Hong Kong Court Convicts Father & Son Chim Pui Chung & Ricky Chim Kim Lun for Conspiracy of Fraud & Concealing Material Interest in Secret Backdoor Hong Kong Listing of Asia Resources Holdings by Selling $68 Million Convertible Notes to Ma Zhonghong Nominees & His Employee Wong Poe Lai, Ma Zhonghong Paid Chim Pui Chung $27 Million to Control 70% to 75% of Issued Share Capital in 2013, Deal Defrauded Asia Resources, Directors, Shareholders & Hong Kong Exchange, Wong Poe Lai Convicted of Money Laundering, Chim Pui Chung was Substantial Shareholder of Asia Resources & Ricky Chim Kim Lun was Chairman & Executive Director, Ma Zhonghong was ex-Chairman of Shenyang Public Utility Holdings Company, Asia Resources Holdings Renamed to Zhong Jia Guo Xin Holdings Company in 2023
11th December 2024 | Hong Kong
A Hong Kong court has convicted father & son Chim Pui Chung & Ricky Chim Kim Lun for conspiracy of fraud & concealing material interest in secret backdoor Hong Kong listing of Asia Resources Holdings by selling $68 million (HKD 535.5 million) of convertible notes to Ma Zhonghong nominees & his employee Wong Poe Lai. Ma Zhonghong paid Chim Pui Chung $27 million (HKD 210 million) to control 70% to 75% of issued share capital in 2013, with the deal defrauding Asia Resources, directors, shareholders & Hong Kong Exchange (HKEX). Wong Poe Lai was convicted of money laundering. Chim Pui Chung was a substantial shareholder of Asia Resources, and Ricky Chim Kim Lun was Chairman & Executive Director. Ma Zhonghong was ex-Chairman of Shenyang Public Utility Holdings Company. In 2023, Asia Resources Holdings was renamed to Zhong Jia Guo Xin Holdings Company. Hong Kong SFC (9/12/24): “The Securities and Futures Commission (SFC) welcomes the conviction by the District Court today of Mr Chim Pui Chung and his son Mr Ricky Chim Kim Lun of two counts of conspiracy to defraud Asia Resources Holdings Limited (Asia Resources), its board of directors and shareholders as well as the Stock Exchange of Hong Kong Limited (SEHK) over a secret backdoor listing arrangement concerning Asia Resources. Their convictions arose from a prosecution brought by the Independent Commission Against Corruption (ICAC) following a referral by the SFC. Ms Wong Poe Lai was also convicted of one count of money laundering in the same case (Notes 1 to 3). Specifically, in July 2013, Chim Pui Chung, Ricky Chim and Mr Ma Zhonghong agreed on a secret backdoor listing arrangement to sell Asia Resources to Ma through the placement of $535.5 million convertible notes by Asia Resources to nominees of Ma, including Wong. It was also agreed among the trio that Ma would pay Chim Pui Chung a sum of approximately $210 million to control 70 to 75% of the issued share capital of Asia Resources (Notes 4 and 5).” See below for statement by ICAC:
“ Hong Kong Court Convicts Father & Son Chim Pui Chung & Ricky Chim Kim Lun for Conspiracy of Fraud & Concealing Material Interest in Secret Backdoor Hong Kong Listing of Asia Resources Holdings by Selling $68 Million Convertible Notes to Ma Zhonghong Nominees & His Employee Wong Poe Lai, Ma Zhonghong Paid Chim Pui Chung $27 Million to Control 70% to 75% of Issued Share Capital in 2013, Deal Defrauded Asia Resources, Directors, Shareholders & Hong Kong Exchange, Wong Poe Lai Convicted of Money Laundering, Chim Pui Chung was Substantial Shareholder of Asia Resources & Ricky Chim Kim Lun was Chairman & Executive Director, Ma Zhonghong was ex-Chairman of Shenyang Public Utility Holdings Company, Asia Resources Holdings Renamed to Zhong Jia Guo Xin Holdings Company in 2023 “
ICAC (9/12/24) – A then substantial shareholder of a listed company and its then chairman, charged by the ICAC, were today (December 9) convicted after trial at the District Court of conspiring with a businessman to defraud The Stock Exchange of Hong Kong Limited (SEHK), the listed company and its board of directors and shareholders by concealing a secret “backdoor listing” agreement in a capital raising exercise. A warrant for the arrest of the businessman, who failed to attend the court hearing, was earlier issued by the court.
- Chim Pui-chung, 78, then substantial shareholder of Asia Resources Holdings Limited (Asia Resources); and Ricky Chim Kim-lun, 55, then chairman of Asia Resources, were found guilty of two counts of conspiracy to defraud, contrary to the Common Law.
- Ma Zhonghong, 51, the businessman implicated, was charged with the abovementioned two counts of conspiracy to defraud, and one of dealing with property known or reasonably believed to represent proceeds of an indictable offence (commonly known as money laundering), contrary to section 25(1) of the Organized and Serious Crimes Ordinance.
