylending told a court yesterday that its cash-advance product appealed to merchants by getting around a rule to disclose loan transactions on an inter-bank credit database.

Angel Ng, who joined Citibank twice as a director, testified that Global Merchant Funding (GMF), the defendant company in which she is a general manager and Hong Kong business director, was not a participant in the database, which concerns loan provisions. '[Our transactions] would definitely not be shown in the database, as it is not a loan,' Ng told Eastern Court.

GMF denies one count of carrying out a business as a moneylender in breach of the Money Lenders Ordinance.

Clifford Smith SC, for the prosecution, questioned whether other potential lenders, including banks, would still require information about such transactions offered by GMF when approached by borrowers.

Magistrate Li Kwok-wai, however, said questions in this regard would be hypothetical for Ng to answer and told Smith to reserve such comments to his closing submission.

Ng, who was responsible for approving training materials for new GMF employees, said the first introductory course for sales managers emphasised that 'merchant cash-advance contracts' were not loans.

GMF buys merchants' future credit card and debit card receivables at a discount. It takes a certain percentage of card sales directly from the merchant's processing bank, which is partnered with GMF.

Avery Stone, GMF co-founder and managing director, testified that other common law jurisdictions did not regard merchant cash advances as loans.

An expert witness, called by the defence, is due to testify today. Closing submissions will be heard next week.