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Hong Kong’s startup community comes face-to-face with its own Fyre Festival in WorkTech
For a few months in late 2019 and early 2020, it seemed like Michael Wong was everywhere. Wong–the Founder and Chairman of WorkTech–was rubbing elbows with all the business glitterati, including Singapore’s Raffles Family Office, Hang Seng University, acclaimed venture capital firm Click Ventures, and other notable players in Hong Kong’s innovation space.
He impressed the community with high-profile collaborations, such as partnering with Hang Seng University on its Innogration Hub in January. Late January also saw news stories crop up regarding a Raffles Family Office-led Series A funding deal worth US$25 million.
It seemed that WorkTech’s influence in the community could only be a good thing, and such news stories were bolstered by a swift expansion that saw the company’s portfolio expand in Singapore, Taiwan, mainland China, and Hong Kong from 14 to over 19 locations.
However, in light of recent events, Wong’s starring role in Southeast Asia’s innovation space may turn out to be more of a veneer. Multiple seize of debtor property cases have been executed against Wong’s company by disgruntled landlords, some of whom haven’t received rent payments in over five months. Former employees and business partners have come forward with testimonies of verbal abuse, labor law violations, and multi-layered fraud.
This tale is one involving bank transfers that never arrived, unpaid salaries, and bewildering webs of broken promises and breaches of contract. All the signs point to an organization in absolute disarray, and a frontman recklessly chasing a dream at the cost of his reputation, business interests, and most worryingly–his employees.
When the startup dream becomes a nightmare
Everyone has different definitions of failure, but when four members of a company’s upper management walk out all at once, it’s a clear indication that something’s not right.
After going without salaries for up to four months, four senior WorkTech managers left the company in a planned move on June 1. While their contract cancellation was made on salary-related grounds, a series of interviews with Jumpstart reveals that this issue is but the tip of a large iceberg. They highlight Wong’s callous disregard for his employees’ wellbeing, and leave the impression that he sees laws more as gentle suggestions.
Former WorkTech COO Eddie Lin says that Wong’s big-dreaming, go-getter persona had a dark side. He reportedly used abusive language, threats, and intimidation to force management to back down on sensitive issues. But when he was in a better mood, he would try to instill optimism by repeatedly referencing two major upcoming deals: an acquisition bid for regional co-working operator Kafnu, and a funding deal-cum-joint venture with Raffles Family Office.
While the company embarked on this ambitious plan, rental payments were piling up. Wong’s aggressive strategy left salaries unpaid for months on end during the height of the Covid-19 pandemic. Attempts to request salaries were often met with abusive language and scathing remarks.
On one occasion, when former Assistant Operations Manager Mandy Lin emailed Wong about her unpaid January salary and intentions to contact the Labour Department upon nonpayment, he responded with condescension and outright anger, claiming that her position at the company was due to her colleague Eddie, and not any merit of her own. An email sent by him on February 11 states: “remember u got the job is not because of your ability is because Eddie Lin! AND I HATE TO BE THREATEN! [sic]”
On another occasion, when former WorkTech Singapore and Taiwan CEO Darren Chua requested money to pay the rent on the Taipei location, Wong sent the following response: “Maybe I really should transfer u the whole company see how u deal with it while the whole company no one making income but just sitting & wait & all the f***ing expenses […][sic].”
More ominously, Mandy realized that neither she nor her staff had been receiving communications from Manulife, the company’s chosen Mandatory Provident Fund (MPF) facilitator.
MPF is Hong Kong’s social security scheme, and mandatory contributions of 5% of salary are legally required from both employee and employer. While Mandy and the staff she managed could see MPF deductions on their payslips, a call to Manulife revealed that accounts had not been set up in their names.
Mandy’s account shows that it was only opened in March this year, one month after she left WorkTech, and she says that this only took place only after she filed a complaint with Hong Kong’s Mandatory Provident Fund Schemes Authority. Furthermore, she says that through the MPFA, she was able to recover the lost funds from WorkTech and deposit them into the account, but the case is ongoing, and there is no indication as yet of how the siphoned-off MPF deductions might have been used.
In an email exchange with the MPFA, the organization stated that it is “closely monitoring the situation of employers defaulting MPF contributions” and their first step is usually to require that the employer enroll the employee and settle the accrued contributions, plus a 5% surcharge, as in Mandy’s case. Failing this, the organization may “take further actions,” for instance, filing civil suits or pursuing criminal prosecutions as needed–if charged, offenders are liable to up to four years’ imprisonment and a maximum fine of HK$450,000.
The organization further added that it is “taking follow-up action on the case under enquiry.”
Lower-level employees aren’t exempt from what can euphemistically be referred to as “WorkTech’s hyper-lean philosophy.” Having left the company, the former management team is dealing with the aftermath and supporting former staff who are still picking up the pieces. They have spoken of the need to take out loans or work additional part-time jobs to make ends meet for their families during what has already been a challenging year.
The wrong side of the truth
By the start of 2020, it was already clear to the WorkTech management team that the company’s financial troubles extended well beyond its inability to pay employees, as it went to increasingly dubious lengths to keep up appearances.
The former management team says that attempts to resolve the issue of unpaid salaries always followed the same pattern: employees would be handed a cheque on Thursday evening, which would inevitably bounce by the time it cleared on Monday. Wong would then allegedly initiate a bank transfer that would mysteriously never make it into the designated account.
Chua recalls one drawn-out battle with the company accountant that ended with him receiving what he believed to be a fake bank transfer proof.
