'King of Gold' stripped of crown and freedom
Once regarded as the 'King of Gold' and controlling four listed companies, Raymond Chan Fat-chu, the former president of the Chinese Gold & Silver Exchange Society, has lost his fortune and will spend four years and 10 months in jail.
Chan, the former chairman of delisted gold trader RNA Holdings, was handed the jail sentence at the District Court yesterday for his role in defrauding the company of HK$100 million to cover up losses in property investments during the Asian financial crisis.
His younger brother and deputy chairman, Alexander Chan Fat-leung, was sentenced to four years imprisonment on the same charge.
However, in the eyes of many brokers and gold traders, the Chans were generous, hard-working and aggressive businessmen who were victims of the financial crisis.
Raymond Chan started trading in the local gold exchange as a teenager for his family business in the 1970s and climbed to become president of the gold and silver exchange from 1996 to 2000.
The Chans have a long history with gold. Their father, Chan Mok-tim, started gold and diamond trading firm Tem Fat Hing Fung in 1949 to supply jewellery shops.
In the early 1990s, Raymond Chan took the helm from his father, and his drive expanded the family business into an empire of four publicly traded companies ranging from gold trading, jewellery retailing to property investment in less than 10 years.
In 1990, Raymond Chan brought Tem Fat Hing Fung to the stock market. The firm spun off its core gold trading business, RNA Holdings, in 1996.
The Chan brothers were well known for splurging on dining out and on investment markets. They loved to treat friends, brokers and property agents to the best food and wine.
They were also big buyers in stocks and the property market.
'Raymond Chan considered traditional gold trading was not exciting enough,' said a friend yesterday. 'The Chan brothers wanted to make quick money and they thought property was an easy investment to do that.'
In 1997, at the peak of the property boom, Tem Fat Hing Fung bought listed property company Can Do Holdings, and began investing heavily in real-estate projects, mainly commercial buildings in Shanghai, Hong Kong and Malaysia.
But when local property prices collapsed by more than 60 per cent as a result of the Asian financial crisis, the Chan brothers and their firms sank in a quagmire of debt.
They turned to tycoon Li Ka-shing, a friend of their father, for help.
Cheung Kong (Holdings), controlled by Mr Li, rescued RNA by buying a large quantity of convertible bonds that would leave the developer with 26.22 per cent of RNA when fully swapped into shares. Even Mr Li's financial aid failed to rescue the debt-ridden brothers.
The court yesterday heard that the brothers, with the assistance from two other RNA directors, channelled a bogus loan of HK$100 million to their shell companies between 2000 and 2001. The other two directors were sentenced to four years and two years in jail for their part in the fraud.
Three of Raymond Chan's listed firms were taken over - Tem Fat Hing Fung has been renamed China National Resources Development Holdings, while Can Do Holdings is now Goldbond Group Holdings. Growth Enterprise Market-listed Trasy Gold Ex, a software research firm spun off from RNA in 2000, is now controlled by ITC Corp. RNA was suspended from trading in June 2003 and delisted in September 2005.
But a source said the one-time 'King of Gold' planned a comeback after serving his jail term. However, as the court also banned him from being a director for five years, Raymond Chan will need to wait a little longer before making his return.
