Securities and Futures Commission v. Li Hui and Others

HCMP 896/2022

[2025] HKCFI 6449

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 896 OF 2022

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BETWEEN

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REASONS FOR DECISION

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Introduction

1.By a petition presented on 12 July 2022, the Securities and Futures Commission (“SFC”)  commenced these proceedings under section 214 of the Securities and Futures Ordinance (Cap. 571)  (“SFO”)  seeking, inter alia, disqualification orders against the 1^st to 6^th Respondents in respect of the business or affairs of National United Resources Holdings Limited (“Company”).

2.Pursuant to my Order dated 24 July 2023, a Points of Claim, which is substantially the same as the petition, was filed on 31 July 2023. On 13 May 2024, the 4^th Respondent filed his Points of Defence.

3.Subsequently, the SFC and the 4^th Respondent agreed to dispose of these proceedings by way of the Carecraft procedure[1] based on a Statement of Agreed Facts dated 28 July 2025 (“Statement of Agreed Facts”), which I have appended to these Reasons for Decision.  The Statement of Agreed Facts contains an outline of the material facts, the SFC’s case against the 4^th Respondent, the relevant mitigating factors and the agreed proposed orders.

4.Based on the facts set out in the Statement of Agreed Facts, the 4^th Respondent agrees that the business or affairs of the Company have been conducted in a manner described in sections 214(1)(a), (b), (c) and (d) of the SFO and that he should be disqualified under section 214(2)(d) of the SFO for a period of three years[2] subject to the carving out of a private company incorporated in Hong Kong, namely, Star Point Limited (“SPL”), from the disqualification order to be made against him. For this purpose, the 4^th Respondent took out a summons on 15 August 2025 seeking leave to carve out SPL from the proposed disqualification order (“Carve-Out Application”).  The SFC adopts a neutral stance to the 4^th Respondent’s Carve-Out Application.

Factual Background

5.The relevant facts have been set out in full at [9]–[65] of the Statement of Agreed Facts, which I shall not repeat here.  For present purposes, the following matters are most pertinent.

6.On 28 July 1972, the Company was incorporated in Hong Kong in the name of Success Holdings Limited.  Since its incorporation, the Company has changed its name a number of times.  On 21 January 2014, the Company changed its name to National United Resources Holdings Limited[3].

7.Since 16 November 1972, the Company has been listed on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”)  with Stock Code 254[4].

8.At all material times, the Company was an investment holding company.  The Company and its subsidiaries (together, “Group”)  principally operate in the following three business segments: (1)  resource trading business, i.e. trading of coking coal, aluminium rod and fuel oil, (2)  online platform business, i.e. provision of online platform for the trading and deferred spot delivery services of precious metal, and (3)  media and advertising business.[5]

9.NUR Clean Energy Investment Limited (“NUR Clean”, formerly Power Sky International Enterprise Limited before 11 May 2015)  is one of the Company’s wholly-owned indirect subsidiaries principally involved in the Group’s trading activities[6].

10.At all material times, the Respondents were the former officers of the Company[7]:

(1)  The 1^st to 4^th Respondents were the Company’s executive directors;

(2)  The 5^th Respondent was the company secretary, financial controller and authorised representative of the Company; and

(3)  The 6^th Respondent was the de facto and/or shadow director of the Company. He was part of the senior management of the Company and was the consultant of the Group regularly giving instructions to the staff of the Group.

11.Further, at all material times, the 1^st, 3^rd and 4^th Respondents were NUR Clean’s directors whilst the 5^th Respondent was NUR Clean’s company secretary[8].

The 2015 Transactions

12.On 25 August 2015, NUR Clean purportedly entered into two back-to-back supply and sale transactions with the following two companies (“2015 Transactions”)  [9]:

(1)  Huge Power Company Limited (“Huge Power”), for the supply of 140,000 metric tons of straight run fuel oil for USD269/metric ton from Huge Power to NUR Clean (“2015 Supply Transaction”); and

(2)  Wealthy Union Pte Limited (“Wealthy Union”), for the sale of 140,000 metric tons of straight run fuel oil for USD270/metric ton from NUR Clean to Wealthy Union (“2015 Sale Transaction”).

13.The delivery of straight run fuel oil under the 2015 Sale Transaction was purportedly supported by three bills of lading (“NUR Bills of Lading”)[10].

14.The SFC submitted that the 2015 Transactions were fictitious for, inter alia, the following reasons.

(1)  Huge Power and Wealthy Union were entities controlled by the Company and/or persons closely connected to the Group. They were not genuine counterparties to the 2015 Transactions[11].

(2)  The NUR Bills of Lading were not genuine. According to the independent inquiries conducted by the SFC with the shipper, the carrier, the shipping agent and the receiving party of the fuel oil as stated in the NUR Bills of Lading, neither the Company, Huge Power, Wealthy Union nor NUR Clean were their customers[12].

(3)  The money that NUR Clean had purportedly paid to Huge Power for the 2015 Supply Transaction was eventually returned to the Company and/or persons closely connected to the Group[13].

(4)  The money that NUR Clean had purportedly received from Wealthy Union for the 2015 Sale Transaction was eventually returned to Wealthy Union[14].

False or Misleading Statements in the 2015 Annual Results and the 2015 Annual Report

15.On 30 March 2016 and 28 April 2016, the announcement containing the annual results (“2015 Annual Results”)  and the annual report of the Group for the year ended 31 December 2015 (“2015 Annual Report”)  were published respectively.  The 2015 audited financial statements were incorporated in the 2015 Annual Report for publication[15].

16.The 2015 Annual Results and the 2015 Annual Report contained, inter alia, the following statements (“Statements”)  [16].

(1)  The Group “expanded its resources trading business in the second half of 2015, which now includes resources such as coking coal, aluminium rod and fuel oil”.

(2)  The Group recorded a total revenue of HKD382,789,000 in 2015 of which HKD337,729,000 was derived from “resources trading” and HKD304,971,000 was derived from a customer located in Singapore who had individually contributed 10% or more to the Group’s revenue in that year.

(3)  Trade receivables amounted to approximately HKD352,322,000, representing an increase of approximately 901.33% when compared to HKD32,489,000 as at 31 December 2014.  “This dramatical increase was mainly due to significant trading transactions in resources commodities occurred [sic] in the fourth quarter of 2015”.

17.The SFC submitted that, as a result of the fictitious nature of the 2015 Transactions, the Statements were in fact false or misleading in a number of aspects and did not reflect the true state of affairs of the Company[17]:

(1)  The revenue for 2015 was purportedly derived from the 2015 Transactions;

(2)  The customer who had individually contributed 10% or more to the Group’s revenue in 2015 was Wealthy Union, which was an entity controlled by the Company or persons closely connected to the Group; and

(3)  In reality, the Group did not expand its resources trading business in the second half of 2015, or conduct significant trading transactions in resources commodities in the fourth quarter of 2015.

Applicable Principles to Section 214 of the SFO

18.I have recently summarised the applicable principles to the Carecraft procedure in SFC v Superb Summit Holdings Ltd[18]. The following three conditions must be satisfied before relief under section 214(2) of the SFO can be granted, namely (1)  the corporation in question is or was a listed corporation, (2)  the business or affairs complained of is that of the corporation, and (3)  the conduct complained of falls within one or more heads of misconduct specified in sections 214(1)(a) to (d) of the SFO.

19.Regarding the first condition, “listed” means “listed on a recognised stock market”[19].

20.Regarding the second condition, the conduct complained of can be that of the listed company and/or the subsidiaries directed by or under the control of such listed company.  The Court will take a realistic approach in determining whether the affairs of the subsidiary are the affairs of the holding company[20].

21.In respect of the third condition:

(1)  “Oppressive” under section 214(1)(a) of the SFO has been described as tyrannical conduct, abuse of power or a visible departure from the standards of fair dealing. It typically involves an abuse of one’s rights or powers as a majority to procure the occurrence or non-occurrence of events unfair or prejudicial to the complainants who, by reason of their minority status, can only submit;

(2)  As regards section 214(1)(b) of the SFO:

(a)  “Defalcation” is defined as “misapplication, including misappropriation, of any property”. Misapplication means the disposition of the company’s property which the company or the board is forbidden, incompetent or unauthorised to make, or which is carried out by the directors in breach of their duties in good faith to promote the success of the company and for proper purposes;

(b)  “Misfeasance” is defined as “the performance of an otherwise lawful act in a wrongful manner”. The notion of misfeasance overlaps with that of breach of fiduciary duty and seemingly covers a wide range of conduct.  In particular, it covers a director’s breach of his duties to exercise reasonable care and diligence in his management of the company, and to act in good faith in the best interests of the company;

(c)  The words “other misconduct” connote improper or wrong behaviour of mismanagement, or culpable neglect of duties.  This term is something of a “belt and braces exercise”, and is intended to cover the “widest range of possible misconduct” including a director’s breach of the duty to exercise reasonable skill, care and diligence in the management of a company;

(3)  Regarding section 214(1)(c) of the SFO, it can be complementary to the other subsections and covers situations such as (a)  the making of misleading or false announcements and (b)  situations requiring publication of periodic financial statements and announcements, as members are entitled to expect the listed company to provide complete and accurate information in respect of such matters; and

(4)  As regards section 214(1)(d) of the SFO, the conduct in question does not have to be wrong per se. “Unfairly prejudicial” conduct covers a range of conduct, from fraud at the one end to neglect or inaction on the part of those to whom the affairs of a company are entrusted on the other end.  The question to be asked in such circumstances is whether the conduct concerned is that which can be expected from the managers of the company to whom those affairs have been entrusted.  It covers the case where the listed company has (a)  failed to comply with the disclosure requirements, (b)  made misleading or false announcements and (c)  failed to publish periodic financial statements and announcements, as members are entitled to expect the listed company to provide complete and accurate information in respect of such matters.

