A 46-year-old restaurant owner was jailed for three years on Thursday after being found guilty of fraud involving the Protection of Wages on Insolvency Fund (PWIF).

The case is the first conviction of its kind, though criminal methods involved in the case are said to be common in the catering industry.

The District Court heard that defendant, Tsang Yung-ping, operated six Chinese restaurants in Sham Shui Po and Kowloon City between 2001 and 2008. He opened a new restaurant at the original premises with the same equipment but a different name shortly after the old one closed down, leaving employees holding the bag for wages.

Tsang concealed fixed assets of his firm during the winding-up process, and denied attending liquidators knowledge of any residual assets. As a result, he defaulted on wages to 66 employees,who had to seek relief from the government's PWIF for unpaid wages and termination compensation, amounting to HK$780,000.

The PWIF was established to provide a safety net for employees that are affected by employers' bankruptcy.

The judge said both the government and taxpayers are victims, because the accused used the government's money to make investments. He pointed out that the accused planned his crime deliberately, and is a "black sheep", and like a cancer cell in the body, setting a bad example for other business operators.

Hong Kong is a free commercial society and the government holds to positive non-interventionism, but it depends on the self-discipline and mutual trust of the merchants, the judge said, adding that the defendant's behavior had further "influenced the operation of the society and reduced the competitiveness of Hong Kong".

The judge went on, if this kind of behavior persists, the government may have to revise related ordinances to stanch leaks which could affect the ecology of business. The judge concluded the court must send a clear message that it will not tolerate such actions, and ordered the defendant to serve three years in prison.

Apart from being convicted on one count of fraud and sentenced to three years' jail, a disqualification order prohibiting company directorship for five years against him was also made.

Secretary for Labour and Welfare Matthew Cheung Kin-chung welcomed Tsang's conviction involving the PWIF.

"The ruling could send a positive message and deter anyone from making use of the PWIF to escape from their responsibility," he said.

Cheung added the judgment will remind employers not to challenge the law. The Labour Department will scrutinize all applications in a careful and prudent way.

Besides, an inter-departmental task force comprising representatives of the Labour Department, the Commercial Crime Bureau, the Official Receiver's Office and the Legal Aid Department has been formed to take concerted action against cases of suspected abuse, and to protect the PWIF from being abused.

fanfeifei@chinadailyhk.com

(HK Edition 08/24/2012 page1)