Loansharks used detective agency as front, say police

PUBLISHED : Saturday, 06 January, 1996, 12:00am
UPDATED : Saturday, 06 January, 1996, 12:00am

POLICE yesterday uncovered a loansharking syndicate working out of the offices of a bogus private detective agency and offering loans at an annual interest rate of up to 500 per cent.

The syndicate, allegedly operated by a disgraced police constable and a retired fire officer, has lent money to about 1,000 people with debts totalling $100 million.

The policeman in charge of the investigation said it was the biggest loansharking case detected in the past 10 years.

Debtors are believed to include high-income professionals such as managers and lawyers, although most are public estate tenants and bar girls. Some small companies also borrowed money.

The original loans ranged from $1,000 to $1.5 million.

Superintendent Li Wai-chi, head of the Organised Crime and Triad Bureau's B Division, said it was the first time police had found loansharks operating under the cover of a detective agency.

'Actually, the agency never existed. And the premises is only a residential unit. There was not even a signboard,' said Superintendent Li.

Business cards distributed to clients said the agency's services included resolving tenancy disputes and designing security systems. They carried only a pager number.

And the agency's publicity gives no hint of the syndicate's real business of money-lending.

'Most debtors got to know the agency by word of mouth from other debtors,' Superintendent Li said.

'I would say the syndicate was fairly well organised. They used computers to store personal details of the debtors and kept their pictures in photo books.

'They had operated since 1992 and came to our attention last November after a report by a debtor.' They usually charged a debtor 10 per cent of the principal as 'administrative commission'. The borrower was required to repay the loan within 10 days.

For example, a debtor who borrowed $10,000 was given $9,000. At an interest rate of 10 per cent, he had to repay $11,000 within 10 days. If he could only repay $1,000 interest at the end of each 10-day instalment, the total interest will build up to $36,000 after a year. And he would still owe the loanshark the $10,000 principal.

With an interest rate of 16 per cent for every 10 days, the annual interest rate becomes about 500 per cent, more than eight times permitted under the Money Lenders' Ordinance.

The syndicate would seek to recover loans from those failing to repay by posting their pictures on walls outside their homes or workplaces. Debtors also received intimidating calls.

Superintendent Li led raids on four premises in Jordan on Wednesday night after two months' investigation. Police arrested four men and two women, aged from 32 and 77, including a retired fire officer, 45, and a police constable, 36, who was thrown out of the force in 1989.

The six - believed to be key syndicate members - were released on police bail of between $50,000 and $100,000 last night. They are required to report back to Organised Crime and Triad Bureau today.