Prosecution fails to show defendants knew their behaviour was dishonest Seven former Housing Authority sub-contractors were acquitted yesterday of forming a cartel to rig tenders for contracts worth $115 million for the supply of gates. A judge found the defendants had indeed formed a cartel, and said they had engaged in shrewd and sharp business practices. But the prosecution had not proved they knew their behaviour was dishonest, said District Court Judge Alan Wright. The court heard the defendants had received legal advice the cartel did not break any laws. The defendants had denied a joint charge of conspiring to defraud the authority of $55 million, between April 1997 and September 2000, by dishonestly submitting bids to supply steel gates for 16 developments. The prosecution alleged the sum represented excess profits made on the contracts. Judge Wright ruled there was insufficient evidence that the sub-contractors' cartel engaged in price-fixing. The seven accused were: William Chan Cheu-hung, 57, and Wong Chun-hay, 51, respectively director and manager of Dynamic Mark; Yu Chuen-wing, 55, director of Hip Tat Engineering; Hui Shun-tang, 47, director of Tien Shan Engineering; Law Chung-for, 41, director of Sheen Harvest Industries; Sit Kam-tai, 54, director of Shing Shun Engineering Factory; and Billy Tsoi Kai-chung, director of Outstanding Engineering. They were arrested by the Independent Commission Against Corruption in September 2000, two years after the authority had aired suspicions that their quotations for the gates might have been manipulated. Two other men were originally charged with the offence by the ICAC. Choi Yun-lam, director of Choi Lam Kee Iron Works, died in 2002. Lam Man-hung, director of Gammon Iron Gate, remains at large, the court heard. The two, and the seven defendants, were all approved sub-contractors for the authority. The court was told that each of the accused's companies paid $500,000 to join the cartel - a company called Everwin Venture - to co-ordinate bidding for the gate contracts for authority housing projects. The purpose of the cartel was to prevent their undercutting each other when they bid, the prosecution said. It alleged that while the cartel was in operation, its members met as many as 80 times. Prosecutors told the court that, before bidding on every contract, they agreed to bid between $6,800 and $7,500 per unit, and decided which of them would get the contract. The others then bid higher than the chosen sub-contractor. The prosecution claimed the 'excess profits' made by the winner of each contract were returned to the cartel and split equally among the member companies. Judge Wright ordered the prosecution to pay the defendants' costs.