Application of Section 214 of the SFO

22.On the basis of the Statement of Agreed Facts, I am satisfied that the conditions for granting relief under section 214(2) of the SFO are met.

23.The first condition is satisfied since the Company has been listed on the Main Board of the SEHK since 16 November 1972.

24.The second condition is satisfied since the conduct complained of by the SFC and summarised at [12]–[17] above concern the business or affairs of the Company and its subsidiary, namely, NUR Clean, which was under the Company’s control.

25.In respect of the third condition, based on the Statement of Agreed Facts, I am satisfied that the conduct complained of falls within sections 214(1)(a), (b), (c) and/or (d) of the SFO.

(1)  As to section 214(1)(a) of the SFO, conducting the business or affairs of the Company in the manner described at [12]–-[17] above prevented its shareholders from knowing the true position of the Company, namely, being improperly utilised for entering into fictitious transactions with allegedly genuine counterparties, such that the Company’s business or affairs are said to have been conducted in a manner which was oppressive to its members.

(2)  Regarding section 214(1)(b) of the SFO:

(a)  I accept the SFC’s submission that Huge Power was not a genuine counterparty to the 2015 Transactions.  Thus, the funds which were disguised as purchase money for the 2015 Supply Transaction should not have been paid out of the Company to Huge Power.  The said payment constituted misapplication of the Company’s funds and amounted to “defalcation”;

(b)  “Fraud” was involved when the Company entered into the fictitious 2015 Transactions with allegedly genuine counterparties as they were, in fact, controlled by the Company and its related entities; and

(c)  “Misfeasance or other misconduct” were involved because the fictitious 2015 Transactions were approved in breach of the relevant Respondent directors’ duties.

(3)  As to section 214(1)(c) of the SFO, I accept the SFC’s submission that the Statements were false and/or misleading.  As a result, members of the Company were not given all the information with respect to its business or affairs that they might reasonably expect, namely, the true nature of the 2015 Transactions and the Company’s control over the counterparties to the 2015 Transactions, i.e. Huge Power and Wealthy Union.

(4)  Regarding section 214(1)(d) of the SFO, the business or affairs of the Company were conducted in a manner which was unfairly prejudicial to its members. The Statements, which were included in the 2015 Annual Results and the 2015 Annual Report, were false and/or misleading such that its shareholders were prevented from knowing the true position of the Company.

Applicable Principles to Disqualification Order

26.In SFC v Superb Summit Holdings Ltd[21], I have also summarised the applicable principles as to the Court’s determination of the appropriate period of disqualification.  In gist:

(1)  The power to determine the appropriate period of disqualification is a discretionary power.  It will be necessary for the Court to be satisfied that the director’s involvement in the relevant matter involves a sufficiently serious failure to satisfy his duties that some period of disqualification is justified and fair;

(2)  The objectives of a disqualification order are twofold: (a)  to protect the public and (b)  as a general deterrence. The former is recognised to be the primary purpose.  It is of the greatest importance that any individual who undertakes the statutory and fiduciary obligations of being a company director should realise that these are personal responsibilities;

(3)  In deciding whether to make a disqualification order, the Court adopts a broad-brush approach.  Earlier decided cases are of limited assistance to the exercise of the Court’s discretion;

(4)  The Court must be independently satisfied, based on the agreed facts, that the business or affairs of the Company have been conducted in a manner described in section 214(1)(a), (b), (c) or (d) of the SFO and, if so satisfied, determine the scope and duration of the disqualification order;

(5)  The Court is not bound by the agreement reached between the parties.  However, in practice, the Court is likely to be guided by the agreement that the SFC, as a responsible regulator, has reached;

(6)  The period of disqualification must reflect the gravity of the offence.  The period of disqualification may be fixed by starting with an assessment of the correct period to fit the gravity of the conduct, and a discount is then given for mitigating factors;

(7)  Generally speaking, the Court has divided the maximum period of disqualification of 15 years into three brackets, though these are only guides and not straitjackets:

(a)  The top bracket, of disqualification for over 10 years, for particularly serious cases;

(b)  The middle bracket, of disqualification for between 6 to 10 years, for cases which, although serious, are not so serious so as to merit a period of disqualification in the top bracket;

(c)  The minimum bracket, of disqualification for up to 5 years, for relatively less serious cases; and

(8)  The Court will have regard to a wide range of considerations, including the age, state of health and character of the offender, the nature of the breaches, the honesty and competence of the offender, the length of time he has been in jeopardy, whether he appreciates and/or admits the breaches, his general conduct before and after the offence, the periods of disqualification of his co-directors that may have been ordered by other courts, and the interest of shareholders, creditors and employees.

27.Recently, I emphasised in SFC v Lu Ying & Ors[22]that while the Court is not bound by the agreement reached between the parties, it will not interfere as long as the disqualification periods are within the range that the Court thinks is reasonable, even if the Court might have imposed a slightly different period of disqualification absent an agreement.

Disqualification Order

28.Mr Norman Nip SC[23], leading counsel for the SFC, submitted that the SFC’s case against the 4^th Respondent is one of negligence and breach of directors’ duties.

29.First, it is the SFC’s case that the 4^th Respondent was negligent in committing NUR Clean to the 2015 Transactions.[24]

(1)  The standard expected of the 4^th Respondent as a director of the Company should be considered in view of his accounting background as well as his extensive experience as financial officers and/or company secretaries in other listed companies[25].

(2)  Together with the 2^nd and the 5^th Respondents, the 4^th Respondent was in control of the Company’s cash flow.  The 4^th Respondent, without convening a board meeting, approved seven payment requests totalling HKD302.3 million from the Company to NUR Clean for the purported settlement of the 2015 Supply Transaction.

(3)  Had the 4^th Respondent scrutinised the 2015 Supply Transaction before approving the seven payment requests, he would have noticed that there was little commercial sense in committing NUR Clean to the 2015 Transactions.  For one, the profit margin for the 2015 Sale Transaction was extraordinarily thin, namely, only about 0.88%.  For another, there was a serious mismatch of credit period between the purported customer (180 days)  and the purported supplier (90 days)  under the 2015 Supply Transaction and the 2015 Sale Transaction.

(4)  Had the 4^th Respondent discharged his duty as a reasonably prudent director of the Company, he would have inquired into the true nature of the 2015 Transactions and the purpose of the fund flows from the Company to NUR Clean for the 2015 Supply Transaction.

30.Second, it is the SFC’s case that the 4^th Respondent wrongfully allowed or did not prevent the Statements, which contained false or misleading information, to be published by (1)  approving the publication of the Statements at a board meeting held on 30 March 2016, or (2)  omitting to provide material information regarding the true state of affairs of the 2015 Transactions to the board for consideration[26].

31.A number of mitigating factors have been agreed between the SFC and the 4^th Respondent[27]:

(1)  The 4^th Respondent has been cooperative in relation to these proceedings with the SFC and accepts liability;

(2)  The 4^th Respondent has adopted a reasonable course of action in agreeing to conclude these proceedings by way of the Carecraft procedure, which would save the time and costs of the SFC as well as the Court;

(3)  There was no dishonesty or lack of integrity on the part of the 4^th Respondent;

(4)  The 4^th Respondent has not made any personal gains from the misconduct stipulated above; and

(5)  Except for these proceedings, the 4^th Respondent has never been the subject of any proceedings commenced under the SFO.

32.For his part, Mr Nip submitted that the gravity of the 4^th Respondent’s conduct falls within the middle of the minimum bracket and warrants a disqualification period of three years.  In so doing, Mr Nip drew to my attention another case of negligence and breach of directors’ duties: SFC v Au Yeung Ho Yin[28].  The relevant complaint against the respondent in that case, who was an executive director of a listed company, was that he had failed to take reasonable steps to, inter alia, ascertain the basis for certain transfers made by the listed company to another company, cause an investigation to be conducted, and refer the matter to the board for consideration in circumstances where the transfers might have involved unauthorised misappropriation or misapplication of the Company’s monies.  In that case, Ng J agreed with the SFC that, in the absence of any allegation of dishonesty, a three-year disqualification period would be appropriate to reflect the degree of negligence on the part of the respondent and to take into account the mitigating circumstances, namely, that the respondent was deliberately withheld from the defalcation of the listed company’s funds, that he had not made any personal gains from the misconduct, and that he had been cooperative with the SFC and accepted liability.

