Chinese Estates' Joseph Lau passes baton to son after graft conviction

Joseph Lau Luen-hung yesterday resigned from the post of chairman of Chinese Estates after being convicted in Macau last week of bribing officials and money laundering, passing on the baton to his son Lau Ming-wai.

Lau was handed a jail term of five years and three months on Friday on corruption charges. As Macau and Hong Kong do not have an extradition agreement, Lau will not need to serve the sentence as long as he does not set foot in Macau.

An appeal against the verdict filed by Lau was accepted by the Court of First Instance of Macau, the company said in an announcement on the Hong Kong stock exchange yesterday.

With acceptance of the application to appeal, the conviction order stands suspended and will not be enforced until there is a final ruling.

However, market observers pointed out that the court verdict said Joseph Lau had always controlled Moon Ocean, the developer of troubled Macau property project La Scala, whereas the company's announcements in 2005 and 2011 said Moon Ocean was owned by an independent third party before being acquired by the company.

These discrepancies between the verdict and the company's previous announcements might lead to further actions by Hong Kong regulators, they said.

"Whether the Hong Kong regulators will follow up on the charge and start an investigation will depend on the evidence provided in the announcements," said Steven Leung, an institutional sales head at UOB Kay Hian.

Leung said Lau bowed to pressure from investors and public opinion to step down from his post at Chinese Estates, the ninth-largest Hong Kong property developer, although it was not mandatory to do so under the Company Ordinance and listing rules.

Lau Ming-wai, 33, Joseph's Lau's eldest son, has long been tipped as his successor. Before this appointment, he was vice-chairman and non-executive director of the company.

Joseph Lau and his business partner Steven Lo Kit-sing were found guilty of corruption and money laundering for paying a HK$20 million bribe to disgraced ex-public works chief Ao Man-long, who was jailed for 29 years in May 2012, in return for five plots of prime land in Macau.

Pronouncing the verdict, Judge Augusto Silvestre said it was Lau's idea to buy the land for a luxury housing development, La Scala, while Lo was just a middleman.

Lo's Eastern Base signed a HK$20 million contract to provide consultation services for Moon Ocean, but the judge said it was difficult to believe actual service was provided. The court was told the sum eventually ended up in a company controlled by Ao.

Chinese Estates reported a 35 per cent drop in net profit to HK$6.3 billion last year from HK$9.8 billion a year earlier.