Medical China's former chief ordered to pay HK$10.7m over misconduct
A Hong Kong court yesterday ordered the former chief executive of Medical China, Li Wo-hing, to pay compensation of HK$10.7 million to the company for the losses it incurred as a result of his misconduct in 2004.
The Court of First Instance also banned Li from being a director or manager of a corporation for seven years, while former chairman James Li Nga-kuk was banned for four years.
Since the events raised in the hearing, the former developer of Chinese drugs and medicines has changed its name to China Asean Resources and is now principally engaged in the natural resources business.
The compensation order was the second to be pursued by the Securities and Futures Commission. In March, the High Court ordered the founder and former chairman of developer Styland and his wife to pay HK$85 million to the company as compensation for the losses it incurred because of their misconduct.
In the latest case, the SFC alleged that Li Wo-hing and James Li issued two cheques drawn on the account of China Asean Resources on December 28 and 29, 2004, amounting to HK$10.7 million and intended to pay two US suppliers. But the funds were transferred to Li Wo-hing and various persons related to him.
The court yesterday accepted that the payments amounted to a "misappropriation of the company's assets which caused unfair prejudice to the company and its shareholders".
The SFC also charged that Li Wo-hing authorised an announcement in December 2004 concerning the sale of a mainland subsidiary to an independent third party. "However … the independent buyer was, in fact, funded by Li Wo-hing himself."
It further charged that James Li authorised a misleading announcement in February 2003 asserting that China Asean Resources' distribution rights were intact when, in fact, a US supplier had terminated them in 2002.
Mark Steward, the commission's executive director of enforcement, said: "The SFC will continue to pursue company directors whose misconduct jeopardises the value of listed companies and investors' prospects."