Hong Kong’s anti-corruption agency plans to haul three central figures in one of the city’s biggest financial fraud cases back to court, attempting to overturn the trio’s acquittal last month of conspiring to defraud HK$89 million (US$11.48 million) from Convoy Global Holdings.
The Department of Justice has applied to overturn the District Court acquittal of Convoy’s former director Roy Cho Kwai-chee, former chief financial officer Christie Chan Lai-yee and former executive director Byron Tan Ye-kai, according to a spokeswoman of the Independent Commission Against Corruption (ICAC), in response to a query by the South China Morning Post.
A hearing at the Court of Appeal will be scheduled later, the ICAC spokeswoman said, declining to elaborate. Cho, Chan and Tan could not be reached to comment.
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The November 30 acquittal of the Convoy trio was a major setback for one of the city’s biggest cases of financial malfeasance in decades, in the first joint investigation between the ICAC and the Securities and Futures Commission (SFC). They conducted numerous raids on Convoy’s offices and questioned dozens of former executives in their probes, as they sought to impose discipline in Hong Kong’s laissez faire capital markets.
The ICAC last year charged Cho and his two associates with conspiring to defraud Convoy. The trio were acquitted of those charges last month by District Court Judge Ernest Lin Kam-hung, citing a lack of evidence to prove the crime. The three former Convoy executives maintained their innocence.
The ICAC and the justice department decided to appeal against the fraud charge acquittal after their review, but decided to withhold their appeal against another charge against the trio of publishing false statements in Convoy’s 2016 annual report.
Convoy is one of the largest independent financial advisers in Hong Kong and a manager of the city’s pension savings scheme, the Mandatory Provident Fund (MPF), with more than 100,000 customers. Trading in its shares has been halted since December 2017 following the high-profile joint investigation by the SFC and ICAC into multiple allegations of fraud involving an estimated HK$4 billion of transactions.
Convoy was part of the so-called Enigma Network of companies, a cluster of interrelated listed firms with layers of overlapping shareholdings that disguise their true owners, according to shareholder activist David Webb.
The SFC has tried for years to bring the network down amid widespread suspicions of fraud, market manipulation and corporate misconduct in transactions among the companies in the network.
After the trio were ousted from the company’s management, Convoy – under a new management team installed by its largest shareholder, the Tsai family of Taiwan’s Fubon Holdings – filed civil lawsuits in 2017 and 2018 against the former executives to retrieve HK$4 billion that was allegedly stolen from the company. One suit seeks HK$715 million in compensation. Those civil cases are pending.
While criminal cases and civil lawsuits are pending, two of the largest shareholders of Convoy continue their tussle in the boardroom for control of the company. The spat is between the family of Fubon’s Richard Tsai Ming-hsing and second-largest shareholder Kwok Hui-kwan, son of Shenzhen developer Kwok Ying-shing, who is also the founder of Kaisa Group.
A shareholders’ meeting has been scheduled in January to resume the unfinished matter of approving directors nominated by Kwok to Convoy’s board, after a November 26 meeting was cut short. Kwok, owning 29.91 per cent of Convoy, nominated MTR’s ex-chairman Fred Ma Si-hang and five others to Convoy’s board to replace the directors supported by the Tsai family. The Tsai family control 29.98 per cent of Convoy’s shares.