SFC takes First Natural Foods founder to court over HK$84m embezzlement claim

Legal proceedings have begun against Yeung Chung-lung, the founder and former chairman of First Natural Foods, over false accounting and the alleged embezzlement of HK$84 million in corporate assets.

The Securities and Futures Commission, which is seeking orders that Yeung repay HK$84 million to the company, is also seeking disqualification orders against Yeung, Yang Le, the former chief executive and executive director of the firm, and Ni Chaopeng, another former executive director. Yang is the son of Yeung, and Ni is the son-in-law of Yeung.

The share price of First Natural Foods fell 1.5 per cent to close at 66 HK cents before the commission made the announcement last night.

At the first hearing of the SFC's petition, in the Court of First Instance yesterday, the SFC said Yeung, Yang and Ni were in breach of their duties owed to the company.

It said Yeung withdrew HK$84 million from the frozen food company's mainland bank account in December 2008, and that amounted to embezzlement of corporate assets, as it was without notice to the firm's directors or with their authorisation.

The commission said the bank statements the firm provided to its auditors in relation to the audited consolidated results for 2007 were false and/or had been fabricated.