Hong Kong Securities and Futures Commission: A 13-year disqualification order has been obtained against three former senior executives of China Candies.

On August 6, it was reported that the Hong Kong Securities and Futures Commission (SFC) has secured a 13-year disqualification order from the original trial court against three former senior executives of China Candy Holdings Limited (China Candy). This is due to their involvement in several orchestrated schemes, where they misled auditors and concealed the company's true financial situation by falsifying accounting records, thereby significantly inflating the company's cash and bank balances. The three former senior executives are: former chairman and executive director Xu Jinpei (male); former executive director, CEO and compliance officer Hung Yam Chi (female); and former CFO and compliance officer Wang Zhi Hong (male). According to the order, without the courts permission, they are prohibited from serving as directors or liquidators of any listed or unlisted corporation in Hong Kong, or as receivers or managers of the property or business of such corporations for a period of 13 years. The court's order against the three also marks a conclusion to the legal proceedings initiated by the SFC in the original trial court against the former directors and senior executives of China Candy. The court found that the cash and bank balances reported in China Candys 2016 Interim Report and 2016 Annual Report were exaggerated by RMB 38.1 million and RMB 43.48 million respectively, which corresponds to 87% and 97% of the reported balances. The court determined that these exaggerations were not merely accounting errors, but part of a scheme to inflate cash and bank balances through fictitious deposits, undocumented transactions, and offsets made after the reporting deadline. These fraudulent acts were concealed through the forgery of bank documents, bank statements, and accounting vouchers. Specifically, the court ruled that: China Candy created a false appearance of holding a large amount of cash by posting fictitious deposits just before the reporting deadline and subsequently writing them off soon after; Xu, Hung, and Wang held senior positions in the management, finance, and compliance functions of China Candy, allowing them to instigate, allow, condone, or perpetuate the relevant schemes; Hung was the claimed payer or payee in 85 of the 116 undocumented transactions and in 30 of the 57 nonexistent transactions, directly linked to the relevant illegal scheme; Wang was responsible for recording forged vouchers and bank documents arranged by himself and/or staff working under his supervision; and The schemes to inflate balances and forge documents were designed to circumvent standard audit oversight, including providing falsified financial information to China Candys auditors for intermediary reviews and annual audits. Mr. Michael Duignan, Executive Director of the SFC's Regulatory Enforcement Division, stated: Accurate corporate financial reporting is the foundation of market integrity and investor confidence. Senior executives, including non-director financial professionals, will be held accountable for misconduct involving the forgery of records, distortion of financial statements, facilitating inappropriate behavior, or being willfully blind to serious violations. Individuals responsible for upholding corporate integrity, if found to be undermining it instead, may face long-term removal from positions of corporate responsibility.