Securities and Futures Commission v. Fan Di and Others
Read the full judgment text of HCMP 1761/2009 on BabelCite. This High Court CFI judgment.
1. By way of the Amended Petition, the Securities and Futures Commission (“SFC”) seeks disqualification orders under s. 214 of the Securities and Futures Ordinance (“SFO”) against the respondents regarding the affairs of the listed company Pearl Oriental Innovation Limited (“POIL”).
Cites 5 cases
|
HCMP 1761 / 2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 1761 OF 2009 _________________
_________________
Before: Hon Au J in Court Date of Hearing: 24th May 2011 Date of Judgment: 24th May 2011 _______________ J U D G M E N T _______________ A. Introduction 1.By way of the Amended Petition, the Securities and Futures Commission (“SFC”) seeks disqualification orders under s. 214 of the Securities and Futures Ordinance (“SFO”) against the respondents regarding the affairs of the listed company Pearl Oriental Innovation Limited (“POIL”). 2.The SFC and the 2nd, 3rd and 4th Respondents (collectively “the Respondents”) have agreed to dispose of these proceedings against them summarily by way of the Carecraft procedure[1]. I granted leave for that purpose at the previous directions hearings. 3.The 2nd Respondent was an executive director of POIL from 26 August to 31 December 2005. The 3rd Respondent has been an executive director of POIL since 27 March 2003. The 4th Respondent has also been an executive director and Managing Director of POIL since 17 September 2004. 4.This is the consolidated Carecraft hearing. 5.The Carecraft procedure involves the submission by the parties to the Court an agreed statement of facts upon which the Court is invited to assess what order should be made. 6.In the present case, a proposed period of 1 year’s disqualification has been agreed against each of the Respondents. Although the Court is not bound by this agreement in deciding what order to be made, it is likely to be guided by the agreement: Re Warderly International Holdings Ltd (unrep., HCMP 1742/2009, 9 April 2010), at para 5 per Harris J. B. The present application B1. Agreed facts 7.The respective agreed statement of facts of each of the Respondents has been submitted to this Court. For the present purpose, the contents of these agreed statements of facts are identical for the Respondents, and any difference in the extent of their knowledge of or participation in the impugned transactions or events is, as submitted by the SFC, immaterial for the present purpose. The 3 statements of facts are appended to this judgment as agreed by the parties. It is therefore not necessary for me to recite them. I would adopt the abbreviations used in the statement of facts below whenever relevant. 8.It is SFC’s case that, in light of the agreed facts, the POIL’s business or affairs, for which the Respondents were partly responsible, have been conducted in a manner resulting in its members or any part of its members no having been given all the information with respect to its business or affairs as they might reasonably expect, in contravention of s. 214 (1)(c) of the SFO. 9.For the present application, the Respondents accept and agree that:
B2. Discussion 10.The principles governing the determination of the appropriate length of a disqualification order are trite. They have been repeatedly applied in Hong Kong. I have tried to summarize them in Re Styland, supra, at paras 6-8, and 13 and would not repeat them herein. See also: Re Sevenoaks Stationer (Retail) Ltd [1991] Ch 164, 174E-G per Dillon LJ; Re Warderly International Holdings Ltd, supra, paras 9-10 per Harris J. 11.Applying these principles to the present case, and having reference to the agreed statement of facts as to nature and extent of the Respondents’ breach of s. 214(1)(c) of the SFO, I agree with Mr Jat’s submissions (for SFC) that the agreed disqualification period of 1 year for each of the Respondents is appropriate in these circumstances, in particular in light of the following:
C. Conclusion 12.I therefore make an order that each of the Respondents shall not, for a period of 1 year from the date of this Order, without leave of the Court:
13.The 3rd and 4th Respondents also agreed to pay the SFC’s costs in these proceedings in the agreed sums of HK$200,000.00 and HK$195,000.00 respectively. I therefore also so order. 14.The 2nd Respondent has in writing[2] asked not to have any adverse costs order made against him, as he has been unemployed since 2006 and living on pension since July 2009. The pension is said to be initially at RMB4,000.00 per month, which has presently been increased to RMB5,000.00. He also says this only barely supports his living now, in particular as he is suffering from certain circulatory medical conditions of the brain. 15.Generally, a party’s impecuniosity (even if true) is irrelevant to the Court’s exercise of discretion on costs: MB Building Contractors Ltd v Ahmed (The Independent, 23 November 1998) at p. 5 per Hirst LJ. In any event, in the present case, I am far from satisfied that there is sufficient evidence before me to support the 2nd Respondent’s claims as set out above in his letters. He has so far only attached to his letter dated 19 May 2011 a copy of a page of what is said to be the statement of his bank account for the past 12 months. Other than the fact that not much useful information could be gathered by simply reading this copy, this is certainly not sufficient evidence to support the 2nd Respondent’s various assertions of impecuniosity. 16.Looking at the all the circumstances, and applying the generally principle that costs should follow the event, I would also order that the 2nd Respondent shall pay the SFC costs of these proceedings attributable to him, to be taxed if not agreed.
Mr. Sew Tong JAT, S.C. leading Mr. Mike S.K. LUI, instructed by Securities and Futures Commission, for the Petitioner. The 2nd and 3rd Respondent, acting in person, absent. Mr. Bernard MAK, instructed by Messrs Y.T. Chan & Co., for the 4th Respondent. Appendix A ________________________________________________________________ 就呈请人与第二答辩人之间的CARECRAFT和解而提出的 不受争议事实的陈述 ________________________________________________________________
A. 引言 1.2009年9月9日，证券及期货事务监察委员会（“呈请人”）依据《证券及期货条例》（第571章）第214条提起此等法律程序，就李兴贵先生（“第二答辩人”）及其他人对东方明珠创业有限公司（“东方明珠”）的业务或事务的经营或处理，寻求对第二答辩人及其他人作出取消资格令。 2.在法庭批准的前提下，呈请人及第二答辩人同意，以Re Carecraft Construction Co Ltd [1994] 1 WLR 172一案中认许，并获英国上诉法院在Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569一案中澄清，及本法庭在证券及期货事务监察委员会诉易仲申[2007] 4 HKLRD 46、证券及期货事务监察委员会诉沈家燊及沈毅（HCMP 1014/2008，无律師代表，2009年5月22日）及证券及期货事务监察委员会诉冯照及其他人[2009] 2HKC 19三案中，就《证券及期货条例》第214条的法律程序所采纳的简易程序方式，处置此等针对第二答辩人的法律程序。 3.提出本陈述书旨在基于法庭将以Carecraft程序处理针对第二答辩人的个案的前提下，为处置此等法律程序而识别出呈请人在此等法律程序中援引且不受第二答辩人争议的重要事实。 4.纯粹为以Carecraft程序解决此等法律程序，第二答辩人藉提述B节所载的事实（经第二答辩人承认及接纳）而接纳，东方明珠的业务及事务（身为东方明珠执行董事的第二答辩人对此负部分责任）在2003年至2005年的有关期间或当中任何时间，曾以《证券及期货条例》第214(1)(c)条所述的方式经营或处理，即导致东方明珠的成员或其任何部分成员未获提供他们可合理期望获得的关于东方明珠的业务或事务的所有资料。 5.基于下文B节所载的事实，呈请人及第二答辩人同意，而第二答辩人亦准备接纳，适宜根据《证券及期货条例》第214(2)(d)条对第二答辩人作出取消资格令，饬令他在一年内不得：
6.如法庭依据本陈述书以Carecraft程序处置此等针对第二答辩人的法律程序，则第二答辩人同意，法庭应另行作出命令，饬令第二答辩人支付呈请人在此等法律程序中法庭认为适当的该部分讼费，如未能就讼费达成协议，讼费便须予以评定。 7.如法庭藉提述本陈述书而对第二答辩人作出取消资格令，则呈请人保留权利：
