Former executive director of listed company and wife charged by ICAC with fraud for concealing interests in $110m loans
2022-6-2
The ICAC today (June 2) charged a former executive director of a listed company, his wife and another person for allegedly conspiring together to defraud The Stock Exchange of Hong Kong Limited (SEHK) and the listed company by concealing the wife’s interests in a borrower when the listed company granted two loans totalling over $70 million to it. The executive director was also charged with fraud for allegedly concealing his wife’s interests in the borrower in another loan of $40 million.
The ICAC investigation arose from a corruption complaint. Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charging the trio.
Yuen Chi-ping, 43, former executive director and chief executive officer of Applied Development Holdings Limited (Applied Development); Lee Lap-kuen, 42, wife of Yuen and former director-cum-shareholder of On Tai International Credit Limited (On Tai); and Cheng Yee-fong, 44, former shareholder of On Tai; jointly face two counts of conspiracy to defraud, contrary to Common Law. Yuen further faces two fraud charges alternative to the above charges.
Yuen alone faces two other charges – one of fraud and one of publishing a false statement, respectively contrary to Section 16A and Section 21(1) of the Theft Ordinance.
The defendants were released on ICAC bail, pending their appearance in the Eastern Magistrates’ Courts next Tuesday (June 7) for transferring the case to the District Court.
At the material time, Yuen was an executive director of publicly listed Applied Development. Applied Development and its directors were required to comply with the Rules Governing the Listing of Securities on the SEHK (Listing Rules), including making timely, complete and accurate disclosures on connected transactions.
The offences took place between January 2018 and June 2019. During the period, Applied Development entered into three loan agreements of totalling over $110 million with On Tai.
Two of the charges allege that the three defendants conspired with other persons to defraud the SEHK, Applied Development and its board of directors, shareholders and potential investors by dishonestly concealing the interests of Lee in On Tai, and two loan agreements between Applied Development and On Tai as connected transactions.
The above concealments caused Applied Development to grant two loans totalling over $70 million to On Tai without complying with the relevant Listing Rules to make appropriate disclosures, and the SEHK not to raise any enquiries in relation to the two loan agreements nor to request Applied Development to comply with the relevant Listing Rules to make appropriate disclosures.
Another charge alleges that Yuen, with intent to defraud, concealed from Applied Development and its board of directors the interests of Lee in On Tai, and a loan agreement between Applied Development and On Tai as a connected transaction, so as to induce Applied Development to grant a loan of $40 million to On Tai without complying with the relevant Listing Rules to make an appropriate disclosure.
ICAC investigation revealed that Yuen married Lee during the above period. After they got married, they had allegedly arranged Cheng to hold part of Lee’s shares of On Tai on her behalf so as to conceal Lee’s interests in On Tai.
The remaining charge alleges that Yuen, being a director of Applied Development, with intent to deceive members or creditors of the company about its affairs, concurred in publishing the annual report of Applied Development for the year 2018 which might be misleading or false.
It was revealed in ICAC’s investigation that the aforesaid annual report did not disclose any connected transaction.
The SEHK and Applied Development have rendered full assistance to the ICAC during its investigation.
The ICAC reminds directors and senior executives of listed companies to adhere to their legal and ethical obligations when conducting businesses so as to safeguard the interest of different stakeholders. The ICAC will continue to assist listed companies to enhance their corruption prevention capabilities and corporate governance. Detailed information is available from the Ethics Promotion Programme for Listed Companies webpage (hkbedc.icac.hk/lc/en/prog-about.html).
The ICAC investigation arose from a corruption complaint. Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charging the trio.
Yuen Chi-ping, 43, former executive director and chief executive officer of Applied Development Holdings Limited (Applied Development); Lee Lap-kuen, 42, wife of Yuen and former director-cum-shareholder of On Tai International Credit Limited (On Tai); and Cheng Yee-fong, 44, former shareholder of On Tai; jointly face two counts of conspiracy to defraud, contrary to Common Law. Yuen further faces two fraud charges alternative to the above charges.
Yuen alone faces two other charges – one of fraud and one of publishing a false statement, respectively contrary to Section 16A and Section 21(1) of the Theft Ordinance.
The defendants were released on ICAC bail, pending their appearance in the Eastern Magistrates’ Courts next Tuesday (June 7) for transferring the case to the District Court.
At the material time, Yuen was an executive director of publicly listed Applied Development. Applied Development and its directors were required to comply with the Rules Governing the Listing of Securities on the SEHK (Listing Rules), including making timely, complete and accurate disclosures on connected transactions.
The offences took place between January 2018 and June 2019. During the period, Applied Development entered into three loan agreements of totalling over $110 million with On Tai.
Two of the charges allege that the three defendants conspired with other persons to defraud the SEHK, Applied Development and its board of directors, shareholders and potential investors by dishonestly concealing the interests of Lee in On Tai, and two loan agreements between Applied Development and On Tai as connected transactions.
The above concealments caused Applied Development to grant two loans totalling over $70 million to On Tai without complying with the relevant Listing Rules to make appropriate disclosures, and the SEHK not to raise any enquiries in relation to the two loan agreements nor to request Applied Development to comply with the relevant Listing Rules to make appropriate disclosures.
Another charge alleges that Yuen, with intent to defraud, concealed from Applied Development and its board of directors the interests of Lee in On Tai, and a loan agreement between Applied Development and On Tai as a connected transaction, so as to induce Applied Development to grant a loan of $40 million to On Tai without complying with the relevant Listing Rules to make an appropriate disclosure.
ICAC investigation revealed that Yuen married Lee during the above period. After they got married, they had allegedly arranged Cheng to hold part of Lee’s shares of On Tai on her behalf so as to conceal Lee’s interests in On Tai.
The remaining charge alleges that Yuen, being a director of Applied Development, with intent to deceive members or creditors of the company about its affairs, concurred in publishing the annual report of Applied Development for the year 2018 which might be misleading or false.
It was revealed in ICAC’s investigation that the aforesaid annual report did not disclose any connected transaction.
The SEHK and Applied Development have rendered full assistance to the ICAC during its investigation.
The ICAC reminds directors and senior executives of listed companies to adhere to their legal and ethical obligations when conducting businesses so as to safeguard the interest of different stakeholders. The ICAC will continue to assist listed companies to enhance their corruption prevention capabilities and corporate governance. Detailed information is available from the Ethics Promotion Programme for Listed Companies webpage (hkbedc.icac.hk/lc/en/prog-about.html).