Former CY Leung Adviser Guilty Of SFC Fraud

Barry Cheung, a former adviser to former Chief Executive CY Leung, was found guilty on Friday of defrauding the securities watchdog and cheating another company out of tens of millions of dollars.

The offences relate to Cheung's time as head of the Hong Kong Mercantile Exchange, a commodities trading platform, between May 2012 and its collapse in May 2013.

The District Court found that Cheung conspired with Jacky Choi, the company's chief financial officer, to defraud the Securities and Futures Commission by hiding the exchange's true financial position and misleading the SFC into allowing it to retain its licence.

Choi had earlier pleaded guilty to the same offence and became a prosecution witness.

The court also found Cheung guilty of fraud in relation to HK$30 million transferred from a company called Sinomax Finance into a business he owned.

Cheung had pleaded not guilty to both offences.

Judge Amanda Woodcock said Cheung’s evidence was “tailor-made to exonerate or distance himself from the offences".

“I did not believe the defendant in the witness box,” she wrote.

The judge wrote that the defendant has attempted to show that he was not hands-on and didn’t know need to know the minute details of the financial position of the exchange at relevant times. However the evidence overwhelmingly suggests otherwise, she wrote.

The sentencing has been adjourned to July 23. Bail applications from the guilty duo were rejected and both were remanded in custody.

Defence lawyer submitted 11 reference letters from people who know Cheung, asking for leniency.

In a letter, Exco member Fanny Law – quoting Carrie Lam who was the then development secretary – said Cheung was “not even one of the best, but the best of non-official public servants".

The defence counsel said the reason why his client committed the offences was because he’s “stubborn, his firm belief of what’s good for Hong Kong, his dedication in doing what he believed was good".

“He lost all his fortune and earned himself a bankruptcy order,” the lawyer said.

The businessman served as chairman of Leung's campaign for the 2012 Chief Executive election and was appointed as a non-official member of the Executive Council after his election.

He also served as chairman of the Urban Renewal Authority from 2007 to 2013, resigning when problems at the Hong Kong Mercantile Exchange emerged.

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