Raking Muck, part 5 & 6

David Webb published the 5th part and 6th part of the "Raking Muck" series.

From the last part:

"We'll bring this hexalogy to a close. We've given you enough reasons to avoid investing in all of the listed companies named at the top of this article, as well as any company which uses the same advisers, particularly on a regular basis. We've also laid out evidence surrounding a substantial number of dubious transactions that the SFC, ICAC or CCB should investigate, and we've drawn attention in the "regulatory notes" boxes to a number of deficiencies in HK's regulatory framework which facilitate some of these schemes.

Once in a while, the authorities do actually listen and act. Examples include our article Cooking with Gas (4-Apr-2004) which was eventually followed by an ICAC investigation and convictions in 2010, and a trilogy of articles about the Styland Network in 2002. Just last week, 10 years later, the SFC won a landmark ruling ordering the former Chairman and his wife (who was an executive director) to pay HK$85m in compensation (plus a lot of interest since 2000). The case was actually heard in Jan-2011 but it took 14 months for Justice Aarif Barma to issue his judgment, which says something about the strain the courts are under and the need to raise the budget for the judiciary. It will be interesting to see whether the couple pay up. The court has disqualified them as directors for 12 years, but their son is now CEO of Styland and they still own 22.72% of it. No criminal charges were brought against the couple.

Other series include the tetralogy of articles in 2009 on China Public Procurement Ltd (1094) and China Railway Logistics Ltd (8089), amongst others. No public action has been taken on those. There was also our articles on EganaGoldpfeil, after which the company collapsed. The SFC has commenced action against the directors seeking disqualification orders and HK$2.13bn of compensation, but no criminal charges have yet been brought despite an investigation by the Commercial Crime Bureau."

David Webb is doing all the work, free of charge, and "Once in a while, the authorities do actually listen and act". For a high-income country like Hong Kong, that is very disappointing. One reason why they are only rated a "B" country in Corporate Governance, similar to Singapore.