Hong Kong’s Securities and Futures Commission (SFC) has obtained orders in the Court of First Instance against three former directors and senior executives of Superb Summit International Group Limited, requiring the trio to pay a total of $595 million in compensation to Superb Summit for orchestrating and/or participating in fraudulent schemes to defraud the company.

The outcome of SFC’s legal action against the trio – Mr Yang Dongjun, a shadow director controlling a 22.6 per cent stake in Superb Summit, Mr Wu Tao, former executive director (ED), and Mr Chan King Chung, former chief financial officer and company secretary – marked the end of the legal proceedings brought by the SFC against former directors and officers of Superb Summit for their misconduct.

The Court also made disqualification orders for 15 years against Yang, and 12 years against Wu and Chan. They were ordered to pay the SFC’s costs in the proceedings. In addition to the trio, 10 former directors of Superb Summit were disqualified earlier, with disqualification periods ranging from two and a half years to 10 years.

The SFC’s case against Yang centred on corporate acquisitions resulting in significant losses for Superb Summit. The Court found that Yang, acting as a shadow director, concealed his personal interests in Superb Summit’s acquisition of a target company in 2009 that purportedly held forestry assets when in fact they did not exist (2009 Acquisition). As a result, Superb Summit suffered a loss of $347 million after Yang caused the transaction to proceed by fraud.

The Court also found that Yang masterminded another fraudulent acquisition in 2014 (2014 Acquisition), in which Superb Summit acquired a company which purportedly owned a grossly overvalued engineering technology. The acquisition resulted in a misappropriation of $248 million from Superb Summit.

The Court further found that Wu played an active role whilst Chan was involved in the fraudulent 2014 Acquisition, breaching their fiduciary duties to Superb Summit.

Consequently, the Court ordered Yang to compensate Superb Summit in the amount of $347 million for the 2009 Acquisition, and ordered Yang, Wu and Chan to compensate Superb Summit in the amount of $248 million on a joint and several basis for the 2014 Acquisition.