Sunday, February 23, 2020
Martin Hennecke

Former CEO charged with fraud, collusion
<p>China Environmental Technology (0646) has taken legal action against its former chief executive Xu Xiaoyang for colluding with major shareholder Leon Li Lihua to embezzle US$7 million (HK$54.6 million) in company funds.</p><p>Its shares fell 3.57 percent to HK$0.027 yesterday.</p><p>The company filed a writ of summons with the High Court against Xu on June 28. It said Xu raised his salary to HK$150,000 a month from HK$100,000, resulting in excess payments amounting to HK$656,129.03 since January 2017.</p><p>It also said Xu executed letter agreements last June without permission to change a subscription agreement of convertible bonds with a principal amount of US$7 million that were due 2021.</p><p>China Environmental Technology said Xu concealed material facts to induce the company and its subsidiary to enter into a sale and purchase agreement in December 2016 in relation to the acquisition of 50 percent of the entire issued share capital in Pacific Fertility Institute Cayman (PFI). It also claimed for the falsification of PFI Cayman&#39;s accounts, Xu failed to take any action against Li to recover US$636,000 that was misappropriated from PFI HK, and implemented steps to obstruct or delay the recovery of misappropriated funds.</p><p>China Environmental Technology said Xu ceased to be a director at the end of the annual general meeting on June 28, with votes against his re-election amounting to more than 98 percent of the total number of shares.</p><p>Li held a 19.74-percent stake in China Environmental Technology, according to the shareholding disclosures in the Hong Kong stock exchange.</p><p>Li was recaptured by police at a hotel in Wan Chai in November after he escaped from custody by clambering through a toilet ceiling at Queen Mary Hospital. Li, who graduated from Cambridge University&#39;s medical school, is the founder and medical director of PFI.</p>

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