Two mainland men, aged 48 and 60, and a man believed to be Dutch were arrested on suspicion of possessing forged documents. The two mainland men had two-way permits and arrived in Hong Kong on Wednesday.

A police officer said the third man, thought to be aged about 60, said he came from the Netherlands and had lost his travel documents. He was held for failing to present an identification document.

Immigration officers alerted police when they found the stash of forgeries.

'The forged US and Japanese bonds were discovered in several briefcases and other pieces of luggage. One contained hundreds of the bonds,' a police investigator said.

'They are in different large denominations, and some have a face value of US$1 million and 500 billion yen [HK$49 billion]. The bond notes are obviously fakes and can be easily detected. I think some of the bond denominations may not even exist.'

Police also seized forged documents of the mainland and Taiwanese finance ministries. 'The falsified documents authorise someone to handle and cash the bonds,' the officer said. He said some of the rubber stamps bore the name of a United Nations fund.

Police also found photo albums containing pictures of people who appeared to be government officials in traditional dress in Indonesia and Papua New Guinea, the officer said. 'They could be edited photos or fakes,' he said, adding that they may have been used to persuade targets they had overseas connections.

Detectives from the commercial crime bureau are investigating the case. Last night, officers were still checking how many fake bonds had been seized and trying to establish the total face value of the haul.

Another officer said the fake bonds might have been intended to be sold as part of a 'lost treasure' scam. 'In the scam, buyers are told ... they can buy the bonds at a discount and people with connections will help them cash them,' the officer said.

Last night, the three suspects were being held for questioning and no one was charged.