33.Mr Kwan Ping Kan[29], leading counsel for the 4^th Respondent, agreed that a disqualification period of three years would be appropriate in principle subject to the Carve-Out Application sought by the 4^th Respondent in respect of SPL.  In addition to the above mitigating factors, Mr Kwan submitted that:

(1)  The SFC did not allege that the 4^th Respondent had primary involvement in the detailed day-to-day operations of the Company’s subsidiaries, including NUR Clean.  The 4^th Respondent’s role, Mr Kwan contended, was not central to the orchestration of the fictitious fund flows or counterparties.  Rather, the 4^th Respondent’s role was limited to approving payments at the parent level, as demonstrated by the fact that he ceased to be a director of NUR Clean before the 2015 Transactions were executed; and

(2)  The 4^th Respondent’s cooperation with the SFC and acceptance of liability reflect a genuine recognition of the seriousness of his misconduct.  There is no evidence to suggest that the 4^th Respondent has reoffended, or that he poses any ongoing risk to public interest.  In sum, the 4^th Respondent, as an experienced accountant, is likely to have found these proceedings a sobering experience.

34.The 4^th Respondent also agreed to pay to the SFC costs in the agreed sum of HKD420,000.00 as full and final settlement of the SFC’s costs in these proceedings within 28 days from the date of the Order[30].

35.Having regard to the above matters, I accept that the conduct of the 4^th Respondent is sufficiently serious to fall within the middle of the minimum bracket.  A disqualification period of three years is commensurate with the gravity of the 4^th Respondent’s conduct and gives appropriate regard to the mitigating factors.

The 4^th Respondent’s Carve-Out Application

36.The approach to be taken by the Court in dealing with carve-out applications is set out in SFC v Yu Longrui & Ors[31].

(1)  The Court has power to grant disqualification orders that apply to all or such companies as it considers appropriate, including unlisted companies.

(2)  So long as the conduct in question is honest and not lacking in commercial integrity, even if the director falls short of the standard of competence which might be expected of a director of a publicly listed company, it does not necessarily follow that the director is unfit to be concerned in the management of any company, however small, private and simple its affairs may be.

(3)  The fact that misfeasance has been committed in relation to a listed company does not mean that only listed companies and their shareholders need protection from the person concerned. The impugned conduct may be such as to show that the respondent is unfit to be a director of companies with the attendant duties and responsibilities generally.

(4)  The following principles borrowed from the Australian Court in deciding cases under section 206G(1) of Corporation Act 2001 are equally applicable.

(a)  The applicant bears the onus of establishing that the court should make an exception to the legislative policy underlying the prohibition.

(b)  That legislative policy is one of protecting the public, not one of punishing the offender.

(c)  Another objective is to deter others from engaging in conduct of the particular kind in question.

(d)  A further objective is the more general one of deterring others from abusing the corporate structure to the disadvantage of investors, shareholders and others dealing with a company.

(e)  The prohibition itself contemplates that there will be hardship to the offender.  Therefore, hardship to the offender alone is not a persuasive ground for the granting of leave.

(f)  The court in exercising its discretion will have regard to the nature of the offence of which the applicant has been convicted, the nature of his involvement and the general character of the applicant, including his conduct in the intervening period since he was removed from the board and from management.  Where the applicant seeks leave to become a director and to take part in the management of particular companies, the court will consider the structure of those companies, the nature of their businesses and the interests of their shareholders, creditors and employees.  One matter to be considered will be the assessment of any risks to those persons or to the public which may appear to be involved in the applicant’s assuming positions on the board or in management.

37.This Court has, on multiple occasions, recognised that carve-outs may be appropriate where the company in question is small, private and not related to the misconduct[32].  In the circumstances, I am satisfied that the carving out of SPL is appropriate bearing in mind that:

(1)  SPL is a private, family-owned and property-holding company incorporated in May 2008.  The 4^th Respondent is the sole director and minority shareholder (2%)  whilst his wife is the company secretary and majority shareholder (98%);

(2)  SPL’s sole asset is a residential property at South Horizons (“Property”), which serves as the family home for the 4^th Respondent and his wife.  Apart from the mortgages secured on the Property, SPL has no liabilities; and

(3)  SIL has no employees, no business operations and no connection with the Company or the Group.

38.I also accept Mr Kwan’s submission that the gravity of the 4^th Respondent’s conduct, which is towards the lower end of the spectrum, is a matter that this Court can properly take into account in deciding whether to grant the Carve-Out Application.  On the whole, I am satisfied that the carving out of SPL would not be against public interest.  The important purpose of protecting the public and the deterrent function of disqualification could still be achieved notwithstanding the carving out.

39.Accordingly, I made an order in terms of the draft order submitted to this Court subject to the minor amendments discussed with counsel at the hearing.

Mr Norman Nip SC and Ms Kelly Shum, instructed by Securities and Futures Commission, for the Petitioner

Mr Kwan Ping Kan and Mr Jason PH Wong, instructed by Li & Partners, for the 4^th Respondent

STATEMENT OF FACTS NOT IN DISPUTE FOR THE PURPOSES OF A CARECRAFT SETTLEMENT BETWEEN THE PETITIONER AND THE 4^TH RESPONDENT

A.  INTRODUCTION

1.  On 12 July 2022, the Securities and Futures Commission (“Petitioner”)  issued proceedings under section 214 of the Securities and Futures Ordinance (Cap. 571)  (“SFO”)  seeking disqualification orders against the following 6 Respondents:-

(a)  Li Hui (“LI HUI”), the 1^st Respondent;

(b)  Feng Yongming (“FENG”), the 2^nd Respondent;

(c)  Tian Songlin (“TIAN”), the 3^rd Respondent;

(d)  Lo Ka Wai (“LO”), the 4^th Respondent;

(e)  Lam Man Kit (“LAM”), the 5^th Respondent; and

(f)  Li Tao (“LI TAO”), the 6^th Respondent

in respect of their conduct of the business or affairs of National United Resources Holdings Limited (the “Company”).

2.  Subject to the approval of this Court, the Petitioner and the 4^th Respondent consent to the disposal of these proceedings against the 4^th Respondent by way of the summary procedure sanctioned in Re Carecraft Construction Co Limited [1994] 1 WLR 172 (“Carecraft Procedure”), as clarified by the English Court of Appeal in Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569 and as adopted by this Court in a number of cases including but not limited to Re Riverhill Holdings Ltd [2007] 4 HKLRD 46, Securities and Futures Commission v Fung Chiu and Others [2009] 2 HKC 19, Securities and Futures Commission v Shum Ka Sang Charlie and Shen Yi (HCMP 1014/2008, unrep, 22.05.2009), Re Styland Holdings Ltd [2011] 1 HKLRD 96, Securities and Futures Commission v Cheung Keng Ching and Others (HCMP 1869/2008, unrep, 18.03.2010)  and Securities and Futures Commission v Kwok Wing & Others (HCMP 3392/2013, unrep, 27.03.2015)  in respect of proceedings under section 214 of the SFO.

3.  This Statement is produced in order to set out the material facts relied upon by the Petitioner in these proceedings that are not disputed by the 4^th Respondent, on the basis that the proceedings against the 4^th Respondent may be dealt with and disposed of by this Court by way of the Carecraft Procedure.

4.  Solely for the purpose of resolving these proceedings against the 4^th Respondent by way of the Carecraft Procedure, and by reference to the facts set out in Section B below (which the 4^th Respondent admits and accepts), the 4^th Respondent accepts that during the relevant period from around June 2015 to April 2016, the business or affairs of the Company, for which he, as an Executive Director of the Company, was responsible, have been conducted in a manner described in section 214(1)(a)  to (d)  of the SFO, namely:

(a)  oppressive to its members or any part of its members;

(b)  involving defalcation, fraud, misfeasance or other misconduct towards the Company or its members or any part of its members;

(c)  resulting in its members or any part of its members not having been given all the information with respect to its business or affairs that they might reasonably expect; and

(d)  unfairly prejudicial to its members or any part of its members.

5.  On the basis of the facts set out in Section B below and the agreed mitigating factors set out in Section C below, the Petitioner and the 4^th Respondent agree, and the 4^th Respondent is prepared to accept, that it would be appropriate for a disqualification order to be made against him under section 214(2)(d)  of the SFO under which he shall not for a period of 3 years, without the leave of the Court:

(a)  be, or continue to be, a director, liquidator, or receiver or manager of the property or business, of any listed or unlisted corporation[33] in Hong Kong; or

(b)  in any way, directly or indirectly be concerned, or take part, in the management of any listed or unlisted corporation[34] in Hong Kong.

6.  In the event of a disqualification order being made against the 4^th Respondent by reference to this Statement:

(a)  the Petitioner and the 4^th Respondent agree that they will jointly apply to this Court for a direction that this Statement be annexed to a judgment of this Court; and

(b)  the Petitioner reserves the right to refer to this Statement for all purposes connected with or ancillary to these proceedings including, but not limited to, the continuation of these proceedings against the other Respondents.

7.  The Petitioner and the 4^th Respondent agree that in the event this Court for whatever reason is of the view that these proceedings shall not be dealt with by way of the Carecraft Procedure or that a full hearing is appropriate, no admission or concession by either the Petitioner or the 4^th Respondent nor any proposal for disqualification or the period of disqualification herein referred to or liability to pay costs shall be referred to or relied upon by either party at any subsequent hearing in these proceedings without the prior written consent of both parties.

