A former executive at the financial advisory firm Convoy Global has been acquitted by the District Court of concealing his shareholding information of a company that Convoy acquired.
Prosecutors alleged that before Roy Cho was named an executive, he was a “shadow director” who had influence on Convoy's operations directly or indirectly, even though he was hired as an advisor.
Cho, along with two co-defendants who were his former associates, were accused of having a secret agreement and failing to disclose to Convoy that he had a 55 percent stake in investment firm True Surplus International.
Convoy acquired True Surplus in 2016 for HK$89 million, and Cho received HK$57 million from the deal.
The two other defendants are Christie Chan, a former chief financial officer at Convoy, and Byron Tan, a former executive director.
Delivering the verdict, judge Ernest Lin said Cho – a doctor-turned-businessman known as "Dr Cho" – could not have hidden the fact that he was a shareholder of True Surplus, which was in the public records.
Although the judge agreed that Cho was the one who actually ran the company, other Convoy board members were also aware of his role and so it was “redundant” for the trio to hide the matter from them.
He went on to say that while Cho had a conflict of interest in the acquisition, all of the board members failed to do their job to raise questions about it.
“If there was an agreement, those who participated in it could not have been limited to the three defendants, but all board members in the know. The people who were deceived were the minority shareholders and the Hong Kong Stock Exchange,” he wrote.
The judge also said Cho was not obliged to declare his interest in True Surplus because he wasn’t a board member of Convoy.
Lin ruled that the evidence presented in court was not sufficient to prove that the trio had a deal to deceive others.
The court also acquitted the three defendants of another offence of deceiving staff by concurring to publish false statements in Convoy's 2016 annual report.