We are proud to bring you "The Toxic Treo" starring 4 (you count them) former SCRO/SREA directors!!!!!!!!!!!
FU CHEONG (US Score One SCRO/SREA), Gold Wo and Yue Fung make the TOXIC IPO LIST
Yue Fung, Gold Wo and Fu Cheong
The independent non-executive directors of Grandtop at the time of IPO were Mr Poon Kuai Cheong (Mr Poon) and Miss Emmy Lo Wing Yan.
Our database reveals that Mr Poon was an INED of printed circuit board maker Fu Cheong International Holdings Ltd (Fu Cheong, 0916) which listed on 27-Mar-02. Mr Poon resigned on 18-Dec-02, the day after the Independent Commission Against Corruption (ICAC) announced that it had raided the company. The ICAC raid of Dec-02 was part of an investigation of alleged fraudulent listings which also involved raids on Gold Wo International Holdings Ltd (Gold Wo, 0090, delisted), a maker of melamine tableware and silicon rubber keypads, and calculator maker Yue Fung International Group Holdings Ltd (Yue Fung, 0965, delisted).
Yue Fung
Yue Fung was listed on 8-Oct-97. The Sponsor was Pacific Challenge Capital Ltd and the reporting accountants were Ernst & Young (E&Y), but the auditors of the main subsidiaries for the first two years of its track record were Li Wing Kei & Co., named after founder Ricky Li Wing Kei (Mr Li). He was associated with another company which collapsed spectacularly but no criminality was alleged in that case. He was the Deputy Chairman of Guo Xin Group Ltd (1215, then Wah Lee Resources) from 1-Oct-96 to 11-Aug-99. That company, then an air conditioner distributor, listed on 17-Jan-97 and went bust in 2000 before its current incarnation.
Gold Wo
Gold Wo listed on 12-Apr-01. Its IPO was sponsored by Kim Eng Capital (Hong Kong) Ltd, (KECHK, now known as KE Capital (Hong Kong) Ltd), and immediately after the IPO Gold Wo was 20.5% owned by Yue Fung. The reporting accountants were E&Y, but the auditors of the subsidiaries for the years ended 31-Mar-98 and 31-Mar-99 respectively were Clement C.W. Chan & Co and Roger B.L. Wan & Co, headed by Roger Wan Bing Leung (Mr Wan) . The stock was ramped, leading to a concentration warning on 6-Aug-01. The price reached a new high that month, up 520% from its IPO.
On 7-Jan-02, Gold Wo proposed a toxic convertible bond with a floating conversion price, and it's financial adviser on that deal was Ernst & Young Corporate Finance Ltd, owned by Gold Wo's auditor. You might think that was a conflict of interest, but they obviously didn't. In the end, Gold Wo adjourned the 6-Feb-02 EGM needed to approve the deal (as well as a share split) claiming lack of a quorum, and when the meeting was reconvened on 15-Feb-02, there was no mention of the proposal in the resulting announcement, nor does the bond show up in the annual report, so we suspect it was quietly withdrawn or voted down by the controlling shareholder.
There's also a Styland connection here: Ever-Long acted as financial adviser to Gold Wo in a rights issue in May-02, and as arranger of a placing of new shares on 26-Jun-02.
The first and last annual report after Gold Wo's IPO, for the year ended 31-Mar-02, contained 2 mysterious outlays of cash. $10m was paid as a deposit for acquisition of an unlisted equity investment and $14m paid for another unlisted equity investment which they than planned to sell at cost. No details were given of either investment. The total of $24m was just a bit less than the net IPO proceeds of $25.4m. E&Y gave it a clean audit report.
The two INEDs of Gold Wo, who both resigned on 19-Dec-04 after the ICAC raid, were Henry Wong Wing Hang (Mr Henry Wong) and Wong Kai Tat (Mr K T Wong). Mr Henry Wong was a partner in law firm W.K. To & Co, and is now a partner of Michael Li & Co. He is also an INED of LeRoi Holdings Ltd (0221). By a very unlucky coincidence that stock has been suspended since 27-Feb-04 pending an ICAC investigation. However, this fung shui did not deter Haywood Investments Ltd (0905) from appointing him as an INED on 25-Aug-04. We note that Michael Li & Co, is listed as legal adviser to Haywood, so we question his independence. As regards Mr K T Wong, he is an executive director of T S Telecom Technologies Ltd (8003), which by coincidence appointed HLB as auditors on 11-Oct-04. He also held INED positions at G-Prop (Holdings) Ltd (0286) from 3-Jan-01 to 4-Jun-02 and briefly at Daqing Petroleum and Chemical Group Ltd (0362) from 30-Sep-04 to 21-Dec-04.
Gold Wo was suspended on 16-Dec-02, ordered to be wound up on 14-Jun-04 and delisted on 30-Sep-04.
Fu Cheong
Fu Cheong listed on 27-Mar-02. Its IPO was also sponsored by KECHK, the same sponsor as Gold Wo, and the Lead Manager and Book-runner was CSC Securities (HK) Ltd, from the same group as CSCA, sponsor of Grandtop and Rontex.
Yue Fung owned 30% of I. World Ltd, a BVI company which owned 82% of Score One, Inc., a Nevada company traded on the OTCBB in the US. This in turn owned 58% of Fu Cheong. The prospectus track record included 3 calendar years to 2000. The reporting accountants were E&Y, but the auditors for all the subsidiaries (except one in the mainland) for the first two years of the track record were HLB. The stock has been suspended since 16-Dec-02.
ICAC brings charges
We first warned readers about Yue Fung's questionable dealings in a Webb-site.com story on 23-Nov-00. The rubber key maker and PCB maker we referred to in that article later became listed as Gold Wo and Fu Cheong respectively. Yue Fung was suspended on 16-Dec-02, provisional liquidators were appointed on 25-Apr-03 and it was delisted on 20-Jan-05.
On 14-Jul-03, the ICAC charged the Chairman, Vice Chairman and another director of Gold Wo together with Mr Li and Ms. Kwok Shuk Wah (Ms Kwok), an executive director of Fu Cheong who also ran her own company, Win Dragon Consultants Ltd, with conspiracy to defraud in relation to the listing of Gold Wo and letters of credit totalling over $290m. An alleged co-conspirator, who was not charged, was Mr Michael Young Chi Shan (Mr Young), the financial controller of Gold Wo. An additional charge of theft was filed against the Chairman and Mr Li on 19-Aug-03. On 17-Dec-03, the ICAC arrested and charged Mr Wan on one count of conspiracy to defraud.
On 8-Dec-04, the ICAC announced that the Chairman of Fu Cheong, Mr Ho Wing Cheong (Mr Ho) and Mr Albert Chan Wing Kui (Mr Chan), the financial controller of Fu Cheong, had been charged together with Mr Li and Ms Kwok with conspiracy to defraud in relation to the listing of Fu Cheong and in the case of Mr Ho and Mr Chan alleged fraudulent applications for letters of credit facilities. In the same announcement, the ICAC said that the former Chairman, Vice Chairman and a clerk of Yue Fung had been charged for alleged with conspiracy in relation to alleged letter of credit fraud involving over $174m.
We'll return to KECHK, the listing sponsor of Gold Wo and Fu Cheong, later in this story.
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