Ming Fung probe claims chief misused company cash
At least $107.35 million was taken from Ming Fung Group companies to bolster the personal finances of majority shareholder Chan Kwong-hung and his family, a probe by liquidators has revealed.
Investigations into the accounts of the collapsed brokerage group have sparked legal action by liquidators KPMG Peat Marwick to recoup the 'numerous payments' made over a period of four months.
On one occasion, money was paid by Ming Fung Bullion - the group's leveraged foreign-exchange arm - to cover the tax bill of Mr Chan's son, according to the liquidators.
The collapse of Ming Fung in May was the largest failure of a brokerage since the stock exchange unified 13 years ago.
Mr Chan - also managing director of the group - was arrested by Commercial Crime Bureau officers in connection with an alleged theft of clients' funds to cover his own losses.
According to the bureau, no charges have been laid against Mr Chan and an investigation is still under way.
Three of the group's four flagship companies were named as plaintiffs in writs filed at the High Court yesterday.
Stockbroking arm Chark Fung Securities, Ming Fung Bullion and margin financing unit Kee Fung Sing International Finance are listed as companies from which funds were transferred. The liquidators are suing on their behalf.
Between January 1 and May 26 last year, inspection of the current accounts of the companies showed discrepancies in withdrawals. Copies of cheques and deposit slips revealed that sums were advanced to companies owned by Mr Chan or his family.
A total of $5.6 million was paid by Chark Fung and Kee Fung to Ming Fung Goldsmith, a company wholly owned by Mr Chan, one of the writs stated.
A further $53.74 million was advanced by Chark Fung, Ming Fung Bullion and Kee Fung to Lau Miu-king, Mr Chan's wife.
The three firms also paid $48.17 million to Link Standard, of which both Mr Chan and his wife were directors and shareholders.
It was also discovered that in February last year $181,345 was paid by Ming Fung Bullion to the Inland Revenue Department on behalf of Mr Chan's son, Chan Ying-leung, in relation to personal taxes.
The total sum being claimed by the liquidators on behalf of the Ming Fung companies in the four writs filed amounts to $107.35 million.
The liquidators wrote to the defendants' solicitors on September 9 requesting payment, and a formal demand was made on October 21. No payment has been made, the writs state.
Interest and costs are also being sought in the action.