Former MTR chairman and minister Fred Ma enters fray as tussle for Convoy sharpens in Hong Kong’s biggest fraud case
- In full-page advertisements in half a dozen Hong Kong newspapers, Fred Ma urged the SFC to ‘intervene and investigate’ Convoy’s arrangement of letting only 25 investors attend a November 26 shareholder meeting in person
- The crucial shareholding meeting will determine who controls board of Convoy, the centrepiece in the Enigma Network of companies engaged in Hong Kong’s biggest corporate fraud case
In his advertisement, Ma said Convoy’s arrangement of allowing only 25 shareholders to vote in person was “unfair, and prejudicial to the fundamental rights of shareholders”. The meeting is scheduled to be held at Convoy’s office in Wan Chai on November 26.
Cho, the alleged mastermind of the fraud, stands accused of a conspiracy to defraud Convoy in 2016 over an HK$89 million investment connected to him. A verdict on his case is pending on November 30.
Control for Convoy could determine the outcome of the case. The company is managed by directors and executives backed by the largest shareholder Richard Tsai Ming-hsing and his family, who control Taiwan’s second-largest financial conglomerate Fubon Financial Holding. The Tsai family paid HK$1.5 billion (US$193.5 million) for a 29.98 per cent stake through a placement of new shares in October 2015.
The second-largest shareholder of Convoy is Kwok, who turned 29 in August. He is the son of Kwok Ying-shing, founder of the Shenzhen-based developer Kaisa Group. Kwok spent about HK$800 million for his 29.91 per cent stakes in Convoy in mid-2017, according to sources.
The tussle for control is the second attempt since December 2017 by Kwok to wrest control of Convoy from the Tsai family, when his votes were excluded from a tally, under a decision by Convoy’s chairman Johnny Chen.
Kwok wants to replace Convoy’s entire 12-member board with six new candidates including Ma and the Hong Kong legislator Abraham Shek Lai-him. Ma served as Secretary of Financial Service and the Treasury from 2002 to 2007, and was the Secretary of Commerce and Economic Development from 2007 to 2008.
Health authorities in Hong Kong, facing a fourth wave of coronavirus infections, have limited indoor events and gatherings to a maximum of 50 persons to contain the spread of the disease. Convoy declined to say why it capped the maximum turnout of its shareholders event at 25. Kwok could not be reached to comment. The Hong Kong SFC declined to comment.
Convoy has not released its financial statements since the middle of 2017, and has not held any annual meetings among shareholders since then. Nine of Convoy’s 12 directors were appointed by management instead of being elected by shareholders, Ma said. Trading in the company’s shares has been suspended since December 2017.
“Why does the company not appoint me and Shek to the board to represent Kwok’s interest?” Ma said. “It is so obvious that the current management does not want Kwok to exercise his rights as a shareholder to have representatives on board.”