A business that supplied oil to the mainland illegally with the help of modified fishing vessels sold 600 million litres of the contraband during a seven month period, according to seized documents, a court heard yesterday.
The Hong Kong company which sold the fuel, enough to fill roughly 3.8 million barrels, received more than HK$2.6 billion over a similar period, the court was told.
The allegations were heard at the District Court trial of four relatives, and a woman who prosecutors say is the syndicate founder's wife. Brothers-in-law Chung To-chuen and Lee Pak-lam, Chung's wife Sze Mei-mun, Lee's son Lee Wai-fung, and Lai Sheung - who investigators say is the wife of Cheng Kam-shui, who set up the syndicate - stand accused. Cheng is not among the defendants in this trial, which is expected to last 50 days.
The five, aged 27 to 54, face one joint charge of conspiracy to export unmanifested cargo. Seven counts of dealing with property known or believed to represent the proceeds of an indictable offence have also been laid. The laundering charges involve HK$3 billion. They have pleaded not guilty to all charges.
Authorities say Cheng formed the syndicate around 2009 to smuggle marked oil - diesel specified for use in industry or at sea - from Hong Kong to the mainland using the boats. It is illegal to use marked oil in a motor vehicle except those specified by law, or to sell or supply it.
"Fishermen were recruited to sail fishing vessels, which were modified with additional or enlarged fuel tanks, to Hong Kong to collect large amounts of marked oil, which were then transported back to the mainland," Arthur Luk SC told the court.
The fishing boats would collect the oil from barges moored in Hong Kong and pay staff on the barges before taking the cargo to the mainland. "Each trip was made on the instructions of the syndicate on the mainland," Luk told the court, adding later: "The fishing vessels involved were making frequent runs to Hong Kong up to January 2010. Occasionally, one such vessel could make two trips in one day, or otherwise up to 20 trips a month."
The brothers-in-law were sole directors of several companies, three of which each owned one barge. Another company of which they were sole directors, Chi Shing Development, hired the barges.
Luk said deposits totalling HK$2.6 billion landed in Chi Shing's accounts at the Bank of China and HSBC from June 2009 to January 2010. The company sold 606 million litres of marked oil in 5,807 deals.
The five defendants were "actively involved" in Chi Shing's daily business, Luk said.
The bank accounts of the brothers-in-law, Sze and Lai also received large sums from Chi Shing Development and other sources. Sze's and Chung's accounts received HK$210 million and US$88 million, while an account of Lee Pak-lam's received HK$118 million and Lai's accounts got HK$46 million.
Hong Kong customs arrested the five in May 2010, after mainland authorities took action against the syndicate in January that year.
When authorities raided the defendants' homes and the barges, and examined a deposit box belonging to Lai's daughter, they found large amounts of cash, oil sale records and other documents.
The maximum penalty for smuggling is a HK$2 million fine and seven years' imprisonment.