DEPARTMENT store operator Sincere has awarded a multi-million dollar contract to sell an $851 million building to a company run by one of its own board members.
Documents distributed to Sincere shareholders reveal Hsin Chong Real Estate Agency has been awarded the contract to sell Sincere House in Mongkok.
Sincere directors announced last month it intended to sell the property pending approval from shareholders. Documents filed with the Companies Registry in Hong Kong reveal the managing director of Hsin Chong Real Estate Agency is Eric Lo Kai-kin.
Official Sincere documents state Mr Lo is also a non-executive director of Sincere and holder of two million of the company's shares.
Mr Lo said: 'Our fee is worked out as a percentage of the sale price. We should generate about $4 million from the sale, with a profit of between $1 million and $2 million after expenses.' The property has been valued by chartered surveyor Knight Frank Kan & Baillieu at $851 million. Sincere's internal valuation suggested the company would book an exceptional gain of $750 million from the sale after expenses.
Mr Lo strenuously denied any conflict of interests. 'Sincere used Hsin Chong because the directors know how I work,' he said.
Sincere held an extraordinary general meeting for shareholders on September 28 this year to seek approval for the sale. A document issued to shareholders in accordance with stock exchange listing rules stated: 'It was announced Hsin Chong had been appointed the selling agent of the company,' and added the appointment was 'contingent on the shareholders approving the proposed sale'.