Hong Kong’s anti-graft agency has charged two former senior executives of a company that operates duty-free stores with conspiracy to defraud for allegedly inflating the price of French wine by more than HK$12 million (US$1.5 million) and reselling it to the business for over HK$26 million.

Au Tsz-kei, 68, a former merchandising and buying director of Sky Connection, and Lau Shu-yin, 75, a former general manager at the company, will jointly face one count of conspiracy to defraud at West Kowloon Court on Wednesday.

The defendants were released on bail, pending the appearance in West Kowloon Court for the case to be transferred to the District Court, according to a statement from the Independent Commission Against Corruption (ICAC) on Monday.

An investigation arose from corruption complaints filed with ICAC. The agency said that the duo was charged upon legal advice sought from the Department of Justice after the investigation came to an end.

The alleged offence took place between August 2004 and May 2011. At the time, Sky Connection sold duty-free goods under the business name “Free Duty”. The company’s merchandising and buying department, headed by Au, was responsible for sourcing wine and tobacco for sale. A winery in France was one of the vendors supplying bottled red wine to Sky Connection.

The defendants have been accused of conspiring with then chief executive officer of Sky Connection and a subordinate buyer of Au at the time to defraud the company by dishonestly causing it to place orders for the wine with Jetfair Development and Master Good Trading instead of the French winery, thereby inducing Sky Connection to pay inflated prices for the products.

“During the above period, Sky Connection had placed 56 purchase orders for bottled red wine with Jetfair and Master Good at more than HK$26 million. It is alleged that Jetfair and Master Good had sourced the bottled red wine concerned from the French winery at over HK$14 million and resold it to Sky Connection at inflated prices, causing Sky Connection to make extra payments of over HK$12 million,” ICAC said.

“The ICAC investigation revealed that Lau and his daughter were the respective sole shareholder-cum-director of Master Good and Jetfair at the material time.”

It is alleged that Lau had never disclosed his association with the two companies to Sky Connection.

Sky Connection offered full assistance to ICAC during its investigation into the case, according to the anti-corruption agency.