8.如法庭藉提述本陈述书而对第二答辩人作出取消资格令，则呈请人及第二答辩人亦同意共同向法庭申请作出指示，将本陈述书附录于法庭的判决书。 9.呈请人及第二答辩人同意，如法庭基于任何理由拒绝藉提述本陈述书而对第二答辩人作出取消资格令，并饬令进行全面聆讯，则呈请人或第二答辩人在未经本陈述书的另一方发出书面同意前，不得在此等法律程序的任何后继聆讯中提述本陈述书（或提述本陈述书所载的任何承认或妥协或任何取消资格建议）。 B. 不受争议事实 10.本节的结构如下：
B1. 东方明珠的背景及管理层 11.东方明珠现时及在所有关键时间：
12.东方明珠的股份于1993年4月30日在香港联合交易所（“联交所”）主板上市，截至本陈述书日期仍然维持上市地位，其股份代号一直以来均是0632。 13.东方明珠在2006年8月8日采纳其现有名称，在此之前称为招商迪辰（亚洲）有限公司。东方明珠在所有关键时间是投资控股公司，主要业务是提供物流服务以及投资能源及资源。 14.截至2009年5月31日，东方明珠的法定股本为20,000,000,000港元，分为200,000,000,000股每股0.1港元的股份，当中已发行581,403,960股股份。 15.招商迪辰集团有限公司（“迪辰集团”）是在香港注册成立的有限公司，在所有关键时间是东方明珠的最终控股公司，拥有东方明珠的多数股权。 16.迪辰仓储服务（深圳）有限公司（“迪辰仓储”）是中华人民共和国（“中国”）的外商独资企业，在所有关键时间是东方明珠的全资附属公司。 17.第二答辩人在2002年8月26日至2005年12月31日期间，任东方明珠的执行董事，负责监督其物流业务。他在物流运作及管理业务方面拥有丰富经验。他亦是迪辰集团的董事。 18.范棣先生（“第一答辩人”）、郑英生先生（“第三答辩人”）及周里洋先生（“第四答辩人”）在所有关键时间亦担任对东方明珠的业务及事务的经营或处理负有重大责任的职位，并参与管理迪辰集团及迪辰仓储。 19.第一答辩人在2002年3月25日至2006年5月24日期间，任东方明珠的执行董事、主席及总裁，负责监督其策略发展。他是迪辰集团的董事，亦负责迪辰仓储的财务事宜。他在所有关键时间是东方明珠的实益股东。 20.第三答辩人自2003年3月27日起担任东方明珠的执行董事至今，负责监督其物流业务。他在物流管理及运输营运方面拥有逾二十年经验。 21.第四答辩人自2004年9月17日起担任东方明珠的执行董事兼董事总经理至今，负责其策略发展及日常营运。 22.基于第二答辩人在东方明珠的职位及职责，他对东方明珠负有责任，即须以一个合理尽责、具备执行第二答辩人在东方明珠的相同职能的人合理地预期应具备的一般知识、技能和经验，以及具备第二答辩人本身具备的知识、技能和经验的人所应有的合理谨慎、技能及勤勉的态度行事。 23.此外，根据《联交所证券上市规则》（“《上市规则》”）第3.08条，东方明珠的董事在所有关键时间均须共同及个别地履行诚信责任及有关技能、谨慎和勤勉行事的责任，而履行上述责任时，至少须符合香港法例所确立的标准。东方明珠的董事在履行其职务时，须对东方明珠资产的运用或滥用向东方明珠负责，并须以应有的技能、谨慎和勤勉的态度行事，程度相当于别人合理地预期具备相同知识及经验，并担任东方明珠董事职务的人士所应有的程度。 24.此外，为出任东方明珠的董事，第二答辩人必须并已经签署一份格式如《上市规则》附录五B表格所载的正式声明及承诺，据此，第二答辩人向联交所承诺，在行使其作为东方明珠董事的权力及职责时，将遵守及尽力促使东方明珠遵守（其中包括）不时生效的《上市规则》。 B2. 透过深圳国际信托投资有限责任公司（“深国投”）投资人民币60,000,000元 25.在2003年4月21日至2005年6月20日期间，迪辰仓储与深国投订立了12份信托基金协议（“信托基金协议”）。 26.依据信托基金协议，迪辰仓储向作为受托人的深国投支付合共人民币60,000,000元，而深国投须将迪辰仓储投资的该笔款项借予第三方，以赚取利息。 27.第一答辩人、第三答辩人及伍世岳先生（“伍先生”）（在2002年至2005年8月30日期间担任东方明珠执行董事）代表迪辰仓储签署信托基金协议。 28.2005年7月25日，东方明珠的审核委员会举行会议，商讨该财政年度的核数工作（“审核委员会会议”）。出席者计有第四答辩人、俞伟杰先生（“俞先生”）（公司秘书兼财务总监）、德勤‧关黄陈方会计师行（“德勤”）（公司核数师）的会计师及两名独立非执行董事毕涤凡先生和杨岳明先生。 29.独立非执行董事在审核委员会会议上投诉，指迪辰仓储透过深国投进行投资一事，事前并没有通知审核委员会。此外，德勤会计师亦关注到该笔人民币60,000,000元的投资款项能否收回，并要求东方明珠的管理层撤回有关投资，或索取一份获深国投借出该笔投资款项的实体名单，以便德勤审核及评估有关实体的信贷能力。 30.在审核委员会会议结束后，俞先生尝试向深国投索取一份获借出迪辰仓储所投资款项的实体名单，但不成功。因此，迪辰仓储的管理层决定终止与深国投订立的信托基金协议。 31.在2005年8月3日至2005年8月9日期间，深国投将该笔投资款项连同利息付予迪辰仓储，合计人民币64,840,849.99元。 32.深国投在2005年8月10日发出证明，确认终止信托基金协议及已向迪辰仓储退还其投资款项连同利息。该证明是当时深国投向俞先生、核数师及审核委员会发出的唯一书面确认，当中并无披露获深国投借出迪辰仓储的投资款项的实体的身分。 33.呈请人在查讯过程中发现，深国投事实上已在2005年8月16日及2005年8月17日拟备了六份正式还款报告，并送交迪辰仓储。据深国投表示，这属于其正常程序的一部分。在呈请人进行查讯前，俞先生及审核委员会从未收到该等正式还款报告，亦从未获告知该等正式还款报告的存在。 34.正式还款报告显示，深国投已将迪辰仓储的该笔投资款项借予中国两家公司，分别为招商际通信息（深圳）有限公司（“招商信息”）及深圳市招商迪辰商务系统有限公司（“招商商务系统”）。 35.第一答辩人在所有关键时间是招商信息及招商商务系统的法定代表人、主席及总经理。 36.在呈请人查讯期间，深国投亦透露，迪辰仓储的信托基金投资具有一项特点，就是迪辰仓储会指定获借出该笔投资款项的实体，而深国投必须遵从迪辰仓储发出的有关指示。此项特点并无在任何信托基金协议内订明。 37.呈请人在调查中发现，第一答辩人全权负责迪辰仓储透过深国投进行的信托基金投资，其中包括指定深国投应向其借出迪辰仓储的投资款项的实体：
38.第三答辩人及伍先生是负责签署部分信托基金协议的唯一另外两名人士，他们并无就信托基金协议与深国投进行任何交易或谈判。
39.在深国投退还款项的同时，招商信息及招商商务系统在2005年8月3日至2005年8月9日期间向深国投支付合共人民币55,840,849.99元。 40.与此同时，在2005年8月3日至2005年8月10日期间，迪辰仓储向中国一家公司大连双喜商贸发展有限公司（“双喜”）转帐合共人民币64,500,000元。迪辰仓储支付该笔款项的情况载于下文B3节。 41.在迪辰仓储支付该笔款项时，臧宏卫先生是双喜的法定代表人。他是双喜的董事，拥有双喜90%的股份，并曾与第一答辩人有姻亲的兄弟关系。 42.在2005年8月3日至2005年10月19日期间，双喜向招商信息及招商商务系统支付人民币57,005,000元。 B3. 据称收购宜兴市旺达物流有限公司（“旺达”） 43.旺达在中国宜兴市经营物流业务。孔柏松先生（“孔先生”）在所有关键时间是旺达的法定代表人兼总经理。 44.迪辰集团过去曾在宜兴市经营一家啤酒厂。宜兴市政府其后收回兴建该工厂所用的土地，并在宜兴市另外拨出一幅土地予迪辰集团。 45.迪辰集团建议在该幅新土地经营物流业务，以取代其啤酒生产业务，但宜兴市政府否决了该项建议。 46.在或大约在2004年12月13日，朱润林先生（“朱先生”）向第一答辩人、伍先生及李浩璋先生（迪辰集团副总裁）提交有关旺达的物流业务的报告。第一答辩人当时聘请朱先生代表东方明珠及迪辰集团在中国探求投资机会。 47.朱先生在报告内表示：
48.2005年7月7日，东方明珠与迪辰集团举行联合董事会会议。据该次会议的会议纪录显示，出席者计有第一答辩人、第二答辩人、伍先生、李浩璋先生、朱先生及其他人，第三答辩人并无出席。 49.在会议上，李浩璋先生及朱先生报告如下：
50.在2005年7月7日举行的该次会议上，一致通过：
51.尽管已通过上述决议案，但呈请人在查讯期间曾尝试取得以下任何证据，却不成功：
52.在或大约在2005年7月21日，Hero Vantage向东方明珠及迪辰集团发出付款通知，要求在2005年9月19日或之前向双喜支付《资产转让预付款协议》（“2005年7月资产转让预付款协议”）及《借款协议》（“2005年7月借款协议”）所列的金额；该两份协议据称是在2005年7月19日订立。 53.呈请人在查讯期间曾尝试寻找2005年7月资产转让预付款协议及2005年7月借款协议，但未能寻获。然而，呈请人取得Hero Vantage与东方明珠（由第一答辩人代表签署）在2005年9月27日订立的另外两份协议，该两份协议同样名为《资产转让预付款协议》及《借款协议》。下文中，该两份协议分别称为“2005年9月资产转让预付款协议”及“2005年9月借款协议”。 54.根据2005年9月资产转让预付款协议，东方明珠同意向Hero Vantage支付按金42,000,000港元，以供收购在宜兴市的若干物流业务资产。 55.根据2005年9月借款协议，东方明珠同意向Hero Vantage贷款18,000,000港元，为期两年，年息4%。 56.迪辰仓储估计是据称按照上文第52段Hero Vantage所发出的付款通知，在2005年8月3日至2005年8月10日期间，向双喜转帐了合共人民币64,500,000元（相等于60,000,000港元）。该笔付款下称“双喜付款”。 57.正如上文B2节所述，该循环现金流如下：
58.呈请人在此等程序中呈述的案情是，东方明珠及／或迪辰仓储在关键时间没有理由或没有正当商业理由促致上述的循环现金流。就Carecraft程序而言，第二答辩人并无就这一点提出争议。 59.在或大约在2005年8月15日，第一答辩人指示东方明珠助理副总裁庄少波先生（“庄先生”）及迪辰集团总会计师刘军先生（“刘先生”）对旺达进行尽职审查。 60.庄先生及刘先生在2005年8月18日至2005年8月20日期间，对宜兴市的旺达进行尽职审查，其后向第一答辩人及李浩璋先生提交尽职审查报告。 61.庄先生及刘先生在报告中指出旺达业务上的多个问题，并在评估收购旺达建议的理据时明确地不表示赞许。 62.在2005年8月20日后不久，庄先生及刘先生与第一答辩人举行会议，会上向第一答辩人解释他们对旺达进行尽职审查时所找到的负面调查结果。 63.2005年9月5日，宜兴市政府官员与孔先生、李浩璋先生及刘先生举行会议。李浩璋先生与刘先生代表迪辰集团出席该会议。会议上讨论的事宜如下：
64.呈请人在查讯后发现（及第二答辩人就Carecraft程序而言亦接纳此为属实），事实上，直至2005年9月5日，宜兴市政府、旺达及迪辰集团或东方明珠之间的所有商谈仅属初步性质，各方从未达成任何可落实的具体协议。其中，迪辰集团的代表向旺达及宜兴市政府作出以下申述：
65.2005年9月，孔先生及刘先生分别代表旺达及迪辰集团，聘任无锡一家会计师事务所无锡普信会计师事务所有限公司（“无锡会计师”），为旺达的固定资产估值。 66.无锡会计师编制了一份报告初稿，评估截至2005年8月31日为止，旺达的固定资产估值为人民币56,447,433.40元，但估价并无计算旺达在宜兴市拥有的土地的价值及其债项。该估值基准与呈请人的调查结果吻合。 67.刘先生（代表迪辰集团）认为无锡会计师的估值过高，拒绝接受该报告作为与旺达及宜兴市政府日后谈判的基础。 68.2005年9月26日，第一、第二、第三及第四答辩人出席东方明珠的董事会会议。第一答辩人在会上派发一份日期为2005年9月22日由深圳市国颂资产评估有限公司（“国颂”）拟备的估值报告（“国颂报告”）及一份旺达资产收购建议，以作讨论。 69.根据国颂报告所载：
70.在国颂报告中对旺达的固定资产所采纳的估值基准，明显与呈请人的调查结果不一致。据呈请人调查所得，旺达、宜兴市政府及迪辰集团已达成共识，收购旺达将不包括其位于宜兴市的土地。 71.呈请人在此等程序中呈述的案情是，截至该会议在2005年9月26日举行当日，第一答辩人完全知悉上述收购旺达建议的详情。呈请人作出此项结论的根据如下：
72.第一答辩人是唯一参与或知悉有关收购旺达的谈判的与会人士，他于2005年9月26日在该会议上报告下列事项：
73.虽然第一答辩人参与有关收购旺达的谈判，但不论在2005年9月26日举行的会议上或任何其他时间，他都从未向东方明珠董事会的其他成员披露：
74.在此情况下，东方明珠董事会在2005年9月26日一致批准据称为收购旺达及收购Hero Vantage的控股权益而之前代表东方明珠向Hero Vantage预缴或按照Hero Vantage指示预缴的所有款项。 75.第二答辩人从未建议或采取任何措施促致东方明珠公布为收购旺达及收购Hero Vantage的控股权益而批准代表东方明珠向Hero Vantage或按照Hero Vantage指示付款。 76.收购旺达的建议始终没有完成。迪辰仓储按照Hero Vantage指示向双喜支付的人民币64,500,000元，从未归还予东方明珠或迪辰仓储；据第一答辩人指称，支付该笔款项的目的是收购旺达。 77.2006年6月，联交所接获投诉，指称第一答辩人、第四答辩人及李浩璋先生挪用东方明珠的款项。 78.因此，东方明珠董事会成立了特别小组调查有关投诉。第一答辩人接受特别小组查问时解释，收购旺达的建议没有落实，原因如下：
79.呈请人在查讯过程中得出的结论是，第一答辩人所作出的上述解释是虚假和不真实的。
80.呈请人呈述的案情指，据称收购旺达的唯一目的或其中一个目的，是要促致上文第57段所述的循环现金流。就Carecraft程序而言，第二答辩人并无就这一点提出争议。 81.直至联交所提出要求，东方明珠才于2006年3月23日及2006年5月4日分别发表公告及通函，向东方明珠的成员或公众人士宣布双喜付款及支付该笔款项的情况，其中包括东方明珠订立2005年9月资产转让预付款协议及2005年9月借款协议。 B4. 援用《证券及期货条例》第214(c)条的理据及第二答辩人的责任基准 82.联交所在2009年3月23日对东方明珠作出公开谴责，指东方明珠：
83.2009年2月16日，联交所对第二答辩人发出警告，并指曾有违反《上市规则》第13.13、13.20、14.34及14.38条的情况。联交所又表明，第二答辩人没有尽力促使东方明珠遵守《上巿规则》，违反了他在《上市规则》附录五B表格所载的表格内向联交所作出的董事声明、承诺及确认。 84.基于上文B2及B3节所列的事实，第二答辩人确认及接纳，东方明珠的业务及事务（包括东方明珠透过迪辰仓储进行的该等业务及事务）的经营或处理方式，导致东方明珠的成员或其任何部分成员未获提供他们可合理期望获得的关于东方明珠的业务或事务的所有资料，即没有就双喜付款迅速及全面作出公布。 85.基于第二答辩人在东方明珠的职位及职责，第二答辩人确认及接纳他须为东方明珠的业务及事务（包括东方明珠透过迪辰仓储进行的该等业务及事务）曾以上述方式经营或处理负部分责任。 C. 取消资格的建议 86.基于上文B节所载不受争议的事实，各方同意适宜根据《证券及期货条例》第214(2)(d)条对第二答辩人作出取消资格令，饬令他在一年内不得：
87.如法庭依据本陈述书以Carecraft程序处置此等针对第二答辩人的法律程序，则第二答辩人同意，法庭应另行作出命令，饬令第二答辩人支付呈请人在此等法律程序中法庭认为适当的该部分讼费，如未能就讼费达成协议，讼费便须予以评定。 D. 协定的减轻罚则因素 88.第二答辩人采取合理的行动，同意以Carecraft程序结束此等法律程序，省去呈请人及法庭的时间和讼费。 89.此外，第二答辩人同意：
附录1
