Hong Kong shareholder activist David Webb reckons that the Financial Reporting Council (FRC) is preparing to investigate fallen stock market star Esprit Holdings.
On Friday, the FRC replaced its chairman John Poon Cho-ming with Nicholas Sallnow-Smith from today because Poon “is not able to perform the functions of his office as chairman as a result of his disclosure of interests”, according to a FRC statement.
Poon was deputy chairman and chief financial officer of Esprit before he left in 2008.
Poon’s “standby role is a highly unusual step and would only be necessary if [he] had a conflict of interests due to an ‘investigation’ by the Audit Investigation Board into possible auditing and reporting regularities in a HK-listed entitiy, or an ‘enquiry’ by the Financial Reporting Review Committee into possible non-compliance with accounting requirements by a listed entity,” wrote Webb on his website.
The council also appointed Vincent Duhamel and Professor Wong Tak-jun as temporary members until November 30; they may have to fill in for two other FRC officials who also had close ties with Esprit in the past.
Lai Sun Development deputy chairman Chew Fook-aun was CFO of the clothing giant between 2009 and 2012, and Wong Kai-man was a partner at PwC, the auditor of Esprit since 1995.
Investors used to love Esprit – but have bitter-sweet memories. The company’s shares have returned a negative 92% since their peak in October 2007, compared with -8.85% on the Hong Kong Tracker Fund.
Photo: Jam Zhang