Disciplinary Measures Enacted for China Ecotourism’s Dubious Deals
In a decisive move, the Stock Exchange of Hong Kong (HKEX) has initiated disciplinary action against the China lottery business operator, China Ecotourism Group. This bold step underscores HKEX’s commitment to halting questionable lending transactions and fortifying governance among its listed issuers.
The probe, bolstered by the Securities and Futures Commission (SFC), has laid bare troubling transactions. Funds from loans, ostensibly for lottery business expansion in China and the Philippines, were diverted to parties linked to executive directors Ms. Chan Tan Na Donna and Ms. Lau Ting. Alarmingly, investment funds also found their way into Ms. Chan’s husband’s personal account, hinting at covert dealings.
Despite claims of bolstering the lottery operations, no proof suggests the funds served their stated purpose. The aftermath? A string of defaults.
An investment earmarked for blockchain innovation in the lottery sector, led by Ms. Kang, also went awry. The capital bypassed the intended company, landing in a third party’s hands, with Ms. Kang vanishing thereafter.
The lack of rigorous due diligence and risk assessment has left the company’s assets and financial health in peril. The financial years 2018 and 2019 saw massive impairment losses, amounting to HK$473.1 million.
The board’s reassurances to auditors about loan recoverability from 2014 to 2017 now ring hollow, given the defaults and lost contacts. The audit committee, tasked with vigilance, failed to verify these claims.
The directors’ neglect in implementing robust internal controls and risk management has put shareholder interests at risk. The spotlight on the company’s lending practices serves as a stark reminder of the need for stringent oversight and safeguards.
