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Cheers fined $10k for collecting 1,400 Phl passports as security for loans

22 November 2019

By Daisy CL Mandap
Consul Paul Saret inspects the 1,413 passports turned over by police after the raid on Cheers on June 5

A hardly-known Hong Kong law was used today, Nov 22, to prosecute and penalize a money lending company for collecting Philippine passports and employment contracts as securities for a loan.

Cheers Holding Company Limited, which also used the name OFC in extending loans to Filipina domestic workers, was fined $10,000 after admitting a count of “accepting security for a loan in a prohibited form” in Eastern Court. The maximum penalty for the offence is a fine of $100,000 and imprisonment of up to two years.

Its sole owner and director, Wong King Yiu Wilson, was bound over for two years as part of a plea bargain, according to Senior Court Prosecutor Tsang Siu Ling.

Cheers was raided by the police in June this year in the course of investigating a complaint, and 1,413 Philippine passports were seized from its three offices across Hong Kong.
The lending company was prosecuted despite its claim that the Filipina loan applicants all signed a declaration stating that they surrendered their documents voluntarily to Cheers (OFC) for safekeeping.

According to the charge which was read out in court in Cantonese, Cheers violated sections 29 (5) and 32 (a) of the Money Lenders Ordinance and regulation 12 of the Money Lenders Regulation, by accepting Ihlyn Sugarol Paquibot’s passport and work contract as security for a loan.

Section 29(5) of the Money Lenders Ordinance states that any money lender who demands or accepts security for a loan in any form prohibited by regulations made under section 34 commits an offence.

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Section 12(a), of the Money Lenders Regulation provides specifically that no money lender shall demand or accept as security for any loan any identity card issued under the Registration of Persons Ordinance, passport, warrant card, or other document establishing the identity or nationality of the holder. 

The charge sheet said Paquibot applied for the loan on May 26, after calling up Cheers and inquiring about the requirements.  A female staff member told her to go to the company’s office at flat A, 19/F, Ngan House at 206-210 Des Voeux Road Central, Sheung Wan, and bring along her passport, employment contract and address proof.

At around 11 am that day, Paquibot went to the Sheung Wan office and obtained a loan for $3,000. Before the money was released to her, she was shown a laminated sign stating the following: “I understand that Cheers Holding (also known as OFC) is a licensed finance company. My monthly interest rate  is around 2.3%. I hereby requesting (sic) the storage service from Cheers (OFC) to keep my important documents (passport and contract). I allow only myself to collect my documents.” She was made to copy the text on a piece of paper and sign it before the money was given to her.

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On June 5, police raided the offices of OFC in Sheung Wan, Shamshuipo and Wan Chai, and arrested Wong and two of his staff. The officers also seized passports, employment contracts, loan agreements and declarations signed by the borrowers.
About 200 Filipinas besieged Cheers' office in Sheung Wan after the raid
During a video interview by the police, Wong said his company had kept the documents at the request of the borrowers. He did not answer questions about Paquibot’s loan application.

In mitigation, counsel for Cheers said, among others, that: the interest rate charged the workers was only 2.3% a month; the company lost $3 million to $4 million because the borrowers had stopped repaying their loan; the complaint arose only because a business rival had written to the Philippine Consulate.

The company’s claim that there was no exploitation of the domestic workers caused quite a stir, and Magistrate Lam Tsz-kan had to ask for the word to be repeated. According to counsel, the workers were living in poor working conditions and the company merely helped them by lending them money.

Receipt issued to a borrower states the amount of loan and terms
Also, according to the counsel, most of the passports were mostly expired, which the borrowers wanted to get rid of, anyway.

It’s a claim that could have been easily debunked by Consulate staff who were kept busy for weeks by borrowers who panicked on hearing about the raid, and wanted to find out how they could get a replacement passport immediately.

Among them was Filipina domestic worker Elen T, who committed suicide recently because of money problems.

On being alerted that police had started returning some of the seized passports to the borrowers at the request of Cheers, Consulate officials protested, and asked that the documents be surrendered to them.

Subsequently, the Consulate declared all the seized passports cancelled, but because of the big number of people involved, modified its previous practice of requiring the borrowers to get their replacement documents at the Department of Foreign Affairs office in Manila.

The borrowers were told that they could apply for a new passport in Hong Kong, but with a shortened validity of five years, instead of 10. They were also made to sign an undertaking that they will not pawn their passports again, or run the risk of not being able to secure another travel document in future.
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