Hong Kong Firms Distance Themselves From BEA Chief Li

Several Hong Kong-listed companies are disassociating themselves from David Kwok Po Li, the chairman and chief executive of Bank of East Asia Ltd. (BEA), as he is involved in a financial crime investigation in Spain.

The National Court in Madrid opened an investigation this month against executives including Li and BEA’s nonexecutive director Isidro Fainé Casas, the lender said last week in a filing with the Hong Kong stock exchange. It is part of a probe of alleged market abuse and insider trading in a number of share sales relating to Barcelona-based CaixaBank S.A., including its takeover bid for Portugal’s Banco BPI, according to the filing.

Fainé Casas is the chairman of Criteria Caixa Corp. S.A., the parent of CaixaBank. Both Li and Fainé Casas were former directors of CaixaBank. Li resigned from the post in October 2014, and Fainé Casas stepped down in June 2016.

Several listed companies issued statements Tuesday clarifying their links with Li. Hong Kong and Shanghai Hotels Ltd., owner and operator of the luxury hotel brand Peninsula, said that as an independent nonexecutive director Li is not involved in the day-to-day business of the company. Beverage maker Vitasoy International Holdings Ltd. released a similar statement. Telecom giant PCCW, where Li is also an independent nonexecutive director, said it was informed of the investigation with no additional information.

BEA said it learned of the case from media reports, and Li and Fainé Casas have informed the bank that the allegations against them were unfounded and without merit. A BEA spokesperson declined to comment beyond the statement.

CaixaBank, once the biggest shareholder of BEA, in 2015 transferred its holdings of 17.24% of BEA shares and 9.01% of Grupo Financiero Inbursa shares to Criteria in exchange for 9.9% of stock of CaixaBank. The deal is part of the court’s investigation, according to BEA.

Li’s great-grandfather Li Pui-choi was a renowned banker who built up the Li family as one of the Big Four Families in Hong Kong during the colonial era.

Founded in 1918, BEA is Hong Kong’s third-largest bank by branch network. The bank had net income of HK$6.3 billion ($804 million) with total assets of HK$808.9 billion at the end of 2017.

Separately, CaixaBank was probed in April in a 100 million euro money laundering case with Industrial and Commercial Bank of China Ltd.’s branch in Madrid. Several senior executives of the Chinese bank were arrested.

BEA fell 3.05% to HK$25.45 Tuesday in Hong Kong, while the Hang Seng Index declined 3.08%.