Fraud trial of ex-minister and official begins
Mak Chai-kwong and assistant highways director Tsang King-man accused of abusing civil service housing allowance with flats swap
Former development secretary Mak Chai-kwong and assistant highways director Tsang King-man appeared in the District Court yesterday on the first day of their fraud trial, with the prosecution detailing how they allegedly abused a civil service housing allowance scheme.
Mak, 62, and Tsang, 57, are accused of conspiracy to defraud the government of HK$700,000 by "cross-leasing" their homes more than 20 years ago. Mak also faces two counts, and Tsang three counts, of using documents with intent to deceive the government.
They pleaded not guilty to all charges before Judge Johnny Chan Jong-herng. The offences allegedly took place between June 8, 1985, and December 31, 1990.
The prosecution said that the fraud was a premeditated arrangement between the defendants. Mak said they met by chance in the queue to buy the flats.
The prosecution's lawyer, Daniel Marash SC, said the men each bought a flat of the same size in the same building at City Garden in North Point in 1985. They then leased each other's flat at the same monthly rent of HK$8,000, and claimed a government housing allowance for the rent, a practice known as "cross-leasing", he said.
When the properties were sold, each received the proceeds of sale of the property they had leased, Marash said. He said the registration of the flats was a sham, and that in reality the two couples were the owners of the flats in which they lived.
On June 8, 1985, Mak, then an engineer with the Civil Engineering Services Department, and his wife, Wong Lai-king, bought flat E on the 21st floor of Block 9 at City Garden for HK$925,800. Tsang, then an engineer with the Transport Department, and his wife, Pau Wai-ming, bought an identical flat on the floor above for HK$928,000.
Marash said Mak and Tsang executed their respective lease agreements with the named landlord as each other's wife, to avoid detection by the administration and to conceal their financial interests in the flats.
The court heard that when Tsang was studying in the UK from September 1989 to September 1990, he arranged for his younger sister Tsang Wai-wah to lease flat 21E. The monthly rent was HK$10,000, which was below the market price and about the same as her maximum housing allowance as an engineer in the Drainage Services Department.
Marash said this arrangement proved that Tsang, not Mak, was the real owner of flat 21E. Tsang Wai-wah is one of 15 prosecution witnesses who will testify.
The court heard that Mak, under caution, told ICAC officers that in November 1990 Tsang had intended to sell his flat, 22E, but that it was then leased to a third party because Mak had moved out two years earlier. Tsang, therefore, proposed to Mak that they swap flats so he could sell 21E instead.
The pair instructed a law firm to prepare a power-of-attorney to effect the transfer of ownership. Tsang sold flat 21E in December 1990, and Mak sold flat 22E two years later, Marash said.
Marash said there was no legal transfer of ownership, so 22E still belonged to Tsang, and if the pair were not the true owners of the flats in which they lived, Mak would not have kept the flat for two years.
The hearing continues today.