The District Court has jailed three people for inducing two banks to pay over $1.4 million to two electrical-appliance retailers over bogus credit-card purchases.

Lam Chun-kit, 39, operator of Hero Ocean Finance Limited, was jailed for 15 months, while Lam Wai-hung, 35, director of Hero Ocean, was jailed for 21 months.

Duncan Tam, 58, director and shareholder of Veto Limited, was sentenced to 27 months' imprisonment.

Deputy Judge Ricky Chan said the offences were serious, adding the defendants' acts were prejudicial to the credit-card system, and impaired the image of Hong Kong as an international financial centre.

Between September 2003 and April 2005, the defendants had instructed a number of loan seekers with poor credit history to make bogus purchases from Veto and Chung Yuen Electrical Company Limited.

The borrowers presented their credit cards at the two retailers for the transactions and signed the installment plan authorisation forms of BOC Credit Card (International) Limited and Dah Sing Bank Limited.

As a result, the two banks were induced to pay over $1.4 million to Veto and Chung Yuen in relation to the bogus purchases.

The amount of loans the borrowers obtained from Hero Ocean was equivalent to the price of their bogus purchases. Hero Ocean charged the borrowers interest calculated at 40% of the loan amount, as well as a handling fee ranging from 10% to 20% of the amount after deducting the interest.