In a rare victory for players, the former boss of Happy Valley has been ordered to pay a fine and serve community service over the club’s salary arrears two years ago. But until there is real reform, nothing will change.
For more than two years, ten former players and staff of Happy Valley fought for justice over unpaid salaries. The saga finally came to a conclusion on 6 December after a judge ordered Happy Valley Football Club Ltd., the third-party company which was responsible for paying salaries on behalf of Happy Valley Athletic Association, to liquidate.
This comes a day after Chen Zhishi, the club’s former boss, was ordered on 5 December to pay at fine of $147,000 and serve 240 hours of community service for failing to pay salaries on time.
For perhaps the first time in Hong Kong football history, the benefactor of a club has been held convicted and sentenced over salary arrears. It is a rare victory for players who have seen clubs such as Dreams FC change names in order to duck responsibility, or other such as R&F liquidate before their court cases can be adjudicated.
In those cases, justice was neither served nor denied.
This article will serve as a recap of how the situation came to be.
Chen leaves court in April after he was indicted on 26 counts. (Credit: inmediahk)
The story of Chen Zhishi and Happy Valley began in the nineties according to the former’s legal defence team. His lawyers had questioned by deputy magistrate Dicky Cheung over a small profit that Happy Valley Football Club Ltd. had made between 11 August-31 December 2019, which was the only period that the defence could an audited financial report.
The defence testified that while the company had grossed $60,000 in ticket revenue and several thousand through sponsorship, kit sales, and membership fees, the main source of the company’s income came through a $3 million cash injection from Chen’s pocket. They further argued that the profit was “negligible” in comparison to the vast expenses that the company incurred.
The magistrate asked the defence team why Chen would invest in football given its low financial prospects. His lawyers explained that their client had become a fan of Happy Valley in high school years and that when he was 18, he attended the 1999 playoff final when Valley beat rivals South China to win the title. However, after the club were expelled from the First Division in 2013-14 due to the match fixing scandal, they suffered successively relegations before landing in the bottom tier of the pyramid in 2016.
As the HKFA’s regulations state that the bottom two teams in the Third Division are to be expelled for a year, Chen could not bare to see his beloved team risk non-participation. Thus, he offered his help to the club.
According to his lawyers, Chen spent $10 million in personal funds since 2016 to get the club back into the top flight. They argued that he could not be hiding any profit from the players since “investing in local football is akin to social welfare…there is no monetary gain despite expenditures.”
Happy Valley Football Club Ltd. was established in 2019 after the club were promoted into the Premier League. Pui Kwan-kay, who is the chairman of Happy Valley Athletic Association and also served at the HKFA’s chairman at the time, was also named as one of the directors of the company along with Chen.
Like many other sports clubs in Hong Kong, Valley are registered as a non-profit entity and do not possess enough cash reserves to pay professional players. To solve this, the Athletic Association outsourced their entire football operation to Chen, who bore all responsibility over salaries.
The boss talked a big game after Valley were promoted, which occurred in the same summer when Dreams FC were forced to withdraw due to financial problems. When asked about Dreams, Chen responded, “We must avoid falling behind on salaries at all costs. If we want to develop players, but we don’t pay them on time, that is not development.” He also outlined a three-year plan for the club and committed to spending $12 million a year.
The history of Hong Kong football is littered with empty promises, and Chen’s promises turned out to be no different.
There was much fanfare when Valley were promoted to the top flight in 2019. (Credit: 體通體透)
The first signs of the club’s financial precariousness came when the first reports of salary arrears emerged in April 2020, although it is believed that they were resolved before the team returned to training in July. At the time, the club’s then-Director of Football, Poon Man-tik, claimed that because of the COVID-19 pandemic, there were tighter restrictions how much money could be remitted from Chen’s Chinese bank account to the club’s account.
In February 2021, the club were threatened with suspension from play by the HKFA’s Disciplinary Committee over unpaid insurance premiums. The Appeals Committee later intervened to overturn the suspension, but rumours that players’ salaries were delayed did not go away.
A sign of growing unrest at Valley came in April, when the club’s foreign players asked not to be picked for a match against RCFC in protest.
Eventually, the club announced on 1 July 2021 that they would not compete in the 2021-22 Premier League but the damage had already been done.
