Mystery Surrounding Collapse Of Hong Kong Mercantile Exchange

From the South China Morning Post:
Three mainland men charged in a scandal over the failed Hong Kong Mercantile Exchange (HKMEx) were found in their hotel rooms with false bank documents purporting to be worth hundreds of millions of dollars, a court heard yesterday.

Dai Linyi, 65; Li Shanrong, 49, and Lian Chunyan, 50, who were arrested on Tuesday, appeared in Kowloon City Court charged with "possessing false instruments with intent".

The men were detained after the Securities and Futures Commission found serious irregularities with the finances of the exchange - chaired by executive councillor Barry Cheung Chun-yuen - and handed the details of its inquiry to the police.
Specifically, among the confiscated false documents were an acknowledgment letter, two letters of guarantee and three proofs of funds allegedly issued by HSBC and Standard Chartered Bank. There were also time deposits and at least one telegraphic transfer. "The acknowledgement letter, which was found among Dai's papers, was dated April 23 and allegedly issued by Standard Chartered in relation to a cheque for US$460 million (HK$3.57 billion). He also had a letter of guarantee from the same bank undertaking to pay US$460 million to a Zhang Jisheng."
Just as "surprising" is that HSBC is involved in another potential money-laundering scheme:
Dai also had a proof of funds dated May 8 and allegedly issued by HSBC confirming that US$11 million had been deposited into an account held by Lian. Both Li and Lian also held two other such "proofs" with the same descriptions. In addition, Dai and Lian had two documents dated May 7 proving the existence of two separate deposits of US$11 million each in another account held by Lian, the court heard.
However that is just the beginning:the scandal over the failed exchange threatens to go to the very top of Hong Kong's political ladder, following Friday's resignation of HKMEx founder Barry Cheung Chun-yuen, from all his public duties - including executive councillor and head of the Urban Renewal Authority - on Friday and is himself under police investigation over the collapse, the government has said.
The probe into the collapse of the Hong Kong Mercantile Exchange has widened, with police questioning three senior executives of the failed commodities agency.

Separate sources confirmed yesterday that detectives from the commercial crime bureau had talked to a total of four staff from the exchange.
Where things get truly bizarre is the news that the head of Hong Kong itself and the founder of the HKMEx were very close.
The probe into the collapse of the Hong Kong Mercantile Exchange has widened, with police questioning three senior executives of the failed commodities agency.

Separate sources confirmed yesterday that detectives from the commercial crime bureau had talked to a total of four staff from the exchange.

Meanwhile, government officials moved to shore up confidence in Leung Chun-ying's administration amid the growing controversy surrounding HKMEx founder Barry Cheung Chun-yuen, who was formerly his top aide.

Cheung resigned from all his public duties - including executive councillor and head of the Urban Renewal Authority - on Friday and is himself under police investigation over the collapse, the government has said.