Will Hong Kong’s ‘enigma network’ unravel with next week’s Convoy court hearings?

The High Court will begin hearings Tuesday in a civil case involving the exceptional story of Roy Cho Kwai-chee, an ethnic Chinese who immigrated as a youngster to Hong Kong from India, gaining professional career success as a doctor, before being linked to one of the biggest corporate investigations in the city’s history.

Convoy Global Holdings has filed three lawsuits against Cho, its former director, and scores of other defendants, in a claim amounting to HK$715 million (US$91.41 million).

In the writs, Convoy alleges that Cho, 53, was the mastermind behind the wrongful transfer of funds belonging to the Tsai family of Taiwan that were diverted via “circular financing agreement” to companies and individuals linked the Enigma Network, a term coined by shareholder activist David Webb that refers to 50 companies to avoid.

Cho is alleged to have siphoned off as much as HK$4.04 billion of Convoy funds to companies associated with him, according to the Convoy suit.

The high-profile case is expected to draw wide media coverage, even though Cho is unlikely to show up at the hearings, as he is believed to have fled Hong Kong.

In December regulators from the Securities and Futures Commission and the Independent Commission Against Corruption raided the office of Convoy, which is the largest financial advisory firm in Hong Kong with 100,000 customers including insurance and Mandatory Provident Funds.

The high-profile crackdown led to the arrests of four people, including Convoy's former chairman, Quincy Wong Lee-man, former vice-chairman Rosetta Fong Sut-sum, former director Christine Chan Lai-yee and former chief executive Mark Mak Kwong-yiu, who was then chairman of another financial services firm, Lerado Financial Group.

In February the two enforcement agencies searched the offices of Cho’s flagship company Town Health International Medical Group, a clinic operator which he founded. Town Health owns 4.5 per cent of Convoy.

Shares in Town Health have been suspended from trading by order of the SFC since November 27. The SFC found misleading information in some of the company's earnings reports. Cho has been uncontactable since the trading suspension. A source familiar with the investigation told the South China Morning Post that they were in contact with Cho around the middle of last year but have had no success recently.

Cho’s whereabouts are unknown, however those who know his background say he may be in Australia or India.

Cho was born in India and moved to Hong Kong with his family while in his teens. He undertook medical studies at the University of Hong Kong and eventually qualified as a doctor.

Acquaintances and others in the financial industry are known to refer to him as “Dr Cho”.

“I have visited his clinic in North Point several times more than a decade ago. He is a good doctor as the medicine he gave me cured my flu quickly. Back then, he was very interested in stock investment as he asked me for stock tips after he learned my profession as a stockbroker,” said a financial worker who asked to be identified only by his surname Lo.

“I remembered one day I left after visiting his clinic and found someone was injured by a car. I went back to Dr Cho’s clinic and asked for help. He came down immediately to help the injured person before the ambulance came. I think he is a kind-hearted doctor.”

Cho, who operates a clinic in Sha Tin was also known to be active in supporting local charities, particularly those who would extend naming rights.

As such, the Education University of Hong Kong (EdUHK) in Tai Po named one of their campus facilities the Cho Kwai Chee Foundation Building.

A ceremony to name the building in August 2016 drew more than 600 people, including former Financial Secretary Antony Leung Kam-chung, the then Secretary for Food and Health Ko Wing Man, and EdUHK president Stephen Cheung Yan Leung.

Cho’s medical background led him to co-found clinic operator Town Health, which was listed on the GEM board for young companies in the early 2000s.

Town Health expanded by acquiring Starbow Holdings, a listed company from veteran banker and former Hong Kong lawmaker Chim Pui-chung in 2004.

“I had several listed companies on hand at the time. Someone introduced Dr Cho to me, for acquisition opportunities, and I therefore sold one of the firms to him,” Chim said in an interview on how he made the deal with Cho 14 years ago.

“Dr Cho was very humble, friendly and hard working. He was very keen on making the deal, so I made the deal with him,” he said.  

Town Health migrated to the main board in 2008. Early investors included billionaire Li Ka-shing, who later exited his holding in the company. 

Among Cho’s patients were a number of prominent businessmen, including Francis Choi Chee-ming, known locally as “Toy King” for his role as manufacturer for toy companies including Mattel.

The two are joint shareholders in an entity called Broad Idea International, with Cho owning 50.1 per cent while Choi controls the remainder, according to Convoy's writ.

Broad Idea owns 18.85 per cent of Town Health. Choi’s daughter Crystal Choi Ka-yee is chairwoman of the company. 

The new management of Convoy, installed in late December, led by chairman Johnny Chen Chi-wang, have the backing of the company’s largest shareholder, the Tsai family. The Tsai family is also the owner of Taiwan's second-largest bank, Fubon Financial Holding.

The Tuesday hearing will also involve a writ filed by businessman Kwok Hiu-kwan, who is the second largest shareholder of Convoy.

The Kwok writ maintains that a decision to invalidate his voting rights during a shareholder meeting in December was improper.

Kwok argues there is no truth to the claim by Convoy that his shares are related to Cho, the ousted former director.