Convoy sues executives for theft, ratcheting up its clean-up effort before a boardroom showdown
Convoy Global Holdings has filed a second law suit in a week to seek redress of its financial woes, in a last-ditch effort at cleaning up ahead of a major boardroom tussle this Friday.
Convoy Global Holdings, the financial advisory firm under investigation by Hong Kong’s anti-graft agency and securities regulator, has filed a second lawsuit in a week against two company insiders, ratcheting up a series of legal actions to recover billions of dollars of stolen assets.
Convoy’s ex-chairman Quincy Wong Lee-man and former chief executive Mark Mak Kwong-yiu used Convoy Investment Services - unrelated to the group - to “misrepresent to the general public” and “systematically divert customers and business opportunities” to the private unit under their control, according to a December 22 writ filed with the High Court before a four-day Christmas holiday.
Another entity called Gransing Securities diverted HK$45.5 million (US$5.8 million) in fees from two of Convoy’s bond sales in 2014 and 2015 to the unit controlled by the two former executives, according to the writ.
Wong and Mak, both among four company executives arrested by the Independent Commission Against Corruption (ICAC) and dismissed from Convoy, could not be reached to comment.
The latest court action is the last-ditch effort by Convoy’s interim chairman Johnny Chen Chi-wang to seek legal redress for the company’s financial woes before a December 29 shareholders’ meeting called by controlling stake owner Kwok Hiu-kwan to kick out eight company directors.
At the heart of the dispute is the struggle for control and clean-up in one of the city’s largest financial advisory firms, with as many as 100,000 customers including the Mandatory Provident Fund (MPF). At stake is the regulatory oversight in Asia’s fourth-largest capital market, as the city prepares to overhaul and relax the city’s listing rules to attract technology companies and start-ups to raise capital.
Hong Kong’s laissez faire economy and regulatory environment, voted the world’s freest economy in 2017 for the 23rd consecutive year by the Heritage Foundation, has been fertile ground for concentrated ownership, spawning a web of 50 interconnected companies dubbed the Enigma Network by activist investor David Webb.
Convoy, whose shareholdings are linked to 10 other listed companies, lies at the heart of the network. It could well be the first in the web to unravel. In a December 18 lawsuit, Convoy claimed that a HK$1.57 billion investment by one of Taiwan’s wealthiest families -- the Tsai family who own the island’s second-largest bank Fubon Financial Holding - was diverted and stolen by company insiders. The company sued deputy chairman Cho Kwai-chee for misuse of the funds. Cho could not be reached to comment.
Along with Wong and Mak, Convoy also dismissed former vice-chairman Rosetta Fong Sut-sum and former director Christie Chan Lai-yee. Both Fong and Chan were also arrested by the ICAC.
Convoy’s shares had been halted from trading since December 8 for investigations by the ICAC and Hong Kong’s Securities and Futures Commission.