A. Introduction 1.On 9 September 2009, the Securities and Futures Commission (“Petitioner”) issued these proceedings pursuant to section 214 of the Securities and Futures Ordinance, Cap. 571 (“Ordinance”) seeking a disqualification order against Mr. Zheng Yingsheng (“3rd Respondent”) and others in respect of their conduct of the business and affairs of Pearl Oriental Innovation Limited (“POIL”). 2.Subject to the approval of this Court, the Petitioner and the 3rd Respondent consent to dispose of these proceedings against the 3rd Respondent by way of the summary procedure sanctioned in Re Carecraft Construction Co Ltd [1994] 1 WLR 172, 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 respect of proceedings under section 214 of the Ordinance in Securities and Futures Commission v Yick Chong San [2007] 4 HKLRD 46, Securities and Futures Commission v Shum Ka Sang Charlie & Shen Yi (HCMP 1014/2008, unrep., 22 May 2009) and Securities and Futures Commission v Fung Chiu & Others [2009] 2 HKC 19. 3.This Statement is produced in order to identify the material facts relied on by the Petitioner in these proceedings that are not disputed by the 3rd Respondent, for the disposal of these proceedings on the basis that the case against the 3rd Respondent will be dealt with by this Court by way of the Carecraft procedure. 4.Solely for the purposes of resolving these proceedings by way of the Carecraft procedure, the 3rd Respondent accepts that, by reference to the facts set out in Section B (which the 3rd Respondent admits and accepts), during the relevant period in 2003 to 2005 or any part thereof, the business and affairs of POIL, for which the 3rd Respondent as its Executive Director was partly responsible, have been conducted in a manner described in section 214(1)(c) of the Ordinance, namely, resulting in the members of POIL or any part thereof not having been given all the information with respect to the business or affairs of POIL that such members might reasonably expect. 5.On the basis of the facts set out in Section B below, the Petitioner and the 3rd Respondent agree, and the 3rd Respondent is prepared to accept, that it would be appropriate for a disqualification order to be made against the 3rd Respondent under section 214(2)(d) of the Ordinance that, for a period of 1 year, he shall not:-
6.If, pursuant to this Statement, the Court disposes of these proceedings against the 3rd Respondent by way of the Carecraft procedure, the 3rd Respondent agrees that there should additionally be an order that the 3rd Respondent shall pay the costs of the Petitioner in these proceedings, or such portion thereof as the court thinks appropriate, to be taxed if not agreed. 7.In the event of a disqualification order being made against the 3rd Respondent by reference to this Statement, the Petitioner reserves the right to:-
8.In the event of a disqualification order being made against the 3rd Respondent by reference to this Statement, the Petitioner and the 3rd Respondent also agree that they will jointly apply to this Court for a direction that this Statement be annexed to the judgment of this Court. 9.The Petitioner and the 3rd Respondent agree that in the event of this Court refusing for any reason to make a disqualification order against the 3rd Respondent by reference to this Statement, and ordering a full hearing to be conducted, either of them will not make reference to this Statement (or to any admission or concession contained herein or any proposal for disqualification) at any subsequent hearing in these proceedings without the prior written consent of the other party to this Statement. B. Facts not in dispute 10.The structure of this Section is as follows:-
B1. Background and management of POIL 11.POIL is and was at all material times:-
12.POIL’s shares became listed on the Main Board of the Hong Kong Stock Exchange (“Stock Exchange”) on 30 April 1993 and remain so listed as at the date of this Statement. Its stock code was and still is 0632. 13.POIL’s current name was adopted on 8 August 2006, before which it was called China Merchants DiChain (Asia) Limited. It was at all material times an investment holding company, with its principal business in the provision of logistics services and investments in energy and resources. 14.As at 31 May 2009, POIL had an authorised share capital of HK$20,000,000,000, divided into 200,000,000,000 shares of HK$0.1 each, of which 581,403,960 shares had been issued. 15.DiChain Holdings Limited (“DC Holdings”) is a limited company incorporated in Hong Kong. It was at all material times the ultimate holding company of POIL with a majority shareholding therein. 16.DiChain Warehouse Services (Shenzhen) Co., Ltd (“DC Warehouse”) is a wholly foreign owned enterprise in the People’s Republic of China (“PRC”). It was at all material times a wholly owned subsidiary of POIL. 17.The 3rd Respondent was, from 27 March 2003 to 31 August 2010, an Executive Director of POIL responsible for overseeing its logistics business. He has over twenty years of experience in logistics management and transportation operations. At all material times, he occupied a position of significant responsibility for the conduct of the business and affairs of POIL, and participated in the management of DC Holdings and DC Warehouse. 18.Mr. Fan Di (“1st Respondent”), Mr. Li Xinggui (“2nd Respondent”) and Mr. Zhou Li Yang (“4th Respondent”) at all material times also occupied positions of significant responsibility for the conduct of the business and affairs of POIL and participated in the management of DC Holdings and DC Warehouse. 19.The 1st Respondent was an Executive Director, the Chairman and the President of POIL in the period from 25 March 2002 to 24 May 2006 responsible for overseeing its strategic development. He was a director of DC Holdings and also responsible for the finance of DC Warehouse. He was at all material times a beneficial shareholder of POIL. 20.The 2nd Respondent was an Executive Director of POIL in the period from 26 August 2002 to 31 December 2005 responsible for overseeing its logistics business. He was also a director of DC Holdings. 21.The 4th Respondent was and still is an Executive Director and the Managing Director of POIL since 17 September 2004 responsible for its strategic development and daily operations. 22.By reason of his position and responsibilities in POIL, the 3rd Respondent owed to POIL the duty to exercise reasonable care, skill and diligence which would be exercised by a reasonably diligent person with the general knowledge, skill and experience which might reasonably be expected of a person carrying out the same functions as were carried out by the 3rd Respondent in relation to POIL; and the knowledge, skill and experience possessed by the 3rd Respondent. 23.Further, under Rule 3.08 of the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”), the directors of POIL, both collectively and individually, were at all material times expected to fulfill fiduciary duties and duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law. In performing their duties, the directors of POIL were answerable to POIL for the application or misapplication of its assets; and had to apply such degree of skill, care and diligence as might reasonably be expected of individuals of their knowledge and experience and holding their offices within POIL. 24.Further, in order to act as a director of POIL, the 3rd Respondent was required to and did sign a formal Declaration and Undertaking in the form as set out in Form B in Appendix 5 to the Listing Rules whereby the 3rd Respondent undertook with the Stock Exchange that he, in the exercise of his powers and duties as a director of POIL, would comply with and use his best endeavours to procure that POIL would comply with, among others, the Listing Rules from time to time in force. B2. RMB60,000,000 investment through Shenzhen International Trust and Investment Co. Ltd. (“SZITIC”) 25.Between 21 April 2003 and 20 June 2005, DC Warehouse entered into 12 trust fund agreements (“Trust Fund Agreements”) with SZITIC. 