ONE director being unseated for having a criminal record which he had concealed was embarrassing for Hong Kong. A second case made matters more disturbing. A third and fourth and we have an undoubted scandal, and the inevitable question which follows is: how many more convicted felons are decorating the boards of Hong Kong companies? The Yu Pun-Hoi case, which kicked off this recent rash of exposures, was seen at the time as an individual indiscretion. The stock exchange, which appeared to have been deliberately misled, acted firmly, and Mr Yu paid the price for his youthful, but concealed, crimes. The Win Win case was more serious. Directors had covered up convictions for violent crimes by lying under oath ahead of the flotation of the group last year. While the stock exchange was once again fast into action, questions about its listing procedures systems began to surface. This sound of skeletons rattling in cupboards rose when the high profile Tsang Hin-Chi, boss of the Goldlion fashion group and a member of the Preliminary Working Committee, revealed himself as part of the old lags club, and resigned from Denway, where he was a non-executive director. Yesterday, it emerged that Siegfried Unruh, a former director of Egana International, a distributor of upmarket watches, failed to reveal a criminal record when the company floated in 1993. No doubt the stock exchange will be vigorous in its investigations into all the current cases. It will, or should, be giving sponsors of the flotations a hard time over their role, and how closely they looked at the background of their clients. What makes the Egana case particularly disturbing is that it appears that Mr Unruh never signed the relevant document on which his record would have had to be revealed. Standard Chartered Bank, which managed the float, and the stock exchange itself should have noticed the omission. If not, why not? In all cases, there were some lax attitudes, and the way in which the system broke down should be thoroughly investigated. The responsibility to reveal all relevant information in a prospectus obviously lies with the directors and their advisers, the stock exchange can hardly be expected to trawl the courts of the world looking for convictions. In many countries there is a statute of limitations, under which a criminal conviction is erased after a certain length of time. If lies are told, then it is obviously difficult for the exchange, no matter what its effort, to uncover the dishonesty. The working party which the stock exchange has formed with the Securities and Futures Commission will have to face up to the problems of enforcement as it reviews the present arrangements, and whether they can be tightened. The introduction of the requirement that all directors of aspiring listed companies should obtain a Certificate of No Criminal Conviction from the police would go some way to ensuring that those contemplating misleading the authorities had second thoughts, but it would not solve the problem of those whose convictions were abroad. Those whose consciences were not bothered by misleading sponsors, the exchange and potential investors, would find it easy to fool a system based so much on honour. The sponsors have a duty to be sure that all is well with their clients, and given the current rash of criminal records coming to light, it is to be hoped that questioning goes a great deal further than it obviously has in some cases. It is not expecting too much to insist that sponsors do look into the past of directors, and, as far as possible, satisfy themselves that there are no hidden depths to the character of board members. None of this would solve the problem of directors already on boards of listed companies who are concealing convictions. Perhaps there are no more, but that view requires a great deal of optimism given recent experience. Requiring all directors of listed companies to officially re-state their records could produce more tainted directors, but those who were prepared to lie or conceal their past once, may have no compunction about doing it again. Fellow directors, particularly non-executives, also have good reason to want to be sure that those they share the boardroom with now, were not once sharing a cell with someone else.