Hong Kong-based Convoy Global Holdings is to sue several of its former directors, including the colourful so-called “Dr Cho” who, the company says, “appears to have fled” the jurisdiction, according to the South China Morning Post.
On December 8, International Investment reported that three senior executives at Hong Kong Stock Exchange-listed Convoy were arrested in the ongoing clampdown on corruption that is seen as a key policy of Chinese president Xi Jinping.
The arrests were part of a joint operation by the Securities and Futures Commission (SFC) and Hong Kong’s Independent Commission Against Corruption (ICAC).
Those arrested were named as former chairman Quincy Wong Lee-man, former vice-chairman Rosetta Fong Sut-sum, pictured above, former director Christie Chan Lai-yee and Lerado Financial Group chairman Mark Mak Kwong-yiu, a former chief executive of Convoy.
Now the South China Morning Post is reporting that Convoy is suing Quincy Wong Lee-man “and related parties” who were behind a complex network of companies known as Enigma first identified by shareholder activist David Webb as being controlled by senior executives at Convoy.
Wong and associates were responsible for stealing some assets from the company’s HK$4.043bn (£390m, US$520m) private placement in 2015, according to the writ obtained by the South China Morning Post on Tuesday morning.
Cho a ‘mastermind’ and a ‘shadow’
Convoy names 28 respondents in the writ, said the newspaper, including all of those named above.
A key person named in the writ is former Convoy director Roy Cho Kwai-chee, known to local stockbrokers as Doctor Cho, because of his medical background.
Convoy said that it had suspended Cho from the company as it could not contact him.
“To the best knowledge of the plaintiffs, Roy Cho has fled Hong Kong,” the writ said.
The writ said Cho was the mastermind behind a number of placements to create a “false and/or misleading appearance” to all that Convoy had raised HK$4.043 billion for its business development but in fact the money was soon circulated back to other companies in Cho’s network via “circular financing agreement” and thus caused “substantial loss and damage” to Convoy.
Convoy described Cho as “a shadow” and “de facto director of Convoy” as he had “gradually acquired ownership and control of Convoy since 2013 by appointing his associates, nominee and/or agents to occupy the various key positions in Convoy”, said the writ.
The writ also pointed out that, although Cho had no formal role in Convoy until he became an executive director in March 2017, he had been making executive decisions on behalf of Convoy as far back as 2013 “through his associates via secret emails and diaries”, the newspaper reported.
As of 2014, Cho and his associates “induced potential investors to invest in his listed flagship Town Health International Medical Group and Convoy”, the newspaper added.
Town Health, a clinic chain founded and chaired by Cho, was suspended from trading last month by the SFC for “giving misleading information”.
In his report “The Enigma Network – 50 Stocks not to own”, dated May 15, 2017, Webb described a system whereby the firms and brokers in the network had cross-holdings in each other’s companies, and signed off loans and transactions between those companies that did not make any commercial sense.