EganaGoldPfeil Holdings (1051682D HK)

Listed in 1993, EganaGoldpfeil (EHL) designed, assembled, manufactured and distributed timepieces, jewellery and leather products. Its auditor, Baker Tilly, qualified the 2007 financial statements due to possible fraudulent sales and accounts receivable.

An independent review by KPMG[1] revealed that the recoverability of receivables totalling HK$2.55bn appeared doubtful. These receivables consisted of trade debts, payments under promissory notes and other prepayments for investments. The doubtful receivables were owed by eight debtor corporations. In 2007, EHL made full impairment provisions for the doubtful receivables. The SFC’s investigation revealed that the directors and/or controllers of at least seven of the doubtful debtors were nominee directors and/or bank signatories appointed by ex-director Wong and acted under the instructions of Wong.

After the doubtful debtors received payments from the EHL group, they immediately transferred the money to other doubtful debtors and other companies or people under the control of or related to Wong. Substantial parts of the money were eventually routed back to the EHL group on the same day and appear to be round-robin transactions. Other parts of the funds were eventually transferred to companies connected to Wong…the related underlying transactions appeared to be bogus.

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[1] SFC petition, 6 March 2009; Webb-Site.com report, 1 August 2011

Egana Goldpfeil: Annual Report 2006/2007

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