Hong Kong's Securities And Futures Commission Obtains Disqualification And $84 Million Compensation Orders Against Former Chairman Of First Natural Foods Holdings Limited

The Securities and Futures Commission (SFC) has obtained disqualification and compensation orders in the Court of First Instance against Mr Yeung Chung Lung, former chairman and executive director of First Natural Foods Holdings Limited (First Natural Foods) over embezzlement of $84 million and provision of false bank statements to auditors (Notes 1, 2 & 3).

Without leave of the court, Yeung has been disqualified from being a director or being involved in the management of any listed or unlisted corporation in Hong Kong for 12 years. He has been ordered to repay $84,880,000, with compound interest, to Topping Chance Development Limited, which has taken up all First Natural Foods’ causes of actions (Note 4).

The court has also ordered that both Mr Yang Le and Mr Ni Chao Peng, First Natural Foods' former executive directors, be disqualified for eight years (Notes 5 & 6).

Yeung, Yang and Ni were absent from the trial in which the court found that:

Yeung embezzled $84,880,000 in December 2008 from First Natural Foods’ subsidiary.
Yeung, Yang and Ni knew that First Natural Foods provided false bank statements that overstated the cash balance of a key subsidiary on Mainland China to its auditors and deceived creditors and shareholders about the true financial position of the company and its subsidiaries.
Yeung, Yang and Ni obstructed the provisional liquidators of First Natural Foods’ investigation into its affairs and prevented the provisional liquidators from gaining control of the company’s subsidiaries which had led to the dispossession of the subsidiaries from First Natural Foods.
Yeung was negligent in publishing a false announcement in December 2008.

Notes:

First Natural Foods was listed on the Main Board of the Stock Exchange of Hong Kong Limited on 11 February 2002. Provisional liquidators were appointed on 7 July 2009 and their duties were discharged on 4 September 2012 upon completion of restructuring. First Natural Foods is now called Imperial Pacific International Holdings Limited.
The SFC commenced proceedings under section 214 of the Securities and Futures Ordinance in April 2013. Please see the SFC’s press release dated 24 April 2013.
Yeung was the founder, chairman and executive director of First Natural Foods until 27 August 2009.
Topping Chance is a special purpose vehicle set up by the provisional liquidators for the purposes of taking up First Natural Foods' causes of action upon completion of the restructuring.
Yang is Yeung’s son and was the chief executive officer and executive director until 12 December 2008. Ni is Yeung’s son-in-law and was an executive director until 12 December 2008.
The disqualification orders made against Yeung, Yang and Ni became effective on 17 February 2017.