Hong Kong court finds a broker and three former executives guilty of fraud, in a win for ICAC’s clean-up of Convoy’s financial scandal
- The four were charged with conspiracy to defraud Convoy Global Holdings, its board of directors and investors in four bond placements in 2014 and 2015
- The guilty were allowed to remain on bail pending a mitigation and sentencing hearing on October 9
Hong Kong’s graft busters scored a victory in their attempt to prosecute one of the city’s biggest financial fraud cases in recent decades, when a court declared three former executives of Convoy Global Holdings and a broker guilty of conspiracy to commit fraud.
Convoy’s former chief executive Mark Mak Kwong-yiu, former chief financial officer Christie Chan Lai-yee, and former manager Wong Shuk-on were found guilty alongside the broker Lee Yick-ming of charges to defraud the company over a HK$51 million (US$6.58 million) kickback involved in four bond placements in 2014 and 2015, according a verdict by the Deputy District Court Judge Newman Wong Hing-wai.
The three former Convoy executives were also found guilty of defrauding the Hong Kong stock exchange. They will remain on bail until their next hearing on October 9 for mitigation and sentencing, according to the court schedule.
Convoy is the largest independent financial adviser in Hong Kong with more than 100,000 customers. Trading in Convoy’s shares has been halted since December 2017, and its management has changed after a high-profile joint investigation by the ICAC and the Securities and Futures Commission (SFC) went public.
The company’s shares were delisted in May this year. Its largest shareholder – the family of Richard Tsai Ming-hsing of Taiwan’s Fubon Financial Holdings, with a 29.98 per cent stake, is in control of the board now.
The latest victory was an important victory for the ICAC. Mak, Chan, Wong and Lee were charged with a conspiracy to defraud Convoy, its board of directors and investors in four bond placements in 2014 and 2015.
The three former executives instructed Convoy to pay HK$51 million in fees to Lee’s Gransing Securities for arranging for four bond sales in 2014 and 2015, the court heard. However, 96 per cent of the sum, or HK$49.61 million, were paid back to Convoy Investment Services (CIS) without informing the company about the arrangement. The three former Convoy executives were also charged for defrauding the city’s stock exchange by not disclosing the payment.
CIS was not a subsidiary of Convoy but it was co-owned by Mak and two other former directors of Convoy.
After the ruling, ICAC issued a statement saying that it will assist listed companies to enhance their corporate governance and directors’ ethics.
“The ICAC will continue to collaborate with relevant regulatory bodies, including the SFC, to combat corrupt and illicit activities in the financial market so as to uphold the integrity of the market, maintain a level-playing field for businesses, and sustain Hong Kong’s status as an international financial centre,” a spokesperson for the anti-graft agency said.
