Duo plead guilty as ICAC graft probe reveals pharmaceutical wholesaler $1.1m service fees fraud

A then general manager of a pharmaceutical wholesaler charged by the ICAC today (February 10) pleaded guilty at the District Court to deceiving the wholesaler into paying service fees totalling about $1.1 million by making false representations that consultancy services were provided by a secretarial services company operated by his subordinate. A director of the secretarial services company concerned pleaded guilty to money laundering.

Watson Yau Wei-ching, 56, then general manager of Kingworld Medicine Healthcare Limited (Kingworld Medicine); pleaded guilty to two counts of fraud, contrary to section 16A of the Theft Ordinance. Another charge of fraud against him was left on court file.

Co-defendant Chau Pak-ho, 41, director cum shareholder of Asia Great Services Limited (Asia Great), pleaded guilty to one count of dealing with property known or believed to represent proceeds of an indictable offence (commonly known as money laundering), contrary to section 25(1) of the Organized and Serious Crimes Ordinance.

Judge Mr Ernest Lin Kam-hung adjourned the case to July 24 for sentence and remanded the duo in custody of the Correctional Services Department.

The above offences were revealed in an ICAC investigation arising from a corruption complaint. At the material time, Kingworld Medicine was a distributor and wholesaler of pharmaceuticals and healthcare products in Hong Kong and the Mainland. Yau oversaw the sales and marketing of Kingworld’s products. Meanwhile, Chau and a subordinate of Yau were the directors and shareholders of Asia Great which provided secretarial and accounting services to clients.

The court heard that between February 2017 and May 2022, Yau submitted to Kingworld Medicine seven invoices issued by Asia Great purporting that consultancy services in relation to food nutrient labelling, legal regulations and import and export licensing were provided to Kingworld Medicine so as to induce it to pay consultancy services fees totalling over $530,000 to Asia Great.

Yau also asked Hong Kong Ling Feng Advertising Company Limited (Ling Feng), a contracted advertising agency of Kingworld Medicine, to assist him in reimbursing consultancy services fees of Asia Great. He made false representations to Ling Feng that Asia Great had provided consultancy services to Kingworld, and told Ling Feng that it could make payment to Asia Great by deducting the amount prepaid by Kingworld Medicine to Ling Feng under an annual advertising contract.

Between March 2019 and September 2023, Yau submitted six invoices issued by Asia Great to Ling Feng to induce the latter to pay consultancy services fees totalling over $540,000 to Asia Great on behalf of Kingworld Medicine.

ICAC enquiries revealed that Asia Great had never provided any services to Kingworld Medicine despite receiving service fees totalling about $1.1 million. Chau assisted in dealing with $180,000 and transferred the sum to Yau.

Co-defendant Alen Yu Yuen-to, then marketing officer of Kingworld Medicine and director cum shareholder of Asia Great, earlier pleaded not guilty to two counts of fraud. His case was set for trial on July 6.

Kingworld Medicine rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by Senior Public Prosecutor Cherry Chong, assisted by ICAC officer Giggs Poon.