The Hong Kong Securities regulator has initiated disciplinary action against lottery operator China Ecotourism Group and seven of its executives.
China Ecotourism Group is a Hong Kong-listed China lottery business operator. According to a statement issued by the Stock Exchange of Hong Kong Limited on Thursday, the Stock Exchange criticized the company for making statements to some executives that harmed the rights and interests of investors. It believed that the retention and continued appointment of three executives pointed as directors would harm the rights and interests of investors.
In addition, the statement also condemned the company’s former executive directors and independent non-executive directors.
The document indicates that between 2014 and 2018, the company’s group granted 13 loans in the total principal sum of HK$363 million ($46.4 million) and RMB91 million ($11.6 million) to nine borrowers, purportedly to develop its lottery business in multiple provinces in China and in the Philippines.
However, all borrowers defaulted on their repayments, and the company lost contact with eight of the borrowers between 2017 and 2020. The Stock Exchange continued to point out that the company had no evidence to prove that the loan proceeds were used for related business development.
Instead, there was evidence that all loans have been transferred to the account of former executives’ relatives’ accounts. And some of the people involved are no longer contactable.
Separately, in the announcement, the company’s subsidiary, Sinmax Limited, entered into a subscription agreement in 2018 to subscribe for 37.5 percent of the share capital of Pan Asia Blockchain Lottery for HK$35 million ($4.5 million).
The subscription money was found to have been paid to a third party according to the instructions of the owner. Evidence shows that part of the subscription money was transferred to an executive’s family member’s personal account, and those people have been out of contact since 2019.
