This article from the BT dated Oct 20, 2011, by Michelle Quah, tells about the Daka Saga....
Two former executives of Daka Designs, a company once listed in Singapore, have been convicted in Hong Kong on charges of defrauding their shareholders and the Singapore Exchange (SGX) between early 2003 and May 2005 - and sentenced to jail.
The company's ex-CEO Raymond Chow and former executive chairman Mah Pat Y were sentenced to three years two months' jail, and two years' jail, respectively.
Both men are also disqualified from serving as directors on the board of any Hong Kong company for five years. Such a disqualification also makes them unfit to serve as directors on any Singapore board.
The two men - along with a third, Daka's former chief financial officer Kevin Leung - were arrested by Hong Kong's Independent Commission Against Corruption (ICAC) in October 2007 and charged in September 2009. Leung has yet to be convicted.
The actions against them took place in Hong Kong as Daka and the three men are based in the special administrative region. The SGX has worked closely with ICAC and the Corrupt Practices Investigation Bureau (CPIB) in Singapore over this case, and one of its officers testified at the hearing in Hong Kong.
Lorraine Chay, vice-president, Risk Management and Regulation, at SGX, said: 'Having been actively involved in the investigation and assisting as a prosecution witness in the Hong Kong Court, I am very pleased that the efforts have resulted in the successful prosecution against former directors of Daka Designs. SGX will continue to actively work with enforcement agencies to protect the integrity of our marketplace.'
Yeo Lian Sim, SGX's chief regulatory officer, said: 'All the effort has been worthwhile to bring the wrongdoers to justice. SGX takes a stern view of fraudulent behaviour in listed companies and will do our utmost against it, assisting regulatory authorities.'
The three men were accused of having 'dishonestly falsified' financial records, such as goods receipt acknowledgements and delivery notes of its subsidiary Briga Group (Macao Commercial Offshore) Company Ltd.
They were said to have inflated the turnover and profit figures by over HK$8.9 million (S$1.44 million), according to ICAC. These inflated numbers were in 'dishonestly compiled and published documents' such as the annual report for the financial year ended March 31, 2004.
'It is alleged that the defendants had misled existing and potential shareholders of Daka Designs and SGX as to the true financial position of the company, and prevented SGX from taking any action against the company for its failure,' ICAC had said in a statement.
Trouble began brewing at Daka not long after the company went public in July 2004. In late 2005, the SGX called for a special audit on Daka following two profit warnings from the company.
When Daka blocked access to its records, the SGX slapped a trading halt in January 2006; the exchange subsequently hardened that into a trading suspension after special auditor KPMG, commissioned by the SGX to look into Daka's affairs, found serious irregularities in the company's finances. The suspension was never lifted.
The issue was then turned over to Singapore's Commercial Affairs Department.
In 2007, Daka sold its entire business to its parent Daka Direct and, as a listed shell company, tried to engineer a couple of reverse takeovers that failed.
Chow, Mah and Leung ceased to be involved in the management of the company, and ceased to hold any interest in the shareholding of the company, from April 2007.
Daka, which was renamed Carats in 2007, was eventually delisted a year later as the SGX denied an extension of the deadline for it to secure a new business.
One down, more to go......
How about Beauty China, another from-HK managed biz, with very similar circumstances?