Andrew Fan, Universal INED
15 May 2019
We took a quick glance through the IPO prospectus of Universal Star (Holdings) Ltd (USH, 2346), a Fujian-based maker of neodymium magnets, which begins trading tomorrow. We found a grossly exaggerated claim in the biography of one of its INEDs, Andrew Fan Chun Wah (Mr Fan). Page 154 (PDF 160) states:
"Mr. Fan was the manager of the assurance department of PricewaterhouseCoopers from September 1999 to November 2004."
Wow, that's a big job with one of the big 4 accounting firms, even if you assume that they are referring to the HK member firm of PwC and not the global operation. Having managed an entire department must make him well-equipped as an INED and Chairman of the Audit Committee of USH. But wait a minute. He's 40 years old now, so he was about 21 in Sep-1999, and 26 in Nov-2004 when he left PwC.
So no, he wasn't the manager of the department. He was "a manager in the department", one of many managers who are subordinate to the partners and probably to others below the partners and above the managers. And he wasn't even a manager when he joined: he was a manager when he left. A more sober description can be found in the prospectus of Space Group Holdings Ltd (2448) dated 28-Dec-2017. Page 164 (PDF 171) states:
"He joined PricewaterhouseCoopers from September 1999 to November 2004 with his last position as Manager."
Mr Fan, who has run his own accounting firm C.W. Fan & Co since Sep-2006, is a rather busy man. This will be his 10th concurrent position as an INED, raising him to joint-9th position in our ranking of INEDs by number of seats. Our database shows that the average total return on the 9 stocks in his current portfolio of directorships, during his tenure and up to today (15-May-2019), is -8.27% per year in absolute terms and -11.14% per year relative to the market (the Tracker Fund of HK) over the respective periods.
The prospectus does itemise the other 9 listed company directorships and explain why he (and presumably, USH) believes that he has the time to carry out his duties. However, it doesn't mention another string of positions and demands on his time, of which investors should have been made aware. According to the 2018 annual report of Sinomax Group Ltd (1418) filed on 26-Apr-2019:
"Mr. Fan was appointed as the chairman of the 23rd council of Hong Kong United Youth Association with effect from 1 July 2015. He is also a committee member of the 10th, 11th and 12th Chinese People’s Political Consultative Conference Zhejiang Province Committee, the 4th and 5th Chinese People’s Political Consultative Conference of Shenzhen Committee, member of HKSAR Committee on the Promotion of Civic Education, HKSAR Justices of the Peace and the vice chairman of Zhejiang Province United Young Association."
Of course, Mr Fan, as a director, is legally responsible for the contents of the prospectus. He should at least have checked his own biography for accuracy and completeness. On 13-May-2019, Webb-site wrote to the SFC and SEHK asking them to require a clarification of both points - the overstated role of Mr Fan at PwC, and the other demands on his time. The SFC issued its usual acknowledgement. The response from SEHK, from [a] Vice President in the Listing Department, came in this evening:
"The matter referred to has been considered by the Listing Department... Since the complaint does not suggest material regulatory misconduct by entities or individuals subject to the Exchange’s scope of regulation, the Listing Department has closed the case and will take no further action."
So it appears that an announcement will not be forthcoming, and that's why we are telling readers instead.
Incidentally, if you are wondering why Mr Fan is in such demand, it can't hurt that his mother is Rita Fan Hsu Lai Tai, former President of the HKSAR Legislative Council and former Standing Committee Member of the National People's Congress.
© Webb-site.com, 2019