Silvio Berlusconi

Italian prosecutors say Hong Kong women were key to a massive money-laundering scheme

Italian prosecutors accuse pair of laundering huge sums in scheme linked to Berlusconi; defence insists it was a legitimate business

PUBLISHED : Saturday, 05 October, 2013, 12:00am
UPDATED : Wednesday, 20 June, 2018, 5:14pm

Prosecutors in Italy say two Hongkongers are key figures in a sophisticated money-laundering scheme that spans at least nine countries and has operated for a quarter of a century.

The investigation has linked the scheme involving businesswomen Paddy Chan Mei-yiu and Katherine Hsu May-chun - who are standing trial in Italy - to former Italian prime minister Silvio Berlusconi.

Yesterday the pair's defence lawyer, Roberto Pisano, spoke out for the first time against the allegations in an interview with the South China Morning Post.

"The pillar of the defence is that it was a legitimate business in buying and reselling … TV rights," Pisano said by phone from Milan.

Chan and Hsu, along with nine others, are accused of buying rights for US television series and movies, then reselling them to Berlusconi's Italian media conglomerate Mediaset at inflated prices and laundering the money in a complex scheme.

In 2006, Italian prosecutors estimated the illicit profits between 1988 and 1999 amounted to US$170 million.

The trial gained prominence after a Post investigation revealed how Sergio De Gregorio, a former senator and political associate of Berlusconi, had tried to exert pressure on Hong Kong officials to stop the transfer of evidence in the case to Italy.

De Gregorio claimed he intervened with the Vatican to help former chief executive Donald Tsang Yam-kuen obtain an audience with Pope Benedict for the purpose of preventing the evidence from reaching Italy.

Last week Milan prosecutors submitted 16,000 files - which police seized in 2007 at the two women's homes and four of their companies - to the court after Hsu and Chan's lawyers failed in seven years of legal proceedings to stop the move.

Pisano said, however, that he was not concerned about the transfer.

"These documents prove that the allegations of the prosecutors - according to which [US film producer Frank] Agrama and the two Hong Kong defendants were harbouring these funds and doing these transactions in order to favour Silvio Berlusconi - all these documents prove exactly the opposite," he said.

Chan met the Egyptian-born Agrama in Cannes, France, in the late 1970s at a trade fair and they decided to form a partnership and trade movie rights internationally, the lawyer said.

Chan set up the Hong Kong-based company Harmony Gold in 1979, records from the city's Companies Registry show.

In the same year, Agrama set up Agrama Film Enterprises on Sunset Boulevard in Los Angeles. Four years later, he set up Harmony Gold USA. He later also became the Los Angeles representative of another Hong Kong company established by Chan, Wiltshire Trading.

These four companies, along with two others linked to Hsu and Chan in Ireland and Curacao, resold rights to Berlusconi-linked companies located in Malta, Ireland and the British Virgin Islands, the prosecutors alleged.

Prosecutors argued that the two women had no real role in the business operations, as shown by sales contracts that carried Hsu's signatures in the form of "some sort of stamp-signature", according to court records.

In 2005, Swiss investigators froze 150 million francs (HK$1.29 billion) at a UBS branch in Lugano belonging to Harmony Gold, Wiltshire Trading and other companies. Pisano says the funds remain frozen.

The Italian prosecutors also traced three transactions amounting to US$40 million to a corporate UBS account of Harmony Gold in Hong Kong in 2005.

The trial is scheduled to resume in Milan on Thursday.

Video:Interview with a former Italian Senator attempts to interfere in Hong Kong’s judicial process