Trio charged by ICAC with conspiracy to defraud over ‘backdoor listing’ of listed company and money laundering
Three persons, including a then chairman and a then substantial shareholder of a listed company, were charged by the ICAC today (November 19) with conspiracy to defraud The Stock Exchange of Hong Kong Limited (SEHK), the listed company and its board of directors and shareholders by concealing a “backdoor listing” agreement when placing convertible notes to increase the share capital of the listed company and dealing with crime proceeds of $42 million.
The ICAC investigation arose from a corruption complaint referred by the Securities and Futures Commission (SFC). Upon completion of the investigation, the ICAC sought legal advice from the Department of Justice, which advised charges be laid against the defendants.
The defendants are Chim Pui-chung, 75, then substantial shareholder of Asia Resources Holdings Limited (Asia Resources); Ricky Chim Kim-lun, 52, then chairman of Asia Resources; and Wong Poe-lai, 65, associate of a merchant named in the charge.
Chim Pui-chung and Ricky Chim jointly face two counts of conspiracy to defraud, contrary to Common Law. Wong also faces one count of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to Section 25(1) of the Organized and Serious Crimes Ordinance.
The defendants were released on ICAC bail. They will appear before the Shatin Magistrates’ Courts this afternoon for mention, pending the case to be transferred to the District Court for plea.
At the material time, Asia Resources was listed on the Main Board of the SEHK. After Chim Pui-chung became a substantial shareholder of Asia Resources in October 2008, Ricky Chim was appointed as an executive director of the company. Between December 19, 2008 and December 11, 2014, Ricky Chim was the chairman of the board of directors of Asia Resources.
One of the charges alleges that between July 1, 2013 and November 15, 2015, Chim Pui-chung, Ricky Chim and the above merchant conspired together and with other persons to defraud Asia Resources, its board of directors and shareholders by dishonestly:
(i) concealing or failing to disclose that the merchant had reached an agreement with Chim Pui-chung and Ricky Chim that the merchant would pay a total sum of about $210 million to Chim Pui-chung in order to control 70 per cent to 75 per cent of the entire issued share capital of Asia Resources (the Illicit Agreement);
(ii) causing the board of directors of Asia Resources to approve, and causing Asia Resources to proceed with the placing of its new shares and the placing of convertible notes of which the convertible shares, upon exercise of the conversion rights, represented approximately 566.67 per cent of the then existing issued share capital of the company (the CN Agreement) with a view to increase the entire issued share capital of the company thereby facilitating the execution of the Illicit Agreement;
(iii) falsely representing in the announcements and circulars of Asia Resources that no director or shareholder of the company had a material interest in the CN Agreement and no shareholder of the company was required to abstain from voting at the special general meeting of the company for the approval of the CN Agreement (the SGM);
(iv) causing the shareholders of Asia Resources to pass the resolution in relation to the CN Agreement at the SGM.
Another charge alleges that between July 1, 2013 and November 15, 2015, Chim Pui-chung, Ricky Chim and the above merchant conspired together and with other persons to defraud the SEHK by dishonestly:
(i) concealing or failing to disclose that Chim Pui-chung, Ricky Chim and the above merchant had reached the Illicit Agreement;
(ii) concealing or failing to disclose the purpose of the CN Agreement was to increase the entire issued share capital of Asia Resources thereby facilitating the execution of the Illicit Agreement;
(iii) falsely representing in the announcements and circulars of Asia Resources that no director or shareholder of the company had a material interest in the CN Agreement and no shareholder of the company was required to abstain from voting at the SGM;
(iv) causing the SEHK not to take prompt action to seek clarification with Asia Resources on the CN Agreement, and/or causing the SEHK to approve the publication by the company of the announcements and circulars in relation to the CN Agreement.
The remaining charge alleges that between October 24, 2013 and January 24, 2014, Wong and the above merchant, knowing or having reasonable grounds to believe that convertible notes issued by Asia Resources in the principal amount of $42 million, in whole or in part, directly or indirectly represented the proceeds of indictable offence, dealt with the said property.
The SEHK and the SFC have rendered full assistance to the ICAC during its investigation.