B.  Facts not in dispute

8.  The structure of Section B of this Statement is as follows:-

(a)  Sections B1 to B2 set out the background information relating to the Company and its management;

(b)  Sections B3 to B5 set out the facts relied upon by the Petitioner in support of its case that the business or affairs of the Company have been conducted in such manner described in sections 214(1)(a), (b), (c)  and (d)  of the SFO; and

(c)  Sections B6 to B7 set out the facts relied upon by the Petitioner in support of its case that the 4^th Respondent was responsible for the aforesaid conduct of business or affairs of the Company.

B1.  The Company

Corporate Background and Management

9.  The Company was incorporated on 28 July 1972 in Hong Kong and has been listed on the Main Board of the Stock Exchange of Hong Kong (the “HKSE”)  with Stock Code No. 254 since 16 November 1972. At the time when the Company was incorporated, it was named Success Holdings Limited.  The Company has changed its name several times since its incorporation.  On 21 January 2014, the Company changed its name to National United Resources Holdings Limited.

10.  At all material times:

(a)  the registered office of the Company was Suite 5208, 52/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong (“Company’s Office”).  On 11 September 2020, the Company’s registered office was changed to Suites 1106-08, 11^th Floor, The Chinese Bank Building, 61-65 Des Voeux Road Central, Hong Kong;

(b)  the Company was an investment holding company; and

(c)  the Company and its subsidiaries (together, the “Group”)  principally operate in three business segments, namely the resources trading business (i.e. trading of coking coal, aluminium rod and fuel oil), the online platform business (i.e. provision of online platform for the trading and deferred spot delivery services of precious metals)  and the media and advertising business.

11.  NUR Clean Energy Investment Limited (“NUR Clean”, formerly Power Sky International Enterprise Limited before 11 May 2015)  and First Concept Industrial Group Limited (“First Concept”, formerly First Concept Logistics Limited before 29 June 2015)  are the Company’s wholly-owned indirect subsidiaries principally involved in the Group’s trading activities.

B2.  The Respondents

12.  The 1^st Respondent, LI HUI:-

(a)  joined the Company in 2013 and was an executive director of the Company from 17 July 2015 to 19 September 2016;

(b)  was a director of NUR Clean from 8 May 2015 to 2 August 2016;

(c)  was a director of First Concept from 13 February 2012 to 2 August 2016; and

(d)  was appointed as the General Manager of 北京創先智尚資產管理有限公司, a wholly owned PRC subsidiary of the Company (the “Beijing Subsidiary”), on 20 December 2013.

13.  The 2^nd Respondent, FENG, was an executive director of the Company from 1 September 2014 to 19 May 2017.

14.  The 3^rd Respondent, TIAN:-

(a)  joined the Company as vice president in 2014;

(b)  was an executive director of the Company from 17 July 2015 to 10 November 2017; and

(c)  was a director of NUR Clean from 26 May 2015 to 10 November 2017.

15.  The 4^th Respondent, LO, also known as Eddy Lo, was:-

(a)  an executive director of the Company from 17 October 2013 to 19 May 2017; and

(b)  a director of NUR Clean from 22 January 2014 to 8 May 2015.

16.  The 5^th Respondent, LAM, also known as Jason Lam, was:-

(a)  the company secretary of the Company from 4 December 2013 to 25 April 2017;

(b)  appointed as the financial controller of the Company on 25 November 2013;

(c)  the company secretary of NUR Clean from 22 January 2014 to 20 July 2016; and

(d)  the authorized representative of the Company from 12 December 2013 to 25 April 2017.

17.  The 6^th Respondent, LI TAO, was at all material times the shadow controller and director of the Company.  He was part of the senior management of the Company.  He had an office in the Company’s offices in Beijing and was known to the staff as the “Big Boss” (“大老闆”).  He was the Consultant of the Group and regularly gave instructions to staff of the Company and its subsidiaries (including in particular Gary Chan, the Finance Manager of First Concept, as referred to in paragraph 32(b)  below).

B3.  The 2015 Transactions

18.  On 25 August 2015, NUR Clean purportedly entered into two back-to-back supply and sale transactions (together, the “2015 Transactions”)  with:

(a)  Huge Power Company Limited (“Huge Power”), for the supply of 140,000 metric tons of straight run fuel oil for USD$269/metric ton from Huge Power to NUR Clean (the “2015 Supply Transaction”); and

(b)  Wealthy Union Pte Ltd (“Wealthy Union”), for the sale of 140,000 metric tons of straight run fuel oil for US$270/metric ton from NUR Clean to Wealthy Union (the “2015 Sale Transaction”).

B3.1  The 2015 Supply Transaction

19.  The 2015 Supply Transaction was purportedly supported by a document entitled “Sales Confirmation” dated 25 August 2015 with reference “HP201508-01TT-NC” signed between Huge Power as the seller and NUR Clean as the buyer (the “Supply Contract”).

20.  The Supply Contract was addressed to TIAN’s attention and signed by LI HUI on behalf of NUR Clean.

21.  According to the Supply Contract:

(a)  Huge Power agreed to sell to NUR Clean 140,000 metric tonnes (+/- 5%)  of straight run fuel oil meeting certain specifications as specified under Clause 4 of the Supply Contract (Clauses 1-5).

(b)  The fuel oil would be delivered in “ONE LOT AS FULL CARGO, DES ONE SAFE PORT/ONE SAFE BERTH, PACIFIC AREA LIGHTERING” and that it would be delivered during the period from 10 September 2015 to 10 October 2015 (Clause 6).

(c)  The unit price is US$269 per metric ton (Clause 7).

(d)  NUR Clean agreed to pay Huge Power in full within 90 days after presentation of Huge Power’s commercial invoice.  Payment was to be effected against “presentation of [Huge Power]’s commercial invoice and standard shipping documents including full set 3/3 original bill of lading(s)” (Clause 8).

22.  A total of 7 payments in the aggregate amount of HK$302,285,021.49 were made by NUR Clean to Huge Power in purported settlement of an invoice in the amount of US$38,954,059.47 (equivalent to HK$302,283,501 according to the Applied Exchange Rate of HK$7.76 to US$1 as set out in Clause 7 of the Supply Contract and the invoice itself)  issued by Huge Power dated 21 September 2015 in respect of the 2015 Supply Transaction (Invoice No.: HP201508-01TT-NC).  Net of bank charges, a total amount of HK$302,283,501.49 was received by Huge Power.  The details of these remittance sums are as follows:

B3.2  The 2015 Sale Transaction

23.  The 2015 Sale Transaction was purportedly supported by a document entitled “Sales Confirmation” dated 25 August 2015 with reference “NC201508-01TT-WU” signed between Wealthy Union as the buyer and NUR Clean as the seller (the “Sales Contract”).

24.  The Sales Contract was signed by LI HUI on behalf of NUR Clean.

25.  According to the Sales Contract:

(a)  NUR Clean agreed to sell to Wealthy Union 140,000 metric tonnes (+/- 5%)  of straight run fuel oil meeting certain specifications as specified under Clause 4 of the Sales Contract (Clauses 1-5).

(b)  The fuel oil would be delivered in “ONE LOT AS FULL CARGO, DES ONE SAFE PORT/ONE SAFE BERTH, PACIFIC AREA LIGHTERING” and that it would be delivered during the period from 10 September 2015 to 10 October 2015 (Clause 6).

(c)  The unit price is US$270 per metric ton (Clause 7).

(d)   Wealthy Union agreed to pay NUR Clean in full within 180 days after presentation of NUR Clean’s commercial invoice. Payment was to be effected against “PRESENTATION OF [NUR CLEAN]’S COMMERCIAL INVOICE AND STANDARD SHIPPING DOCUMENTS INCLUDING FULL SET 3/3 ORIGINAL BILL OF LADING(S)” (Clause 8).

26.  The delivery of straight run fuel oil was purportedly supported by three bills of lading (together, the “NUR Bills of Lading”), namely:

(a)  a Tanker Bill of Lading (No. PAL/S-1)  dated 12 September 2015 for the shipment of 144,810.630 metric tons of RMG 380 fuel oil (“NUR B/L 1”);

(b)  a bill of lading (SCAC Code: PPDPALIA15009A)  dated 25 August 2015 for the shipment of 43,376.306 metric tons of fuel oil (“NUR B/L 2”); and

(c)  a bill of lading (SCAC Code: PPDPALIA15009)  dated 21 August 2015 for the shipment of 9,885.554 metric tons of fuel oil (“NUR B/L 3”).

27.  On 21 September 2015, NUR Clean purportedly issued a commercial invoice to Wealthy Union (“NUR Clean Commercial Invoice”).

(a)  The NUR Clean Commercial Invoice was for the payment of US$39,098,870.10 (equivalent to HK$303,407,231.976 according to the Applied Exchange Rate of HK$7.76 to US$1 as set out in Clause 7 of the Sale Contract and the invoice itself)  for 144,810.630 metric tons of straight run fuel oil.

(b)  The due date of payment of the NUR Clean Commercial Invoice was stated to be 19 March 2016.

(c)  The NUR Clean Commercial Invoice was signed by LI HUI.

