Superboy crashes to earth: Richard Li was hailed as Asia's broadband pioneer. Now some investors are putting him in the dot.com dustbin
The Guardian - United Kingdom; May 31, 2001
BY JOHN GITTINGS EAST ASIA EDITOR
Few things delay the global elite. Usually the ire of shareholders and the small matter of an annual meeting can be delegated to management. Especially when prime ministers are waiting for you. However, one card carrying member of the super-rich had to endure a rough session at the hands of investors last week despite an invitation to talks with the Chinese premier, Zhu Rongji.
Richard Li, 34-year-old chairman of Pacific Century Cyberworks (PCCW), was supposed to take part in the high-level Hong Kong delegation now being briefed on China's plans to develop its vast western region. His father, Li Ka-shing, Hong Kong's richest businessman, was there, smiling in the front row while Mr Zhu told executives that they could make a lot of money in the west - though they "might not catch up with Li Ka-shing".
Richard had to stay behind to be grilled on Friday by shareholders at the annual meeting of his tottering multimedia empire to explain the mess that has been made of it.
Investors were griping about a 90% slide in the share price, which peaked at HKDollars 28.50 in early 2000 and ended at HKDollars 2.70 on Friday.
One woman singled out deputy chairman Francis Yuen, whose compensation topped HKDollars 283m (pounds 26.75m): "He's making so much money. Is that fair?"
Investors refrained from personal attacks on Mr Li, who has featured on the cover of Time magazine and is known as Hong Kong's "golden bachelor". Still, at one point during the meeting, general counsel Donald Hess interjected: "I think the shareholders have made their views very clearly. Let's move on to the business of the company."
'Triple whammy'
Last year, the former internet upstart used its high-flying share price to buy Hong Kong's dominant telecoms carrier for about pounds 20bn. That carrier, Cable & Wireless HKT, was widely held by Hong Kong investors and was a reliable dividend-payer.
"May I ask you to suggest something concrete to restore the company to its former glory?" one shareholder asked indignantly from the floor.
Mr Li had intended to go to the west with his father while the men in suits handled the complaints after an Dollars 886m (pounds 633m) year-end loss.
"It's been a triple whammy for him this year," says a Li family watcher in Hong Hong. The fall in the share price was followed by the disclosure that Mr Li's education was not all it seemed. Then PCCW's corporate governance was ranked lowest of the top Hong Kong corporations.
Asked on Friday about PCCW's plans for the future, the man credited with "global vision" said something about the need to increase turnover and profits.
Could this be the "Superboy" who was feted by the world's press just a year ago? His "spanking new empire", Time gushed, was starting to rival the one his father had taken years to amass.
Interest in Mr Li seemed insatiable. "An avid scuba diver and a licensed pilot", said the entry in Forbes World's Richest, adding that he was "considered one of Hong Kong's most eligible bachelors".
The press, recorded every detail of his choice of dates, restaurant dishes, cars and decor for his luxury house under construction at peaceful Shek O on the south of Hong Kong island.
One eulogy called him the "venture visionary" whose business practice "combines a mastery of the Chinese art of relationship with a headstrong American obstinacy, gutsiness and drive."
The profile likened Mr Li to Bill Gates, with one exception: Mr Gates dropped out of Harvard but Mr Li "completed his degree at Stanford".
So said all the biographical lists of Asia's most powerful businessmen, recording his degree in computer engineering - as did material put out by PCCW.
Digging by the International Herald Tribune unearthed a rather different story. The paper found that Mr Li abandoned his studies and went to work for an investment bank.
What might have seemed muckraking chimed with public disillusion. PCCW's media division could only counter that the inaccuracy had not appeared "in public disclosures filed [for legal purposes]".
Even this claim was undermined by a persistent critic, David Webb, who discovered that Mr Li was described as a Stanford graduate by two companies of which he was or had been director.
PCCW responded feebly: the error was overlooked because equity interests in those companies "were relatively small".
There is no suggestion that Mr Li has at any time claimed he has a degree from Stanford.
This month the news was that PCCW was seeking a replacement for its top boss.
The company is focusing on North America, where the Hong Kong-based internet and telephone company has hired a headhunter to find an experienced telecoms executive.
Critics feel that PCCW's management has too many executives from a finance background and that the addition of a telecom industry veteran could help lift the share price.
Mr Li will not easily relinquish power - unless it is for a star executive with the right skills.
He "will step aside" as chief executive while remaining in his role as executive chairman.
The new arrival may also get a title such as "president" - that has unnerved many investors who hope for a new broom to sweep up the mess.
One contender was named by the Wall Street Journal as Alex Mandl, who resigned last month as chairman and chief executive of Teligent, a telecoms start-up which filed for bankruptcy protection under Chapter 11.
Mr Mandl is no stranger to sprawling telephony companies: before joining Teligent he was the boss at AT&T.
'Chip on my shoulder'
Given PCCW's poor performance, many now openly wonder whether Mr Liwill ever match his father's achievements. Mr Li does not welcome questions about his father, and once admitted that living in the shadow gave him "a chip on my shoulder as big as a railroad tie".
Li senior began his career in 1940 by manufacturing plastic flowers. He moved through real estate to gain a foothold in the colonial trad ing world through his controlling stake in Hutchison Whampoa. Richard and elder brother Victor had an early taste of big business, sitting in on Li Ka-shing's board meetings and no doubt learning from their father's giantkilling style.
As Hong Kong looked ahead to the handover, Li Ka-shing became Beijing's favourite Chinese business leader. Richard, educated - up to a point - in California, was called home in 1990 to run Hutchison's satellite operations. Here he showed a touch of originality.
Wired to the new generation, Richard saw the opportunity to launch satellite transmission from the Hutchison platform. He established StarTV, with the help of Dollars 125.5m from his father.
Four years later, Richard sold StarTV to Rupert Murdoch's News Corporation for nearly Dollars 1bn and set up the Pacific Century Group on the proceeds.
The group languished for years until Mr Li made a sensational re-entry into the hi-tech world in 1999 by transforming it into PCCW with an ambitious promise to build a broadband network for Asia.
A year later came the ultimate coup when Mr Li beat Singapore Telecom in the fight for Hong Kong Telecom.
Just as father captured the commercial hongs, so son seemed to be conquering the electronic world.
Perhaps Mr Li is now being dismissed as glibly as he was hyped then.
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