Former lawmaker Chim Pui-chung and his son have been remanded in custody after a District Court judge found them guilty of conspiracy to defraud the stock exchange and a listed company 10 years ago.
The elder Chim was a legislator representing the financial services sector between 2004 and 2012.
The case also included the conviction of 68-year-old businesswoman Wong Poe-lai for money laundering.
Wong's employer, Ma Zhonghong, 51, was charged with two counts of conspiracy to defraud and one of money laundering.In 2022, an arrest warrant was issued as Ma failed to attend the court hearing.
Chim Pui-chung was then a substantial shareholder of the listed company Asia Resources Holdings Ltd while his son was the chairman from 2008 to 2014.The court heard that they conspired with Ma to defraud the HKEX and Asia Resources' board of directors and shareholders through a "secret backdoor listing" agreement in a capital-raising exercise.
Ma was said to have paid HK$210 million to the father and son pair to takeover between 70 percent and 75 percent of Asia Resources' stocks.The payments were made by Ma between July 1, 2013, and November 15, 2015, for the stake in the manufacturing of pharmaceutical and health-care products.
To execute the "backdoor listing" agreement, Ricky Chim chaired two board meetings in late July and early August 2013, during which directors of Asia Resources resolved and approved proceeding with the placing of new shares and the issuance of convertible notes to raise funds of over HK$550 million.Ricky Chim, at that time, declared that he did not have any interest in the capital-raising exercise and he had never disclosed the "backdoor listing" agreement to Asia Resources.
Judge Lin said the elder Chim used his power as the company's largest shareholder to arrange for his son to be the chairman and executive director, as well as to sign a deal with Ma and others.Judge Lin said although the transactions involving shell companies were not illegal and did not have to be reported to the stock exchange, the company's board and smaller shareholders were unable to make a decision after reviewing all the information.
"The co-conspirators in this case were in cahoots, they used their own financial skills to sell a listed company as if it was a piece of private property for their own personal gain," judge Lin wrote."The victims of their actions were not only Asia Resources, but also the small shareholders of the company. They were not only denied the choice of a mandatory offer, their personal investments also became someone else's tools for financial gain."
Wong and Ma were charged with money laundering for handling HK$42 million in proceeds from a placement of convertible notes issued by Asia Resources between October 2013 and January 2014.Lin said Wong should have realized the assets came from illegal sources and that it was abnormal for her to handle such a huge amount, adding Wong also profited in the process.
The Independent Commission Against Corruption said the case stemmed from a corruption complaint referred to the ICAC by the Securities and Futures Commission."The commission will continue its close collaboration with financial regulators to combat corruption and related crimes involving listed companies and continue to enhance corporate governance of listed companies through corruption prevention and education," an ICAC spokesman said.
eunice.lam@singtaonewscorp.com
