Four charged by ICAC jailed for 14 to 21 months for $4.6m subcontract payment fraud over false reservoir inspection reports

The director of a former subcontractor of the Water Supplies Department (WSD) and three of his employees, charged by the ICAC, were today (November 18) sentenced to jail terms of 14 to 21 months at the District Court for 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, 45, sole director-cum-shareholder of Helpful Engineering Company Limited (Helpful Engineering), was sentenced to 21 months’ imprisonment; Li Wing-to, 34, then clerk of Helpful Engineering, received a jail term of 18 months; Kwok Ka-hay and Kwok Ka-kei, both 41 and then handymen of Helpful Engineering, were respectively jailed for 19 and 14 months. The defendants earlier pleaded guilty to a total of two counts of conspiracy to defraud, contrary to the Common Law.

In sentencing, Judge Mr Isaac Tam Sze-lok remarked that the defendants had conspired to defraud a government department, undermining the public interest and involving public safety. The Judge took a starting point of 24 to 33 months’ imprisonment for the defendants, and reduced their sentences to 14 to 21 months, having considered their guilty pleas and other mitigating factors.

The ICAC had earlier filed an application with the court for the confiscation of Lau’s crime proceeds involved in the present case. Hearing on the application is scheduled for February 13 next year.

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 condition of the service reservoirs.

The WSD required its subcontractors to assign a designated number of teams, each consisting of three members for conducting 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 submission 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 amounting to 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.