The Hong Kong and China chairman of Ernst & Young, whose Hong Kong offices were raided on Tuesday by the police in connection with a fraud probe, has stepped down from his post. Ernst & Young told the firm's partners yesterday in an e-mail that David Sun Tak-kei had relinquished his position. He will remain a partner with the firm and keep his other title as co-managing partner of its 'Far East' business, a unit that includes Hong Kong and the mainland. An Ernst & Young Hong Kong spokesman said Sun's move was not related to the Akai case and that it was normal for the firm to announce appointments and reorganisations on October 1. In an e-mailed statement, Ernst & Young Hong Kong also said that Sun's move had been announced internally in July. Sun was not available for comment. The police Commercial Crime Bureau is investigating Ernst & Young Hong Kong after the firm was accused in court of falsifying documents to shield itself from an audit negligence claim from the liquidators of its former client, Akai Holdings. Edmund Dang, an Ernst & Young Hong Kong partner who was previously a manager on the Akai audit, was arrested on Tuesday on suspicion of forgery. He was released on bail without being charged. Legal and police sources familiar with the criminal investigation said police were unlikely to focus their inquiries solely on Dang, as he was only a junior member of the Akai audit team. In the civil audit negligence case, Akai's liquidators Borrelli Walsh alleged that Ernst & Young's evidence contained files from the firm's Akai audits that had been tampered with or invented after the electronics giant collapsed. The liquidators alleged that Dang's handwriting was on some of the suspect files. But Leslie Kosmin QC, for Borrelli Walsh, also claimed that the actions went beyond that of a junior manager. Kosmin alleged that Dang, who joined the Akai audit team in December 1997, had tampered with files dated as far back as 1994. Solicitors speculated that Dang could be granted immunity if he revealed that other people at Ernst & Young Hong Kong were involved in the alleged interference with papers that found their way into the firm's evidence. Sun was involved in the auditing of Akai, which was wound up in 2000 in Hong Kong's biggest ever corporate collapse. From 1991-99, Sun was Ernst & Young's independent partner in charge of the Akai audit. It was his job to review the firm's handling of Akai's financial statements. A police officer involved in the criminal investigation said of Dang's arrest: 'Like all other cases, police hope arrested persons and witnesses will co-operate and tell us the facts.' The officer said no further arrests were made yesterday and that the investigation was continuing. On September 23, Ernst & Young paid hundreds of millions of dollars to settle the civil negligence case, saying it could not continue to fight, in light of the altered documents. The liquidators alleged Ernst & Young Hong Kong staff tampered with and falsified Akai-related audit files in the months after the company collapsed, then used the questionable papers in witness statements, court pleadings and expert reports. Yesterday, Ernst & Young Hong Kong sent a memo to staff saying it was assisting and co-operating with police inquiries. It confirmed that a partner who had been suspended already by the firm, which it did not name as Dang, had been arrested. 'Why is [Ernst & Young] trying to pin everything on Dang?' asked a friend of Dang's, who asked to remain nameless. 'The firm is a partnership, and partnerships are like families. It is horrible to isolate one man who was only a junior member of Akai's audit team and to suggest he was the cause of all this.' Sun will be replaced as Hong Kong and China chairman by Ernst & Young tax partner Albert Ng. Ng was formerly Arthur Andersen's head of China and joined PricewaterhouseCoopers after Arthur Andersen collapsed following the Enron scandal. He joined Ernst & Young a year ago.