Hong Kong SFC Obtains Interim Injunction to Prohibit Selling Individual Assets of Value Above HKD 50,000 Against Former CEO of SMI Culture & Travel Group Anita Leung, Lawsuit Against Senior Executives for Fraud with SMI Acquiring $41 Million of Overpriced Assets & Transferring Fees of $4.4 Million to $9.4 Million to Companies Owned Senior Executives
28th September 2023 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has obtained an interim injunction to prohibit selling individual assets of value above HKD 50,000 ($6,300) against former CEO of SMI Culture & Travel Group Anita Leung, with the SFC lawsuit against the senior executives for fraud with company (SMI) acquiring $41 million of overpriced assets and transferring fees of $4.4 million to $9.4 million to companies owned the (SMI) senior executives. Hong Kong SFC: “The application for an interim injunction order to prohibit Leung from disposing assets in Hong Kong and elsewhere stemmed from new information the SFC recently received regarding her. There is indication of a real risk of dissipation of assets by Leung. CFI granted an interim injunction order following an application by the SFC on 19 September 2023, pending the substantive hearing of the SFC’s injunction application … … The SFC commenced the legal proceedings under section 214 of the Securities and Futures Ordinance (SFO) in October 2019 against Leung and two other senior executives of SMI Culture & Travel Group. They are Mr Philip Wong Yu Hong (deceased), former chairman and non-executive Director, and Mr Tsiang Hoi Fong, former executive director. The SFC alleges that at the material times between 2010 and 2012, Leung, Wong and/or Tsiang implemented a fraudulent scheme under the guise of numerous non-genuine sale and purchase agreements in relation to TV licence rights with a total consideration of $327.75 million, resulting in substantially overpriced assets being purchased by SMI Culture & Travel Group. The resulting losses suffered by SMI Culture & Travel Group was estimated to be around $235.36 million, while the unjust profits gained by Leung or Wong was in the range of $35.2 million to $74.27 million, being the sums transferred to Leung and/or companies owned by Leung or Wong. As part of the legal action, the SFC is also seeking disqualification orders, and a compensation order for losses suffered by SMI Culture & Travel Group or alternatively an order to account for any profits gained by the respondents as a result of the alleged fraudulent scheme.” More info below:
“ Hong Kong SFC Obtains Interim Injunction to Prohibit Selling Individual Assets of Value Above HKD 50,000 Against Former CEO of SMI Culture & Travel Group Anita Leung, Lawsuit Against Senior Executives for Fraud with Company Acquiring $41 Million of Overpriced Assets & Transferring Fees of $4.4 Million to $9.4 Million to Companies Owned Senior Executives “
Hong Kong SFC Obtains Interim Injunction to Prohibit Selling Individual Assets of Value Above HKD 50,000 Against Former CEO of SMI Culture & Travel Group Anita Leung
25th September 2023 – The Securities and Futures Commission (SFC) has obtained an interim injunction order at the Court of First Instance (CFI) against Ms Leung Anita Fung Yee Maria, former chief executive officer and executive director of SMI Culture & Travel Group Holdings Limited (SMI Culture & Travel Group), to preserve assets for satisfying a compensation order that the court may impose at the conclusion of legal proceedings brought by the SFC (Note 1).
The application for an interim injunction order to prohibit Leung from disposing assets in Hong Kong and elsewhere stemmed from new information the SFC recently received regarding her. There is indication of a real risk of dissipation of assets by Leung. CFI granted an interim injunction order following an application by the SFC on 19 September 2023, pending the substantive hearing of the SFC’s injunction application.
Under the interim injunction order, Leung must (i) inform the SFC in writing all her assets of an individual value of $50,000 or more, whether in or outside Hong Kong, whether in her own name or not and whether solely or jointly owned; (ii) notify the SFC of the execution of a sale and purchase agreement of, creation of any new encumbrance on and the drawing down of any new loan secured by the specified properties of her in Hong Kong, Shanghai and Canada; and (iii) not dispose of, deal with or diminishing the purchase price, the loan monies or any monies generated by relevant encumbrance unless 28 days have elapsed from the notification to the SFC.
The SFC commenced the legal proceedings under section 214 of the Securities and Futures Ordinance (SFO) in October 2019 against Leung and two other senior executives of SMI Culture & Travel Group. They are Mr Philip Wong Yu Hong (deceased), former chairman and non-executive Director, and Mr Tsiang Hoi Fong, former executive director (Note 2).
The SFC alleges that at the material times between 2010 and 2012, Leung, Wong and/or Tsiang implemented a fraudulent scheme under the guise of numerous non-genuine sale and purchase agreements in relation to TV licence rights with a total consideration of $327.75 million, resulting in substantially overpriced assets being purchased by SMI Culture & Travel Group. The resulting losses suffered by SMI Culture & Travel Group was estimated to be around $235.36 million, while the unjust profits gained by Leung or Wong was in the range of $35.2 million to $74.27 million, being the sums transferred to Leung and/or companies owned by Leung or Wong. As part of the legal action, the SFC is also seeking disqualification orders, and a compensation order for losses suffered by SMI Culture & Travel Group or alternatively an order to account for any profits gained by the respondents as a result of the alleged fraudulent scheme (Notes 3 & 4).
Notes:
- The principal business of SMI Culture & Travel Group – founded by Leung and Philip Wong Yu Hong – was providing media services including TV programme and production related services, TV advertising, and other public relations services in the People’s Republic of China. The company’s shares were listed on The Stock Exchange of Hong Kong Limited on 30 June 2004 and delisted on 21 March 2022.
- Wong passed away after the commencement of the proceedings. On 24 October 2022, the SFC took out a summons seeking an order that executor(s) of the estate of Wong (or any other person as the Court thinks fit) be appointed to represent the estate of Wong for the purpose of these proceedings, which will be heard on 29 January 2024.
- Under section 214 of the SFO, the court may, amongst other things, make orders to disqualify a person from being a director or being involved, directly or indirectly, in the management of any corporation for a period of up to 15 years, if the person is found to be wholly or partly responsible for the company’s affairs having been conducted in a manner, amongst other conduct, involving defalcation, fraud, misfeasance or other misconduct towards the company or its members.
- SMI Culture & Travel Group is also a respondent in the section 214 proceedings. In November 2020, SMI Culture & Travel Group was ordered to be wound up, and joint and several liquidators were appointed. In December 2021, the SFC obtained a court order to proceed with the section 214 proceedings as against the company.
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