High-profile businesswoman Lily Chiang Lai-lei was found to have breached the Securities and Futures Commission's takeover code, but the chairman of an investigation panel turned out to be a director of a company in direct competition with hers, a court heard yesterday.
That chairman was the elder brother of the commissioner of the Independent Commission Against Corruption in 2006 to 2007.
A second investigation by the SFC, in 2007, cleared her of the breach, the court heard.
Chiang, 50, former chairwoman of the General Chamber of Commerce; Tahir Hussain Shah, 45; and former chief executive of Eco-Tek Holdings, Pau Kwok-ping, 54, are on trial in the District Court on fraud charges brought by the ICAC.
The three defendants face five charges of fraud and making false statements, with two charges being alternatives. Prosecutors allege Chiang instructed her employees to hold shares for her and concealed her beneficial interests from shareholders, the Securities and Futures Commission and the Hong Kong Stock Exchange. The alleged offences took place between January and December 2001, and between February and August 2002.
In 2004, then vice-chairman of the SFC, Henry Fan Hung-ling, chaired the first panel of disciplinary proceedings into allegations that Chiang, Pau and another had acted in concert, the court heard. By a majority of 3-2, the panel found that she was in breach.
Chiang testified that Fan declared there was no conflict of interest. But later it was disclosed that Fan was on the board of management of Dah Chong Hong Holdings - a direct competitor of Eco-Tek.
Fan's younger sister, Fanny Law Fan Chiu-fun, was the commissioner of the ICAC from 2006 to 2007, Chiang said.
Counsel for Chiang, Adrian Bell SC, asked: 'Was Mr Henry Fan also a chairman of any committees with ICAC matters?'
Chiang replied: 'My lawyers at Clifford Chance told me so.'
In 2001, a takeover deal was agreed between seller Super Drive, controlled by Chiang's Pacific Challenge Holdings, and purchaser Mega Land. But the deal fell through because it was not approved by the SFC, the court heard. Chiang testified that prosecution witness Cheuk Kam-wa, who represented the SFC in the disciplinary proceedings, was also involved in the failed deal.
Immune witness Yip Yuk-chun, who worked for Chiang for 15 years, testified earlier that Chiang instructed her to deal with more than HK$3 million in proceeds of the surrender of shares held by Chiang's employees - a claim that Chiang denied.
The trial continues today before Judge Albert Wong Sung-hau.