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The "@Convoy" building which houses the headquarters of Convoy Global Holdings in Hong Kong in December 2017. Photo: Bloomberg

Convoy stymies second-largest shareholder’s bid for board seat, repelling boardroom coup as court verdict looms on fraud case

  • Convoy’s lawyer stopped the meeting just 10 minutes after proceedings began and before any vote could be counted
  • Fred Ma said he has the support of 51.2 per cent of the votes for him to become chairman of Convoy Global Holdings
Convoy Global Holdings succeeded in repelling an attempt by its second-biggest shareholder to remake the board and management of the company at the centre of Hong Kong’s biggest fraud case, days before the alleged ringleader is expected to receive a verdict in court.

A shareholders’ meeting at Convoy’s Wan Chai office was stopped 10 minutes after proceedings began and before votes could be counted, by a corporate lawyer who only provided his surname Lam.

The company allowed only 25 people to attend the meeting, citing Hong Kong’s social-distancing rule to prevent coronavirus infections. Convoy’s spokesman was not immediately available to comment.

The halt marked the second failure since 2017 by Convoy’s second-biggest shareholder Kwok Hui-kwan to nominate his representatives to replace current directors appointed by the largest shareholder: the family of Richard Tsai Ming-hsing of Taiwan’s Fubon Financial Holding.

Frederick Ma Si-hang leaving the venue of Convoy Global Holdings’ shareholders meeting in Wan Chai on Thursday. Photo: Xiaomei Chen

“I am deeply disappointed and feel sad about Hong Kong’s corporate governance,” said former Hong Kong financial services minister Frederick Ma Si-hang, who represents Kwok’s bid to get on Convoy’s board.

“This is a big scandal in Hong Kong. The government and the regulator should look into the matter as the incident shows the company has totally ignored shareholders’ interests. The corporate governance of Convoy is so bad that it is going to hurt the reputation of Hong Kong as an international financial centre.”

The boardroom tussle for control of Convoy, one of the largest managers of Hong Kong’s mandatory employees’ fund, comes just days before a November 30 verdict is expected on former director Roy Cho Kwai-chee and two associates, who face criminal charges of attempting to defraud Convoy of HK$89 million (US$12 million).

They additionally face civil suits over HK$4 billion (US$516 million) that was allegedly pilfered from Convoy.

The financial services company is a crucial piece in the so-called Enigma Network of companies. Hong Kong’s financial regulator has mounted a multi-year campaign to bring the network down on suspicions of fraud, market manipulation and corporate malfeasance.
Richard Tsai Ming-hsing. Photo: New York University

Convoy is managed by directors and executives backed by the family of Richard Tsai, who paid HK$1.5 billion for a 29.98 per cent stake in a placement of new shares in October 2015. Tsai could not be reached to comment.

Kwok, 29, is the son of Kwok Ying-shing, founder of Shenzhen-based developer Kaisa Group Holdings. He spent HK$800 million for his 29.91 per cent stake in Convoy in mid-2017, making him the second-largest shareholder, according to sources.

The tussle is the second attempt by Kwok to wrest control of Convoy from the Tsai family, when his votes were excluded from a tally. He wants to replace the entire 12-member board with six new candidates including Ma and legislator Abraham Shek Lai-him.

Kwok said he had 51.2 per cent of all shareholders’ votes, which are all being put behind Ma’s bid to join Convoy’s board. He could not be reached to comment.

Paul Tse Wai-chun, a lawmaker in Hong Kong’s legislature, representing 4.9 per cent of minority shareholders, was also barred from joining the meeting.

Kwok Hui-kwan (middle, with a green mask), the second-largest shareholder of Convoy Global Holdings, leaves the High Court after a hearing in August 2018. Photo: Enoch Yiu

“Ma has always supported corporate governance, and can help improve the company’s management,” said Tse, throwing his weight behind Ma’s bid for a seat on Convoy’s board. “The company has not released any accounts for three years which is not fair to investors. The regulators should investigate into it.”

Ma served as secretary of financial service and the treasury from 2002 to 2007, and was the secretary for commerce and economic development from 2007 to 2008. He is MTR chairman from 2015 to 2019.

Convoy has not released its financial statements since the middle of 2017, and has not held any annual meetings among shareholders since then. Trading in the company’s shares has been suspended since December 2017 after a joint investigation between the Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC).

Before the November 26 meeting, Convoy said it received a non-binding takeover bid from Nasdaq-listed AGBA Acquisition Limited for US$400 million in cash and shares. AGBA’s office address in Hong Kong turned out to be an unrelated toy company of a different name, while the contact number listed on its regulatory filings is wrong.