Published March 6, 2009

HK tycoon says he's not facing probe

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(HONG KONG) Hong Kong billionaire Joseph Lau, who purchased shares in PCCW Ltd after a buyout for the phone company, said yesterday that he is not being investigated by the city's stock market regulator in its probe of the HK$15.93 billion (S$3.2 billion) takeover bid.

Purchases: Billionaire Joseph Lau and 'his friends' had bought about US$200 million of PCCW shares since the buyout bid was announced in November

Mr Lau and 'his friends' had bought about US$200 million of PCCW shares since the buyout bid was announced in November, the South China Morning Post reported the chairman of Chinese Estates Holdings Ltd as saying on Wednesday. Alison Yeung, a spokeswoman at the Hong Kong property developer, yesterday confirmed his comments.

The Securities and Futures Commission seized voting records from a Feb 4 PCCW shareholder ballot and started an investigation into the buyout plan led by Richard Li, the operator's chairman, amid allegations that some insurance agents were offered stock to support the takeover bid.

The regulator must file evidence from its probe by the middle of this month, before an April 1 High Court hearing to sanction the buyout.

Ernest Kong, a spokesman for the SFC, declined to say if the regulator will investigate Mr Lau.

'It is quite difficult to verify the vote-rigging allegations,' said Timothy Chan, who rates PCCW shares a 'sell' at CLSA Ltd in Hong Kong. 'There are still many uncertainties and risks surrounding the buyout.'

It's 'likely' someone was behind a scheme to divide up their PCCW holdings into smaller units to make more people eligible to participate in the shareholder meeting, investor activist David Webb alleged last month.

Hundreds of Hong Kong insurance agents may have accepted shares for supporting the buyout, according to Mr Webb.

The HK$4.50 a share offered by Mr Li and co-bidder China United Network Communications Group was approved by PCCW shareholders after more than 1,400 investors accepted the plan at the Feb 4 meeting, compared with more than 800 who opposed it.

Adoption of the offer required the support of a majority of investors taking part.

Mr Lau regretted he didn't transfer his PCCW shares to colleagues so more people would be entitled to vote in favour of the bid, he said on Wednesday.

All his PCCW shares were held under a single account, he added.

'I think the SFC will make a submission to the Court on whether they consider that vote-rigging is acceptable practice, and the Court will then pass judgment on this,' Mr Webb, a former director at Hong Kong Exchanges & Clearing Ltd, said yesterday. 'If it is ruled as acceptable, then it is a recipe for chaos.'

The SFC was given a further 21 days to file evidence from its probe into the PCCW buyout, Judge Susan Kwan ruled on Feb 24. -- Bloomberg