Valley’s players called a press conference on 12 July where they alleged that the club owed a total of $5.5 million to various players and staff at the club. Former player, Lam Ngai-tong, revealed that he was not paid in full for the 2019-20 season until 14 October 2020, and that he was notified by the Mandatory Provident Funds Authority that his employers had not made any MPF contributions since December 2020.
The players sought help from FIFA, but were told that local players needed the HKFA’s approval in doing so. This was a non-starter as long as Pui Kwan-kay was involved with both Happy Valley and the HKFA. The foreign players, on the other hand, were able to do so through their respective football associations, and in February 2022, FIFA banned Happy Valley from registering players for three transfer windows.
The players and staff also went to the Labour Department, which led to a mediation session on 15 July between Chen and the players. An agreement was reached in which Chen would remit between $350,000-400,000 a week to the company for the purposes of clearing outstanding arrears. It was thought that the saga had reached its resolution at that point.
Meanwhile, Happy Valley self-relegated to the First Division where they permitted by the HKFA to play as if nothing had happened. The club have continuously denied responsibility over the unpaid salaries as it was Happy Valley Football Club Ltd., who the players were contracted to, and not the Athletic Association.
Pui, too, has denied any responsibility. After the players took their case to the Labour Department, they discovered that he resigned as a director of Happy Valley Football Club Limited in December 2020, which was also when the club allegedly started to fall behind on salaries. Pui has maintained that his role was honorary and directed all questions to Chen.
Former Valley players and staff, including Lam Ngai-tong (centre) held a press conference on 12 July 2021 to brief the media on their situation. (Credit: Screenshot/Now)
On 20 April 2023, Chen was indicted on 26 charges, including failure to pay outstanding wages at upon the termination of contract, failure to pay any sums payable under the order of a tribunal without the consent of a director or which is attributable to one’s own neglect, and failure to pay outstanding wages upon the completion of contract.
After his court hearing, he told reporters that he would pay off all debts within the next months. However, at the following court hearing on 15 June, it was revealed that Chen still owed money but the judge in the case granted Chen more time as his lawyers were in negotiations with the prosecution over a plea bargain.
The debts were finally paid in full on 20 September, one day before Chen was due in court. The defence told the court that Chen was willing to strike a plea bargain with prosecutors and that, as a condition of receiving their money, the players and staff would write letters of mitigation on Chen’s behalf.
It was revealed that only ten former Valley employees pursued the case until the end. They were former team manager, Jackal Hui; former administrative assistant Tam Tak-hang; former kit manager, Yu Ka-wai; and players Wong Chi-hong, Marco Cheung, Wong Hong-yin, To Chun-kiu, Tsang Chi-hau, Luciano, and Mikael. They were owed a total of $1.357 million.
Notably, former midfielder Charlie Scott was not part of the case as he had decided to retain his own legal counsel. He would later file a winding-up petition on 29 September against Happy Valley Football Club Ltd.
On Tuesday, 5 December, Chen plead guilty to 15 counts as part of a plea bargain with prosecutors. After reading mitigation letters sent by the players, staff and also, Pui Kwan-kay, the judge sentenced Chen to 240 hours of community service. The ex-Valley boss was also fined $147,000.
The following day, the High Court approved Scott’s petition to liquid Happy Valley Football Club Ltd. – bringing an end to the saga.
Scott asked for Happy Valley Ltd. to be liquidated, but is unclear whether the company has any remaining assets. (Credit: Happy Valley)
But is this really the end? Scott told SCMP that he is still owed money, whilst his teammates who sought help from the Labour Department, have been paid in full. He hoped that liquidators would find assets at Happy Valley Football Club Ltd. that could be sold in settle debts, but it appears that the company has only liabilities and no assets.
As for the club, Happy Valley decided not to participate in this season’s First Division, presumably owing to the match-fixing scandal. Even so, HKFA chairman, Eric Fok, stated that he would open to allowing the club to return. There is also no provision that prevents Valley, or any other club, from contracting players to third party-entities and to the club simultaneously.
So, it is fair to say that this is the end of the road – but only for the time being. The players should be encouraged that they have legal recourse against club owners who run into arrears, though the wheels of justice turn slowly.
In the end, it is just another chapter in the story of Hong Kong football.
