Almost a decade after the spectacular collapse of Hong Kong electronics conglomerate Akai, the saga has ended with the failed firm's liquidators securing a major moral and financial victory for its creditors.
Hong Kong tycoon Christopher Ho Wing-on and his locally listed company Grande yesterday settled a High Court case brought against them by Akai's liquidators, Borrelli Walsh. The payout exceeded US$100 million, people familiar with the negotiations said.
Borrelli Walsh began suing Ho and Grande for up to US$500 million in late 2007. They claimed Ho conspired with Akai's former chairman James Ting to strip the failed company's assets, so there was nothing left in the business for its creditors. They have also claimed Ting plundered US$800 million from Akai, concealing the thefts with the use of fake bank accounts and fabricated investments. Ho and Grande have denied the claims against them.
On September 23, Borrelli Walsh wrested about US$400 million out of Akai's former accountants, Ernst & Young Hong Kong, which it had accused of audit negligence. The accountant's defence collapsed after the liquidators said the firm had falsified some of its evidence. Hong Kong police are now investigating that claim.
Akai collapsed in 2000 owing more than US$1.1 billion to creditors, including HSBC and Standard Chartered. When liquidator Cosimo Borrelli took charge of the business in 2001, he found just US$167,000 worth of cash and assets, according to previous court rulings. In the mid-1990s, Akai had more than 100,000 staff and owned brands including America's Singer Sewing Machines, Akai Electric and Sansui.
In November 1999, Ting and Ho injected all of Akai's businesses into Grande, according to multiple court rulings. Akai's shareholders and banks were not told about the deal, which the Hong Kong Stock Exchange has never investigated. EY Hong Kong was alleged to have advised Grande on the transaction.
Ting was imprisoned for false accounting in 2005 but released a year later on appeal, following errors in the prosecution's case.
