Fraud trial of ex-minister and official begins

Former development secretary Mak Chai-kwong and assistant highways director Tsang King-man appeared in the District Court yesterday on the first day of their fraud trial, with the prosecution detailing how they allegedly abused a civil service housing allowance scheme.

Mak, 62, and Tsang, 57, are accused of conspiracy to defraud the government of HK$700,000 by "cross-leasing" their homes more than 20 years ago. Mak also faces two counts, and Tsang three counts, of using documents with intent to deceive the government.

They pleaded not guilty to all charges before Judge Johnny Chan Jong-herng. The offences allegedly took place between June 8, 1985, and December 31, 1990.

The prosecution said that the fraud was a premeditated arrangement between the defendants. Mak said they met by chance in the queue to buy the flats.

The prosecution's lawyer, Daniel Marash SC, said the men each bought a flat of the same size in the same building at City Garden in North Point in 1985. They then leased each other's flat at the same monthly rent of HK$8,000, and claimed a government housing allowance for the rent, a practice known as "cross-leasing", he said.

When the properties were sold, each received the proceeds of sale of the property they had leased, Marash said. He said the registration of the flats was a sham, and that in reality the two couples were the owners of the flats in which they lived.

On June 8, 1985, Mak, then an engineer with the Civil Engineering Services Department, and his wife, Wong Lai-king, bought flat E on the 21st floor of Block 9 at City Garden for HK$925,800. Tsang, then an engineer with the Transport Department, and his wife, Pau Wai-ming, bought an identical flat on the floor above for HK$928,000.