26.Pursuant to the Trust Fund Agreements, DC Warehouse paid a total of RMB60,000,000 to SZITIC as a trustee; SZITIC was obliged to lend this sum invested by DC Warehouse to third parties to earn interest. 27.The 1st Respondent, the 3rd Respondent and Mr. Wu Shiyue (“SY Wu”) (an Executive Director of POIL in the period from 2002 to 30 August 2005) had signed the Trust Fund Agreements on behalf of DC Warehouse. 28.The 3rd Respondent had signed six of the Trust Fund Agreements on behalf of DC Warehouse between 18 June 2004 and 20 June 2005. 29.On 25 July 2005, the Audit Committee of POIL held a meeting for the purposes of discussing the audit exercise for that financial year (“Audit Committee Meeting”). The attendees were the 4th Respondent, Mr. Yu Wai Kit Eddie (“Eddie Yu”) (the company secretary and financial controller), accountants from Deloitte Touche Tohmatsu (“Deloitte”) (the company auditors) and two independent non-executive directors, Mr. Barry J. Buttifant and Mr. Victor Yang. 30.At the Audit Committee Meeting, the independent non-executive directors complained that the Audit Committee had not been given any prior notice of the investment made by DC Warehouse through SZITIC. Furthermore, the accountants from Deloitte expressed concerns over the recoverability of the invested sum of RMB60,000,000 and demanded the management of POIL to either call back the investment or obtain a list of the entities to which SZITIC had lent the invested sum so as to enable Deloitte to review and assess their credibility. 31.After the Audit Committee Meeting, Eddie Yu tried but failed to obtain from SZITIC a list of the entities to which it had lent the sum invested by DC Warehouse. As a result, the management of DC Warehouse decided to terminate the Trust Fund Agreements with SZITIC. 32.Between 3 August 2005 and 9 August 2005, SZITIC paid DC Warehouse its invested sum with interest amounting to RMB64,840,849.99 in total. 33.On 10 August 2005, SZITIC issued a Certificate confirming the termination of the Trust Fund Agreements and that the sums invested by DC Warehouse had been refunded with interest. This Certificate did not reveal the identity of those entities to which SZITIC had lent the invested sum of DC Warehouse, and was the only written confirmation from SZITIC provided to Eddie Yu, the auditor and the Audit Committee at that time. 34.The Petitioner has discovered in the course of its inquiries that SZITIC had in fact prepared six official repayment reports dated 16 August 2005 and 17 August 2005 and sent the same to DC Warehouse. According to SZITIC, this was part of its normal procedures. Eddie Yu and the Audit Committee had never received these official repayment reports or been informed of their existence until the inquiries conducted by the Petitioner. 35.The official repayment reports showed that SZITIC had lent the invested sum of DC Warehouse to two companies in the PRC, namely, 招商際通信息（深圳）有限公司 (“CM Information”) and 深圳市招商迪辰商務系統有限公司 (“CM Business Systems”). 36.The 1st Respondent was at all material times the Legal Representative, the Chairman and the General Manager of CM Information and CM Business Systems. 37.In the course of inquiries by the Petitioner, SZITIC also revealed that one characteristic of the trust fund investment of DC Warehouse was that DC Warehouse would designate the entities to which its investment would be lent and that SZITIC was bound to follow such instructions from DC Warehouse. This characteristic was not stipulated in any of the Trust Fund Agreements. 38.The Petitioner’s investigations revealed that the 1st Respondent had been solely responsible for the trust fund investment by DC Warehouse through SZITIC including designating the entities to which SZITIC should lend the invested sum of DC Warehouse:-
39.The Petitioner has further discovered that:-
40.In agreeing to sign six of the Trust Fund Agreements:-
41.Contemporaneous with the refund from SZITIC, between 3 August 2005 and 9 August 2005, CM Information and CM Business Systems had paid a total of RMB55,840,849.99 to SZITIC. 42.Meanwhile, from 3 August 2005 to 10 August 2005, DC Warehouse transferred a total sum of RMB64,500,000 to a company in the PRC called 大連雙喜商貿發展有限公司 (“Double Happiness”). The circumstances under which DC Warehouse had made this payment are set out in Section B3 below. 43.At the time of such payment by DC Warehouse, Mr. Zang Hongwei was the Legal Representative of Double Happiness. He was a director of and owned 90% of the shares in Double Happiness, and a former brother-in-law of the 1st Respondent. 44.Between 3 August 2005 and 19 October 2005, Double Happiness paid RMB57,005,000 to CM Information and CM Business Systems. B3. Purported acquisition of Yixing Wangda Logistics Co. Ltd. (“Wangda”) 45.Wangda operated logistics business in Yixing in the PRC. Mr. Kong Baisong (“BS Kong”) was at all material times the Legal Representative and the General Manager of Wangda. 46.DC Holdings had in the past operated a beer factory in Yixing. When the Yixing government later resumed the land on which the factory was built, it had granted to DC Holdings a separate piece of land in Yixing. 47.Instead of continuing with its beer production business, DC Holdings proposed to operate logistics business on that new piece of land. However, the Yixing government rejected that proposal. 48.On or about 13 December 2004, Mr. Zhu Runlin (“RL Zhu”) submitted his report on the logistics business of Wangda to the 1st Respondent, SY Wu and Mr. Li Haozhang (“HZ Li”) (the Vice President of DC Holdings). RL Zhu was then employed by the 1st Respondent to explore investment opportunity in the PRC on behalf of POIL and DC Holdings. 49.RL Zhu stated in his report as follows:-
50.On 7 July 2005, a joint board meeting of POIL and DC Holdings was held. As shown in the minutes of that meeting, the attendees were the 1st Respondent, the 2nd Respondent, SY Wu, HZ Li, RL Zhu and others. The 3rd Respondent did not attend. 51.At this meeting, HZ Li and RL Zhu reported as follows:-
52.It was unanimously resolved at this meeting on 7 July 2005 that:-
53.Despite such resolutions, in the course of its inquiries the Petitioner has tried but failed to obtain any evidence of:-
