Some thought him dead, perhaps at the hands of shadowy gambling syndicates with which the racehorse owner is said to have consorted. But last week, Azedo was found alive and hiding out in Spain. He may be repatriated to Hong Kong to face fraud charges, although the two jurisdictions have no extradition treaty.

 

What’s the next act in this long-running drama? Will Azedo’s trial finally lay to rest the reputational damage that was done to his old firm? Will the lawsuits against Grant Thornton Hong Kong and the global network Grant Thornton International be revived? What will be the impact, if any, on the supposed mass exodus of Grant Thornton Hong Kong partners and staff to rival BDO and the future prospects of new Grant Thornton International member firm Jingdu Tianhua Hong Kong?   

 

After he disappeared in September last year, Azedo was sued by his distant cousin Angela Rita Gardner, who alleged that Azedo, through Grant Thornton Hong Kong and Grant Thornton International, defrauded her of US$9.8 million. Azedo was also taken to court by Arthur Antonio Da Silva and his wife Betty, two of his close friends (and also long-time friends with Gardner), for supposedly absconding with US$2.2 million that they had entrusted to Grant Thornton as part of their estate planning.  

 

On November 27 that year, the Da Silvas obtained a default judgement against the missing Azedo for US$2,339,922.07. On January 10, 2010, Gardner was awarded another default judgment against the accountant for US$9,756,879.63. Both petitioners then took out enforcement proceedings in Hong Kong and London to track down Azedo’s assets. So far, the assets uncovered include two properties in London, a bank account in Hong Kong, and money that Grant Thornton Hong Kong is said to owe Azedo.

 

Gardner also took out a “vicarious liability action” against Grant Thornton Hong Kong and Grant Thornton International. According to Gardner, Azedo persuaded her in 1999 to protect her wealth by placing money with Grant Thornton Hong Kong, which would invest it on her behalf. As managing partner of the accounting firm, he promised to “personally oversee and handle her investments with Grant Thornton,” Gardner said in court papers.   

 

Beginning July 2007, said Gardner, the statement of accounts regarding her investments that Azedo sent her were issued and signed by Grant Thornton Hong Kong. In January 2008, the statements were issued and signed by Grant Thornton International. Azedo had retired as managing partner of the Hong Kong member firm in March 2008 and was a consultant to it until September of that year. He had been appointed to Grant Thornton International’s Global Leadership Board in 2005 and served on it until he disappeared in September 2009.

  

Gardner argued that she had no reason to believe that Azedo was not acting for the two Grant Thornton organizations. “At all material times, whether in his position as Managing Partner of [Grant Thornton Hong Kong] or member of the Global Leadership Team of [Grant Thornton International],” she said, Azedo “worked from the office premises of [Grant Thornton Hong Kong], retaining the same business contact details including telephone number, facsimile number, and email address, as well as retaining the same personal assistant.”

 

On October 29, 2010, the High Court of the Hong Kong Special Administration Region Court of First Instance ruled against Gardner’s plea to be allowed to serve a writ against Grant Thornton International (GTI). In his judgment, Deputy High Court Judge L. Chan accepted that GTI “does not provide services to clients and has no clients,” being a not-for-profit, non-practising, international umbrella entity of independently owned member accounting firms such as Grant Thornton Hong Kong.

 

Judge Chan wrote that the investment statements issued under the letterhead of GTI “are obviously false documents created by Mr. Azedo to perpetrate his fraud on the plaintiff. I do not think a fraudster’s unwarranted representation purportedly on behalf of the principal can bind the principal.” The judge concluded: “I therefore do not think the 2nd defendant [GTI] should be liable for Mr Azedo’s fraudulent acts.”