Court of Appeal grants the Securities and Futures Commission (the “SFC”) $622 million compensation orders against former directors of EganaGoldpfeil (Holdings) Ltd
The SFC has obtained compensation orders from the Court of Appeal against three former directors of EganaGoldpfeil (Holdings) Ltd (“EHL”), namely Mr. David Wong Wai Kwong, Mr. Peter Lee Ka Yue and Mr. Chik Ho Yin following an appeal against the decision of the Court of First Instance. While the Court of First Instance accepted that a compensation order can, in an appropriate case, be made irrespective of whether a respondent has received any financial benefits, it declined to grant the compensation order sought by the SFC in that case and considered it should remain with the liquidators of EHL to assess the efficacy as to whether it would be beneficial to bring proceedings in the name of EHL against any party.
The Court of Appeal held that the Court of First Instance had made errors of fact and law. It was further held as a result of the misconduct and failure to act in the best interest of EHL, the said three directors were ordered to pay, jointly and severally, $622 million as compensation to EHL for the company’s loss of funds.
The SFC’s investigation found that the three directors failed to carry out proper enquiries and perform appropriate due diligence before causing or permitting subsidiaries of EHL to enter into transactions that were not genuine commercial transactions. The concerned subsidiaries were mere conduits for the transfer of $622 million from EHL to Peninsula International Ltd, a company owned by the family of EHL’s then-chairman, to purchase some of the Peninsula International’s shares, instead of the purported transactions as recorded in EHL’s internal accounting records.
A copy of the Judgement is available on the Judiciary’s website.
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