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From toys to money lending: the companies under investigation by Hong Kong’s watchdogs

Financial services companies Convoy and Lerado, under investigation by both the market regulator and the anti-corruption body, have simple origins but have become part of a complex web of interconnected businesses

PUBLISHED : Friday, 08 December, 2017, 9:52pm
UPDATED : Friday, 08 December, 2017, 9:52pm

In the first action of its kind, Hong Kong’s market regulator, the Securities and Futures Commission, and its anti-graft body, the Independent Commission Against Corruption, are jointly investigating two financial services companies, Convoy Global Holdings and Lerado Financial Group, on suspicion of corruption.

The case has thrust into the spotlight businesses that had humble origins but which have gone on to become part of a complex web of companies.

ICAC detains Convoy chairman at the airport as investigation expands to involve Lerado

Convoy began life in 1993 with 10 staff, offering advice on insurance products and later for the Mandatory Provident Fund, Hong Kong’s retirement pension system. It listed on the Hong Kong stock exchange in 2010, subsequently expanding into overseas property investment consulting, money lending and asset management. It now employs some 1,600 people, according to its website, and is led by group chairman and executive director Quincy Wong Lee-man, who in 2015 finished third in the annual Antarctic 100K Marathon race, the first person from Hong Kong to cross the finish line in the event. Convoy shares remained suspended on Friday. It last traded at 16.7 HK cents, giving it a market value of HK$2.49 billion (US$319 million). It posted a net loss of HK$141.97 million in the six months to June 30. Its registered office is in the Cayman Islands.

Lerado was originally a manufacturer of prams and baby and children’s toys. Its chairman, Mark Mak Kwong-yiu, was chief executive officer of Convoy from 2010 to 2016. It listed on the exchange in December 1998, but sold the pram business to Canadian firm Dorel Industries in 2014. It now engages in securities broking, margin financing and money lending, as well as making toys and health care products such as mobility aids, according to its website. Its shares have also been suspended. It last traded at 12.7 HK cents, with a market capitalisation of HK$322 million. It reported a net loss of HK$461.74 million for the six months to June 30. It is registered in Bermuda.

Two other firms linked to Convoy have had their shares suspended from trading by the SFC in recent weeks. Clinic operator Town Health International Medical Group, whose founder and vice-chairman Cho Kwai-chee is an executive director of Convoy, stopped trading on November 27 after the SFC said it found misleading information in some earnings reports. Consumer loan firm First Credit Finance Group, of which Convoy holds 29.5 per cent, was ordered to suspend trading by the SFC on November 24. The company is registered in Bermuda.

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