54.On or about 21 July 2005, Hero Vantage issued a payment notice to both POIL and DC Holdings, under which they were asked to make payments to Double Happiness, on or before 19 September 2005, in the amount stated in two agreements, i.e.《資產轉讓預付款協議》(“July 2005 HV Deposit Agreement”) and《借款協議》(“July 2005 HV Loan Agreement”), both of which were allegedly entered into on 19 July 2005. 55.In the course of its inquiries, the Petitioner has tried but failed to locate the July 2005 HV Deposit Agreement and the July 2005 HV Loan Agreement. However, the Petitioner has obtained two other agreements also entitled《資產轉讓預付款協議》and《借款協議》entered into by Hero Vantage and POIL (with the 1st Respondent signing on its behalf) dated 27 September 2005. These agreements are referred to below as “September 2005 HV Deposit Agreement” and “September 2005 HV Loan Agreement” respectively. 56.Under the September 2005 HV Deposit Agreement, POIL agreed to pay Hero Vantage a deposit of HK$42,000,000 for the purpose of the acquisition of certain logistics business assets in Yixing. 57.Under the September 2005 HV Loan Agreement, POIL agreed to lend Hero Vantage HK$18,000,000 for a period of 2 years with interest at 4% per annum. 58.DC Warehouse, presumably in purported compliance with the payment notice from Hero Vantage referred to in paragraph 54 above, transferred RMB64,500,000 (RMB equivalent of HK$60,000,000) in total to Double Happiness from 3 August 2005 to 10 August 2005. This payment is referred to as “Double Happiness Payment” below. 59.As already described in Section B2 above, the round-robin cash flow was as follows:-
60.nbsp; Between 3 August 2005 to 19 October 2005, Double Happiness paid RMB57,005,000 back to CM Information and CM Business Systems. 61.On or about 15 August 2005, the 1st Respondent instructed Mr. Chong Siu Po Bryan (“Bryan Chong”) (an Assistant Vice President of POIL) and Mr. Liu Jun (“J Liu”) (the Chief Accountant of DC Holdings) to conduct a due diligence exercise of Wangda. 62.Bryan Chong and J Liu conducted the due diligence exercise of Wangda in Yixing from 18 August 2005 to 20 August 2005. They submitted a due diligence report to the 1st Respondent and HZ Li thereafter. 63.In the report, Bryan Chong and J Liu identified various problems with the business of Wangda; and their assessment of the merit of the proposed acquisition of Wangda was unequivocally not favourable. 64.Shortly after 20 August 2005, Bryan Chong and J Liu had a meeting with the 1st Respondent in which they explained to him the unfavourable findings of their due diligence exercise on Wangda. 65.On 5 September 2005, a meeting was held among the Yixing government officials, BS Kong and HZ Li and J Liu (both attending on behalf of DC Holdings). The following matters were discussed at this meeting:-
66.As a result of its inquiries, the Petitioner has discovered (and the 3rd Respondent does not dispute that to be the case for the purpose of the Carecraft procedure) that in fact up to 5 September 2005, all the discussions among the Yixing government, Wangda and DC Holdings or POIL were only preliminary and the parties had never agreed on anything concrete which was capable of being implemented. In particular, what had been represented on behalf of DC Holdings to Wangda and the Yixing government were as follows:-
67.In September 2005, BS Kong on behalf of Wangda and J Liu on behalf of DC Holdings engaged an accountants’ firm in Wuxi called 無錫普信會計師事務所有限公司 (“Wuxi Accountants”) to prepare a valuation of the fixed assets of Wangda. 68.The Wuxi Accountants produced a draft report valuing the fixed assets of Wangda at RM56,447,433.40 as at 31 August 2005, without taking into account the value of the land owned by Wangda in Yixing and its debts. This basis of valuation was consistent with the findings of the Petitioner. 69.J Liu, on behalf of DC Holdings, considered this valuation arrived at by the Wuxi Accountants excessive and refused to accept it as the basis for further negotiations with Wangda and the Yixing government. 70.On 26 September 2005, the 1st, 2nd, 3rd and 4th Respondents attended a board meeting of POIL, in which a valuation report prepared by Shenzhen Guosong Assets Appraisal Co. Ltd. (“SGAA”) dated 22 September 2005 (“Guosong Report”) and an Assets Acquisition Proposal for Wangda were tabled by the 1st Respondent for discussion. 71.As stated in the Guosong Report:-
72.The basis for valuing the fixed assets of Wangda adopted in the Guosong Report was clearly inconsistent with the findings of the Petitioner that a consensus had been reached by Wangda, the Yixing government and DC Holdings that the acquisition of Wangda would not include its land in Yixing. 73.The Petitioner’s case in these proceedings is that as of the date of this meeting on 26 September 2005, the 1st Respondent had full knowledge of the details of the proposed acquisition of Wangda as described above. In this regard, the Petitioner relies on the following:-
74.The 1st Respondent had signed the September 2005 HV Deposit Agreement and the September 2005 HV Loan Agreement on behalf of POIL. The 3rd Respondent does not dispute the matters stated in this paragraph for the purposes of the Carecraft procedure.
75.Despite his involvement in the negotiations on the acquisition of Wangda, the 1st Respondent had never, whether at the meeting on 26 September 2005 or any other time, revealed to other members of the board of POIL:-
76.Under such circumstances, the board of directors of POIL unanimously approved on 26 September 2005 all the previous prepayments to Hero Vantage, or to the direction of Hero Vantage, on behalf of POIL purportedly for the purposes of the acquisition of Wangda and the acquisition of a controlling equity interest in Hero Vantage. 77.The 3rd Respondent had never advised, or taken any step to procure, POIL to make an announcement of the approved payments on behalf of POIL to Hero Vantage, or to the direction of Hero Vantage, for the purposes of the acquisition of Wangda and the acquisition of a controlling equity interest in Hero Vantage, save and except that, on or around 29 November 2005 (more than 2 months after the board meeting on 26 September 2005 referred to in paragraphs 70 to 76 above), when the 3rd Respondent became aware of the approved payments to Hero Vantage, the 3rd Respondent had asked Eddie Yu whether POIL was required under the Listing Rules to disclose the September 2005 HV Deposit Agreement and the September 2005 HV Loan Agreement but the 3rd Respondent had been wrongly advised that POIL was not required to disclose the same. 78.The proposed acquisition of Wangda had never proceeded to completion. The RMB64,500,000 paid by DC Warehouse to Double Happiness, under the direction of Hero Vantage, which the 1st Respondent had alleged to be for the purposes of the acquisition of Wangda had never been repaid to POIL or DC Warehouse. 79.In June 2006, the Stock Exchange received complaints alleging that the 1st Respondent, the 4th Respondent and HZ Li had misappropriated the funds of POIL. 80.As a result, the board of directors of POIL formed a special unit to investigate the complaints. When being questioned by the special unit, the 1st Respondent explained that the proposed acquisition of Wangda had fallen through for the following reasons:-
81.In the course of its inquiries, the Petitioner has come to the conclusion that the above explanations from the 1st Respondent are false and untrue.
