Victor Chan's TKR Finance, which is now bankrupt, lent cash to mainland-based firms with no security An executive director of two listed companies has been hauled before a judge to answer questions over 'completely and utterly uncommercial loans' made by a moneylending firm he ran that went bankrupt. Creditors of TKR Finance, of which Rexcapital International Holdings and Rexcapital Financial Holdings board member Victor Chan How-chung was a major shareholder and director, suspect some of the loans may be bogus. Mr Chan was questioned at the High Court yesterday over asset discrepancies at the firm. A petition was filed to wind up TKR by Global Tech Holdings in June last year amid debt of US$14 million. TKR, a licensed moneylender, would secure large sums of cash primarily from Standard Chartered Bank, before lending it to other firms. Liquidators have, however, had trouble finding some of the debtors. While TKR in early June estimated that $623 million in loans was recoverable, this was downgraded two weeks later to $275 million, after the liquidators' appointment. A deficiency of about $345 million, Global Tech alleges, arose after Mr Chan arranged to have payment made to his own companies first, although the executive stated: 'I do not agree.' Mr Chan said the lower figure was based on a 'guess of what we can recover from the debtors when the company was wound up'. Many of the companies are in the mainland, had unsecured loans, and no method of enforcing the debt had been set up. 'Isn't that two basic errors for someone operating as a finance company in this jurisdiction?' asked Barrie Barlow, the counsel for Global Tech. Mail has been returned to the liquidators, and no further e-mail, fax or telephone numbers have been furnished. As an example to the court, Mr Barlow explained that in April 2002 a $55 million loan was made to China Information Commercial, which Mr Chan claimed to be a state-owned enterprise that needed cash for a 'scientific-technical project'. The cash was, however, paid into the bank account of a listed company in Hong Kong. Mr Chan maintained it was for a science-related project. He deemed only $10 million recoverable. No process agent had been appointed in Hong Kong to recover the debt should the need arose, no interest was paid and no steps were taken to recoup the cash between 2002 and last year. According to Mr Chan: 'We talked with their representative, Mr Hong. Of course, it was their attitude that we should take our time to talk to see what should be done.' Mr Barlow claimed Mr Chan's credibility 'is at the very least, suspect'. He said: 'If you have a situation where a person of his experience ... makes loans that ostensibly are completely and utterly uncommercial, it tests your view on his credibility as to whether they were ever genuine in the first place.' The case was adjourned to a date to be fixed.
