Fang Liu pleaded guilty to one count of conspiracy to defraud after she was charged by the Hong Kong Independent Commission Against Corruption (ICAC). In sentencing, judge Ernest Lin Kam-hung said the court had to “mete out a deterrent sentence as the defendant was a key culprit of a premediated cross-border insurance scam”.
The judge added that the fraud could have “increased the operational costs of insurance companies in vetting insurance claims, and the burden would be shifted to members of the public”.
Details of the case - Hong Kong-based Dah Sing Life Assurance received two applications from a mainland policyholder, one in March 2015 and another in July of the same year.
They were submitted by one of the insurer’s own agents. After the applications were approved, Dah Sing Life issued two policies to an unnamed individual with a basic sum assured of $380,000 and additional insured sum totalling $400,000.
As the sole beneficiary, Liu was entitled to receive a maximum of $580,000 if the policyholder died of natural causes or $780,000 for accidental death.
Death certificate - In a meeting held around May 2016; Liu, the policyholder and the insurance agent agreed for the defendant to submit a death claim to Dah Sing Life by “falsely representing” that the policyholder had died to “deceive the insurer of a compensation of about HK$5m (£512,000, $639,000, €578,000)”, according to the ICAC.
As arranged by the policyholder, Liu obtained a fake death certificate that month bearing the name of the policyholder and their employer, which was a power supply company in Jinzhong, Shanxi Province.
The certificate stated that the policyholder died of a sudden heart attack on 26 May 2016, and was buried four days later. To meet the insurance company’s requirements and prove how the policyholder had died, Liu also obtained a medical certificate of death on 2 June 2016 from a community health service centre. She then had to secure a deregistration certificate from a police station in Jinzhong.
On the following day, Liu, accompanied by the insurance agent, submitted a death claim form supported by the death certificate and the deregistration certificate to Dah Sing Life, now known as Tahoe Life Insurance. The court heard that the power supply company had never issued the death certificate, while colleagues of the policyholder had met him alive on different occasions in 2017.
Financial planner case - Elsewhere, the ICAC has charged a former senior financial planning manager of China CITIC Bank International (CNCBI) with fraud. Yuk-lam Chui “defrauded the bank of commission by falsely representing that eight insurance applications were referred by a relationship manager of the bank”, the ICAC said.
He faces one count of fraud, contrary to Section 16A(1) of the Theft Ordinance.
Partnership - Sometime before June 2016, CNCBI entered into a partnership scheme with an insurance company to promote its products. Chui was a senior financial planning manager employed by CNCBI under the scheme and promoted the insurance products to the bank’s clients.
Relationship managers of CNCBI could also refer bank clients to financial planning managers for taking out insurance policies of the insurance company. Commissions would be paid by the bank to its relationship managers, depending on their quarterly performances.
The charge alleges that, between 3 June and 20 September 2016, the defendant “falsely represented” to CNCBI that one of its relationship managers was the referee of eight insurance applications of the insurance company.
In addition, with “intent to defraud”, Chui “induced CNCBI to take into account the eight insurance applications when calculating the commission to be payable to that relationship manager”, the ICAC said. In reality, the commission was to be paid to Chui.
Court appearance - He has been released on ICAC bail, pending his court appearance on 19 September 2019. Both cases arose from corruption complaint investigations by ICAC.
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