- Wong Poe-lai, 68, then employee of Ma, was found guilty of one count of money laundering.
- In the reasons for verdict handed down today, Judge Mr Ernest Lin Kam-hung deplored the co-conspirators in the present case for their involvement in underhand dealings. Through financial shenanigans, the co-conspirators had sold a listed company like their private property for personal gain.
- The judge adjourned the case to January 8 next year for mitigation and sentence, as well as the hearing of the prosecution’s application for a confiscation order. Chim Pui-chung, Ricky Chim and Wong were remanded in the custody of the Correctional Services Department.
- The present case stemmed from a corruption complaint referred to the ICAC by the Securities and Futures Commission (SFC). Upon completion of the ICAC investigation, four individuals taking part in the secret “backdoor listing” scheme were charged with conspiracy to defraud and money laundering.
- An ICAC spokesperson notes that 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 company through corruption prevention and education. The ICAC will strive to uphold integrity and fair operation of the Hong Kong financial market and to foster the confidence of stakeholders in the financial system.
- At the material time, Asia Resources was listed on the Main Board of the SEHK. After Chim Pui-chung became a substantial shareholder of Asia Resources in mid-October 2008, his son, Ricky Chim, was appointed as an executive director of Asia Resources on the following day, and served as chairman of its board of directors between December 19, 2008 and December 11, 2014.
- The court heard that in July 2013, Chim Pui-chung and Ricky Chim negotiated with Ma in private a “backdoor listing” agreement selling the control of Asia Resources to Ma. On the basis that the entire 100 per cent shareholding of Asia Resources would cost $300 million, the trio made an agreement for Ma to pay Chim Pui-chung a sum of about $210 million to control 70 to 75 per cent of the entire issued share capital of Asia Resources (the “backdoor listing” agreement).
- In order to execute the “backdoor listing” agreement, Ricky Chim, as the chairman of Asia Resources, chaired two board meetings in late July and early August 2013. At the meetings, directors of Asia Resources resolved and approved to proceed with the placing of new shares and the issuance of convertible notes to raise funds of over $550 million (capital-raising exercise). Ricky Chim, who voted on both occasions, 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. The placing of new shares in the capital-raising exercise was completed in late July 2013.
- In mid-August and mid-September 2013, Asia Resources respectively published an announcement and a circular in relation to the issuance of convertible notes in the capital-raising exercise, stating that no directors and shareholders had a material interest in the issuance of convertible notes, and no shareholders were required to abstain from voting in the special general meeting concerned. At the special general meeting held on October 3, 2013, Chim Pui-chung voted for the issuance of convertible notes. The resolution was eventually passed by shareholders.
- ICAC enquiries revealed that Chim Pui-chung received a total sum of $169 million from Ma pursuant to the “backdoor listing” agreement about a month after Asia Resources approved of the capital-raising exercise.
- Chim Pui-chung and Ricky Chim had concealed from the SEHK the purpose of the capital-raising exercise, which was to increase the entire issued share capital of Asia Resources, thereby facilitating the execution of the “backdoor listing” agreement, causing the SEHK to approve the publication of the announcements and circulars in relation to the capital-raising exercise by Asia Resources, the court heard.
- Between October 2013 and January 2014, co-defendant Wong followed the instruction of her employer, Ma, to deal with proceeds of indictable offence, namely convertible notes issued by Asia Resources in the principal amount of $42 million.
- The SEHK and the SFC rendered full assistance to the ICAC during its investigation into the case.
Notes:
- The shares of Asia Resources (currently known as Zhong Jia Guo Xin Holdings Company Limited) have been listed on the Main Board of SEHK since 24 October 1997.
- At the material time, Chim Pui Chung was the substantial shareholder of Asia Resources while Ricky Chim was the chairman and executive director of Asia Resources.
- The reasons for verdict is available on the Judiciary’s website (DCCC439/2022).
- Ma was a former chairman of Shenyang Public Utility Holdings Company Limited.
- Please see ICAC’s press release for further details.
Hong Kong Court Convicts Father & Son Chim Pui Chung & Ricky Chim Kim Lun for Conspiracy of Fraud & Concealing Material Interest in Secret Backdoor Hong Kong Listing of Asia Resources Holdings by Selling $68 Million Convertible Notes to Ma Zhonghong Nominees & His Employee Wong Poe Lai, Ma Zhonghong Paid Chim Pui Chung $27 Million to Control 70% to 75% of Issued Share Capital in 2013, Deal Defrauded Asia Resources, Directors, Shareholders & Hong Kong Exchange, Wong Poe Lai Convicted of Money Laundering, Chim Pui Chung was Substantial Shareholder of Asia Resources & Ricky Chim Kim Lun was Chairman & Executive Director, Ma Zhonghong was ex-Chairman of Shenyang Public Utility Holdings Company, Asia Resources Holdings Renamed to Zhong Jia Guo Xin Holdings Company in 2023
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