A former high-flying businessman who Hong Kong leader Carrie Lam Cheng Yuet-ngor once called “the best” public servant has been jailed for four years for conspiring with his financial officer to defraud the city’s market regulator.
On Thursday, Barry Cheung Chun-yuen, a one-time top aide to former chief executive Leung Chun-ying, Lam’s predecessor, was also disqualified from acting as a company director for the next five years.
The 62-year-old was found guilty last week on a count of fraud and another of conspiracy to defraud – punishable by seven years in prison – over his attempts to keep his commodities market afloat before authorities shut down the platform in May 2013.
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His then chief financial officer, Jacky Choi Tat-ying, 51, was given a lesser jail term of one year, in recognition of his early guilty plea and the help he offered to the prosecution in a case that has dragged on for years.
District Court judge Amanda Woodcock said the case was a “monumental fall from grace” for Cheung, who has made substantial contribution in public service as a pillar of the community, which made sentencing “more difficult”.
But she found there was a need to impose a deterrent sentence, since any attempt to manipulate the Securities and Futures Commission was serious.
“This was not a fraud to line one’s own pocket per se,” the judge said, in acceptance of the defence mitigation. “Nevertheless, the seriousness comes in that the SFC has been a victim.”
While the defence submitted that Cheung had committed the offence out of stubbornness and an error in judgment, Woodcock said his downfall could also be explained by the self-assured businessman’s ambitious desire for the exchange to succeed and his arrogance in believing that he could have his way and get away with it.
As for Choi, the judge noted that he had a lesser culpability than Cheung as she accepted that he was merely a follower acting upon his employer’s instruction with “a sense of misguided loyalty”.
Woodcock also recognised that Choi had been brave to testify against Cheung as she could sense his reluctance and turmoil while giving truthful, reliable and material evidence that offered significant assistance to the prosecution.
Cheung has yet to indicate to his lawyers whether he would lodge an appeal.
Chief Inspector Charles Fung Pui-kei, of the Commercial Crime Bureau’s fraud section, said police welcomed the ruling as he believed the sentence could sufficiently reflect the seriousness of the case he described as complex and challenging.
“The case involved large volumes of documents, many different fund flows and false information,” Fung said.
“Police had to spend a lot of time in gathering and analysing evidence.”
Earlier, the judge found there was overwhelming evidence proving that Cheung and Choi had conspired, between May 2012 and May 2013, to deliberately hide the true financial position of Hong Kong Mercantile Exchange – which he [Cheung] founded – and mislead SFC into letting it keep its authorisation to provide automated trading services in Hong Kong, contrary to the regulator’s public duties.
Cheung was also found to have made false representations that induced Sinomax Finance to lend him HK$30 million (US$4 million) in April 2013 for the benefit of his firm, New Effort Holdings, based in the British Virgin Islands.
Leung’s campaign chairman when he ran for the city’s top job, Cheung later served as an executive councillor after Leung was elected in 2012.
He had taken up important public posts, including that of the chairman of the Urban Renewal Authority.
Cheung also earned praise from Lam, who as the development chief in 2010, described him as “not even one of the best, but the best non-official public servant”.
In the same year, Cheung received a Gold Bauhinia Star – alongside Lam – that recognised his significant contribution to society.
But he retired and resigned from all public posts in 2013 when the Hong Kong Mercantile Exchange was being investigated.
He was declared bankrupt in 2015 with debts of at least HK$116 million.
Defence counsel Eric Kwok Tung-ming SC had argued that the case was unusual in that nobody had suffered a loss or even risked one as a result of his client’s conspiracy, which he believed was fuelled by a stubbornness in believing the mercantile market would be good for Hong Kong.
His submissions were backed by 11 mitigation letters, most notably from Exco member Fanny Law Chiu-fun and Abraham Shek, his former colleague at the Land Development Corporation, the Urban Renewal Authority’s forerunner.
But not all of those letters were read out in open court, and Cheung’s lawyers would not confirm whether Leung was among the writers.
Conspiracy to defraud carries a maximum sentence of 14 years in prison, but that jail term is capped at seven years at the District Court.
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More from South China Morning Post:
- Former Leung Chun-ying adviser Barry Cheung requests Hong Kong judge sitting on his fraud trial steps down over ‘apparent bias’
- Seven years after Hong Kong Mercantile Exchange shuttered, former adviser to ex-city leader CY Leung found guilty of fraud