College denies covering up alleged HK$700,000 fraud case

Confidential HKIEd report details management 'weaknesses' which allowed a former boss to allegedly defraud students of HK$700,000

PUBLISHED : Wednesday, 25 September, 2013, 12:00am
UPDATED : Tuesday, 24 September, 2013, 11:10pm

An alleged HK$700,000 fraud at the Hong Kong Institute of Education is under investigation without ever having been made public.

The case, in which a hostel manager at the teacher training college is alleged to have pocketed hall fees paid by students, has shown up management weaknesses at the institute's four hostels, according to a confidential internal college report seen by the South China Morning Post.

According to the report, the manager had been in debt for years and had attempted to borrow money from various staff.

He had also recently thrown an expensive wedding banquet.

The alleged fraud, discovered in February after the suspect had left his post at the college, was not reported to the institute council until June.

The college said it had been reported to police but refused to say when. Contacted by the Post, police said they could not comment without relevant case reference details, which the institute has also refused to disclose.

A spokeswoman for the college confirmed an alleged fraud had been discovered at the Jockey Club Student Quarters earlier this year, but rejected suggestions of a cover-up.

"We have no intention of covering up the case," she said on Thursday.

"We have at all times acted in the best interests of our students but we cannot do anything that might possibly jeopardise the police investigation, which is still ongoing."

The spokeswoman said prompt action had been taken to inform the affected students and assure them that they would not have to bear any financial loss.

According to the confidential report seen by the Post, the fraud may have been committed over nine months last year, during which the school saw the sudden departure of former president Anthony Cheung Bing-leung to join the government as transport and housing secretary.

The suspect is believed to have fabricated e-mails to students instructing them to pay their hall fees in cash instead of by bank deposit, and to have issued fake receipts for those payments.

An investigation by the college between July 2012 and March this year found no frauds at the institute's other three hostels, but "weaknesses" that made the alleged fraud possible were identified.

"Internal control weaknesses ... and a lack of reconciliation of hall-related records from different sources gave rise to opportunities to commit fraud by the former [hall manager] that went undetected," the report said.

"The weaknesses should be rectified and a system of internal controls be implemented as a matter of urgency," it concluded.

Cheung, appointed president in 2008, left the school in June last year.

Vice-president Professor Cheng Yin-cheong subsequently became acting president for 13 months until Professor Stephen Cheung Yan-leung, former business dean of Baptist University, took office this month.

The spokeswoman refused to comment on whether there had been mismanagement while the top position was vacant.

The spokeswoman also refused to disclose whether the HK$700,000 had been recovered or whether anyone had been arrested in relation to the case.