Four charged by ICAC sentenced for conspiracy to defraud over bonds placement of listed company


Four persons, including two former senior executives of a then listed company, charged by the ICAC, were today (October 16) sentenced to jail terms up to seven months at the District Court for conspiracy to defraud the company and its board of directors and shareholders as well as The Stock Exchange of Hong Kong Limited (SEHK) over the placement of bonds issued by the listed company.

Mak Kwong-yiu, 47, former executive director of Convoy Financial Services Holdings Limited (Convoy Financial Services) was jailed for seven months, while Lee Yick-ming, 51, former general manager of Gransing Securities Co., Limited (Gransing), received a jail term of five months.

Co-defendants Chan Lai-yee, 49, former financial controller of Convoy Financial Services (later promoted to chief financial officer) and Wong Shuk-on, 42, former manager of Convoy Financial Services, were respectively sentenced to five months’ and four months’ imprisonment, both suspended for 18 months.

In addition, Mak and Chan were respectively disqualified from being company directors for three years and two years.

In sentencing, Deputy Judge Mr Newman Wong said the court had considered the adverse impacts of the case on the society and the financial system. He also reprimanded Mak for not following the listing rules and not declaring his conflict of interests. Failure to observe the law was unacceptable in Hong Kong.

The four defendants were earlier convicted of one count of conspiracy to defraud, contrary to Common Law. Mak, Chan and Wong were further found guilty of another similar offence.

The court heard that at the material time, Convoy Financial Services, later renamed as Convoy Financial Holdings Limited, was listed (publicly listed Convoy) on the Main Board of the SEHK. Gransing and Convoy Investment Services Limited (CIS), which was not a subsidiary of publicly listed Convoy, both provided dealing in securities regulated activity, such as bonds placement.

Mak and two other former executive directors of publicly listed Convoy held substantial shares of CIS. The annual report of publicly listed Convoy at the material time disclosed that CIS was its connected person.

On four occasions between July 8, 2014 and January 21, 2015, publicly listed Convoy engaged Gransing as the placing agent of four bond placing exercises of the publicly listed Convoy.

The court heard that the defendants conspired together to arrange Gransing to further engage CIS as the sub-placing agent of the four exercises. One of the sub-placing letters was issued two weeks before Gransing was engaged by the publicly listed Convoy as a placing agent.

CIS subsequently received around $49.6 million as sub-placing commission from publicly listed Convoy via Gransing and $1.2 million as bonus from Gransing under the sub-placing arrangements. In fact, Gransing did not place any bonds with any investor and CIS was the actual placing agent.

The court heard that it was never disclosed to publicly listed Convoy and its board of directors and shareholders as well as the SEHK that CIS was the actual placing agent of the four bonds.

Failure of the disclosure would have deprived shareholders of publicly listed Convoy of the right to vote for or against the sub-placing arrangements, and hindered SEHK’s enforcement of the Rules Governing the Listing of Securities on the SEHK.

ICAC’s investigation commenced upon receiving complaints in 2017 which alleged breaches of the Prevention of Bribery Ordinance and the Securities and Futures Ordinance. The ICAC and the Securities and Futures Commission (SFC) jointly mounted an operation in December 2017. The SFC, SEHK and the then publicly listed Convoy have rendered full assistance to the ICAC during its investigation.

The ICAC will continue to collaborate with relevant regulatory bodies, including the SFC, to combat corrupt and illicit activities in the financial market so as to uphold the integrity of the market, maintain a level playing field for businesses, and sustain Hong Kong’s status as an international financial centre.

The ICAC has made continuous and proactive efforts in assisting listed companies in enhancing their corporate governance. The ICAC has developed and publicised on its website a practical guide to assist listed companies to put in place good corporate governance systems and effective internal control measures; and has also been offering free and tailor-made service to assist listed companies in enhancing their corporate governance upon request.

The ICAC attaches great importance to the integrity standard of listed companies. Through the Ethics Promotion Programme for listed companies and continuous professional development courses, messages of ethical leadership and good corporate governance have been promulgated to directors, senior executives and governance professionals of listed companies for safeguarding the interest of different stakeholders. The Commission also approaches all newly listed companies proactively to promote our corruption prevention services, including training for all levels of staff to enhance their understanding of the anti-corruption law and remind them to comply with relevant laws and regulations.

The prosecution was today represented by Acting Deputy Director of Public Prosecutions Jonathan Man, Senior Assistant Director of Public Prosecutions Alice Chan and Senior Public Prosecutor Human Lam, assisted by ICAC officers Esther Poon and Neville Wong.
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