KPMG senior manager Leung Sze-chit was acquitted on two bribery charges last week, but the case still leaves a lot of unanswered questions for our regulatory friends to think about.
One important message in District Court Judge Stephen Geiser's verdict is that accounting firms and investment banks should be cautious when dealing with mainland agents who act as initial public offering matchmakers.
In his verdict, Geiser ruled that Leung be freed immediately because the prosecutor could not provide evidence beyond reasonable doubt that he had committed a crime. But the judge concluded that Leung and his assistant, Suki Lau Shuk-ting, did receive money from mainland agent Chan Chau-wan.
The lesson is that professional firms with good reputations such as KPMG should be cautious in dealing with these mainland agents.
During the high-profile case, all eyes were on Leung, who was on the KPMG audit team that was helping to prepare a listing prospectus for Hontex International Holdings, which raised HK$1 billion in a share sale in December 2009. The accounting statements in the prospectus were later found to be unreliable by the internal auditor committee at Hontex.
Leung was acquitted of the charges brought by the Independent Commission Against Corruption, which accused him of accepting HK$300,000 from Chan.