Hong Kong government hits back at EU allegations

HONG KONG, Reuters

The Hong Kong government struck back on Thursday at allegations in an EU report that it was allowing tycoon Li Ka-shing and his family to wield too much power in the territory, saying its policies ensured competition.

“All businesses, irrespective of their origins, are competing on a level playing field,” the government said in a statement playing up its free market and minimalist intervention policies.

The report, prepared by Euro MP John Cushnahan, expressed concern that Li and his family dominated large sectors of the Hong Kong economy and said competition laws were needed to protect European business interests.

“The influence of the Li Ka-shing family on Hong Kong business life has been the subject of criticism from a number of sources within Hong Kong itself,” said the report.

“It has been alleged that this family’s business operations account for somewhere between one quarter to one third of stock market capitalization and include such sectors as telephones, mobile telephones, electricity, supermarkets and property.”

Li, Hong Kong’s richest man, controls Cheung Kong (Holdings) Ltd and conglomerate Hutchison Whampoa Ltd.

The companies hold huge stakes in sectors such as power, telecommunications, property, manufacturing, ports and retail.

The report noted the buyout this year of Hong Kong’s largest telecoms company, Cable & Wireless HKT, by Li’s younger son Richard, whose Pacific Century CyberWorks Ltd. was also awarded the right to develop the waterfront Cyberport office, retail and residential project in 1999 without an open tender.

The Cyberport project sparked controversy locally and attracted rare criticism from other local property developers.

Cushnahan also cited the exemptions and waivers granted by the stock exchange for the listing of Internet company tom.com, backed by the elder Li, when it went public early in 2000.

“If there is any substance to these allegations, they have significant implications for EU businesses who either trade with or locate their Asian headquarters in Hong Kong,” he said. A spokeswoman for Li’s companies said figures cited in the EU report were inaccurate.

The four listed companies controlled by Li Ka-shing — Cheung Kong, Hutchison, Cheung Kong Infrastructure and Hongkong Electric Holdings — accounted for about 15.23 percent of the total market capitalization of Hong Kong’s main board on Tuesday, and not a quarter or a third that the report claimed, she said.

The government also rejected Cushnahan’s claims, saying tom.com was not the first company to have requested and been granted exemptions by the stock exchange.

It also said it awarded the Cyberport project to the younger Li’s company because it had the expertise, commitment and was “willing to complete the project in the shortest possible time and to shoulder all the costs and the risks”.

Editorials in local newspapers on Thursday also criticized Cushnahan’s remarks as unfair.

“There is no evidence to prove that Li Ka-shing is doing anything illegal. In fact, there are lots of facts to show that his success is a result of his hard work and business acumen,” the Hong Kong Economic Journal said.

While defending Li, the Hong Kong Economic Times called on the government to be on the alert and ensure it was seen to be impartial in public auctions and when granting licenses.

The EU report coincides with an article in the Nov. 2 issue of the Far Eastern Economic Review which said Beijing was trying to curb the elder Li’s influence over Chinese ports because it was concerned that his port business is growing too strong in mainland China.

The Review said Beijing and Hutchison denied the claims.