28.  A total of 6 payments in the aggregate amount of HK$149,507,231.98 were made by Wealthy Union to NUR Clean in purported settlement of the NUR Clean Commercial Invoice in respect of the 2015 Sale Transaction.  Net of bank charges, a total amount of HK$149,506,141.98 was received by NUR Clean.  The details of these remittance sums are as follows:

29.  In addition to the payment of HK$149,506,141.98 received directly by NUR Clean as set out in paragraph 28 above, between 18 October 2016 and 20 October 2016, NUR Clean also received three payments totalling RMB75,000,000 through its wholly-owned subsidiary 遐興（上海）投資管理有限公司from a北京京濱投资管理有限公司 (on behalf of Wealthy Union)  in purported settlement of the NUR Clean Commercial Invoice. Details of the three payments are as follows:

30.  In the premises, NUR Clean had received a total of HK$149,506,141.98 and RMB 75,000,000 from Wealthy Union in purported settlement of the NUR Clean Commercial Invoice in respect of the 2015 Sale Transaction.

B4.  Fictitiousness of the 2015 Transactions

31.  By reason of the matters set out in paragraphs 32 to 51 below, it is the Petitioner’s case that the 2015 Transactions are fictitious.

B4.1  Huge Power is not a genuine counterparty

32.  By reason of the following, Huge Power is an entity controlled by the Company or persons closely connected to the Company or its subsidiaries:-

(a)  Huge Power was incorporated in Macau on 28 July 2015, less than one month before NUR Clean and Huge Power purportedly entered into the Supply Contract on 25 August 2015.

(b)  The instruction to incorporate Huge Power and to address the invoice for incorporating Huge Power to First Concept (instead of to Huge Power)  was given to the company secretary of Huge Power, Keng Ou Secretarial Service Limited, in June 2015 by one Chan Chon Hong Gary (“Gary Chan”).  Gary Chan was the Finance Manager of First Concept, who was accustomed to act in accordance with the directions or the instructions of LI HUI and LI TAO.

(c)  The Petitioner found the original passports of the two registered directors and shareholders of Huge Power, namely Wang Na (“Wang Na”)  and Lan Mu (“Lan Mu”), on the desk of Feng Tao during a search operation on 14 June 2016 at the Company’s Office (the “Search Operation”).  Feng Tao was a director and deputy general manager of First Concept who was accustomed to act in accordance with the directions or the instructions of LI HUI and LI TAO.

(d)  The Petitioner also found the business registration and tax declaration documents of Huge Power as well as some contractual documents between Huge Power and other third parties at the Company’s Office during the Search Operation.

(e)  According to Wang Na, she was instructed by Feng Tao to set up Huge Power.  She did not know what kind of business Huge Power was engaged in.  She had not seen the Supply Contract or any other contractual documents entered into between Huge Power and other third parties; and she gave her original passport to Feng Tao for opening securities accounts for Huge Power.

33.  In the premises, Huge Power is an entity controlled by the Company or persons closely connected to the Company or its subsidiaries and is not a genuine counterparty to the 2015 Supply Transaction.

B4.2  Wealthy Union is not a genuine counterparty

34.  By reason of the following, Wealthy Union is an entity controlled by the Company or persons closely connected to the Company or its subsidiaries:-

(a)  Wealthy Union was incorporated in Singapore on 28 August 2015, which was 3 days after NUR Clean and Wealthy Union had purportedly entered into the Sales Contract on 25 August 2015.  It was struck off by the Accounting and Corporate Regulatory Authority in Singapore on 5 April 2018.

(b)  The instruction to incorporate Wealthy Union and to address the invoice for incorporating Wealthy Union to First Concept (instead of to Wealthy Union)  was given by Gary Chan to the company secretary of Wealthy Union, CS Corporate & Advisory Services Pte Limited, on 21 July 2015.

(c)  At all material times, the sole shareholder and one of the two directors of Wealthy Union was one Chu Wenyao (“Chu Wenyao”).  The other director of Wealthy Union was one Wang Fang from the company secretary of Wealthy Union, i.e. CS Corporate & Advisory Services Pte Limited.  Chu Wenyao and Feng Tao, director and deputy general manager of First Concept, shared the same contact number (86-135-1082-5210).

(d)  The Petitioner found some processed bank remittance forms on Gary Chan’s desk at the Company’s Office during the Search Operation showing that the bank remittance forms for the sum of HK$124 million were submitted to the OCBC Bank in Singapore by Gary Chan on behalf of Wealthy Union between 16 and 23 March 2015 in purported settlement of the 2015 Sale Transaction.

(e)  The Petitioner also found pre-signed bank remittance forms of Wealthy Union containing Chu Wenyao’s signature in the drawers of Gary Chan’s desk at the Company’s Office during the Search Operation.

(f)  The email account of Wealthy Union ([email protected])  was created via a fixed IP address (210.3.86.106)  at the Company’s Office on 11 March 2016.

35.  In the premises, Wealthy Union was an entity controlled by the Company or persons closely connected to the Company or its subsidiaries and was not a genuine counterparty to the 2015 Sale Transaction.

B4.3  The NUR Bills of Lading are not genuine

B4.3.1 Independent enquiry with the shipper

36.  According to the NUR Bills of Lading, the shipper was PMI Trading Limited (“PMI”).

37.  However, according to the information provided by PMI to the Petitioner, PMI did not order the shipment of fuel oil stated on the NUR Bills of Lading.  Instead, PMI had ordered a different shipment of fuel oil, particulars of which were stated in a different set of bills of lading (“PMI Bills of Lading”).

38.  There are substantial discrepancies between the 2 sets of Bills of Lading.  The differences between the NUR Bills of Lading and the PMI Bills of Lading are set out below:

39.  PMI confirmed with the Petitioner that none of NUR, NUR Clean, Wealthy Union and Huge Power was an actual customer of PMI.

B4.3.2 Independent enquiry with the carrier

40.  On the face of NUR B/L 2 and NUR B/L3, the fuel oil was transported on a vessel called “M. T. ALIAKMON”.

41.  Upon the enquiry of the Petitioner, Pleiades Shipping Agents S.A. (“Pleiades”), the manager and owner of “M. T. ALIAKMON”, confirmed that it did not ship the fuel oil as stated on NUR B/L 2 and NUR B/L 3.

42.  Pleiades provided the Petitioner with two bills of lading showing the shipments that “M. T. ALIAKMON” actually carried (“Pleiades Bills of Lading”).  The Pleiades Bills of Lading match with the PMI Bills of Lading (but not the NUR Bills of Lading)  in terms of the quantity of the goods and destination of shipment.

B4.3.3 Independent enquiry with the shipping agent

43.  On the face of NUR B/L 1, the shipping agent was Transmarine Navigation Corporation (“TNC”).

44.  Upon the enquiry of the Petitioner, TNC confirmed that:

(a)  Notwithstanding that NUR B/L 1 purported to contain a signature from TNC, it was not a document prepared by TNC.

(b)  NUR B/L 1 is not found in TNC’s files after a thorough review.

(c)  TNC did not have any communications with the Company, Wealthy Union, or Huge Power for the vessel’s loading and did not have any bill of lading copies related to these companies.

45.  TNC provided the Petitioner with the Tanker Bill of Lading which they had actually prepared upon PMI’s instructions (“Transmarine Bill of Lading”).  The contents of the Transmarine Bill of Lading match with that of the PMI Bills of Lading.

46.  According to TNC, the actual shipment was delivered to Zhoushan, China and Tanjung Pelepas, Malaysia.

(a)  TNC received from PMI a copy of a Letter of Indemnity (“LOI”)  on 5 October 2015 at 10:30 am in order that the vessel may discharge part of the cargo in China and part of the cargo in Malaysia.

(b)  In the LOI, the receivers listed for Zhoushan, China were Shenzhen Brightoil Group Co., Ltd (“Shenzhen Brightoil”)  and the receivers for Tanjung Pelepas, Malaysia were SK Energy International Pte Ltd (“SK Energy”).

B4.3.4 Independent enquiry with the receiving party of the fuel oil

47.  Shenzhen Brightoil confirmed with the Petitioner that:

(a)  Between 7 and 8 October 2015, Shenzhen Brightoil received delivery of 56,861.732 metric tons of RMK 500 fuel oil from “SONANGOL KALANDULA” at Zhoushan China.

(b)  The cargo was purchased by Brightoil Petroleum (S’pore)  Pte Ltd (“Brightoil S’pore”)  from PMI on Delivered at Place (DAP, Incoterms 2010)  one safe port/berth Zhoushan China for delivery in the period from 5 to 9 October 2015.  Shenzhen Brightoil was authorised by Brightoil S’pore to receive and store the cargo at Zhoushan on behalf of Brightoil S’pore.

(c)  The fuel oil was used by Brightoil S’pore to supply to its customers’ vessels in and around Zhoushan to be used as marine bunker in the course of its business as a marine bunker supplier.

(d)  The Company, NUR Clean, Huge Power and Wealthy Union were not the customers of Shenzhen Brightoil.

