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Probe starts on directors of CITIC Pacific
By Kyunghee Park |
January 3, 2009, Saturday
|
Print Edition
Print Edition
CITIC Pacific Ltd, predicting US$2.4 billion of losses from currency derivatives, said the Hong Kong Securities and Futures Commission is investigating its chairman and managing director in relation to the bets.
Chairman Larry Yung, 66, and Managing Director Henry Fan are among the 17 directors being probed, CITIC Pacific said yesterday in a statement to the Hong Kong stock exchange, without elaborating. The commission had announced the investigation on October 22 without giving details.
Yung, son of a former Chinese vice president, had to seek a bailout from parent CITIC Group after wrong-way bets on the Australian currency, disclosed on October 20. The board was criticized for a six-week delay in revealing the losses by law makers and shareholder activist David Webb.
CITIC Pacific rose 22 percent to HK$10.20 in Hong Kong exchange yesterday. The statement came after the market closed.
The company, which makes steel and develops property, learnt of the currency agreements on September 7, Bloomberg News said. On September 12, it issued a circular saying "directors are not aware of any material adverse change in the financial or trading position of the group since 31 December 2007," when announcing a connected transaction.
The company's shares fell 42 percent between September 7, when the board learnt of the exposure, and October 20. The city's benchmark Hang Seng Index dropped 23 percent in the same period.
Yung had said Financial Director Leslie Chang, 54, didn't follow hedging policy and failed to seek his approval for the transactions. Chang and Financial Controller Chau Chi-yin were ousted for the trades.
Should the September company circular contain a misleading statement, that would be an offence for which the company and directors could be prosecuted, Webb, a former independent director at the exchange, had said on his Website. The maximum penalty is a fine of HK$10 million (US$1.3 million) and 10 years jail, he said. Yung is the son of Rong Yiren, who had set up CITIC Group in the 1970s as a state vehicle for foreign investment.
Chairman Larry Yung, 66, and Managing Director Henry Fan are among the 17 directors being probed, CITIC Pacific said yesterday in a statement to the Hong Kong stock exchange, without elaborating. The commission had announced the investigation on October 22 without giving details.
Yung, son of a former Chinese vice president, had to seek a bailout from parent CITIC Group after wrong-way bets on the Australian currency, disclosed on October 20. The board was criticized for a six-week delay in revealing the losses by law makers and shareholder activist David Webb.
CITIC Pacific rose 22 percent to HK$10.20 in Hong Kong exchange yesterday. The statement came after the market closed.
The company, which makes steel and develops property, learnt of the currency agreements on September 7, Bloomberg News said. On September 12, it issued a circular saying "directors are not aware of any material adverse change in the financial or trading position of the group since 31 December 2007," when announcing a connected transaction.
The company's shares fell 42 percent between September 7, when the board learnt of the exposure, and October 20. The city's benchmark Hang Seng Index dropped 23 percent in the same period.
Yung had said Financial Director Leslie Chang, 54, didn't follow hedging policy and failed to seek his approval for the transactions. Chang and Financial Controller Chau Chi-yin were ousted for the trades.
Should the September company circular contain a misleading statement, that would be an offence for which the company and directors could be prosecuted, Webb, a former independent director at the exchange, had said on his Website. The maximum penalty is a fine of HK$10 million (US$1.3 million) and 10 years jail, he said. Yung is the son of Rong Yiren, who had set up CITIC Group in the 1970s as a state vehicle for foreign investment.
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