HK firm Convoy sues more than 20 officials for financial losses (updated)

Baijuyi Holdings

20/12/2017 05:31

(Add comment from Kaisa, China Green, Interactive, HK 
Education) 
    HONG KONG, Dec 19 (Reuters) - A Hong Kong company identified 
as part of a network of penny-stock firms whose share prices 
crashed massively in June said on Tuesday it had initiated legal 
action against 28 defendants for causing the firm substantial 
financial loss and damage. 
    The writ by Convoy Global Holdings Ltd  1019.HK  was filed 
in Hong Kong's High Court more than a week after Convoy 
appointed new senior officials to the company following the 
arrest by the anti-graft agency of three of its executive 
directors.  urn:newsml:reuters.com:*:nL3N1OA098 
    In the writ, Convoy said it was seeking unspecified damages, 
claiming the defendants were involved in a "gross breach of 
fiduciary duty and illegitimate diversion of the company's 
funds" in relation to share placements in 2015 that raised 
HK$4.5 billion ($587 million). 
    Convoy, a financial services company, was featured in May by 
independent investor and stock commentator David Webb in a group 
dubbed the "Enigma Network". 
    Several Enigma stocks plunged within minutes of each other 
on June 28 for no apparent reason, erasing over $6 billion in 
market capitalisation in a single day. Many shares lost more 
than half their value. 
    The defendants identified in the writ include officials from 
Convoy, other individuals and companies including China Green 
(Holdings> Ltd  0904.HK  as well as firms owned by Interactive 
Entertainment China Cultural Technology Investments Ltd 
 8081.HK , Jun Yang Financial Holdings Ltd  0397.HK  and Hong 
Kong Education (International) Investment Ltd  1082.HK . 
    It named Roy Cho, an executive director of Convoy, as the 
first defendant. Reuters could not ascertain any contact details 
for Cho to seek comment. 
    Kaisa said in a statement that while a son of its chairman 
had invested in Convoy, that matter was unrelated to Kaisa and 
it was reserving its right to take legal action. Another person 
identified by Convoy as a Kaisa employee was not working for the 
property developer, it said. 
    Reuters could not immediately obtain contact details for the 
people named in Kaisa's statement. 
    China Green, Interactive Entertainment and Hong Kong 
Education said in a separate statement it was seeking legal 
advice on the matter. 
    Jun Yang declined to comment. 
    Earlier this month, the Independent Commission Against 
Corruption in the former British colony conducted its first ever 
joint operation with the markets' watchdog, the Securities and 
Futures Commission, to arrest the three Convoy executive 
directors. 
    The trio, Wong Lee-man, Fong Sut-sam and Chan Lai-yee,  were 
suspended by the company following their arrests and were all 
named in the writ as defendants. Reuters could not ascertain 
contact details for them to seek comment. 
    Trading in Convoy shares have been suspended since Dec. 7. 
 
 (Reporting by Donny Kwok; Editing by Neil Fullick and Edwina 
Gibbs) 
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters 
Messaging: donny.kwok.reuters.com@reuters.net)) 
 
Keywords: HONGKONG CONVOY/SCANDAL