Jailed tycoon Wong Kwong-yu and wife agree to pay HK$420m to Gome in misconduct case
Jailed company founder Wong Kwong-yu and wife settle with the SFC over misconduct case involving a share repurchase deal in 2008
Jailed mainland billionaire Wong Kwong-yu, founder and former chairman of Gome Electrical Appliances, and his wife Du Juan will pay HK$420.6 million to the company as compensation for misconduct in a 2008 share repurchase deal.
Wong, known as Huang Guangyu on the mainland, was a high school dropout from Shantou who set up a street-side electronic stall in 1987 that was later named Gome and turned into the country's largest electronic appliance retailer with over 1,000 stores. The company's listing in Hong Kong in 2004 helped Wong climb to the top of the Hurun rich list in 2007.
Gome lost its top billing to its rivals after a Beijing court in 2010 sentenced Wong to a 14-year prison term and a fine of 600 million yuan (HK$759 million) for insider trading and other financial crimes.
In August 2009, the SFC initiated legal action against the couple. It alleged that as directors, they had organised two share repurchases of Gome - in January and February 2008 - amounting to HK$2.2 billion to raise cash for repaying a HK$2.4 billion personal loan from a financial institution.
The SFC said Wong had directed Gome to repurchase most of the 136.94 million shares originally held by him. The shares bought from him accounted for 70 per cent of the total repurchase.
In reaching the settlement with the SFC, Wong and Du agreed that they had breached their directors' duties to ensure a repurchase was in the best interest of the company. Instead, they engineered the deal to make personal gains at the expense of Gome.