Ex-director of listed company charged with conspiracy to defraud over acquisition of investment firm


A former director of a listed company has been charged by the ICAC this (May 16) morning with conspiracy to defraud The Stock Exchange of Hong Kong Limited (SEHK), the board of directors, shareholders and investors of the listed company by causing its subsidiary to acquire an investment company owned by him at a consideration of over $89 million.

Cho Kwai-chee, 55, former director of Convoy Global Holdings Limited (CGHL), formerly named as Convoy Financial Holdings Limited (CFHL), faces one count of conspiracy to defraud, contrary to Common Law.

The defendant will be brought to the Eastern Magistracy this (May 16) afternoon for mention.

Upon receipt of complaints alleging breaches of the Prevention of Bribery Ordinance and the Securities and Futures Ordinance, the ICAC started an investigation and mounted a joint operation with the Securities and Futures Commission (SFC) in December 2017.

The SFC, SEHK and CGHL had rendered full assistance to the ICAC during its investigation. Having sought legal advice from the Department of Justice after the investigation, the ICAC laid the charge against the defendant.

At the material time, the defendant acted as a de facto or shadow director of CGHL, exerting significant influence over its operation directly or indirectly. He was also a substantial shareholder of CGHL, owning 50% shareholdings in CGHL.

In April 2016, the defendant introduced to CGHL the potential acquisition of True Surplus International Investment Limited (TSIIL), which was engaged in assets investment and provided consultant services, and its principal asset was its interests in two investment funds which required continuous capital commitment. At the material time, the defendant held 55% shareholdings in TSIIL.

Five months later, the defendant and other senior executives of CGHL caused Convoy Collateral Limited (CCL), an indirectly wholly owned subsidiary of CGHL, to acquire TSIIL at the total consideration of over $89 million.

The charge alleges that between April 1, 2016 and December 7, 2017, the defendant conspired with two other persons to defraud SEHK, the board of directors, shareholders and investors of CGHL, formerly named as CFHL, by dishonestly:

(i) failing to disclose to SEHK that he was a substantial shareholder of CGHL;

(ii) failing to disclose to SEHK that he was a de facto or shadow director of CGHL;

(iii) failing to disclose the acquisition of TSIIL by CCL as a connected transaction to CGHL and SEHK; and

(iv) causing CCL to acquire TSIIL in September 2016 without convening the required company meeting(s) or complying with the Rules Governing the Listing of Securities on SEHK.

As a result, the defendant received payments totalling over $57 million from CCL for the acquisition at the consideration of over $89 million, and was relieved from a further capital commitment of around $16.2 million into the two investment funds.
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