48.  SK Energy confirmed with the Petitioner that:

(a)  On 21 October 2015, SK Energy received a delivery of 87,524.557 metric tons of RMK 500 fuel oil from “M. T. SONGANGOL KALANDULA” at Tanjung Pelepas, Malaysia.

(b)  The cargo was purchased by SK Energy from PMI which issued a sales confirmation to SK Energy on 1 October 2015.

(c)  The fuel oil was not sold to SK Energy’s customer and was stored by SK Energy at its Jubilee Star’s storage facility for blending purposes.

(d)  The Company, NUR Clean, Huge Power and Wealthy Union were not the customers of SK Energy.

49.  In the premises, the NUR Bills of Lading are not genuine bills of lading.

B4.4  Round-robin fund flows pertaining to the 2015 Transactions

B4.4.1   Purchase Money

50.  By reason of the matters set out below, the money that NUR Clean purported to have paid to Huge Power for the 2015 Supply Transaction (the “Purchase Money”)  was eventually returned to the Company or companies/persons closely connected to the Company or its subsidiaries.

(a)  Between 30 October 2015 and 14 December 2015, NUR Clean paid approximately HK$302 million to Huge Power in purported settlement of the 2015 Supply Transaction.  Paragraph 22 above is repeated.

(b)  From around 4 November 2015 to 16 December 2015, approximately HK$271 million out of the said HK$302 million Purchase Money was remitted by Huge Power to Sincere Logistics Limited (“Sincere Logistics”).

(c)  From around 6 November 2015 to 23 December 2015, Sincere Logistics remitted approximately HK$268 million to First Concept.

(d)  From around 18 November 2015 to 11 December 2015, First Concept repatriated approximately HK$237 million to the Company.

(e)  A fund-flow diagram illustrating the aforesaid payments pertaining to the 2015 Supply Transaction together with breakdown tables of the individual fund transfer referred to in paragraphs 50(a)  to (d)  above are attached as Annex I to this Schedule.

(f)  By reason of the matters set out below, Sincere Logistics is a company related to the Company or the Group or persons closely connected to the Company or the Group:-

(1)  The Petitioner found the banking and corporate documents of Sincere Logistics, including its internet banking token, internet banking password, cheque books, cheque deposit advice and shareholding transfer documents, at the residence of FENG during a search operation on 14 October 2016.

(2)  At all material times one Business Secretarial Consultants Limited (“Business Secretarial”)  was a company that provided company secretarial and other corporate services to China Wish Limited (“China Wish”), China Wish Group Limited (“China Wish Group”), Sincere Logistics, Sino King Trading (HK)  Co Limited (“Sino King”)  and Upper Target Limited (“Upper Target”).

(3)  Laura Tian (田媛媛)  (“Laura”)  was the contact person who gave instructions to Business Secretarial in respect of Sincere Logistics. The Sincere Logistics’ Annual Return dated 4 October 2015 included Business Secretarial as the company secretary.  Laura was an assistant (助理)  to the General Manager’s Office (總經辦)  from 1 January 2014 to 31 May 2015 and a department assistant (部門助理)  to the Project Planning Department (項目规划部)  from 29 July 2015 of the Beijing Subsidiary. LI HUI was appointed as the General Manager of the Beijing Subsidiary on 20 December 2013.

(4)  Service charges of Business Secretarial, insofar as Sincere Logistics was concerned, were settled by cheques issued by First Concept signed by LI HUI and Feng Tao.

(5)  Sincere Logistics was controlled by LI TAO through Feng Tao and Gary Chan.

(i)  Notwithstanding that Wang Na was a director and shareholder of Sincere Logistics, she was a nominee under the control of Feng Tao or LI TAO at all material times.  Wang Na was the authorised signatory of Sincere Logistics’ bank account. She signed on documents and pre-signed bank cheques in respect of Sincere Logistics at the request of Feng Tao or LI TAO.

(ii)  Gary Chan was in control of the bank account of Sincere Logistics at the request of LI TAO.

(6)  Seven tranches of the said transfers from Sincere Logistics and First Concept were effected online via a fixed IP address (210.3.86.106)  at the Company’s Office.

(g)  In the premises, there was no genuine business relationship between NUR Clean, Huge Power, Sincere Logistics and the Company as they were related parties and the aforesaid payments pertaining to the 2015 Supply Transaction were round-robin and served no genuine commercial purpose.

B4.4.2 Sales Money

51.  By reason of the matters set out below, the money NUR Clean purported to have received from Wealthy Union in settlement of the 2015 Sales Transaction (the “Sales Money”)  were eventually returned to Wealthy Union.

(a)  From 18 March 2016 to 16 June 2016, Wealthy Union paid approximately HK$150 million to NUR Clean in purported settlement of the 2015 Sale Transaction.  Paragraph 28 above is repeated.

(b)  The Sales Money were ultimately returned to Wealthy Union by NUR Clean directly or indirectly via companies connected to the Company or its subsidiaries including Huge Power, China Wish and Upper Target:-

(1)  A total of 7 payments in the aggregate amount of approximately HK$145 million were made by NUR Clean to Huge Power from around 21 March 2016 to 6 June 2016 (“2016 Prepayments”).

(2)  The 2016 Prepayments were purportedly made pursuant to the Sales Confirmation Nos. HP 201511-01TT-NC, HP 201511-02TT-NC, and HP 201511-03TT-NC between NUR Clean and Huge Power dated 1 November 2015, 10 November 2015 and 10 November 2015 respectively (together “November 2015 Sales Confirmations”)  whereby NUR Clean purportedly agreed to buy 40,000, 40,000 and 21,000 metric tons (+/- 5%)  high sulfur fuel oil at USD 226, USD 251 and USD 220 per metric ton respectively from Huge Power (“Purported November 2015 Transactions”).

(3)  In fact, the Purported November 2015 Transactions were fictitious in that there was no high sulfur fuel oil delivered to NUR Clean by Huge Power at all.

(i)  During the Search Operation, the Petitioner seized three documents entitled “CARGO RECEIPT” all dated 13 January 2016 (“Purported Cargo Receipts”)  purportedly issued by NUR Clean to Huge Power to confirm the receipt of high sulfur fuel oil for the Purported November 2015 Transactions.

(ii)  During the Search Operation, the Petitioner also seized three bills of lading in which “M.T. BRIGHTOIL LION” was named as the motor vessel (B/L Nos. E4832, E4835 and E4830)  (“Brightoil B/Ls”).  The quantities of high sulfur fuel oil as stated in the Brightoil B/Ls match the quantities as stated in the Purported Cargo Receipts.

(iii)  Brightoil Shipping Singapore Pte Ltd, a wholly-owned subsidiary of Brightoil Petroleum (Holdings)  Ltd (“Brightoil Petroleum”), was the manager of the motor vessel “BRIGHTOIL LION”.

(iv)  Brightoil Petroleum confirmed with the Petitioner by way of letters dated 26 August 2016 and 7 November 2016 that the shipments of high sulfur fuel oil mentioned in the Brightoil B/Ls were in the nature of relocation of cargo for the own purposes of Brightoil Petroleum (S’pore)  Pte Ltd. (“Brightoil S’Pore”)  (a wholly-owned subsidiary of Brightoil Petroleum that carried on business in the trading of crude and petroleum products, as well as the supply of marine bunker fuel to ocean going vessels), in particular, to support Brightoil S’pore’s business of oil trading and supply of bunker fuel to ocean going vessels in China.  Brightoil Petroleum further confirmed that the Company, NUR Clean and Huge Power were not the customers of Brightoil S’Pore.

(v)  In the premises, the Purported Cargo Receipts and the Brightoil B/Ls are not genuine documents in support of the receipt of high sulfur fuel oil by NUR Clean from Huge Power under the Purported November 2015 Transactions.

(4)  The 2016 Prepayments were purportedly made pursuant to a supplemental agreement dated 8 January 2016 entered into between NUR Clean and Huge Power (“Purported January 2016 Agreement”). According to the Purported January 2016 Agreement:

(i)  Huge Power was agreeable to NUR Clean’s request to “return the goods” (i.e. the high sulfur fuel oil mentioned in the November 2015 Sales Confirmations)  (Preamble).

(ii)  Notwithstanding the purported agreement that the said high sulfur fuel oil was to be returned to Huge Power by NUR Clean, Huge Power would issue invoices to NUR Clean in accordance with the original November 2015 Sales Confirmations (Clause 1), and NUR Clean would issue cargo delivery receipts in accordance with normal procedure (Clause 2).

(iii)  Huge Power shall actively locate a new customer for the high sulfur fuel oil (Clause 3).

(iv)  NUR Clean was required to pay Huge Power an amount of not less than HK$145 million on or before 30 June 2016 allegedly for the purpose of maintaining Huge Power’s ability to promptly meet its payment obligations for goods (Clause 4).

(v)  Huge Power would return the payments made by NUR Clean in full without interest within 10 days after Huge Power has received payment from its new customer, and in any event not later than 31 December 2016 (Clause 5).

(5)  Subsequent to the Purported January 2016 Agreement, Huge Power issued a number of reminder letters from February 2016 to June 2016 (“Purported Reminder Letters”)  purportedly chasing NUR Clean to fulfil the obligation to pay HK$145 million by 30 June 2016 under Clause 4 of the Purported January 2016 Agreement.

