A son of billionaire philanthropist Eric Hotung is suing an accounting giant and the surveying firm that HK Chief Executive Leung Chun-ying used to head, for fraud

November 26, 2013 Leave a comment

Tycoon’s son names CY firm in fraud suit
Mary Ann Benitez
Tuesday, November 26, 2013
A son of billionaire philanthropist Eric Hotung is suing an accounting giant and various other entities, including the surveying firm that Chief Executive Leung Chun-ying used to head, for fraud. CY Leung & Co, which merged with property consultant DTZ in 2000, is named as one of 10 defendants in a writ filed yesterday in the High Court by Sean Eric Mclean Hotung.He is suing them for allegedly helping and conspiring to “dissipate” property assets held in two family trusts set up by his father for him and his five siblings in 1979 and 1980.

David Sun Tak-kei, now the director of audit, is also a defendant, having been a partner and/or chairman of Ernst and Young as well as a director of Hillhead, a trustee holding the shares in Hotung Enterprises Ltd and Hotung Investment (China) Ltd.

The two companies formed the assets of secret trusts for Eric Hotung’s children.

According to the writ obtained by The Standard’s sister publication Sing Tao Daily, CY Leung & Co’s relationship with officers of Ernst and Young – named as first defendant – and with Eric Hotung was in place by 1995.

The surveying firm had made a valuation of all Eric Hotung’s company properties under Cosmopolitan International Holdings, which were audited by Ernst and Young and Ronald Ho Yau-hoo, Eric Hotung’s nephew and an accountant at Ernst and Young, from 1972 to 2003.

Sean Hotung claims in the writ that Ronald Ho, David Sun, Winnie Ho Yuen-ki – his father’s cousin – and Hillhead “wrongfully” permitted HEL and HICL to “fraudulently dissipate, divert and or deplete the properties and assets” of the two companies, so the assets suffered a substantial reduction in value.

The properties are listed as a shop in Cheong Hong Mansion in Wan Chai, sold in 1996 for HK$19 million, and at least nine lots in Kam Tsin, Kwu Tung, sold for HK$17.5 million in 1998.

Sean Hotung says CY Leung and Co had assessed these properties, which he alleges were “gross undervalues.” But he did not discover the figures until about June this year when he was able to obtain copies of the valuations.

He also queries the apparent loss of about HK$892 million in rental income and HK$138 million from bank accounts.

Sean Hotung alleges too that Ernst and Young, its chief operating officer Marshall Byres, Ronald Ho, David Sun, Winnie Ho and Hillhead had made false declarations and false statements in various legal proceedings to stop the Hotung children from asserting their rights in assets of the trusts.

Also among the defendants are former HEL and HICL directors Frank Song Fong-tek and Ricky Ho Shu-wah plus Anthea Chan Pui-yi, Eric Hotung’s solicitor.

Sean Hotung claims he did not have access to the accounts and documents of HICL until about mid-2009 and started to discover what he alleges was a conspiracy involving the first six defendants.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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