“Obviously he sent me a fake receipt. And he sent me a cheque that bounced,” Chua says. The cheque was, in fact, countermanded–meaning that Wong retracted the payment before it could be processed.
Claims have come forth that suggest Wong’s propensity for this type of deceit didn’t stop with employees. Jumpstart spoke with a company that provided WorkTech with services and received a wire transfer receipt when the payment was due. The money never showed up in the account, and when WorkTech was confronted, the company was told that it failed to fulfill the services and would not be receiving the payment after all. It is suspected that the wire transfer receipt was either fabricated, or WorkTech stopped the payment after it was initiated. The company is exploring legal action against WorkTech.
Further, Chua says that he was directed to initiate a US$25 million transfer from the company’s Singapore bank account (under WorkTech Pte Limited) to Sky Regal Holdings Limited–the registered company behind the WorkTech brand–on February 28. Wong says that the transfer receipt was needed to secure another deal, to show the other party that funds were set aside in anticipation of the deal’s closing.
Chua was baffled–he says the account balance never exceeded “a couple hundred SGD,” but he was still somewhat reassured by Wong’s insistence that big things were on the horizon for WorkTech. But that soon changed.
The money was ostensibly from the Raffles Family Office deal, but those negotiations soon collapsed. Chua says that Wong continued to use the news of the deal and the phoney $25 million bank transfer to solicit further interest and investment from the startup community.
“Since no money would flow, I thought that no harm was done. But I really regretted doing that because he took the receipt. He went around Hong Kong to say that he got the Raffles money, which never came,” he says.
On April 15, Raffles issued a press release announcing that it “will not proceed with its proposed investment in and the partnership with WorkTech Asia” (Click Ventures released a similar statement on June 17 on its Facebook Page). Though the deal was reportedly dead in the water by February, it appeared in local media as late as June 2.
Readers should also be aware that Jumpstart was engaged by WorkTech for a possible investment in our company last year and a SAFE agreement was signed. But like many other individuals and organizations in this story, we ultimately did not receive any funds. We also ran an advertorial about WorkTech in our January 2020 issue.
One bad apple
Just as WorkTech’s employees began scrutinizing Wong’s leadership with increasing alarm, the company’s tenancy agreements seemed to be coming apart at the seams.
Based on information provided by a former employee, the vast majority of WorkTech’s tenancy contracts were breached, and several landlords have proceeded with possession orders. It is also revealed that the amount of rent owed ranged from HK$300,000 to $6 million for each lease takeover.
The actions taken by the parties involved have varied. Jumpstart reviewed several legal documents pertaining to the landlords’ actions against WorkTech’s outstanding rental and management fee payments, including an application under the Landlord and Tenant (Consolidation) Ordinance for possession recovery, and a Writ of Possession by the Hong Kong Lands Tribunal.
Jumpstart also spoke to one co-working operator who entered into a licensing and management contract with WorkTech. According to the source, there were delays in rent payments from the outset, until they stopped altogether.
Furthermore, both the source and former employees mentioned instances where co-working members at WorkTech-managed spaces were ignored in their requests for their two-month deposit refunds when their contracts ended. Mandy says that obtaining the deposit money from the previous owners was part of a checklist she had to go through for new management contracts, but when it was time to refund the members, there was no money available.
What’s next for WorkTech
At the time of writing, WorkTech is still operating. Even though Mandy believes that it’s unlikely for any WorkTech spaces to be open in three or four months’ time in light of the possession orders that have been executed by the majority of the landlords, Chua says that the company continues to hire, renew current tenant contracts, and onboard new members.
In the last few weeks that Chua, Eddie, and two other colleagues were still at the company, their personal finances had reached an alarming state. After raising their concerns with Wong, he consented to pay all their outstanding salaries and continue paying them 50% of their salaries going forward. He set himself a deadline of May 22 to come through with the payments.
May 22 came and went, and at that point, having worked without a salary for at least four months, Eddie says it was obvious to them that he couldn’t pay, and there was no point in staying. The four of them sent a notice of contract cancellation to Wong on June 1.
Eddie says that they all attempted to courier their work laptops back to WorkTech’s Hong Kong office, with one who tried to return it in person, but the deliveries were refused each time. They were notified soon after that Wong had initiated a police investigation against them on the grounds of theft for the laptops, which Chua believes to be a vengeful response to their departure.
With several unresolved court cases and disputes, it will be some time before WorkTech’s employees–the most notable victims of the company’s downfall–receive the answers they need to move on from this chapter.
For those who are a part of Hong Kong’s beleaguered co-working community, the scandal surrounding WorkTech is another blow following WeWork’s IPO debacle. Uncertainty about the co-working industry, together with the wider instability that the city has been met with over the past year, allowed cards to be stacked in WorkTech’s favor, granting the company access to the startup ecosystem in a way that proved devastating to many.
As for Wong, these allegations may have painted him as a loose cannon, an almost Trumpian caricature of the fake-it-till-you-make-it startup philosophy, but only he knows whether he was in it for personal gain, or if he was truly acting upon a nobler vision of the future.
Editor’s note, June 17, 2020: On the day of publication, Hong Kong startup ecosystem builder WHub shared an ‘Open Letter to the Community’ on its website regarding its decision to “[end] all contractual and non-contractual relationships with WorkTech, its legal entities and its founder Mr. Michael Wong.” Read the full statement here.
Editor’s note, June 18, 2020: The term ‘clients’ was changed to ‘members’ to more clearly describe the tenants of WorkTech-managed co-working spaces. Additionally, comments from Michael Wong and the Mandatory Provident Fund Schemes Authority were added to the story.