HK$50m bank loan for secret political mission, court hears
A loan of HK$50 million that a Hong Kong bank injected in a Kuomintang investment arm 10 years ago was alleged to have been paid out for a secret political mission, a court heard yesterday.
The allegation was cited by Robert Whitehead SC, counsel for the Bank of East Asia (BEA), who described it as outrageous.
The allegation has been made as part of the defence by two companies - one of them formerly owned by the Kuomintang - against a claim by the bank for repayment of a HK$50 million loan plus interest, a total of HK$80 million.
Quoting from defence documents, Mr Whitehead said the companies, Labour Buildings and China States, contended that the loan, made as a debenture, was void and not binding because about half of the HK$50 million had been directed, with BEA's help, to fund certain unions and organisations in Hong Kong, as well as the election of the late legislator Pang Chun-hoi.
Deputy High Court Judge David Gill is being asked to determine if the bank can gain possession of the Labour Building in Mong Kok from the two companies.
Labour Buildings was a company set up in 1963, with the Kuomintang holding more than 70 per cent of shares via APH Hong Kong and the remaining shares held by a number of trade unions and individuals in Hong Kong.
The company, part of an investment arm of the then ruling party of Taiwan, owned the Labour Building situated at 11 Changsha Street in Mong Kok, now the site of the Tatami Hampton Hotel.
The court heard that in 1997 the BEA advanced a loan of HK$30 million to Labour Buildings by way of debenture, which was increased to HK$50 million within 10 months.
In October 1999, a second debenture was signed to replace the previous one. In September 2001, APH sold all its shares in Labour Buildings to Yan Hei (Holdings), allegedly without the bank's written consent.
In October 2001, Labour Buildings entered into a lease of the entire building in favour of China States, which allegedly sub-leased the various floors of the building.
According to Mr Whitehead, the debenture between the parties required the borrower to obtain approval from BEA whenever the building was to be leased out, licensed, removed or pulled down. But the building had been leased to sub-tenants without seeking consent from BEA.
The hearing continues today.
