An Explosive Wake-up Call
Are angry investors targeting a telecom tycoon?
The explosions may also signal growing anger among the working classes at the tycoons who have traditionally run Hong Kong.
By Mahlon Meyer
NEWSWEEK INTERNATIONAL
March 12 issue — The Chinese instructions on the explosive are clear: “Light the fuse, wait 15 seconds, stand 40-50 meters away.” That’s exactly what someone has been doing in Hong Kong over the past two months.
IN THAT TIME police have found fireworks, low-grade explosives and eight-inch tubular grenades, usually used for fishing, in at least seven phone booths. A few, such as the one shown to NEWSWEEK by police, were unexploded. But at least four were simply paper shreds left over after they blew the phone boxes apart. (In addition, a dozen other booths have been smashed or had their handsets ripped out recently.) No one has been hurt so far, and the police have been unable to find a culprit. But they do have suspicions about a possible motive.
The phone booths belong to Pacific Century CyberWorks, a former high-flying telecom company owned by tycoon Richard Li. Once valued at $70 billion, PCCW’s stock collapsed last year, battering thousands of investors. The company is now worth about $12 billion, and there are a lot of angry people holding a grudge against Li, whose vision of a wired Hong Kong had been hyped as the future of this former trading port.
At a time of collapsing confidence in Hong Kong’s ability to reinvent itself, Li’s energy and pedigree were seen as almost surefire harbingers of success. His father is Li Ka-shing, the territory’s dominant businessman and a billionaire fabled for having the Midas touch. Some investors had gambled all they had on the younger Li’s venture, which was to deliver interactive television to Asia, much as he had once brought satellite television to the region with Star Television. With his surging stock valuation, 34-year-old Li was able to acquire Hong Kong Telecom last year, providing an advanced fiber network to showcase his technology—and a steady stream of revenue. Police speculate that one or more investors may have lashed out at PCCW’s most visible symbols—the phone booths. “It certainly wasn’t for the money,” says Andy Tsang, chief superintendent of the Organised Crime and Triad Bureau. “Nobody stayed behind to pick up the coin box.”
The explosions may also signal growing anger among the working classes at the tycoons who have traditionally run Hong Kong. For decades poor immigrants tapped into the city’s seemingly endless real-estate boom by sinking their life savings into tiny apartments that then skyrocketed in value. When prices fell after the Asian financial crisis, many investors turned in panic to the stock market. In the late 1990s, fueled by the stratospheric rise in tech stocks, the market seemed to offer new hope. But the good times came to an end last year, when share prices tumbled. Thousands of individual investors lost large sums of money. “If poor people, having had huge expectations, can’t improve their lives, there will be even more anger,” says contrarian investment adviser Marc Faber.
Pacific Century was a moneymaker—for a while. The stock hit the market last May at less than four cents a share, and quickly soared. At its height, PCCW was valued at 1,400 percent of its initial-public-offering price. But soon the share price fell precipitously; investors seemed to feel that, despite its grand-sounding strategy, PCCW boiled down to little more than a scheme to deliver broadband television using other companies’ networks. Investors turned on Li. “People feel he used their money to buy a lot of worthless things,” says a broker. “Some have lost so much they now have mental problems.”
The phone-booth explosions have triggered copycat crimes among young Hong Kongers. Until recently teenagers could expect a clear path to success in one of Asia’s most dynamic cities. Now they suffer from a 20 percent unemployment rate. Since the beginning of the year police have arrested several groups of teenagers, 13 to 18, suspected of blowing up public toilets with powerful fireworks. Earlier this month police seized six fishing grenades taped together on an 18-year-old prowling through an upper-class area. “Youth are turning to violence,” says Lee Cheuk Yan, general secretary of the Hong Kong Confederation of Trade Unions, “and the major reason is frustration over their economic problems.”
Hong Kong police acknowledge that finding the bomber or bombers could be difficult. They are pushing for harsher punishments as a deterrent: a maximum 14 years for possession of explosives, instead of the current six months. For tycoons like Li and his father, the city’s famed stability has always provided a solid foundation for their business empires. Their hardest task may now be deciding how they are going to answer what appears to be a wake-up call—placed with gunpowder.
© 2001 Newsweek, Inc.
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