PCCW vote buying

Puppet Master: ??

Deputy Puppet Master: Francis Yuen - ex stock exchange CEO, ex chairman Pacific Century Insurance, present deputy chairman  Pacific Century Regional Developments

Puppet controller: Lam Hau-wah: regional director, Fortis Insurance (Asia) (formerly Pacific Century Insurance Company Ltd)

Puppets: 465 Fortis insurance employees

Cost of Deal: $15B HKD

For privatizations in HK there has to be supported by >50% number of shareholders and >75% share holders. Since many public companies are family controlled (minimum 25% of shares with the public) they can get past the later hurdle easily. In this case to get over the 50% number of shareholders hurdle, 500,000 shares were bought (500 board lots) ~@ $3.5/share, total $1.75m HKD and were distrubed to Fortis employees in exchange for signing a proxy in support for the PCCW privatization.  This exchange was described in various terms as a "bonus" by Yam Hau-wah who obviously has a warped sense of what a bonus is.  

Michael Todd QC, counsel of PCCW, descended from an alternate universe, reading from the 1984 playbook, argued that the SFC was "attacking innocent people such as PCCW's minority shareholders". An absurd argument that reflects the hubris behind the main business players who expect to steamroll the SFC and HK government as they have done in the past.

Expected verdict: Spirit of the law was violated but is legal. PCCW will be privatized, main players will grant themselves a huge cash dividend to pay for the deal and get the rest of the upside. Minority shareholders can work hard for the next 10 years to repair their balance sheets until they forget and buy into another Tom IPO.