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Pedestrians walk past the @Convoy building, which houses the headquarters of Convoy Global Holdings in Hong Kong in December 2017. Photo: Bloomberg
BusinessBanking & Finance

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
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Enoch Yiu
Enoch Yiu
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One of Hong Kong’s best known public figures has entered the boardroom tussle for control of a company at the heart of the city’s biggest fraud case, days before a crucial shareholders meeting to determine the fate of Convoy Global Holdings.
Frederick Ma Si-hang, representing Convoy’s second-largest shareholder Kwok Hui-kwan, ran full-page advertisements on November 24 in half a dozen of Hong Kong’s newspapers including the South China Morning Post urging the local securities regulator to “intervene and investigate” claims that Convoy’s controlling shareholders abused their power to limit dissenting votes.

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.

The Securities and Futures Commission (SFC) and other officials “should take action to safeguard shareholders’ interest of Convoy, which is a terrible example of corporate governance” in Hong Kong, Ma said in an interview with the Post. “It will hurt the reputation of Hong Kong as an international financial centre.”
Frederick Ma Si-hang, former Secretary for Commerce and Economic Development of the Hong Kong Special Administrative Region at his Wan Chai office in April. Photo: K. Y. Cheng
Convoy, with more than 1,000 employees and 100,000 customers, is one of the biggest financial managers of Hong Kong’s mandatory pension fund (MFP). It is a crucial piece of the so-called Enigma Network of the city’s penny stocks, where three former senior managers including executive director Roy Cho Kwai-chee face civil lawsuits for conspiracy to pilfer from the company and defraud Convoy’s shareholders and investors of as much as HK$4 billion (US$516 million).

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.

Lawmaker Abraham Shek Lai-him will be among the six supported by Convoy’s second largest shareholder Kwok Hiu-kwan to join the board. Photo: Jonathan Wong

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.”

This article appeared in the South China Morning Post print edition as: Ex-minister enters tussle to wrest control of Convoy
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