Hong Kong Market Misconduct Tribunal Finds China Forestry Holdings ex-Chairman Li Kwok Cheong & CEO Li Han Chun Guilty of Providing False & Misleading Information in IPO Prospectus & Annual Results for 2009, Overstated Turnover by 91.56% in 2008 & by 99.99% in 2009, Customers Were Non-Existent or Not Genuine, False Documents Including Forestry Rights, Logging Permits & Bank Statements, CEO Li Han Chun & Personal Investment Vehicle Top Wisdom Overseas Holdings Sold 119 Million Shares in 2011 January & Avoided Loss of HKD 353 Million ($45 Million) after Auditor KPMG Had Highlighted Checks on False Documentations During Meeting in 2010 December, China Forestry Raised HKD 1.67 Billion in IPO ($214 Million) in 2009
9th August 2024 | Hong Kong
The Hong Kong Market Misconduct Tribunal (MMT) has found China Forestry Holdings ex-Chairman Li Kwok Cheong & CEO Li Han Chun guilty of providing false & misleading information in IPO prospectus & annual results for 2009, overstating turnover by 91.56% in 2008 & by 99.99% in 2009, customers were non-existent or not genuine, and false documents including forestry rights, logging permits & bank statements. CEO Li Han Chun & his personal investment vehicle (Top Wisdom Overseas Holdings) had also sold 119 million shares in 2011 January, and avoided loss of HKD 353 million ($45 million) after auditor KPMG had highlighted checks on false documentations during meeting in 2010 December. China Forestry had raised HKD 1.67 billion in IPO ($214 million) in 2009. Hong Kong Securities & Futures Commission (SFC) 7/8/24: “The Market Misconduct Tribunal (MMT) has found Mr Li Kwok Cheong and Mr Li Han Chun, former chairman and chief executive officer (CEO) of China Forestry Holdings Company Limited (China Forestry), culpable for disclosing false or misleading information in China Forestry’s IPO prospectus and its annual results announcement and annual report for the year ended 31 December 2009, inducing transactions in the company’s shares (Notes 1 to 3). The MMT found that China Forestry’s IPO prospectus and its 2009 annual results announcement and annual report contained numerous false or misleading statements covering China Forestry’s turnover generating activities, profit, plantation assets and bank balances. Specifically, China Forestry’s reported turnover was overstated by 91.56% and 99.99% for the years ended 31 December 2008 and 2009. The MMT also found that the purported customers of China Forestry were either non-existent or not genuine, and the company engaged in a substantial and ongoing falsification of documents, including the forestry rights certificates, logging permits and bank statements, to conceal the false statements. The MMT concluded that Li Han Chun and Li Kwok Cheong knew such statements were false or misleading when authorising the issuance of the IPO prospectus and the 2009 annual results announcement and annual report (Note 4). The MMT also found Li Han Chun and his investment vehicle, Top Wisdom Overseas Holdings Limited, engaged in insider dealing by selling 119,000,000 shares of China Forestry through a share placement in January 2011, thereby avoiding a loss of approximately $353 million. The MMT held that Li Han Chun was aware of the imminent danger facing China Forestry shares following a pre-audit meeting with China Forestry’s then auditors KPMG in early December 2010. KPMG indicated during the meeting that various audit procedures were to be performed on areas where rampant falsification of documentation had occurred. Li Han Chun knew that such enquiries could expose the reality of the situation and spell disaster for the value of China Forestry shares. The MMT is satisfied that it was with that knowledge that Li Han Chun started to take steps to dispose of his holdings in China Forestry.
“ Hong Kong Market Misconduct Tribunal Finds China Forestry Holdings ex-Chairman Li Kwok Cheong & CEO Li Han Chun Guilty of Providing False & Misleading Information in IPO Prospectus & Annual Results for 2009, Overstated Turnover by 91.56% in 2008 & by 99.99% in 2009, Customers Were Non-Existent or Not Genuine, False Documents Including Forestry Rights, Logging Permits & Bank Statements, CEO Li Han Chun & Personal Investment Vehicle Top Wisdom Overseas Holdings Sold 119 Million Shares in 2011 January & Avoided Loss of HKD 353 Million ($45 Million) after Auditor KPMG Had Highlighted Checks on False Documentations During Meeting in 2010 December, China Forestry Raised HKD 1.67 Billion in IPO ($214 Million) in 2009 “
Notes:
- The SFC instituted proceedings in the MMT against the duo for market misconduct in 2018. A copy of the SFC’s Notice of the MMT proceedings is available on the MMT’s website. Please see the SFC’s press release dated 28 June 2018.
- China Forestry was listed on the Main Board of The Stock Exchange of Hong Kong on 3 December 2009. It raised a net proceed of approximately $1.6776 billion in its initial public offering.
- On 26 January 2011, trading in the shares of China Forestry was suspended after discovery of serious irregularities by its then auditors KPMG. Pursuant to an Order of the Grand Court of the Cayman Islands dated 18 June 2015, China Forestry was wound-up in accordance with the law of the Cayman Islands. On 24 February 2017, the listing of China Forestry’s shares was cancelled.
- While the MMT is satisfied that both Li Kwok Cheong and Li Han Chun had knowledge of the false statements when approving the interim results announcement and interim report for the six months ended 30 June 2010, the MMT is of the view that the collective effect of the false information in the interim report was neutral and not likely to induce investors either to sell or purchase China Forestry shares.
Hong Kong Market Misconduct Tribunal Finds China Forestry Holdings ex-Chairman Li Kwok Cheong & CEO Li Han Chun Guilty of Providing False & Misleading Information in IPO Prospectus & Annual Results for 2009, Overstated Turnover by 91.56% in 2008 & by 99.99% in 2009, Customers Were Non-Existent or Not Genuine, False Documents Including Forestry Rights, Logging Permits & Bank Statements, CEO Li Han Chun & Personal Investment Vehicle Top Wisdom Overseas Holdings Sold 119 Million Shares in 2011 January & Avoided Loss of HKD 353 Million ($45 Million) after Auditor KPMG Had Highlighted Checks on False Documentations During Meeting in 2010 December, China Forestry Raised HKD 1.67 Billion in IPO ($214 Million) in 2009
Sign Up / Register
Caproasia Users
- Manage $20 million to $3 billion of assets
- Invest $3 million to $300 million
- Advise institutions, billionaires, UHNWs & HNWs
Caproasia Platforms | 11,000 Investors & Advisors
- Caproasia.com
- Caproasia Access
- Caproasia Events
- The Financial Centre | Find Services
- Membership
- Family Office Circle
- Professional Investor Circle
- Investor Relations Network
Monthly Roundtable & Networking
Family Office Programs
The 2024 Investment Day
- March 2024 - Hong Kong
- March 2024 - Singapore
- July 2024 - Hong Kong
- July 2024 - Singapore
- Sept 2024 - Hong Kong
- Sept 2024 - Singapore
- Oct 2024 - Hong Kong
- Nov 2024 - Singapore
- Visit: The Investment Day | Register: Click here
Caproasia Summits
- The Institutional Investor Summit
- The Investment / Alternatives Summit
- The Private Wealth Summit
- The Family Office Summit
- The CEO & Entrepreneur Summit
- The Capital Markets Summit
- The ESG / Sustainable Investment Summit
