Convoy scandal takes a new twist as ‘suffering minority group’ threatens legal action to recover losses
- A group of ‘suffering minority shareholders’ is seeking to garner support for legal action against company, directors, owners
- Roy Cho Kwai-chee, the alleged mastermind in the scandal, faces trial with two others on conspiracy to defraud group
The move was triggered by the company’s announcement on June 5 that it was facing a delisting threat because trading in its shares has been suspended for more than 18 months. Convoy Global is appealing the decision.
“Convoy Group treats minority shareholders with zero transparency,” the group said in its advertisement, calling others to work together to safeguard their assets. “It will be impossible to continue to monitor Convoy Group in future” as a private entity, it added.
Listed in 2010, Convoy Global was the largest independent financial advisory firm in Hong Kong with some 100,000 Mandatory Provident Fund clients at its peak.
The stock had lost 83 per cent of its value from its all-time high in 2015 when it last traded at HK$0.17 on December 6, 2017. It was halted the next day, following a high profile investigation by the Securities and Futures Commission and Independent Commission Against Corruption (ICAC) into allegations of fraud involving HK$4.4 billion (US$568 million) of transactions.
Former executive director Roy Cho Kwai-chee and two other executives are facing trial for conspiracy to defraud Convoy and investors in 2016 over a HK$89 million (US$11.3 million) investment connected to him. The stock exchange was not aware of the fact that Cho received HK$57 million from the deal, according to the ICAC.
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The minority shareholder group is urging other investors to band together in a WhatsApp group to pursue actions. The Post called the phone number for comment and received a message that it would respond later.
Convoy acknowledged the advertisement by the group when contacted by the Post, and reiterated its decision to seek a resumption of its stock trading. Convoy earlier on Sunday said its financial situation remains good and it was planning to move into a new headquarters in Wan Chai.
Shareholders have the right to file to liquidate a company to safeguard their interests, according to Kenneth Leung Kai-cheong, a lawmaker representing the city’s accountancy sector. But the threshold for support is high.
It typically requires more than 10 per cent stake for shareholders to call for an extraordinary meeting, and 75 per cent to approve a vote to liquidate a firm, according to Derek Lai Kar-yan, vice-chairman of Deloitte China.
Besides the litigation proposal, the unidentified minority shareholders are also planning civil action against the company’s board members and the Tsai family, while also asking them to explain and account for Convoy’s financial situation, according to its advertisement. Convoy has not published its accounts since 2016.
The Tsai family, which controls Taiwan’s second-largest financial group Fubon, held a 29.98 per cent stake in Convoy, according to its last financial report. It was locked in boardroom battles with Convoy’s second-largest owner Kwok Hiu-kwan, who owned a 29.91 per cent stake.
Convoy’s new management, in place since December 2017, had filed three lawsuits against 27 defendants including Cho, seeking compensation amounting to HK$715 million.
