Hong Kong's Independent Commission Against Corruption (ICAC) has brought charges against Adrian Foo Tiang-hock, former portfolio manager at ING Investment Management, and Nicholas Tan Chye-seng, former executive director at UBS Securities, for fraud and bribery. It has also charged Li Man-tak, executive director of publicly listed Kwong Hing International Holdings (Bermuda) and Louis Lin Chak-pui, former director at SBI E2-Capital China Holdings.

All four defendants have been released on bail and face a court appearance before Hong Kong's Eastern Magistracy this morning (Thursday) at 9.30am. They face five charges: three counts of conspiracy to offer advantages to an agent, one of accepting an advantage as an agent, and one of conspiracy to defraud.

Foo, Li and Lin are accused of conspiring together with another person to offer advantages to Foo for him to cause ING to purchase and hold Kwong Hing shares. Li and Lin are further charged with conspiring together and with one other person to offer advantages to Foo to continue to hold Kwong Hing shares.

All four are accused of conspire with a fifth person to offer advantages to UBS' Tan, a small companies research analyst, to promote the shares of Kwong Hing and causing UBS to publish a favourable report in relation to those shares.

Foo alone faces two more charges, including the alleged acceptance of HK$1 million from another person to cause ING to purchase the shares of LeRoi Holdings, and to defraud SBI E2-Capital Securities in relation to share placement of HC International. These alleged offences took place between July 2003 and February 2004.

A lawyer not involved in the case says this is the first time, at least in recent memory, that the ICAC's powers have been turned against a fund manager. The ICAC was established in the 1970s to combat police corruption and has considerable power in pursuing investigations. In the past it has often established a case by noting sums of money in defendants' bank accounts that exceed their job earnings.

ING Investment Management confirmed that is has been cooperating with the ICAC's investigation. The firm is conducting an internal investigation into its investment process and the circumstances surrounding the ICAC case. The ICAC has confirmed that ING Investment Management is not the subject of its investigation. "ING observes the highest internal and external standards of ethics and governance with regard to all investments in financial markets and is fully cooperating with the ICAC on this issue," says a firm spokesman.

Foo, who joined ING in 2000 as a regional equities manager, was suspended in March and subsequently left the firm, the spokesman says.

UBS suspended Tan in February after his arrest with full pay, and on Monday, May 31, he left the firm, says a spokesman. UBS has suspended coverage on stocks Tan had followed and will review and reassign them. His research was also removed from the firm's extranet site. "UBS has initiated an independent investigation of all Hong Kong research activities to ensure that this is an isolated incident and confirm the robustness of our internal controls and procedures," says the spokesman.