New | Tribunal of Citic ex-chairman and four other former directors gets underway
Proceedings will look into whether ex-chairman Larry Yung Chi-kin and four other directors made misleading statements related to HK$14.7b in forex hedging losses
Hearings begin today in the keenly anticipated tribunal of mainland conglomerate Citic and four former directors, including princeling and ex-chairman Larry Yung Chi-kin, on market misconduct charges relating to massive undisclosed foreign exchange losses.
To be heard by the Market Misconduct Tribunal, the case is part of a wider action taken against Citic and its directors by Hong Kong’s securities regulator, the Securities and Futures Commission.
The tribunal will hear claims that billionaire Yung and four other former directors were either “reckless” and/or “negligent” to sign off on an exchange filing that was “false or misleading as to a material fact or was false or misleading through the omission of a material fact,” a tribunal document shows.
Facing the tribunal alongside Yung are former deputy managing directors Leslie Chang Li-hsien and Peter Lee Chung-hing, former managing director Henry Fan Hung-ling, and former executive director Chau Chi-yin.
Son of China’s former vice-president Rong Yiren, Yung built Citic into a conglomerate with a range of businesses from telecommunications, property, steel making and mining.
The case dates back to 2008 when Citic revealed HK$14.7 billion in losses stemming from a foreign exchange hedging product that was meant to protect the company’s Australian mining investment against adverse changes in the Australian dollar. According to a tribunal document, Citic directors were aware of the “material” losses by September 9, 2008 but on September 12, 2008 the directors signed off on an exchange filing saying they were “not aware of any material adverse change in the financial or trading position of the Group.” It was more than a month later, on October 20, 2008, that Citic first issued a profit warning.
