Ex-subcontractor of WSD and three employees charged by ICAC admit $4.6m payment fraud over false service reservoir inspection reports

The director of a former subcontractor of the Water Supplies Department (WSD) and three of his employees, charged by the ICAC, today (September 16) admitted at the District Court that they had committed conspiracy to defraud by submitting service reservoir inspection reports containing false information to induce the WSD to release service payments totalling about $4.6 million.

Lau Ho-kei, 44, sole director-cum-shareholder of Helpful Engineering Company Limited (Helpful Engineering); and three then employees of Helpful Engineering, namely Li Wing-to, 34, clerk; and Kwok Ka-hay and Kwok Ka-kei, both 41 and handymen, today pleaded guilty to a total of two counts of conspiracy to defraud, contrary to the Common Law.

Judge Mr Isaac Tam Sze-lok adjourned the case to November 18 for sentence. The defendants were remanded in the custody of the Correctional Services Department.

The ICAC today filed an application with the court for confiscating Lau’s crime proceeds involved in the present case. Hearing on the application will be scheduled for a date to be fixed later.

The court heard that between July 2020 and June 2022, the WSD awarded two term contracts for the provision various waterworks services for the New Territories East District to Ming Hing Waterworks Engineering Company Limited (Ming Hing). Helpful Engineering was subcontracted to conduct inspections at around 40 service reservoirs in the district to maintain safety and conditions of the service reservoirs.

The WSD required its subcontractors to assign a designated number of teams, each consisting of three members to conduct daily inspections. Subcontractors were also required to compile a daily inspection report supported by photographs taken during the inspections.

The ICAC investigation arose from a corruption complaint. Enquiries revealed that at the material time, Helpful Engineering did not conduct the relevant inspections in compliance with the requirements of the WSD.

The ICAC investigation revealed that on various occasions, Lau had instructed Kwok Ka-hay, Kwok Ka-kei and other employees of Helpful Engineering to take photographs of waterworks facilities and alter the date and time of the photographs, which purported to have been taken on different days. Upon Lau’s instruction, Helpful Engineering’s employees used those photographs to compile the relevant daily inspection reports for submissions to the WSD.

Lau and Li had also instructed employees of Helpful Engineering to prepare false attendance records to show that inspection teams had duly conducted daily inspections at the service reservoirs pursuant to the requirements of the WSD and that each inspection was conducted by three members.

As a result, the defendants had induced the WSD to release service payments totalling about $4.6 million to Helpful Engineering through the fraudulent scheme.

The WSD and Ming Hing rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by Senior Public Prosecutor Noelle Aileen Chit, assisted by ICAC officer Christine Wong.