Hong Kong courts

Ex-Hong Kong care home warden arrested in sex scandal stripped of directorship over ‘irreparable damage’

Judge rules facility’s parent company would take financial and reputational hit over offences involving mentally disabled female inmates

PUBLISHED : Tuesday, 27 February, 2018, 7:20pm
UPDATED : Tuesday, 27 February, 2018, 9:57pm

A former Hong Kong care home warden involved in a sex scandal two years ago has been stripped of his directorship after a judge ruled his title would cause “irreparable damage” to the facility’s parent company.

Cheung Kin-wah was first arrested in 2014 for sexual offences involving mentally disabled female inmates under his care at the now-defunct Bridge of Rehabilitation Centre in Kwai Chung. A High Court judgment handed down on Tuesday revisited the saga.

He was formally charged with unlawful intercourse with a mentally disabled woman, but the charge was dropped on May 16, 2016, as the victim was unable to testify due to post-traumatic depression. A public outcry followed.

This lawsuit stemmed from Cheung’s attempt to appoint himself in the following year as the sole director of Cheer Holdings – the company that ran Bridge of Rehabilitation before its closure – as well as Hong Kong Treasure International Limited.

While Cheer Holdings still runs four care homes in the city, Hong Kong Treasure owns various properties.

Cheung’s gambit prompted the company’s majority shareholders to take him, a minor shareholder with only seven per cent of the firm, to court. They accused him of removing the original directors behind their backs and appointing himself in their place.

Handing down her judgment on Tuesday, Madam Justice Queeny Au-Yeung Kwai-yue wrote that Cheung’s “continuing presence” as director would “cause material damage to the applicants financially and irreparable damage in terms of reputation”.

She ordered the Companies Registry to disregard the application Cheung had made, and prohibited Cheung from referring to himself as a director.

During the trial earlier this month, Au-Yeung heard that the criminal allegations against Cheung had provoked a public outcry and sparked a demonstration outside the Bridge of Rehabilitation when it was still operating. The facility housed more than 90 residents and was forced to shut down as a result of the uproar. Its certificate was revoked.

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In October last year, three months after Cheung appointed himself director, the Social Welfare Department told Cheer Holdings that if he still had anything to do with Main Home, another care home the company runs, its certificate would not likely be renewed.

Au-Yeung said she could draw a conclusion on Cheung’s impact on the company even before turning to the government’s concerns.

“The public reading this judgment today can still remember how its confidence in the responsible running of a care home for the mentally disabled was shattered upon the arrest of Mr Cheung.”

The risk of damage to the reputation ... was and is real
Madam Justice Queeny Au-Yeung

“The risk of damage to the reputation ... was and is real,” she added, noting the inmates might have to be relocated if history repeated itself.

During the trial, Cheung argued that Li Wing-yiu, the CEO, had no standing to raise the case as he was neither a shareholder nor a director. Li’s father was once a major shareholder, but his shares and those of another shareholder were transferred to Chow Ho-yan and Chow Siu-chi, whose directorships were stripped by Cheung.

Au-Yeung refuted his claims, saying documents provided to the court showed Li had been authorised by the company’s board to bring the legal action.

While Cheung maintained he was properly installed as a director at a minority shareholders’ meeting that the majority shareholders had refused to attend, the judge disagreed.

She said the letter purportedly calling the meeting failed to provide a date and location, nor did it address the directors – only the shareholders.

The meeting was held within 14 days of the letter being sent, falling short of what the law required, she added.