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Leung Chun-ying

Former adviser to Hong Kong’s ex-leader CY Leung in court after arrest on fraud charges

Barry Cheung, who served on Executive Council under previous government, appears in court on Thursday after arrest earlier in the day

PUBLISHED : Thursday, 10 August, 2017, 11:38am
UPDATED : Thursday, 10 August, 2017, 11:21pm

A former member of Hong Kong’s Executive Council, which advises the city’s leader on policy, was arrested and taken to court on Thursday to face charges over allegations of misleading the financial markets watchdog and cheating a company out of HK$30 million.

Barry Cheung Chun-yuen, who was a close aide of former chief executive Leung Chun-ying and helped run his campaign in the 2012 leadership election, was picked up by police from his flat in Happy Valley in the morning.

Cheung resigned from all his public positions – including as an executive councillor and head of Hong Kong’s Urban Renewal Authority – in May 2013 after police questioned him during their investigation into his failed company, the Hong Kong Mercantile Exchange.

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The 59-year-old former high flier appeared at Eastern Court in Sai Wan Ho in the afternoon to face a charge of conspiracy to defraud with co-defendant Jacky Choi Tat-ying, 48, the commodities trading platform’s former chief financial officer.

Prosecutors alleged the duo had conspired to hide the true financial position of the exchange in an effort to mislead the Securities and Futures Commission into letting it keep its licence to provide automated trading services in Hong Kong.

Cheung also faced one count of fraud over allegations that he cheated a company named Sinomax Finance out of HK$30 million to the benefit of New Effort Holdings, a British Virgin Islands-based firm wholly owned by Cheung which was the majority shareholder in the exchange.

In November 2013, Sinomax Finance filed a court writ claiming New Effort had failed to repay HK$30 million borrowed in April that year.

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The alleged offences were said to have spanned a year starting from May 2012.

In court on Thursday, Cheung towered over the shorter Choi as he stood close to the railings surrounding the dock in a chequered blue suit. With his back to his co-defendant a few steps behind him, Cheung’s attention was fixed on Principal Magistrate Bina Chainrai, while Choi’s eyes darted back and forth across the packed courtroom.

Senior public prosecutor Ira Lui Tsz-ming applied for the case to be transferred to the District Court in Wan Chai for pleas, citing the seriousness of the case.

Prosecutors were expected to call 42 witnesses, including staff members from the commission, Sinomax Finance and banks, as well as Cheung’s business partners.

The case was adjourned to August 24, and bail was granted on condition that the pair remain in Hong Kong, reside at their given addresses and offer HK$50,000 in cash bail.

“These conditions will take effect immediately,” Chainrai said.

The Mercantile Exchange, founded in 2011, collapsed in May 2013 after Cheung handed back its trading licence to the Securities and Futures Commission amid poor business and questions over its financial position. Cheung was the company’s founder and chairman.

Malaysian businessman Ong Shen Kuo was jailed for six months after admitting to possessing a false document seized from Cheung’s office at the exchange, showing he had US$516 million in funds.

Cheung said previously his commodities trading platform had been a victim of crime, as the recipient of the false document.