Convoy said at a media briefing on Sunday that it plans to spend HK$300m (£28.8m, $38.4m, €32.6m) to more than double its team of financial advisers in 2018 and pay a bonus to retain staff and expand its business.
On 7 December, Hong Kong’s Independent Commission Against Corruption (ICAC) raided eight locations connected to Convoy and arrested three senior executives on suspicion of corruption.
The arrests were Convoy deputy chairwoman and executive director of financial advisers, Rosetta Fong Sut-Sam, executive director Christie Chan Lai-yee and the previous chief executive Mark Mak Kwoong-yiu.
Additionally, on 8 December, the company’s chairman, Quincy Wong Lee-Man was arrested at Hong Kong’s International Airport by anti-graft officers.
“Such a complicated issue requires a lot of information and time for investigation…the cancer is not spreading.”
Convoy’s shares were also halted from trading on 7 December after the firm’s share price fell by 7%.
Buying back confidence
According to newspaper South China Morning Post, Convoy said the spending was a way to restore the confidence of its customers and investors.
Convoy, which has more than 100,000 clients, is one of Hong Kong’s largest financial advisory firms.
“Our cash flow position is enough for us to maintain our operations for 18 months, even if we do nothing during the period,” Convoy’s president and executive director, Ng Wing-fai, said at the briefing.
Ng said the company is not the subject of the investigation and the “problem is isolated in three subsidiaries” of Convoy.
He said cross-holdings among controlling shareholders had “hijacked” Convoy’s business over the last few years, according to the Post.
“Such a complicated issue requires a lot of information and time for investigation…the cancer is not spreading,” Ng said.
HK$1 billion lost
The Post said industry experts believe Convoy will suffer a loss of about HK$1bn as a result of the ICAC investigation. Ng said that the loss would not have any substantial impact on the company.
The company added that while the hiring of staff is important, its immediate priority is to resume the trading of its shares and it is currently in discussions with the Hong Kong Stock Exchange.
The firm’s shareholders released a statement on 8 December saying they would hold a meeting on 29 December where they would look to expel eight directors, including Ng.
When the Post questioned Ng about his potential expulsion he said “let’s wait and see”.
Two of the shareholders believed to be disgruntled are Kwok Hiu-Kwan, who owns 29.91% of the company, and Fubon Financial who own 30%.
New appointments
Following the arrests and suspensions, Convoy has appointed three new independent non-executive directors and three executive directors.
They include Johnny Chen as interim chairman of the board with effect from 9 December.
Chen said he understood the “immense responsibility” he has in reforming Convoy.
“The new directors are all experts in financial auditing and corporate governance, who are able to bring Convoy back on track with their experiences,” he said.
Chen is also a senior adviser at LionRock Capital and an associate professor of finance and management at the Hong University of Science and Technology.
Prior to these roles, Chen worked at Zurich Insurance from March 2005 to February 2015 in multiple senior managerial roles in the Asia Pacific region.
