Hong Kong  - A 75-year-old businessman has been jailed for 55 months after masterminding a 265-million-Hong-Kong-dollar (34-million-US-dollar) fraud, a media report said Tuesday.

Chen Xun had denied five counts of conspiracy to defraud three banks to issue letters of credit by providing false documents, The Standard newspaper said.

Accomplice Lau Ka-ping, 54, who also acted as a prosecution witness against Chen, received a 32-month sentence after pleading guilty to two counts of conspiracy to defraud.

Deputy judge Johnny Chan jailed Chen even though the money had been fully repaid. The judge said granting leniency by giving Chen a lighter sentence would send the wrong message to the public.

He added that Chen had put banks at risk and caused fundamental damage to the banking system.

A district court heard how Chen had provided fictitious documents to persuade Kwangtung Provincial Bank, Kincheng Banking Corporation and the Bank of China (Hong Kong) into believing that transactions had occurred between various companies between 1994 and 1996.

As a result, the banks approved or released millions of dollars in letters of credit which were later transferred to accounts of companies in which Chen was a shareholder. (dpa)