MUST READ! Did China take Telstra for $1 billion?
Peter Zhang
BrookesNews.Com
Sunday Feb. 23 2003
On 21 February Telstra shares dived because the company lost $1 billion on a Chinese venture. Now the media are reporting it as a Hong Kong investment that went sour. Hong Kong had nothing to do with it. The deal was decided in Beijing by the powers that be and was sour from the very beginning. The result is that Telstra has had to write off its entire investment in its joint venture with Pacific Century CyberWorks.
A very embarrassed Ziggy Switkowski, Telstra's chief executive, has been forced to publicly admit that Telstra's investment with the Li family is now worthless. So, so predictable. In March 2000 I wrote:
"I strongly suggest that before any Australians become financially involved with [Richard] Li they take care to acquaint themselves with a little of his financial history, including accusations of insider trading."
An investigation could have begun with Beijing Enterprises Holding LTD in which about $1 billion in stock simply disappeared. This was a fraudulent company the shares of which had been pumped up and then dumped. This particular fraud destroyed one bank and seriously damaged a number of other banks. And who was one of the prime movers behind Beijing Enterprises? The Li family.
See what I mean about predictable.
From what I can deduce, Telstra's bright boys figured that paying exorbitant prices to the Li family would gain them special access to China and perhaps even protection against competition. Only someone completely ignorant of the situation on the mainland and the operations of the Li family could be that naïve.
It is pretty clear how Telstra probably got sucked in. Richard Li could have stressed to the company his connections with Zhu and Jiang Zemin through his Father's close links to the Chinese government. What would not have been revealed is the family ties to Gen. Ji Shengde, former head of Chinese military intelligence, who was arrested for corruption. Also omitted from the family's business tree is its links to Gen. Xiong Guangkai who was Ji's superior.
These powerful connections are very handy when a great deal of money disappears or the value of shares suddenly slump after a steep rise, which brings me to Pacific Century CyberWorks. Before this company appeared there was the Pacific Century Group. It was supposed to use US money to finance electricity generating plants that would supply vast amounts of electricity to fuel China's rapid economic growth.
It was discovered that the Pacific Century Group was a front whose principle owners were the Macau-based Ng Lapseng and Li Ka-Shing. Ng has been accused of involvement in drug-running, prostitution, including child prostitution, extortion, smuggling illegal immigrants, loansharking, money laundering, etc. He was also deeply implicated in the Clintons' fundraising scandals.
I am not going to assert that the allegations against Ng are justified, only that it is very peculiar for a company like Telstra to even be indirectly linked to such a character. But I suppose greed can blind even the best among us.
As I said at the time: "I strongly suggest that before any Australians become financially involved with Li they take care to acquaint themselves with a little of his financial history, including accusations of insider trading." It is a pity that Telstra and the Australian Government did not heed the advice.
Editor: Senator Alston, minister for communications, must be forced to share the blame for Telstra's Asian fiasco. It is no defence for him to say that "the Keating government had overseen similarly poor decisions." Even if this is true it does not justify him trying to walk away from his responsibilities.
Senator Alston can scarcely claim ignorance on the subject considering that he was personally warned about the Li family's business history. Nevertheless, he chose to ignore the warning. It is time for him to go.
brookesnews.com |
