Global Crossing rescue faces opposition
Monday, February 11, 2002
ERIC NG and AGENCIES
Hutchison Whampoa has dismissed concerns that its rescue of ailing Global Crossing could be derailed by claims from a United States congressman that chairman Li Ka-shing's close connections to the mainland should disqualify him from ownership.
The comments by Congressman Dana Rohrabacher came 2.5 years after he said Hutchison's port operations in the Panama Canal would give China effective control over the strategic waterway. US government officials later rejected his comments.
Mr Rohrabacher, a California Republican, has sent letters to US President George W. Bush, the attorney-general, the Department of Defence and the investigative arm of Congress, demanding an inquiry into the rescue proposal next week, according to Al Santoli, national security adviser to Mr Rohrabacher.
This came a week after Hutchison and Singapore Technologies Telemedia proposed taking a combined 79 per cent stake in international Internet protocol network provider Global Crossing for US$750 million.
Global Crossing's network is estimated to have control of about 20 per cent of fibre-optic cables leaving the United States, which Mr Rohrabacher considered too important to be controlled by Hutchison.
Hutchison's spokeswoman yesterday would not directly comment on the issue, but said Hutchison was not concerned.
"Such allegations do not warrant a comment or response," she said, adding Hutchison had investments in 36 countries and the previous Panama investment attacks were later dismissed by the US Government and some congressmen.
Hutchison beat several US firms to win a 25-year contract from the Panamanian Government in 1997 to run container ports at both the canal's Pacific and Atlantic entrances.
Mr Rohrabacher and some other Republicans had claimed the contract would give China control over the canal.
Meanwhile, Hong Kong investors' concerns over accounting policies of global telecommunications firms and other recent negative industry news have prompted the dumping of shares in the sector.
Hutchison fell 3.2 per cent to HK$67.25 yesterday, while China Mobile tumbled 2.4 per cent to HK$21.50.
Pacific Century CyberWorks (PCCW) fell 3.1 per cent to HK$1.83, as some investors were concerned about the earnings outlook of Reach - its joint venture with Australia's Telstra.
Merrill Lynch analyst Alistair Scott said while Reach's earnings visibility was not high, he believed Reach was less of a concern than the accounting practices for which Global Crossing was under investigation, as its revenue base - from Telstra and PCCW - was not reliant on new network capacity sales.
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