Banks cheated out of millions of dollars in a loan fraud should shoulder some blame for their losses, a court heard yesterday. Barrister Kevin Egan said seven banks had demonstrated lax supervision in the misuse of more than $25 million in loans taken out by five people convicted of fraud last month. Samuel Kwan Kwok-tai, 40, his sisters Joyce Kwan Shuk-ching, 36, and Tracy Kwan, 35, Chan Pui-wa, 40, and Chan Wo-on, 36, pleaded not guilty in the Court of First Instance. They defrauded the Bank of East Asia, the China State Bank, Hang Seng Bank, the China and South Sea Bank, Kredietbank N.V., Rabobank and Allied Capital Resources Ltd. Prosecutor Michael Poll had told the court the Kwan siblings were shareholders in a garment manufacturing company, Am-Asian Resources (International) Ltd. The defendants conspired to obtain letters of credit from the banks by claiming Am-Asian Resources had business transactions with other firms. These transactions were found to be bogus. In mitigation, Mr Egan, who represented the Kwan sisters and the two Chans, said they had a 'very small role' in the scam. He accused the banks of hypocrisy in professing alarm when fraud was revealed, saying banks tended to turn a blind eye to what their clients did so long as their businesses did well. Hoosen Abdul Aziz, for Samuel Kwan, said his client had not personally gained from the transactions as he had channelled all the money into the company. Mr Justice Pang Kin-kee adjourned sentencing to Monday.