82.The Petitioner’s case is that the only purpose, or one of the purposes, of the purported acquisition of Wangda was to procure the round-robin cash flow as described in paragraph 59 above. The 3rd Respondent, who had no knowledge of the round-robin cash flow at the material time, does not dispute this for the purposes of the Carecraft procedure. 83.The Double Happiness Payment and the circumstances under which it had been made, including the entering into of the September 2005 HV Deposit Agreement and the September 2005 HV Loan Agreement by POIL, were not made known to the members of POIL or the public until the publication of an announcement on 23 March 2006 and a circular on 4 May 2006 and only upon request by the Stock Exchange. B4. Grounds for invoking section 214(c) of the Ordinance and basis of the 3rd Respondent’s responsibility 84.On 23 March 2009, the Stock Exchange issued a public reprimand against POIL for failing to:
85.On 16February 2009, the Stock Exchange issued a warning to the 3rd Respondent and stated that there were breaches of Rules 13.13, 13.20, 14.34 and 14.38 of the Listing Rules but the Stock Exchange decided not to impose a public statement which involves criticism or any sanctions under Rule 2A.09 of the Listing Rules on the 3rd Respondent. It was also stated that the 3rd Respondent breached the Director’s Declaration, Undertaking and Acknowledgment given by him to the Stock Exchange in the form set out in Appendix 5 Form B to the Listing Rules for failing to use his best endeavours to procure POIL’s compliance with the Listing Rules. 86.By reason of the facts stated in Sections B2 and B3 above, the 3rd Respondent acknowledges and accepts that the business and affairs of POIL (including such business and affairs carried out by POIL through DC Warehouse) have been conducted in a manner resulting in the members of POIL or any part thereof not having been given all the information with respect to the business or affairs of POIL that such members might reasonably expect, namely, in failing to announce promptly and fully the making of the Double Happiness Payment. 87.By reason of his position and responsibilities in POIL, the 3rd Respondent acknowledges and accepts that he was partly responsible for the aforesaid conduct of the business and affairs of POIL (including such business and affairs carried out by POIL through DC Warehouse). C. Proposal for disqualification 88.On the basis of the facts not in dispute as set out in Section B above, the parties agree that it would be appropriate for a disqualification order to be made against the 3rd Respondent under section 214(2)(d) of the Ordinance that, for a period of 1 year, he shall not:-
89.If the Court disposes of these proceedings against the 3rd Respondent by way of the Carecraft procedure pursuant to this Statement, the 3rd Respondent agrees that there should additionally be an order that the 3rd Respondent shall pay the costs of the Petitioner in these proceedings, or such portion thereof as the court thinks appropriate, to be taxed if not agreed. D. Agreed mitigating factors 90.The 3rd Respondent adopted a reasonable course of action in agreeing to conclude these proceedings by way of Carecraft procedure at an early stage which would save both the time and costs of the Petitioner and the court. 91.Further, the 3rd Respondent has agreed :-
APPENDIX 1 “Corporation” means a company or other body corporate incorporated either in Hong Kong or elsewhere. “Company” means a company as defined in section 2(1) of the Companies Ordinance, Cap. 32. The expression “company” in the definitions of subsidiary, holding company and affiliate below, shall be read as including a corporation. “Subsidiary” means, with respect to its holding company, a company:-
“Holding company” in relation to a company shall be read as a reference to a company of which that last-mentioned company is a subsidiary. “Affiliate” in respect of a company, means any subsidiaries or holding companies of such company or any subsidiaries of any of the holding companies of such company. Appendix C ________________________________________________________________ STATEMENT OF FACTS NOT IN DISPUTE FOR THE PURPOSES OF A CARECRAFT SETTLEMENT AS BETWEEN THE PETITIONER AND THE 4th RESPONDENT ________________________________________________________________ A. Introduction 1.On 9 September 2009, the Securities and Futures Commission (“Petitioner”) issued these proceedings pursuant to section 214 of the Securities and Futures Ordinance, Cap. 571 (“Ordinance”) seeking a disqualification order against Mr. Zhou Li Yang (“4th Respondent”) and others in respect of their conduct of the business and affairs of Pearl Oriental Innovation Limited (“POIL”). 2.Subject to the approval of this Court, the Petitioner and the 4th Respondent consent to dispose of these proceedings against the 4th Respondent by way of the summary procedure sanctioned in Re Carecraft Construction Co Ltd [1994] 1 WLR 172, 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 respect of proceedings under section 214 of the Ordinance in Securities and Futures Commission v Yick Chong San [2007] 4 HKLRD 46, Securities and Futures Commission v Shum Ka Sang Charlie and Shen Yi (HCMP 1014/2008, unrep., 22 May 2009) and Securities and Futures Commission v Fung Chiu & Others [2009] 2 HKC 19. 3.This Statement is produced in order to identify the material facts relied on by the Petitioner in these proceedings that are not disputed by the 4th Respondent, for the disposal of these proceedings on the basis that the case against the 4th Respondent will be dealt with by this Court by way of the Carecraft procedure. 4.Solely for the purposes of resolving these proceedings by way of the Carecraft procedure, the 4th Respondent accepts that, by reference to the facts set out in Section B (which the 4th Respondent admits and accepts), during the relevant period in 2003 to 2005 or any part thereof, the business and affairs of POIL, for which the 4th Respondent as its Executive Director was partly responsible, have been conducted in a manner described in section 214(1)(c) of the Ordinance, namely, resulting in the members of POIL or any part thereof not having been given all the information with respect to the business or affairs of POIL that such members might reasonably expect. 5.On the basis of the facts set out in Section B below, the Petitioner and the 4th Respondent agree, and the 4th Respondent is prepared to accept, that it would be appropriate for a disqualification order to be made against the 4th Respondent under section 214(2)(d) of the Ordinance that, for a period of 1 year, he shall not:-
6.If, pursuant to this Statement, the Court disposes of these proceedings against the 4th Respondent by way of the Carecraft procedure, the 4th Respondent agrees that there should additionally be an order that the 4th Respondent shall pay the costs of the Petitioner in these proceedings, or such portion thereof as the court thinks appropriate to be taxed if not agreed. 7.In the event of a disqualification order being made against the 4th Respondent by reference to this Statement, the Petitioner reserves the right to:-
8.In the event of a disqualification order being made against the 4th Respondent by reference to this Statement, the Petitioner and the 4th Respondent also agree that they will jointly apply to this Court for a direction that this Statement be annexed to the judgment of this Court. 9.The Petitioner and the 4th Respondent agree that in the event of this Court refusing for any reason to make a disqualification order against the 4th Respondent by reference to this Statement, and ordering a full hearing to be conducted, either of them will not make reference to this Statement (or to any admission or concession contained herein or any proposal for disqualification) at any subsequent hearing in these proceedings without the prior written consent of the other party to this Statement. B. Facts not in dispute 10.The structure of this Section is as follows:-
B1. Background and management of POIL 11.POIL is and was at all material times:-
