Murder, Corporate Greed, Rats and Jokers in 1980s Hong Kong

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fountainhall

Murder, Corporate Greed, Rats and Jokers in 1980s Hong Kong

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As a footnote to the article about Inspector John MacLennan in the Gay World forum, Hong Kong had a very colourful history in the 1980s. One of its most infamous scandals and criminal cases involved what had started life as a small pest control company run by a Singaporean Chinese, George Tan. Tan had started life as a construction engineer. Declared bankrupt in Singapore, he moved to Hong Kong in 1972 where he began buying cheap property. He took over the pest control business and renamed it Carrian Investment Company. In 1980 the company shocked Hong Kong not only by entering the property market but by paying a sum regarded as outrageous and massively over market value for an existing commercial office building near the waterfront. Gammon House was an unremarkable small tower. Carrian paid nearly US$200 million for it. Many wondered about the source of Carrian’s funds. It was assumed they probably came from wealthy overseas Chinese. And if that was the source, then there was probably more to come from that source in future. A few months later Carrian sold Gammon House for a huge $127 million profit.

Believing they were now seeing one of Hong Kong’s regular property bubbles, Hong Kong developers started creating one. What they did not know was that Carrian’s Gammon House deals were fiction. Carrion was Enron writ small long before Enron started its financial shenanigans. Dozens of shell companies engaged in many fake transactions. But with bankers like HSBC, Citibank, Merrill Lynch and J P Morgan – the cream of the crop – no one suspected that George Tan was playing them like a puppet master. Soon Carrian became a tangle of businesses including shopping, insurance, taxi fleets, restaurants as well as oil and property developments in the USA. Tan was regarded as one of Hong Kong business success stories. Barely a few had started to smell a lot more than a rat.

Malaysia’s banking industry was heavily involved in lending to Carrian and in its deceptions. But not even when a Malaysian banker sent by the Bank Bumiputra to go over Carrian’s books was found murdered in a banana plantation in Hong Kong’s New Territories did the bells ring and the red lights flash. The banker had tried to block a Bank Bumiputra loan to Carrian.

Much more gruesome was another death. Carrian’s main lawyers were one of Hong Kong’s most venerable legal firms, Deacons. It’s senior partner John Wimbush was a pillar of society within the confines of Hong Kong’s rich and mostly expatriate community. One morning, he was found dead in the swimming pool of his house up on Victoria Peak. His immaculately polished black shoes were neatly placed at the side of the pool. Dressed in his three-piece suit, white shirt and sober tie, his body was discovered at the base of the pool by the drain. What made the death unusual was that a nylon rope had been placed around his neck and was tied to the grille of the drain. As in the case of Inspector John MacLennan, it was assumed this must have been murder. The coroner unbelievably ruled it was suicide!

Wimbush had been due to be interviewed in connection with the Carrian story by the Commercial Crime Bureau later that day. Carrian was by then known to be in serious trouble and its financial manipulations were beginning to unravel. Carrian soon went bankrupt and George Tan arrested.

Carrian’s problem was that as fast as its artificially created bubble had grown, so did it collapse. By early 1983 the negotiations in Beijing on Hong Kong’s future were not going well. Faith in Hong Kong was collapsing. The Hong Kong dollar, after falling as much as 10% in just one week, was pegged at HK$7.8 = U$1 where it remains today. Investors got worried and wanted property off their portfolios. Carrian was now in serious trouble and haemorrhaging cash. As was later discovered, Carrian’s debts had mounted to US$1.2 billion.

It was around this time that I received a call from an old friend in the UK. He was a circuit court judge. He informed me that one of his judiciary friends, Dennis Barker, was to be arriving soon in Hong Kong to take up a post as a Hong Kong Appeals Court Judge. He asked if he could give Judge Barker my contact numbers and perhaps take him out for a drink or a meal and fill him in on what I knew of the Hong Kong government’s workings. Through my business contacts I knew another member of the judiciary. I was not overwhelmed at meeting another judge.

Barker did make contact. I asked where would be convenient to meet, assuming it would be one of the two bars in the Mandarin Hotel where senior members of the legal profession often did their drinking. I was therefore surprised when Barker suggested The Bull and Bear, an English-style pub located – perhaps surprisingly – in the building which had earlier been known as Gammon House!

I found Barker to be extremely affable, easy to chat to and someone who clearly liked his drink for he drank quite a bit! Indeed, more than a bit! Thereafter I heard nothing more from him, reading only occasionally in the media about cases in which he had been involved.

During this time the Attorney General spent years preparing the government’s case against George Tan. It was said to involve a sordid tale of corruption, false accounting and illusory profits in addition to the murder and alleged suicide. As the trial date neared, it was announced that the case would be heard before Justice Dennis Barker and a jury.

So complicated were the issues that the Carrian trial was eventually to last for close to 18 months. Barker often expressed concern that the issues were overly complex for the jury. In fact they had became far too complex for him to comprehend. He completely lost track of the case. In 1987 he came to a series of decisions that halted the trial. The most extraordinary of these was the verdict that, despite a mountain of evidence, George Tan had no case to answer. The trial therefore collapsed and Tan was a free man.

This farce of a judgment brought Hong Kong’s most expensive fraud trial in history to an end. A judicial review by his peers trashed his verdict. He then had no choice but to resign from the bench in disgrace. He and his newly married wife moved to the island of Cyprus. Less than three months later he, too, was found dead at the age of 63. He had wrapped his car around a tree – or that is how it looked. His widow soon let it be known that he had left so many debts she could not pay for his grave. She sent his judge’s robes back to Hong Kong in the hope that someone would pay the nearly US$4,000 she required for a cemetery plot and headstone.

George Tan was later to stand trial again in 1992. He pleaded guilty to the lesser charge of conspiracy to defraud and was sentenced to just three years in jail. A number of his Hong Kong associates received similar terms of incarceration. It was the Malaysians who ended up with tougher sentences. One banker involved in the case received a 5-year sentence; another 10 years.

The Carrian case heralded a new era in corporate sleaze that would be mirrored in many countries. In an article summing up the largest corporate fraud of its time, the distinguished Hong Kong-based journalist and author Philip Bowring wrote: “The Court of Final Appeal’s judgement is in keeping with the dark and dirty chapter in Hong Kong banking and legal history known as Carrian.” A book written about the case in 2014 is appropriately titled “The Joker’s Downfall”.
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