Lau allegedly bribed Ao Man-long, a former government official in the region, around 20 million Hong Kong dollars in order to buy five plots of land next to the Macau International Airport in June 2005, according to news reports. Lau denied the charges and asked the Macau court to throw out the suit based on lack of evidence. On Wednesday May 23 the court rejected his request and accepted the prosecution's allegations for a hearing, according to a regulatory filing. The Hong Kong Stock Exchange suspended trading in Chinese Estates' shares the next day at the company's request.
On May 24 Lau said in a statement that he and the company have agreed that he "will continue to be able to discharge his duties as Executive Director" and devote sufficient time to management. Lau, his son, Ming Wai Lau, and his sister, Amy Lau, who make up half the board, will abstain from voting in meetings related to the bribery allegations. The board also plans to appoint Chinese Estates' group financial controller Kwong-wai Lam and its manager of sales and leasing Sze-wan Sue Chan as additional executive directors "as soon as practicable." It is forming a committee tasked with watching the development of the lawsuit and its potential impact on Chinese Estates' land development project.
The company had said in a filing April 17 that the Macau proceedings will not affect its business and normal operations.
Investors have battered the stock. Chinese Estates has fallen more than 21% in the year to date to around $9.82 per share, underperforming its benchmark.
It's not the first time that Chinese Estates has had a scandal. After Lau's brother Thomas received a 34 million Hong Kong dollar fine in December 2006 for insider trading, he had to resign from his position as director of Chinese Estates' board, according to news reports.
Lau's financial statements about his company reflect an AGR score of 35 as of September 2011, which indicates more risk than 65% of comparable companies. The AGR was a 14 in June 2010. GMI gives Chinese Estates a D on its corporate governance.
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Sector: Real Estate Operations
Market Cap: HKD 20,754.9 million (Mid Cap)
ESG Rating: D
AGR: Aggressive (35)