A GERMAN company director changed the expiry dates on containers of penicillin by two years and falsified shipping documents for the drug which was for use in Vietnamese hospitals, Eastern Court heard yesterday. The Vietnamese Government has alleged that the penicillin was sub-standard. Between April and July 1991, Kai Mellahn, 32, is alleged to have forged certificates of analysis and labels to give false expiry dates to make three shipments of penicillin appear two years younger than they actually were. He is also accused of falsifying accounting documents and of forging a letter in November 1991 stating that the labels attached to canisters of penicillin showing a manufacturing date of 1988 were printed in error as a result of a computer malfunction. Mellahn faces five counts of forging documents, four counts of uttering forged documents, two counts of false accounting and one count of possessing implements for forgery. Detective Inspector Peter Hazlewood of the fraud division of the Commercial Crime Bureau opposed bail. He applied for a 14-day remand in custody. He told the court that the case was politically sensitive as the victim was the Government of Vietnam. Defence counsel Mr Gary Alderdice said the Vietnamese Government had been formally rejecting shipments since July 1992. He said that extending the life of a drug was acceptable provided it was tested. That was not a defence because the documents were false. The case was not ''black and white'' because the Vietnamese Government had been willing to take the supplies if say US$60 (HK$464) was knocked off the price. He asked for bail because he said his client was now wholly responsible for running a pharmaceutical company which would fold if he were remanded in custody. He pointed out that Mellahn had returned voluntarily from Germany even though the country did not have an extradition agreement with Hongkong. Magistrate Mr Michael Hill agreed to grant bail of $50,000 cash plus $50,000 on his own recognisance with conditions of surrendering his and his wife's passports and reporting daily to Stanley police station.