The Bank of East Asia was accused of committing a breach of duty to help a Kuomintang investment arm obtain a HK$50 million loan for a secret political mission 10 years ago, the Court of First Instance heard yesterday. The allegation was made against BEA by two companies - one of which was formerly owned by the KMT and is countering a claim from the bank demanding the repayment of HK$80 million, including the H$K50 million loan plus interest. The money was loaned for the purpose of redeveloping a Mong Kok property in which the KMT company invested in 1997. BEA claimed it had not received any repayments since 2001. Senior counsel Robert Whitehead, acting for BEA, told Deputy High Court Judge David Gill that the two firms alleged the loan agreement should be made void because the company records in relation to the loan were forged. He said the two companies - Labour Buildings and China States - alleged that BEA did not have the proper authority to grant the loan. The defendants alleged that the minutes of a Labour Buildings board meeting approving the loan application, held in Taiwan in September 1999, were forged because three of the five directors were absent and the resolutions could not be passed. They also alleged that part of the HK$50 million loan was misappropriated and was not used in the redevelopment of the property. 'The defendants claimed that they suffered loss and damages because of the bank's dishonest breach of its fiduciary duty,' Mr Whitehead said, calling the allegation 'absurd'. The court was told that Labour Buildings was a company holding the property, with the KMT holding more than 70 per cent of shares via APH Hong Kong. In September 2001, APH sold all its shares in Labour Buildings to Yan Hei (Holdings). The court heard that late legislator Pang Chun-hoi was one of the five directors of Labour Buildings. The hearing continues today.