A shareholder vote that approved Hong Kong telecom giant PCCW's 2.1 billion US dollar privatisation move was clearly manipulated by a city businessman, a court ruled Monday. Lam Hau-wah, a senior manager at Fortis Insurance Company (Asia), dished out around 500,000 shares to insurance agents and others in return for them approving the controversial vote, the judgement said.
As a result of the manipulation, the bid should be scrapped, Justice Anthony Rogers wrote in a detailed opinion explaining an earlier rejection of the buyout by the Court of Appeal. "Vote manipulation is nothing less than a form of dishonesty. The court cannot sanction dishonesty," Rogers wrote.
The judge added "there was a clear manipulation of the vote and because of the extent to which that happened the court cannot be sure that the vote was fair." The original decision over PCCW chairman Richard Li's attempt to take the city's largest fixed-line operator into private hands was made by the court last month.
The full judgement has been keenly awaited by market-watchers to assess what effect it may have on future privatisation bids. Li has since dropped the buyout plan. There was no suggestion in the judgement that Li was aware of any manipulation. The long-running saga has gripped the financial hub, as it pitted one of the city's richest families - Li is son of Hong Kong's richest man Li Ka-shing - against minority shareholders and the Securities and Futures Commission (SFC), a regulator.
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