Oh What a tangled web we weave when first we practice to deceive

Sir Walter Scott was a wise man.

I turn your attention to the trust beneath the recent (and on-going) controversy surrounding Akai Holdings and Ernst & Young (E&Y). There are many layers, each making lawyers rich, that span the globe. Could be made into a movie starring Julia Roberts as a Borrelli Walsh paralegal who relentlessly goes after Chow Yun Fat as the charismatic Chairman of Akai, James Ting. Yes, same James Ting of the Semi-Tech fiasco with Bankers Trust and E&Y in New York a decade ago. Throw in Clooney as some courtroom litigator.

Akai was in the consumer electronics business: stereos, VCRs (remember those?). The brand ended up belonging to Grande Holdings, a listed Hong Kong company (which also owns other Japanese consumer AV producers such as Emerson, Sansui and Nakamichi (who made great cassette players in the day, remember those?) and had an interest in Singer and Pfaff, the sewing machine makers. Ernst & Young Hong Kong was the company's auditor.

In the late 1990's, Akai amassed a $1.5 billion or so in losses. By far the largest corporate failing in these parts. The Ting skips town. Enter Borrelli Walsh (BW), the liquidators (http://www.borrelliwalsh.com/significant_assignments.html).

Fast forward a few years and after a CSI-like investigation, BW sues E&Y for negligence! Apparently a few suspicious deals involving millions between Akai and Grande and others went unnoticed just before Akai went belly up, leaving the company's cupboard bare. Allegations of auditor's "document tampering" (nice way of saying dodgy as some audit evidence was signed off by some accountant who had yet to work for the auditor until some 4 years later....some back-to-the-future time traveler trick I guess) which of course ruffled a few feathers at the Hong Kong Institute of CPAs (http://www.hkicpa.org.hk/file/media/section8_communications/media_centre/pdf-pr/2009/pr-20091005e.pdf). E&Y decides that no fight is better than to lose the fight and settles without admission of wrongdoing for approximately $200million!!! Unfortunately for E&Y partners in Hong Kong, it appears their global brothers want nothing to do with them and will jettison them from the global network rather than help pay the bill according to the SCMP newspaper (Ernst & Young's US$200m snag

Naomi Rovnick and Enoch Yiu ) . So much for partnership. Could be only Big 3 in Hong Kong from now on.

Enter E&Y audit partner on the Akai case, Christopher Ho (http://people.forbes.com/profile/christopher-ho/29254) with business ties to gambling magnet Stanley Ho in Macau though unrelated. Andy Lau can play him. Ho gives up his daytime job to become Chairman of Grande! BW also sued Grande and Ho. BW wins a Mareva injunction against Ho (ie freezing his assets). Here's where I take notice.......http://legalref.judiciary.gov.hk/lrs/common/ju/ju_body.jsp?DIS=67746&AH=&QS=&FN=&currpage=

Like any good professional with potential liabilities, Ho had set up a discretionary trust in 1993: The Ho Family Trust of which he was apparently sole beneficiary. The appointer/protector to the trust was Stephen Lau, a E&Y tax partner. The trustees was a PTC called Accolade Inc.. Details are: The shareholders of Accolade are Dr Sabrina Ho and Ms Christine Asprey (both sisters of Mr Ho). Ms Christine Asprey is a director of Grande Holdings. According to Dr Ho, the Board of Directors of Accolade comprises Mr Alister Asprey, a former secretary for security and the husband of Ms Christine Asprey, and Ms Eleanor Crosthwaite: (who has worked with Mr Ho for years and she is now the head of the Human Resources Department and the Central Treasury Department of Grande" The Trust holds some 70% interest in Grande which of course "acquired" Akai from Ting. In one of the many judgments stemming from this case, the creditors of Akai were a victim of "had been subjected to a ‘double mugging’, first at the hands of Mr Ting, and thereafter, upon the latter’s departure from the scene, at the hands of Mr Ho and the Grande defendants, who had removed what assets remained after the pillaging that Akai already had received at the hands of Mr Ting."

According to BW's counsel, Ho is now stripping assets out of Grande as we speak!

So the Hong Kong courts have essentially disregarded the trust and considered the trust assets as that of Ho's and subject to the Mareva order. Ho's fighting for a leave. So far he's been unsuccessful....stayed turn to see if he's successful in the BVI courts to "uphold" the trust.