Hong Kong lawmakers to probe if favour given to PCCW
Hong Kong lawmakers are demanding to know if Internet and telecoms giant Pacific Century CyberWorks received preferential treatment to exempt it from stock market listing rules regarding large transactions.
The embattled PCCW, run by tycoon Li Ka-shing's younger son Richard Li, was granted a waiver this week by the Stock Exchange of Hong Kong from having to seek shareholder approval for transactions worth less than HK$2 billion (US$256 million).
Under the exchange's listing rules, transactions that exceed 50 percent of a company's total asset value ordinarily require approval at a shareholders' meeting.
"I've written to the (regulatory) Stock and Futures Commission (SFC) for further information into the criteria that was adopted in granting the waiver to PCCW," legislator Albert Ho of the Democratic Party told Reuters.
The stock exchange explained its position on the waiver in a statement on Thursday without referring specifically to PCCW.
"The overall principle ... when considering an issuer's compliance with the listing rules is to balance regulatory requirement and investor protection without restricting the issuer's business activities," it said.
News of the waiver followed PCCW's release of a worse-than-expected net loss of $886 million for 2000.
PCCW also put itself in a position of negative shareholder equity of US$1.8 billion after it wrote-off against reserves US$22 billion in goodwill stemming from its purchase last year of Hong Kong's main telecoms company Cable & Wireless HKT.
The once high-flying company's stock, which soared as high as HK$28.50 in February 2000, ended at HK$3.075 on Friday.
Ho said he would table his question before the assembly if he failed to get an SFC answer, which he expects in a week or two.
"This is to ensure there is a level-playing field in Hong Kong, and to make sure that nobody should be entitled to enjoy special privileges, even the Li family."
"(We want to know) the timing of the waiver and whether there are other comparable examples, such as how many times such waivers have been granted in the past," he said.
The probe push by the Democratic Party comes as the younger Li, nicknamed "Superboy" for his past exploits, struggles with the fallout from his confirmation that he never graduated from a top U.S. university, as claimed in company press materials.
The elder Li, whose flagship Cheung Kong Holdings and conglomerate Hutchison Whampoa are deeply entrenched in Hong Kong's real estate, ports, retail, telecommunications and energy sectors, has long denied that he received special treatment.
But the issue resurfaced last year when the government awarded his son's PCCW, without competitive bid, the right to develop the "CyberPort" office, retail and residential complex.
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