Former Chairmen of Ocean Grand Holdings Limited Michael Yip Kim-po and five co-defendants have been sent to prison by the District Court for defrauding HK$180 million from Ocean Grand Company.

The former chairman, his younger sister Yip Wan-fung, also a director of Ocean Grand, and four accomplices carried out fictitious transactions in 2005 and 2006 by creating falsified machinery purchase orders from shell companies which they owned and inflated purchase prices paid by Ocean Grand, according to the District Court.

Yip Kim-po, 50, was sentenced to seven-years in prison and barred from holding the directorship of any company for ten years. His younger sister Yip Wan-fung, 42, was sentenced to six-years imprisonment and a six-year prohibition on holding directorships. She received the lighter sentence because she held "no direct interest in the fraudulent trade" and has "suffered from depression". The four co-defendants received sentences of three to six years.

Judge Kevin Browne in passing the sentence said Yip Kim-po, as the Chairman of the company, had committed a gross breach of trust. Money laundering, the judge added, is an extremely serious crime which merits a jail term that stands as a deterrent to others.

"His sentence was actually too lenient to reflect the seriousness of his crime," the judge went on to tell Yip directly that former chairman was "lucky to be judged in District Court" that is barred by statute from imposing sentences of greater than seven years.

Since the case involved top management officers in the listed company, the Judge voiced concern that the case would affect public confidence in listed companies and would damage the city's reputation.

The six defendants, including Yip sibling, Project Director Yip Wai-lun and three directors of shell companies were convicted of fifteen charges connected to fraud in District Court on September 16. The charges included fraud, conspiracy, issuing a false statement, money laundering and accessing a computer for dishonest purposes.

According to a court hearing on September 17, on behalf of two Ocean Grand subsidiaries, Yip signed a HK$150 million contract with Cometal Engineering, which was a shell company owned by the Yip siblings and their accomplices, to purchase machinery. In August 2005, Yip executed another fictitious contract with the same company this time, for the purchase of metal equipment.

Yip later fled to the mainland after being asked to clarify financial matters by the provisional liquidator appointed by Ocean Grand Holdings and subsidiary Ocean Grand Chemicals on July 2006. He claimed he had gone to take care of his ailing father. Yip was arrested at the Lok Ma Chau checkpoint when he tried to return to the SAR fourteen months later in September 2007.

Yip Kim-po founded Ocean Grand Holdings Limited in 1991 as a business dealing in aluminum products. The company later expanded into energy and property field. His ex-wife is former television actress Gigi Fu Ming-hin.

China Daily

(HK Edition 10/09/2010 page1)