(6)  The Purported January 2016 Agreement and the Purported Reminder Letters are not documents in support of a genuine commercial transaction but merely instruments to disguise the nature of the 2016 Prepayments:

(i)  Huge Power is not a genuine counterparty to NUR Clean by reason of the matters set out in paragraph 32 above.

(ii)  No high sulfur fuel oil was in fact delivered by Huge Power to NUR Clean by reason of the matters set out in paragraph 51(b)(3)  above.

(iii)  In any event, it made no commercial sense at all for NUR Clean to agree with Huge Power (by the Purported January 2016 Agreement)  to pay it an amount of not less than HK$145 million, which represented a substantial part of the original contractual sums specified in the November 2015 Sales Confirmations, within a short period of time or effectively advancing an interest-free loan to Huge Power purportedly pending the location of a new customer by Huge Power, or until 31 December 2016, notwithstanding the purported return of the goods.

(7)  The 2016 Prepayments were eventually transferred by Huge Power to Wealthy Union directly and indirectly via China Wish and Upper Target.  They were never repaid to NUR Clean, whether pursuant to the Purported January 2016 Agreement or otherwise.

(c)  Further, out of the HK$150 million paid by Wealthy Union to NUR Clean set out in paragraph 51(a)  above, HK$15 million was sourced from Sino King.

(d)  A fund-flow diagram illustrating the aforesaid payments pertaining to the 2015 Sale Transaction together with breakdown tables of the individual fund transfer referred to in paragraphs 51(a)  to (c)  above are attached as Annex II to this Schedule.

(e)  The companies involved in the fund flows of the Sales Money are either related to the Company, the Group, persons closely connected to the Company, or the Group.  In particular:

(1)  China Wish:

(i)  LI TAO was a shareholder and director of China Wish from around 15 July 2013 to 26 November 2014 and from 3 September 2013 to 25 November 2014 respectively.  He was succeeded by Liu Zidong (shareholder from 26 November 2014 to 18 December 2014 and director from 25 November 2014 to 30 April 2015, and a mere driver of the Beijing Subsidiary), and later by Li Lei (director since 30 April 2015).  At all material times LI TAO remained the controlling mind of China Wish.

(ii)  The instructions given to Business Secretarial for the change of shareholding and directorship in China Wish from LI TAO to Liu Zidong were given by Laura who was an assistant of LI HUI i.e. the General Manager of the Beijing Subsidiary at the time. Laura also instructed Business Secretarial to prepare a set of documents for future use including: (i)  a letter of resignation as director to be signed by Liu Zidong; (ii)  documents for transferring the entire shareholding of China Wish (with the identity of the new shareholder left blank); and (iii)  documents for changing the director of China Wish (with the identity of the new director left blank).

(iii)  The instructions given to Business Secretarial for the change of shareholding in China Wish from Liu Zidong to China Wish Group, and change of directorship of China Wish from Liu Zidong to Li Lei, were also given by Laura.

(iv)  China Wish Group was incorporated by Business Secretarial upon the instructions of Laura. LI TAO was the sole director and sole shareholder of China Wish Group between 6 November 2014 and 29 November 2014.  Under the instructions of Laura, the sole shareholder and sole director of China Wish Group was changed from LI TAO to Liu Zidong on 29 November 2014 and subsequently from Liu Zidong to Li Lei on 1 May 2015.

(v)  Service charges of Business Secretarial, insofar as China Wish and China Wish Group are concerned, were settled by cheque issued by First Concept signed by LI HUI and Feng Tao.

(vi)  LI TAO was an authorised signatory of China Wish’s bank account.

(vii)   LI TAO was an authorised dealer of China Wish’s securities account at Yue Xiu Securities Company Limited (“Yue Xiu Securities”).

(2)  Upper Target:

(i)  Upper Target was incorporated by Business Secretarial upon the instructions given by Laura.

(ii)  LI TAO was the sole shareholder and sole director of Upper Target between 21 November 2014 and 20 May 2015.

(iii)  LI TAO was an authorised signatory of Upper Target’s bank account.

(iv)  LI TAO was an authorised dealer of Upper Target’s securities account at Yue Xiu Securities.

(v)  Two of the transfers from Upper Target to Wealthy Union in the aggregate sum of HK$20 million were effected online via a fixed IP address (210.3.86.106)  at the Company’s Office.

(vi)  On 20 May 2015, the shareholding of Upper Target was transferred to Liu Zidong, who was appointed its director.  The relevant instructions for effecting the said transfer and appointment were given by Laura to Business Secretarial.

(vii)   Service charges of Business Secretarial, insofar as Upper Target was concerned, were settled by cheque issued by First Concept signed by LI HUI and Feng Tao.

(3)  Sino King:

(i)  At all material times, Gary Chan was the sole shareholder and director of Sino King and an authorised signatory of Sino King’s bank account.

(ii)  Service charges of Business Secretarial provided to Sino King were settled by cheques issued by First Concept signed by LI HUI and Feng Tao.

(4)  Huge Power: By reason of the matters set out in paragraph 32 above, Huge Power is connected with the Company or the Group.  Further, Huge Power was incorporated by Gary Chan at the instruction of LI TAO.

(5)  LI TAO: By reason of the matters set out in paragraphs 17, 50(f)(5), 51(e)(1)  to (4), he is a person connected with the Company or the Group.

(f)  In the premises, there was no genuine business relationship between NUR Clean, Wealthy Union, Huge Power, China Wish, Upper Target and Sino King as they were related parties and the payments pertaining to the 2015 Sale Transaction were round-robin and served no genuine commercial purpose.

B4.5  Conclusion on the fictitiousness of the 2015 Transactions

52.  By reason of the matters set out in Sections B4.1 to B4.4 above, it is the Petitioner’s case that the 2015 Transactions are fictitious.

B5.  The Statements in the 2015 Annual Results and the 2015 Annual Report

53.  On 30 March 2016, a meeting of the board of directors of the Company (“Board”)  was held at the Company’s Office (“30.3.16 Board Meeting”).

54.  Apart from LI HUI, all the directors (including FENG, TIAN and the 4^th Respondent)  and the company secretary (i.e. LAM)  of the Company attended the 30.3.16 Board Meeting.

55.  At the 30.3.16 Board Meeting:

(a)  The audited financial statements of the Group for the year ended 31 December 2015 (“2015 Audited Financial Statements”)  and the draft announcement relating to the annual results of the Group for the year ended 31 December 2015 (the “2015 Annual Results Announcement” and “2015 Annual Results” respectively)  were tabled for consideration and approval.

(b)  It was resolved at the meeting, amongst other things, that the 2015 Audited Financial Statements be approved for presentation to the members of the Company at the Annual General Meeting 2016 and that any one of the executive directors or the company secretary of the Company be authorised to arrange publication of the 2015 Annual Results Announcement on the websites of the HKSE and the Company.

56.  On 30 March 2016 and 28 April 2016, the 2015 Annual Results Announcement and the annual report of the Group for the year ended 31 December 2015 (“2015 Annual Report”)  were published respectively.  The 2015 Audited Financial Statements were incorporated in the 2015 Annual Report for publication.

57.  The 2015 Annual Results and the 2015 Annual Report contain, inter alia, the following statements (together the “Statements”):

(a)  The Group has “expanded its resources trading business in the second half of 2015, which now includes resources such as coking coal, aluminium rod and fuel oil”.

(b)  The Group recorded a total revenue of HK$382,789,000 in 2015.

(c)  HK$337,729,000 of the total revenue in 2015 was derived from “resources trading”.

(d)  HK$304,971,000 of the total revenue in 2015 was derived from a customer located in Singapore.

(e)  In the section on “Information about major customers”, it was stated that:

“Revenue from operations of approximately HK$304,971,000 (2014: HK$104,428,000, HK$78,603,000, HK$51,883,000 and HK$41,550,000)  was derived from one customer (2014: four customers)  in the resources trading segment which individually contributed 10% or more to the Group’s revenue for the year ended 31 December 2015.” (“Imputed 2015 Revenue”)  (emphasis added)

(f)  In the section on “TRADE RECEIVABLES”, it was stated that:

“As at 31 December 2015, one (31 December 2014: three)  customers [sic.] attributable to the Group’s total trade receivables were 94% (31 December 2014: 95%).” (emphasis added)

(g)  In the section on “FINANCIAL REVIEW”, it was stated that:

“Trade receivables amounted to approximately HK$325,322,000, representing an increase of approximately 901.33% when compared to HK$32,489,000 as at 31 December 2014. This dramatical increase was mainly due to significant trading transactions in resources commodities occured [sic.] in the fourth quarter of 2015.” (emphasis added)

58.  By reason of the matters set out in Section B4 above, it is the Petitioner’s case that the Statements are false or misleading in the following respects:

(a)  The Imputed 2015 Revenue is revenue purportedly derived from the 2015 Transactions, which were fictitious by reason of the matters set out in Section B5 above.

(b)  The “one customer” referred to in the Statements was Wealthy Union, which was an entity controlled by the Company or persons closely connected to the Company or its subsidiaries. Paragraph 34 above is repeated.

(c)  The Group did not in fact expand its resources trading business in the second half of 2015 or conduct significant trading transactions in resources commodities in the fourth quarter of 2015.

