Daily Lesson from Life 07 April 2009

"HK wonders about reining in its tycoons -Tue, Apr 07, 2009 AFP

HONG KONG, April 7, 2009 (AFP) - Hong Kong has a long tradition as a fair yet free-wheeling financial hub, but a string of market controversies has left many wondering if the city has failed to rein in its powerful tycoons.

From allegations of insider trading and dodgy shareholder votes to complex investment schemes that left some ordinary investors penniless, the incidents raise questions over how free from restraint Hong Kong's free-market should be.


David Webb, a prominent shareholder activist, said the controversies were chipping away at Hong Kong's reputation and that the government should have moved more quickly in dealing with them.

In February, the company that runs Hong Kong's stock exchange watered down proposals to toughen limits on directors trading in shares in their own companies. The decision was made after the original proposals faced strong opposition from some of the city's powerful tycoons, who have huge influence over government policy and many other aspects of the city's life and business.

In March, the exchange was then pressed to halt a controversial 10-minute window at the end of the trading day to settle the closing price of shares. The system was blamed for a dramatic last-minute plunge in shares of banking giant HSBC, when a single transaction order wiped more than 16 billion US dollars off the value of the company in seconds.

The latest potentially damaging episode is the unfolding courtroom drama over whether telecoms giant PCCW should be allowed to go into private hands, a case which has pitted tycoons against regulators. PCCW chairman Richard Li's battle to privatise the city's largest fixed-line operator was halted by the city's Court of Appeal on Monday just hours after the High Court had given it the green light. Li is the son of Hong Kong's richest man, Li Ka-shing, and the courtroom drama has involved a cast of other notable businessmen.

The 2.1 billion-US-dollar bid is opposed by the Securities and Futures Commission (SFC), who claimed a shareholder vote in February approving the deal was unfairly manipulated by Li's associates. Making the original decision to grant the buy-out, High Court judge Susan Kwan pointed out there was no law against such vote-rigging and said it was not the court's place to create legislation. Kwan's decision sparked fury from disillusioned minority shareholders.
"I would not invest in any stocks or properties in Hong Kong from now on. The market is not transparent and unfair. It's not worth it," shareholder Leung Kwok-keung told AFP outside the court. Veteran stockbroker Francis Lun, general manager of Fulbright Securities, said the decision was bad news for Hong Kong investors. "If planting votes and manipulating the vote is no obstacle to privatisation, then majority interests can do anything they wish," he said. "This is ridiculous." "

Hong Kong's reputation as a free and the closest thing to true capitalism is under threat or already tainted!

Lessons for me are:

1. in some society rich and powerful can decisively influenced the making of laws to their favours. This cannot last long though if the laws are unjust no matter how powerful the elites are!;

2. those who believed that the unjust can continue forever are denying people has the power to overthrow regime that is unjust and unreasonable to the common people. When enough common people feel hurt, they will be self0-motivated to change the order of power - sometimes with lots of blood spilled for sure!;

3. those who interpret the laws must recognize that there will be a time when they have to put common sense and doing the right things before the 'need to stick to a fixed and set rule or way'! Where the laws do not specifically point out 'questionable deals', it should not stop the judges, who are entrusted with interpreting the points of laws, to apply common sense!!

May Hong Kong rid of the inordinate amount of influence by the rich and powerful tycoons whenever they did not do the RIGHT things! Be a 7e leader!!