12.POIL’s shares became listed on the Main Board of the Hong Kong Stock Exchange (“Stock Exchange”) on 30 April 1993 and remain so listed as at the date of this Statement. Its stock code was and still is 0632. 13.POIL’s current name was adopted on 8 August 2006, before which it was called China Merchants DiChain (Asia) Limited. It was at all material times an investment holding company, with its principal business in the provision of logistics services and investments in energy and resources. 14.As at 31 May 2009, POIL had an authorised share capital of HK$20,000,000,000, divided into 200,000,000,000 shares of HK$0.1 each, of which 581,403,960 shares had been issued. 15.DiChain Holdings Limited (“DC Holdings”) is a limited company incorporated in Hong Kong. It was at all material times the ultimate holding company of POIL with a majority shareholding therein. 16.DiChain Warehouse Services (Shenzhen) Co., Ltd (“DC Warehouse”) is a wholly foreign owned enterprise in the People’s Republic of China (“PRC”). It was at all material times a wholly owned subsidiary of POIL. 17.The 4th Respondent was and still is an Executive Director and the Managing Director of POIL since 17 September 2004 responsible for the execution of its strategic development and daily operations. He has worked in a provincial government and a conglomerate in the PRC, and extensive experience in listed company management, mergers and acquisitions, direct investment, corporate finance and fund management. At all material times, he occupied a position of significant responsibility for the conduct of the business and affairs of POIL, and participated in the management of DC Holdings and DC Warehouse. 18.Mr. Fan Di (“1st Respondent”), Mr. Li Xinggui (“2nd Respondent”) and Mr. Zheng Yingsheng (“3rd Respondent”) at all material times also occupied positions of significant responsibility for the conduct of the business and affairs of POIL and participated in the management of DC Holdings and DC Warehouse. 19.The 1st Respondent was an Executive Director, the Chairman and the President of POIL in the period from 25 March 2002 to 24 May 2006 responsible for overseeing its strategic development. He was a director of DC Holdings and also responsible for the finance of DC Warehouse. He was at all material times a beneficial shareholder of POIL. 20.The 2nd Respondent was an Executive Director of POIL in the period from 26 August 2002 to 31 December 2005 responsible for overseeing its logistics business. He was also a director of DC Holdings. 21.The 3rd Respondent was an Executive Director of POIL from 27 March 2003 to 31 August 2010 responsible for overseeing its logistics business. He has over twenty years of experience in logistics management and transportation operations. 22.By reason of his position and responsibilities in POIL, the 4th Respondent owed to POIL the duty to exercise reasonable care, skill and diligence which would be exercised by a reasonably diligent person with the general knowledge, skill and experience which might reasonably be expected of a person carrying out the same functions as were carried out by the 4th Respondent in relation to POIL; and the knowledge, skill and experience possessed by the 4th Respondent. 23.Further, under Rule 3.08 of the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”), the directors of POIL, both collectively and individually, were at all material times expected to fulfill fiduciary duties and duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law. In performing their duties, the directors of POIL were answerable to POIL for the application or misapplication of its assets; and had to apply such degree of skill, care and diligence as might reasonably be expected of individuals of their knowledge and experience and holding their offices within POIL. 24.Further, in order to act as a director of POIL, the 4th Respondent was required to and did sign a formal Declaration and Undertaking in the form as set out in Form B in Appendix 5 to the Listing Rules whereby the 4th Respondent undertook with the Stock Exchange that he, in the exercise of his powers and duties as a director of POIL, would comply with and use his best endeavours to procure that POIL would comply with, among others, the Listing Rules from time to time in force. B2. RMB60,000,000 investment through Shenzhen International Trust and Investment Co. Ltd. (“SZITIC”) 25.Between 21 April 2003 and 20 June 2005, DC Warehouse entered into 12 trust fund agreements (“Trust Fund Agreements”) with SZITIC. 26.Pursuant to the Trust Fund Agreements, DC Warehouse had paid a total of RMB60,000,000 to SZITIC as a trustee; SZITIC was obliged to lend this sum invested by DC Warehouse to third parties to earn interest. 27.The 1st Respondent, the 3rd Respondent and Mr. Wu Shiyue (“SY Wu”) (an Executive Director of POIL in the period from 2002 to 30 August 2005) had signed the Trust Fund Agreements on behalf of DC Warehouse. 28.On 25 July 2005, the Audit Committee of POIL held a meeting for the purposes of discussing the audit exercise for that financial year (“Audit Committee Meeting”). The attendees were the 4th Respondent, Mr. Yu Wai Kit Eddie (“Eddie Yu”) (the company secretary and financial controller), accountants from Deloitte Touche Tohmatsu (“Deloitte”) (the company auditors) and two independent non-executive directors, Mr. Barry J. Buttifant and Mr. Victor Yang. 29.At the Audit Committee Meeting, the independent non-executive directors complained that the Audit Committee had not been given any prior notice of the investment made by DC Warehouse through SZITIC. Furthermore, the accountants from Deloitte expressed concerns over the recoverability of the invested sum of RMB60,000,000 and demanded the management of POIL to either call back the investment or obtain a list of the entities to which SZITIC had lent the invested sum so as to enable Deloitte to review and assess their credibility. 30.After the Audit Committee Meeting, Eddie Yu tried but failed to obtain from SZITIC a list of the entities to which it had lent the sum invested by DC Warehouse. As a result, the management of DC Warehouse decided to terminate the Trust Fund Agreements with SZITIC. 31.Between 3 August 2005 and 9 August 2005, SZITIC paid DC Warehouse its invested sum with interest amounting to RMB64,840,849.99 in total. 32.On 10 August 2005, SZITIC issued a Certificate confirming the determination of the Trust Fund Agreements and that the sums invested by DC Warehouse had been refunded with interest. This Certificate did not reveal the identity of those entities to which SZITIC had lent the invested sum of DC Warehouse, and was the only written confirmation from SZITIC provided to Eddie Yu, the auditor and the Audit Committee at that time. 33.The Petitioner has discovered in the course of its inquiries that SZITIC had in fact prepared six official repayment reports dated 16 August 2005 and 17 August 2005 and sent the same to DC Warehouse. According to SZITIC, this was part of its normal procedures. Eddie Yu and the Audit Committee had never received these official repayment reports or been informed of their existence until the inquiries conducted by the Petitioner. 34.The official repayment reports showed that SZITIC had lent the invested sum of DC Warehouse to two companies in the PRC, namely, 招商際通信息（深圳）有限公司 (“CM Information”) and 深圳市招商迪辰商務系統有限公司 (“CM Business Systems”). 35.The 1st Respondent was at all material times the Legal Representative, the Chairman and the General Manager of CM Information and CM Business Systems. 36.In the course of inquiries by the Petitioner, SZITIC also revealed that one characteristic of the trust fund investment of DC Warehouse was that DC Warehouse would designate the entities to which its investment would be lent and that SZITIC was bound to follow such instructions from DC Warehouse. This characteristic was not stipulated in any of the Trust Fund Agreements. 37.The Petitioner’s investigations revealed that the 1st Respondent had been solely responsible for the trust fund investment by DC Warehouse through SZITIC including designating the entities to which SZITIC should lend the invested sum of DC Warehouse:-
38.Neither the 3rd Respondent nor SY Wu, who were the only other two persons signing some of the Trust Fund Agreements, had been involved in any dealings or negotiations with SZITIC in relation to the Trust Fund Agreements.
39.Contemporaneous with the refund from SZITIC, between 3 August 2005 and 9 August 2005, CM Information and CM Business Systems had paid a total of RMB55,840,849.99 to SZITIC. 40.Meanwhile, from 3 August 2005 to 10 August 2005, DC Warehouse transferred a total sum of RMB64,500,000 to a company in the PRC called 大連雙喜商貿發展有限公司 (“Double Happiness”). The circumstances under which DC Warehouse had made this payment are set out in Section B3 below. 41.At the time of such payment by DC Warehouse, Mr. Zang Hongwei was the Legal Representative of Double Happiness. He was a director of and owned 90% of the shares in Double Happiness, and a former brother-in-law of the 1st Respondent. 42.Between 3 August 2005 and 19 October 2005, Double Happiness paid RMB57,005,000 to CM Information and CM Business Systems. B3. Purported acquisition of Yixing Wangda Logistics Co. Ltd. (“Wangda”) 43.Wangda operated logistics business in Yixing in the PRC. Mr. Kong Baisong (“BS Kong”) was at all material times the Legal Representative and the General Manager of Wangda. 44.DC Holdings had in the past operated a beer factory in Yixing. When the Yixing government later resumed the land on which the factory was built, it had granted to DC Holdings a separate piece of land in Yixing. 45.Instead of continuing with its beer production business, DC Holdings proposed to operate logistics business on that new piece of land. However, the Yixing government rejected that proposal. 46.On or about 13 December 2004, Mr. Zhu Runlin (“RL Zhu”) submitted his report on the logistics business of Wangda to the 1st Respondent, SY Wu and Mr. Li Haozhang (“HZ Li”) (the Vice President of DC Holdings). RL Zhu was then employed by the 1st Respondent to explore investment opportunity in the PRC on behalf of POIL and DC Holdings. 47.RL Zhu stated in his report as follows:-
48.RL Zhu had explored with SE Li the possibilities of cooperation, and the feedback from SE Li had been positive.
