J.P. Morgan of Asia billionaire convicted of insider trading

A British-educated billionaire tycoon who generated a fortune by building a massive food empire, was sentenced to jail for insider trading by Hong Kong’s highest court Friday, a prosecution victory of sorts that could break up the family of the embattled founder.

Jimmy Lai, who is often dubbed the J.P. Morgan of Asia, was convicted last month for making $230 million from illegal insider trading.

As the verdict against Lai was announced, family members looked on as it was carried live on television in Hong Kong. They appeared to walk out of the courtroom shortly afterward, and Lai’s wife, two sons and sister left the courthouse before the judge made his pronouncement.

Lai gained respect for overseeing his family’s $5.7 billion empire that spans celebrity restaurants like Laiju and Magic Lantern, as well as seafood hot pot and furniture stores.

But he has been largely shunned since he was arrested nearly two years ago on suspicion of insider trading in advance of a planned deal to merge his influential seafood processing business, Yum Restaurants International Limited, into Swire Pacific Ltd.

The Australian-listed parent company, formerly Fosun International Ltd., said in a statement that Friday’s sentence will have no material effect on its business, where “disruption will have no impact on its operations.” The merged company, Swire-Yum, operates restaurants, hotels and brands including Sichuan King and Masa 14-14.

Lai, however, maintained that what he did was acceptable, arguing it was not wrong to dig for information on the two companies before they merged.

He spent nearly two years fighting the charge but was successful in convincing the Court of Appeal to reverse a lower court ruling that found him guilty on two counts of insider trading.

He also appealed to Britain’s High Court, but the decision on the criminal charges was made in Hong Kong, making the appeals court decision final.

The 51-year-old was convicted after a two-week trial in July and he was sentenced Friday to 6 ½ years, including five years in jail. It was not immediately clear whether Lai would appeal.

He has no criminal record and his conviction also follows no formal notice. It does not affect his ability to hold shareholder positions or foreign investments in the family business.

In sentencing, the Court of Appeal expressed concern over how a possible loss of freedom might affect the career of Lai, a philanthropist and member of Hong Kong’s business elite who was ranked 28th on the list of the world’s 100 richest billionaires in 2007, according to Forbes magazine.

His lawyer, Winston Fung, said the sentence fell outside the legal limits in the British colony.

Fung called on the British government to be more proactive to prevent “capital flight” from the British colony. He said Lai has devoted decades to the country and is a “model citizen” who never gambled on matters of state or used illicit funds to purchase property.

Lai’s family is considered to be one of Hong Kong’s most successful business dynasties. Lai grew up in a Hong Kong childhood home of 55 square meters (577 square feet), a room with a peeling covered window and creaky floorboards where he played games with his dog in the street as the British and the Chinese fought the bloody civil war of the late 1940s.

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