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Non-Tech : GENI: Inc
GENI 2.4300.0%Oct 3 4:00 PM EDT

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To: Brasco One who wrote (277)9/22/2001 11:35:52 AM
From: StockDung   of 574
$700m in Suspect Funds Frozen

Coyright 2001 South China Morning Post Ltd.
South China Morning Post

September 9, 2001

$ 700m in suspect funds frozen
Adam Luck

Hong Kong's two leading banks have frozen $ 700 million in clients' funds over police fears the banks were being used by
illegal and fraudulent stock-trading firms to launder money.

The revelation came in the week that Hong Kong assumed leadership of the influential Financial Action Taskforce. Set up
to tackle rampant international money laundering, the taskforce blacklists countries suspected of being money -laundering
havens. The accounts frozen by the banks include those connected with Benson Dupont Capital Management (BDCM), which
had offices in Hong Kong and was raided by police in Thailand last month.

But legal experts believe that the estimated $ 700 million, understood to be held by HSBC and Standard Chartered Bank,
represents just a fraction of the revenue generated by the so-called "boiler room" operations.

One legal source said: "We are talking about just a few days of accrued credit, because this money was routinely moved
offshore within a matter of days of coming into Hong Kong.

"You can only imagine the sums of money involved here."

The Sunday Morning Post has also been told that the police investigation, led by the Commercial Crime Bureau, has run
into problems because of the multi -national nature of the scam.

These suspected "boiler room" firms, often registered in obscure offshore locations, have used only virtual offices in Hong
Kong that simply forward calls, correspondence and information.

Yet, while the operations have been physically centred in Thailand, the victims have been drawn mainly from Australia,
New Zealand and South Africa.

A Hong Kong lawyer said: "The reality is that the police have got a real problem. They need a victim in Hong Kong and as
I understand it they do not have one. If there is no complaint, is there a crime? Where does their jurisdiction start and end?

"If they are not careful, both the banks and the authorities could leave themselves open to compensation claims from the
account holders."

It is understood that the police put the banks "on notice" that a raft of accounts were involved in suspected money laundering
after receiving a tip-off from a foreign law-enforcement agency.

Under the Organised and Serious Crimes Ordinance, anyone who "suspects or believes" that money is the proceeds of
crime and does not report it is also breaking the law.

BDCM, Berkeley Samson, Fisher Sterling International and other firms are understood to have used accounts with both
HSBC and Standard Chartered Bank.

Both banks refused to comment when quizzed by the Post.

Businessmen claiming to be the account holders have employed several Hong Kong legal firms in a bid to secure the
release of the money.

But one lawyer, who represents one such client, said: "It is a Catch 22 situation. Because the police have not used court
orders to freeze these accounts, the holders cannot challenge it in the courts. It is only when the police instigate the court
action themselves that a challenge can be mounted.

"Because of this there is a very real danger of long-term damage to Hong Kong's economic reputation. After all, if nothing
comes of these investigations, what legitimate businesses will want to risk having their accounts frozen in Hong Kong

Initially, the Organised Crime and Triad Bureau (OCTB) was involved, but the case has since been passed over to the
Commercial Crime Bureau (CCB).

Senior Inspector David Cope, of the OCTB, said: "No comment. This is an operational matter."

The CCB's Chief Superintendent, Victor Lo Yik-kee, similarly declined to comment.
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