Free on bail after allegedly offering HK$100,000 to Hontex IPO auditor

A senior manager with the accounting firm KPMG appeared in Eastern Magistrates Court Friday, accused of bribery in connection with the preparation of an initial public offering that raised nearly HK$1 billion.

Leung Sze-chit, the company's senior manager, was charged by the Independent Commission Against Corruption (ICAC) with offering a bribe of HK$100,000 to an employee in regard to an IPO by Hontex International. Leung entered no plea and is due back in court later this month.

He remains free on HK$100,000 bail.

The ICAC said Leung and another person offered the inducement to a person employed by KPMG on February 20 as a reward for auditing Hontex's prospectus in preparation of the IPO. Responding to enquiries, KPMG said Leung has been suspended and the company was cooperating with relevant authorities.

Lawyers for the ICAC said investigations were on going and further charges may be pending.

The HK$1 billion raised in Hontex's December IPO was frozen by order of the High Court on April 1 after a first-ever such application by the Securities and Futures Commission (SFC).

Hontex floated 500 million shares, comprising a quarter of its enlarged share capital with 440 million in new shares and 60 million in shares sold off by existing shareholders.

Shares in Hontex, a Fujian-based sports apparel company, were suspended after 64 days following accusations by the SFC that the company had misled investors regarding its finances, in breach of SFC regulations pertaining to deception and fraud.

Shareholders may be entitled to have their investments reimbursed if the allegations are confirmed.

Taiwanese businessman Shao Ten-Po is chairman of the company and controls roughly 59 percent of the company.

Hong Kong saw a surge of IPOs in 2009 with some HK$224 billion raised compared to HK$66 billion the year before.

In another case brought by the corruption watch dog, two former directors of Swire's SITA Waste Services Company plead not guilty in the District Court Friday in connection to an alleged HK$28 million bribe given to Macao's disgraced former secretary for transport and public works, Ao Man-long.

Lionel John Grieger and James Tam allegedly plotted to offer the bribe to Ao for renewing public hygiene contracts with the company. The two accused are out on bail and will appear back in court on October 11. Ao is currently serving a 27-year jail sentence in Macao for 40 counts of taking bribes, 13 counts of money laundering and two counts of abuse of power, allegedly amassing more than 800 million Patacas in kickbacks.

China Daily

(HK Edition 04/10/2010 page1)