First Natural Foods former chairman ordered to repay HK$84.9 million
Former chairman banned as a director for 12 years while his son and son-in-law – both former executive directors of the company – face eight-year bans
A Hong Kong court has ordered the former chairman of First Natural Foods Holdings to pay back HK$84.9 million (US$10.9 million) he embezzled, according to the Securities and Futures Commission.
The frozen food company, which went into provisional liquidation in 2009 and completed the restructuring three years later, has been renamed Imperial Pacific International Holdings.
On Monday, the SFC said it had obtained disqualification and compensation orders in the Court of First Instance of Hong Kong against Yeung Chung-lung, founder and former chairman of First Natural Foods, over his embezzlement of HK$84.9 million from the company in December 2008 and for giving false bank statements to auditors.
The court ordered Yeung to repay the amount with compound interest to Topping Chance, the special-purpose vehicle formed by the provisional liquidators to take up First Natural Food’s causes of action on completion of the restructuring.
The court’s disqualification order will ban Yeung from acting as a director or taking any management role of any listed or unlisted corporation in Hong Kong for 12 years. It also bans Yeung’s son Yang Le and son-in-law Ni Chaopeng as directors for eight years. Yang and Ni were former executive directors of the company and stepped down in December 2008.
First Natural Foods was listed on the main board of the stock exchange of Hong Kong in February 2002.
The Hong Kong court trial found that Yeung had embezzled HK$84.9 million in December 2008 from a First Natural Foods subsidiary.
The court said Yeung, Yang and Ni knew about the false banking statements that were given to auditors in 2007 and that they “overstated the cash balance of a key subsidiary on mainland China to its auditors and deceived creditors and shareholders about the true financial position of the company and its subsidiaries”.
While the statements showed a cash balance of more than 674 million yuan (US$98.1 million) at the end of 2007, the SFC said, bank statements obtained by the commission showed a balance of only about 20 million yuan.
Yeung, Yang and Ni also obstructed the provisional liquidators’ investigation of First Natural Foods’ affairs, the regulator said.
All three did not attend the trial, it said.