The Independent Commission Against Corruption (ICAC), Hong Kong’s anti-corruption watchdog, charged a former senior executive of bourse operator Hong Kong Exchanges and Clearing on Wednesday for accepting HK$9.15 million (US$1.18 million) in bribes between 2017 and 2019.
Eugene Yeoh Kim-loong, 43, the former joint-head of the initial public offering (IPO) vetting team of HKEX’s listing department, is said to have accepted the amount in bribes between June 20, 2017 and April 30, 2019, from an IPO consultant for supporting certain listing applications. He has been charged with two offences, accepting an advantage as a public servant and for misconduct in public office, the ICAC said.
Although HKEX is a listed company, it is also a frontline regulator for other listed companies, so its staff is treated as public servants under Hong Kong’s corruption law. Richard Lum Chor-wah, 60, the consultant, has therefore been charged with offering an advantage to a public servant.
Lum transferred the money to Hao Yuanyan, Yeoh’s wife, the ICAC said. Yeoh, who was responsible for vetting listing applicants, did not declare a conflict of interest when he recommended IPOs handled by Lum.
The bourse operator said it was cooperating fully with the ICAC. “HKEX promotes the highest standards of integrity and professionalism across its business, and is committed to continuing to play its role in maintaining the integrity of Hong Kong as a leading financial centre,” a spokesman said on Wednesday.
IPOs are big business for Hong Kong – the city has been the world’s top new listings destination seven times in the past 11 years.
Yeoh and Lum, who were arrested by the ICAC in June last year after a complaint by Hong Kong’s Securities and Futures Commission (SFC), were brought before the West Kowloon Magistracy on Wednesday. The case has been adjourned to June 3 for mention in Eastern Court, to allow time for the prosecution to seek legal advice.
The prosecutors will apply in the next hearing to transfer the case to the District Court for plea. The defendants were each granted bail at HK$100,000, on conditions that they neither leave Hong Kong, nor interfere with prosecution witnesses.
A government spokesman said it would support the SFC, which in June had indicated it was conducting a review of the manner in which HKEX administered listings. “The integrity and credibility of HKEX’s IPO vetting process is of utmost importance to the reputation of Hong Kong as a leading international financial centre.
The government has zero tolerance for bribery and corruption. We are very concerned about the case. We will spare no effort in safeguarding the integrity and robustness of our IPO vetting process,” the spokesman added.
The ICAC did not say how many listings were involved, but gave details of the case involving Hong Kong-based Shen You Holdings, which manufactures and sells sewing threads and raised HK$75 million in an IPO on GEM in December 2017. GEM is HKEX’s smaller second board.
According to the regulator, Yeoh accepted HK$2 million from Lum on December 21, 2017, for favouring Shen You’s listing application. The payment was made six days after the company’s successful listing.
Shen You’s shares plunged 87 per cent from their IPO price of 37.5 HK cents to 5 HK cents in recent trading.
Yeoh and Lum could not be reached for comment, and Shen You did not respond to an email by the South China Morning Post.