49.At this meeting, HZ Li and RL Zhu reported as follows:-
50.It was unanimously resolved at this meeting on 7 July 2005 that:-
51.Despite such resolutions, in the course of its inquiries the Petitioner has tried but failed to obtain any evidence of:-
52.On or about 21 July 2005, Hero Vantage issued a payment notice to both POIL and DC Holdings, under which they were asked to make payments to Double Happiness, on or before 19 September 2005, in the amount stated in two agreements, i.e.《資產轉讓預付款協議》(“July 2005 HV Deposit Agreement”) and《借款協議》(“July 2005 HV Loan Agreement”), both of which were allegedly entered into on 19 July 2005. 53.In the course of its inquiries, the Petitioner has tried but failed to locate the July 2005 HV Deposit Agreement and the July 2005 HV Loan Agreement. However, the Petitioner has obtained two other agreements also entitled《資產轉讓預付款協議》and《借款協議》entered into by Hero Vantage and POIL (with the 1st Respondent signing on its behalf) dated 27 September 2005. These agreements are referred to below as “September 2005 HV Deposit Agreement” and “September 2005 HV Loan Agreement” respectively. 54.Under the September 2005 HV Deposit Agreement, POIL agreed to pay Hero Vantage a deposit of HK$42,000,000 for the purpose of the acquisition of certain logistics business assets in Yixing. 55.Under the September 2005 HV Loan Agreement, POIL agreed to lend Hero Vantage HK$18,000,000 for a period of 2 years with interest at 4% per annum. 56.DC Warehouse, presumably in purported compliance with the payment notice from Hero Vantage referred to in paragraph 52 above, transferred RMB64,500,000 (RMB equivalent of HK$60,000,000) in total to Double Happiness from 3 August 2005 to 10 August 2005. This payment is referred to as “Double Happiness Payment” below. 57.As already described in Section B2 above, the round-robin cash flow was as follows:-
58.The Petitioner’s case in these proceedings is that there was no or no legitimate commercial reason at the material time for POIL and/or DC Warehouse to procure the above round-robin cash flow. The 4th Respondent does not dispute this for the purposes of the Carecraft procedure. 59.On or about 15 August 2005, the 1st Respondent instructed Mr. Chong Siu Po Bryan (“Bryan Chong”) (an Assistant Vice President of POIL) and Mr. Liu Jun (“J Liu”) (the Chief Accountant of DC Holdings) to conduct a due diligence exercise of Wangda. 60.Bryan Chong and J Liu conducted the due diligence exercise of Wangda in Yixing from 18 August 2005 to 20 August 2005. They submitted a due diligence report to the 1st Respondent and HZ Li thereafter. 61.In the report, Bryan Chong and J Liu identified various problems with the business of Wangda; and their assessment of the merit of the proposed acquisition of Wangda was unequivocally not favourable. 62.Shortly after 20 August 2005, Bryan Chong and J Liu had a meeting with the 1st Respondent in which they explained to him the unfavourable findings of their due diligence exercise on Wangda. 63.On 5 September 2005, a meeting was held among the Yixing government officials, BS Kong and HZ Li and J Liu (both attending on behalf of DC Holdings). The following matters were discussed at this meeting:-
64.As a result of its inquiries, the Petitioner has discovered (and the 4th Respondent does not dispute that to be the case for the purpose of the Carecraft procedure) that in fact up to 5 September 2005, all the discussions among the Yixing government, Wangda and DC Holdings or POIL were only preliminary and the parties had never agreed on anything concrete which was capable of being implemented. In particular, what had been represented on behalf of DC Holdings to Wangda and the Yixing government were as follows:-
65.In September 2005, BS Kong on behalf of Wangda and J Liu on behalf of DC Holdings engaged an accountants’ firm in Wuxi called 無錫普信會計師事務所有限公司 (“Wuxi Accountants”) to prepare a valuation of the fixed assets of Wangda. 66.The Wuxi Accountants produced a draft report valuing the fixed assets of Wangda at RM56,447,433.40 as at 31 August 2005, without taking into account the value of the land owned by Wangda in Yixing and its debts. This basis of valuation was consistent with the findings of the Petitioner. 67.J Liu, on behalf of DC Holdings, considered this valuation arrived at by the Wuxi Accountants excessive and refused to accept it as the basis for further negotiations with Wangda and the Yixing government. 68.On 26 September 2005, the 1st, 2nd, 3rd and 4th Respondents attended a board meeting of POIL, in which a valuation report prepared by Shenzhen Guosong Assets Appraisal Co. Ltd. (“SGAA”) dated 22 September 2005 (“Guosong Report”) and an Assets Acquisition Proposal for Wangda were tabled by the 1st Respondent for discussion. 69.As stated in the Guosong Report:-
70.The basis for valuing the fixed assets of Wangda adopted in the Guosong Report was clearly inconsistent with the findings of the Petitioner that a consensus had been reached by Wangda, the Yixing government and DC Holdings that the acquisition of Wangda would not include its land in Yixing. 71.The Petitioner’s case in these proceedings is that as of the date of this meeting on 26 September 2005, the 1st Respondent had full knowledge of the details of the proposed acquisition of Wangda as described above. In this regard, the Petitioner relies on the following findings:-
72.The 1st Respondent had signed the September 2005 HV Deposit Agreement and the September 2005 HV Loan Agreement on behalf of POIL. The 4th Respondent does not dispute this for the purposes of a Carecraft settlement.
73.Despite his involvement in the negotiations on the acquisition of Wangda, the 1st Respondent had never, whether at the meeting on 26 September 2005 or any other time, revealed to other members of the board of POIL:-
74.Under such circumstances, the board of directors of POIL unanimously approved on 26 September 2005 all the previous prepayments to Hero Vantage, or to the direction of Hero Vantage, on behalf of POIL purportedly for the purposes of the acquisition of Wangda and the acquisition of a controlling equity interest in Hero Vantage. 75.The 4th Respondent had never advised, or taken any step to procure, POIL to make an announcement of the approved payments on behalf of POIL to Hero Vantage, or to the direction of Hero Vantage, for the purposes of the acquisition of Wangda and the acquisition of a controlling equity interest in Hero Vantage, save and except that, on or around 29 November 2005 (more than 2 months after the board meeting on 26 September 2005 referred to in paragraphs 70 to 76 above), when the 4th Respondent became aware of the approved payments to Hero Vantage, the 4th Respondent had asked Eddie Yu whether POIL was required under the Listing Rules to disclose the September 2005 HV Deposit Agreement and the September 2005 HV Loan Agreement but the 4th Respondent had been wrongly advised that POIL was not required to disclose the same. 76.The proposed acquisition of Wangda had never proceeded to completion. The RMB64,500,000 paid by DC Warehouse to Double Happiness, under the direction of Hero Vantage, which the 1st Respondent had alleged to be for the purposes of the acquisition of Wangda had never been repaid to POIL or DC Warehouse. 77.In June 2006, the Stock Exchange received complaints alleging that the 1st Respondent, the 4th Respondent and HZ Li had misappropriated the funds of POIL. 78.As a result, the board of directors of POIL formed a special unit to investigate the complaints. When being questioned by the special unit, the 1st Respondent explained that the proposed acquisition of Wangda had fallen through for the following reasons:-
79.In the course of its inquiries, the Petitioner has come to the conclusion that the above explanations from the 1st Respondent are false and untrue.
80.The Petitioner’s case is that the only purpose, or one of the purposes, of the purported acquisition of Wangda was to procure the round-robin cash flow as described in paragraph 57 above. The 4th Respondent, who had no knowledge of the round-robin cash flow at the material time, does not dispute this for the purposes of a Carecraft settlement. 81.The Double Happiness Payment and the circumstances under which it had been made, including the entering into of the September 2005 HV Deposit Agreement and the September 2005 HV Loan Agreement by POIL, were not made known to the members of POIL or the public until the publication of an announcement on 23 March 2006 and a circular on 4 May 2006 and only upon request by the Stock Exchange. B4. Grounds for invoking section 214(c) of the Ordinance and basis of the 4th Respondent’s responsibility 82.On 23 March 2009, the Stock Exchange issued a public reprimand against POIL for failing to:
83.On 16February 2009, the Stock Exchange issued a warning to the 4th Respondent and stated that there were breaches of Rules 13.13, 13.20, 14.34 and 14.38 of the Listing Rules but the Stock Exchange decided not to impose a public statement which involves criticism or any sanctions under Rule 2A.09 of the Listing Rules on the 4th Respondent. It was also stated that the 4th Respondent breached the Director’s Declaration, Undertaking and Acknowledgment given by him to the Stock Exchange in the form set out in Appendix 5 Form B to the Listing Rules for failing to use his best endeavours to procure POIL’s compliance with the Listing Rules. 84.By reason of the facts stated in Sections B2 and B3 above, the 4th Respondent acknowledges and accepts that the business and affairs of POIL (including such business and affairs carried out by POIL through DC Warehouse) have been conducted in a manner resulting in the members of POIL or any part thereof not having been given all the information with respect to the business or affairs of POIL that such members might reasonably expect, namely, in failing to announce promptly and fully the making of the Double Happiness Payment. 85.By reason of his position and responsibilities in POIL the 4th Respondent acknowledges and accepts that he was partly responsible for the aforesaid conduct of the business and affairs of POIL (including such business and affairs carried out by POIL through DC Warehouse). C. Proposal for disqualification 86.On the basis of the facts not in dispute as set out in Section B above, the parties agree that it would be appropriate for a disqualification order to be made against the 4th Respondent under section 214(2)(d) of the Ordinance that, for a period of 1 year, he shall not:-
87.If the Court disposes of these proceedings against the 4th Respondent by way of the Carecraft procedure pursuant to this Statement, the 4th Respondent agrees that there should additionally be an order that the 4th Respondent shall pay the costs of the Petitioner in these proceedings, or such portion thereof as the court thinks appropriate, to be taxed if not agreed. D. Agreed mitigating factors 88.The 4th Respondent adopted a reasonable course of action in agreeing to conclude these proceedings by way of Carecraft procedure at an early stage which would save both the time and costs of the Petitioner and the court. 89.Further, the 4th Respondent has agreed :-
APPENDIX 1 “Corporation” means a company or other body corporate incorporated either in Hong Kong or elsewhere. “Company” means a company as defined in section 2(1) of the Companies Ordinance, Cap. 32. The expression “company” in the definitions of subsidiary, holding company and affiliate below, shall be read as including a corporation. “Subsidiary” means, with respect to its holding company, a company:- (1) the composition of the board of directors of which is directly or indirectly controlled by the holding company; or (2) more than half of the issued share capital of which is directly or indirectly controlled by the holding company; or (3) which is a subsidiary of a company which is a subsidiary of the holding company; or (4) which is accounted for and consolidated in the holding company’s consolidated financial statements. “Holding company” in relation to a company shall be read as a reference to a company of which that last-mentioned company is a subsidiary. “Affiliate” in respect of a company, means any subsidiaries or holding companies of such company or any subsidiaries of any of the holding companies of such company. [1] The procedure, sanctioned in Re Carecraft Construction Co Ltd [1994] 1 WLR 172 and clarified in Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569, has been repeatedly adopted in Hong Kong as appropriate for s. 214 proceedings. See: Re Styland Holdings Ltd [2011] HKLRD 96, at para 3. [2] In 2 letters addressed to the SFC respectively dated 11 November 2010 and 19 May 2011. | ||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCMP 1761/2009