The Hong Kong ICAC sues four auditors for conspiring to defraud Macau construction companies to make false accounts and go public in Hong Kong

The Zhitong Finance App learned that on May 6, the Hong Kong Independent Commission against Corruption said that four auditors and consultants from the accounting firm HuaLien were sued last Friday (2nd) on suspicion of preparing false accountant reports for Macau construction company Huaji Global (pre-delisting listing number: 02296) and conspiring to defraud Hong Kong Exchanges and Clearing Limited (Hong Kong Stock Exchange) into approving its listing application. The four are also suspected of conspiring with 3 relatives to conceal their identities to subscribe for placement shares in Huaji Global's initial public offering (IPO). The seven defendants appeared in the Eastern Magistrates' Court on Wednesday (7th). Relevant corruption investigations are continuing, and it is not ruled out that other crimes will be prosecuted.

The four auditors and consultants involved in the case were also charged with one count of conspiracy to defraud. At the time of the incident, Lin Ruimei and Siu Yuen-shan were the chief auditors and audit managers of Huilian Certified Public Accountants Limited (Huilian Accounting), respectively; while Chen Weilun and Huang Yizhong were assistants and managers of Huilian Enterprise Consulting Co., Ltd. (Huilian Enterprise), a similar company of Huilian Accounting, respectively. Among them, Siu Yuen-shan and Wong Yat-chung are certified public accountants.

The four and three relatives were also charged with one count of conspiracy to defraud. The three were Lin Ruimei's husband Li Wenxiang and grandpa Li Jianshe; and Huang Yizhong's sister, Huang Yingwen, between the ages of 46 and 50.

Seven defendants have been granted bail by the ICAC, and their cases will be arraigned in the Eastern Magistrates' Court tomorrow (May 7). The prosecution will later refer the application to the District Court for defense.

At the time of the incident, Huaji Global Group Holdings Limited (Huaji Global) was a construction company in Macau. Huaji Global appointed Huilian Accounting as its reporting accountant in October 2016 to prepare accountant reports for them to apply for listing on the main board of the Hong Kong Stock Exchange. The four auditors and consultants involved in the case were all assigned to prepare the report and audit the financial situation of Huaji Global from January 2016 to April 2019.

Huaji Global's listing application was approved by the Hong Kong Stock Exchange in October 2019. The company conducted its initial public offering in November of the same year. Gaozheng Securities Co., Ltd. (Gaozheng Securities) is one of the share placement agents. Huaji Global was later delisted in September 2023.

One of the charges alleges that between October 2016 and November 2019, the four auditors and advisors in the case allegedly conspired with the Chairman of Huaji Global and others to defraud HuiLian Accounting's directors and the Hong Kong Stock Exchange, falsely representing the accountant report prepared by them to accurately reflect the financial situation of Huaji Global, and caused the accounting director of Huaji Global to endorse the report and submit the report to the Hong Kong Stock Exchange, causing the Hong Kong Stock Exchange to approve the application for Huaji Global's listing on the main board.

Another charge alleges that between October 2019 and April 2021, the four auditors and consultants conspired to defraud Gaozheng Securities with three relatives in the same case and the chairman of Huaji Global, and others, causing Gaozheng Securities to allocate a total of 5,888,000 shares of Huaji Global's placed shares to Li Jianshe and others.

The person concerned is suspected of falsely claiming that Li Jianshe, Huang Yingwen and others are the ultimate beneficial owners of the shares distributed to Huajee Global, that they are independent of Huaji Global, that they are not funded by or subject to Huaji Global's instructions to buy or sell the placement shares.

The Hong Kong ICAC received corruption complaints and launched an investigation, and then took joint action with the Accounting and Financial Reporting Council (previously known as the Financial Reporting Council) and the Macau Independent Commission against Corruption (ICAC) in November 2021.

The investigation revealed that the four auditors and consultants involved in the case were suspected of preparing false accounting reports for Huaji Global to show steady growth in its business to help the company apply for listing on the main board of the Hong Kong Stock Exchange. The Chairman of Huaji Global was later suspected of providing HK$1.5 million in compensation to relevant auditors and their families to subscribe to Huajee Global's placement shares in Huajie Global's initial public offering.

The relevant corruption investigations are still ongoing. After seeking further legal advice from the Department of Justice, the ICAC will not rule out charging those involved with other crimes or prosecuting other persons involved in the case.