(d)  In the premises, the Statements are false or misleading and do not reflect the true state of affairs of the Company.

B6.  Duties owed by the 1^st to 6^th Respondents to the Company

59.  At all material times, each of LI HUI, FENG, TIAN, LO and LI TAO owed the following duties to the Company:

(a)  A duty to act in good faith and in the best interests of the Company, including a duty to disclose all relevant material information to the Company and the shareholders.

(b)  A duty to exercise reasonable care, skill and diligence in the performance of their duties as directors, and in the case of LI TAO, as the shadow director, of the Company.

(c)  A duty not to place himself in a position where his interests (including of those entities associated with him)  or the interests of any third party, might conflict with those of the Company without making full and frank disclosure to, and obtaining informed consent from, the Company.

(d)  A duty to exercise independent judgment in the performance of their duties as directors of the Company.

60.  Further, in order to act as the directors of the Company, each of LI HUI, FENG, TIAN and LO had signed a formal declaration, respectively undertaking to the HKSE that they would, in the exercise of their powers and duties as directors of the Company, comply and procure the Company to comply with the Listing Rules from time to time in force.

61.  At the material times, the Listing Rules provide, amongst other things, that:

(a)  Rule 2.13(2):

“2.13 … any announcement or corporate communication required pursuant to the Exchange Listing Rules must be prepared having regard to the following general principles: …

(2)  the information contained in the document must be accurate and complete in all material respects and not be misleading or deceptive.”

   (b)  Rule 3.08:

“3.08 The board of directors of an issuer is collectively responsible for its management and operations. The Exchange expects the directors, both collectively and individually, to fulfil fiduciary duties and duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law. This means that every director must, in the performance of his duties as a director:—

(a)  act honestly and in good faith in the interests of the company as a whole;

(b)  act for proper purpose;

(c)  be answerable to the issuer for the application or misapplication of its assets;

(d)  avoid actual and potential conflicts of interest and duty;

(e)  disclose fully and fairly his interests in contracts with the issuer; and

(f)  apply such degree of skill, care and diligence as may reasonably be expected of a person of his knowledge and experience and holding his office within the issuer. …”

(c)  Rule 13.04:

“13.04 An issuer’s directors are collectively and individually responsible for ensuring the issuer’s full compliance with the Listing Rules.”

(d)  Rule 13.47:

“13.47 An issuer’s annual report must comply with the provisions set out in Appendix 16 in relation to annual reports. The issuer’s summary financial report must comply with the provisions set out in the Companies (Summary Financial Reports)  Regulation.”

(e)  Paragraph 2 of Appendix 16:

“Each set of financial statements presented in an annual report, listing document or circular shall provide a true and fair view of the state of affairs of the listed issuer and of the results of its operations and its cashflows.”

B7.  Liability of the 4^th Respondent under section 214(1)  and (2)  of the SFO

62.  By reason of the matters aforesaid, the business or affairs of the Company have been conducted in a manner as set out in paragraph 4 above and the 4^th Respondent is responsible for the business or affairs of the Company having been so conducted.

63.  LO had wrongfully committed NUR Clean, a wholly-owned subsidiary of the Company, to enter into the fictitious 2015 Transactions.

(a)  According to the Company’s 2015 Annual Report:

(1)  LO graduated from the University of Wollongong, Australia with a Bachelor degree in commerce.

(2)  LO is a member of the Hong Kong Institute of Certified Public Accountants as well as CPA Australia.

(3)  LO has over 20 years of experience in financial management and corporate finance gained from working as a chief financial officer/company secretary for various HKSE listed companies.

In the circumstances, the standard expected of LO as a director of the Company should be considered in view of his accounting background as well as his extensive experience as financial officers/company secretaries in other listed companies.

(b)  Together with FENG and LAM, LO was in control of the cash flow of the Company.

(c)  LO approved 7 payment requests totalling HK$302.3 million from the Company to NUR Clean for the purported settlement of the 2015 Supply Transaction.

(d)  Had LO scrutinised the underlying Supply Contract before he approved the 7 payment requests from the Company to NUR Clean, he would have noticed that it made little commercial sense to commit NUR Clean to the 2015 Transactions.  The profit margin for the 2015 Sale Transaction was extremely thin (only about 0.88%). There was also a serious mismatch of credit period between the purported customer (180 days)  and the purported supplier (90 days)  under the Supply Contract and the Sales Contract.

(e)  In view of the matters set out in paragraphs 63(a)  to 63(d)  above, LO was negligent in committing NUR Clean to the 2015 Transactions. Had LO properly discharged his duty as a reasonably prudent director of the Company, he ought to have inquired into the background of the 2015 Transactions and the underlying purpose of the fund transfers from the Company to NUR Clean for the 2015 Supply Transaction.

(f)  Further, LO committed NUR Clean to the 2015 Transactions without convening a Board meeting to discuss the same in the circumstance where a substantial amount of HK$300 million was involved in the 2015 Transactions.

64.  LO wrongfully caused false or misleading statements/ representations to be published.

(a)  LO allowed the Statements to be published by:

(1)  approving the publication of the Statements at the 30.3.16 Board Meeting;

(2)  omitting to provide material information regarding the true state of affairs of the 2015 Transactions to the Board for consideration; or

(3)  allowing or not preventing the Statements from being published.

(b)  The Statements are false or misleading by reason of the matters set out in paragraph 58 above.

(c)  LO was negligent as to whether the Statements were false or misleading and did not present the true state of affairs of the Company.  Paragraph 63 above is repeated.

65.  In the premises, by reason of the acts or omission of LO, the business or affairs of the Company have been conducted in a manner:

(a)  oppressive to its members or any part of its members within the meaning of section 214(1)(a)  of the SFO;

(b)  involving defalcation, fraud, misfeasance or other misconduct towards the Company or its members or any part of its members within the meaning of section 214(1)(b)  of the SFO;

(c)  resulting in its members or any part of its members not having been given all the information with respect to its business or affairs that they might reasonably expect within the meaning of section 214(1)(c)  of the SFO; and

(d)  unfairly prejudicial to its members or any part of its members within the meaning of section 214(1)(d)  of the SFO.

C.  Agreed Mitigating factors

66.  The 4^th Respondent has been cooperative in relation to these proceedings with the Petitioner and accepts liability.

67.  The 4^th Respondent has adopted a reasonable course of action in agreeing to conclude these proceedings by way of the Carecraft Procedure which would save the time and costs of the Petitioner and the Court.

68.  There was no dishonesty or lack of integrity on the part of the 4^th Respondent.

69.  The 4^th Respondent has not made any personal gains from the misconduct stipulated above.

70.  Except for these proceedings, the 4^th Respondent has never been the subject of any proceedings commenced under the Securities and Futures Ordinance (Cap. 571).

D.  Proposed Orders

71.  On the basis of the facts not in dispute as set out in Section B above and the agreed mitigating factors set out in Section C above, the Petitioner and the 4^th Respondent agree that it would be appropriate for a disqualification order to be made against the 4^th Respondent under section 214(2)(d)  of the Ordinance that, for a period of 3 years, he shall not, without the leave of the Court:-

(1)  be, or continue to be, a director, liquidator, or receiver or manager of the property or business, of any listed or unlisted corporation[35] in Hong Kong; or

(2)  in any way, whether directly or indirectly, be concerned, or take part, in the management of any listed or unlisted corporation[36] in Hong Kong.

72.  If, pursuant to this Statement, the Court dispose of these proceedings summarily, the Petitioner and the 4^th Respondent have reached an agreement on the Petitioner’s costs in these proceedings. The 4^th Respondent shall pay the Petitioner agreed costs in the sum of HK$420,000.00 in full and final settlement of the 4^th Respondent’s share of the Petitioner’s costs in these proceedings within 28 days from the date of the Order to be made.

Dated this 28^th day of July 2025.

Annex I

Fund-flow diagram and breakdown tables of the fund flows pertaining to the 2015 Supply Transaction

Breakdown Table of the Funds Transferred in Fund Flow 1A

Breakdown Table of the Funds Transferred in Fund Flow 1B

Breakdown Table of the Funds Transferred in Fund Flow 1C

Breakdown Table of the Funds Transferred in Fund Flow 1D

Breakdown Table of the Funds Transferred in Fund Flow 1E

Annex II

Fund-flow diagram and breakdown tables of the fund flows pertaining to the 2015 Sale Transaction [37]

Breakdown Table of the Funds Transferred in Fund Flow 2A

Breakdown Table of the Funds Transferred in Fund Flow 2B(i)

Breakdown Table of the Funds Transferred in Fund Flow 2B(ii)

Breakdown Table of the Funds Transferred in Fund Flow 2C(i)

Breakdown Table of the Funds Transferred in Fund Flow 2C(ii)

Breakdown Table of the Funds Transferred in Fund Flow 2C(iii)

Breakdown Table of the Funds Transferred in Fund Flow 2D

Breakdown Table of the Funds Transferred in Fund Flow 2E(i)

Breakdown Table of the Funds Transferred in Fund Flow 2E(ii)

Breakdown Table of the Funds Transferred in Fund Flow 2E(iii)