HK authorities arrests Crostini director after sudden halt of retail stores

Hong Kong Customs has arrested the director of local bakery chain Crostini, as he is suspected of engaging in wrongful acceptance of payment in the sale of cake coupons or gift vouchers, in contravention of the Trade Descriptions Ordinance (TDO). This comes after Crostini suddenly halted operations for all of its retail stores on 13 September, leading to some consumers reportedly requesting for refunds of prepaid cake coupons.

According to its press statement, the customs said it has been paying close attention to the incident and called on members of the public affected by the incident to provide information. On 22 September, customs said it has received a total of 104 complaints regarding the bakery chain, involving 5,300 cake coupons or gift vouchers amounting to about $270,000. 
 
After investigation, it was revealed that customers who had purchased cake coupons or gift vouchers were unable to redeem the products concerned nor receive any refund of payments after the bakery chain suddenly announced that it had suspended its business. Customs officers therefore arrested a 55-year-old male director of the bakery chain today. 
 
Investigation is ongoing and the arrested man has been released on bail pending further investigation, said customs. It also reminded traders to comply with the requirements of the TDO. Consumers are also reminded to procure cake coupons or gift vouchers at reputable shops and think prudently before making consumption decisions with a prepayment. 
 
Under the TDO, any trader commits an offence if at the time of acceptance of payment, the trader intends not to supply the product or intends to supply a materially different product, or there are no reasonable grounds for believing that the trader will be able to supply the product within a specified or reasonable period. The maximum penalty upon conviction is a fine of $500,000 and imprisonment for five years.

Previously, Crostini drew flak after it suddenly halted operations for all of its retail stores on 13 September. This has led to some consumers reportedly requesting for refunds of prepaid cake coupons. According to its Facebook post on 13 September, Crostini said due to the harsh business environment under the pandemic, the company had to make the decision to cease operations for all of its retail outlets as of 13 September. It also said it had “tried in vain to turn the tide”.

Wong Kwong Fai, the founder of Crostini told local press that landlords had started to chase him for payment after the government’s rent deferral mechanism, which allows local businesses to delay rental payments for up to three months. He added that he had taken loans to repay salaries of staff and the company was looking for new investors but the lack of cash flow made it difficult to pay rents for physical stores.

Wong also explained that the decrease in sales under the pandemic is the main reason for the closure. 

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