The Wrath of Public Opinion

Many twists and turns have occurred in the PCCW privatization saga since David Webb, corporate white knight, first blew the whistle on alleged vote-rigging in January. Kudos to him, minority shareholders of PCCW are getting a reprieve from the latest court verdict. Not only do they have good cause to celebrate over the Court of Appeal judgment that overturned the High Court’s approval of the privatization, but all Hong Kong people should have reason to rejoice in that we’ve come to know that there are shrewd and conscionable judges in our independent judiciary system. Giving credit where credit is due, the Hong Kong Securities and Futures Commission does deserve a pat on the back for aptly carrying out its vested duties as a corporate watchdog on this case.

The latest news is that Li and China Netcom are giving up on the privatization pursuit. But it is still not clear whether the PCCW major shareholders will take the case to the Court of Final Appeal. If they do, though, it may be advisable for them to first gauge the sentiment of the Hong Kong public.

Here is my translation of some of those online forum comments:-

"Regardless of what the final judgment will be, the society and the Court of Appeal have taken this opportunity to overtly pass public judgment on the ethics of PCCW’s majority shareholders, making it clear that ‘legal’ (share splitting is legal in HK) is not equal to ‘ethical’."

"Ha ha, using quotes from the judges’ speeches to criticize Richard Li is a convenient way to let out steam!"

"Kudos to the three judges who prepared themselves so well ahead of the trial. The High Court judge should be ashamed of herself…….."

"Small shareholders should be mentally prepared that after winning the case they might face a slide in the share price. Some people might, out of spite, refrain from distributing dividends and might artificially suppress the share price."

"If the media reports are accurate, the judges have used emotional terms like ‘pathetic’ and ‘outrageous’, as if they empathize with the small shareholders….. One of Hong Kong’s key assets is her rule of law foundation. If one commercial privatization case is turned into a subjective and emotional public trial, then we had better move to Shanghai. Hong Kong has no future anyway."

"Does Hong Kong have a future in her rule of law? That’s the question. Political parties/Legco/civil servants do not care about the protection of shareholders by proper legislation. If shareholders do not help themselves, who will?"

"…… The law should not only protect the wealthy; it should also protect small shareholders’ rights and benefits in a fair and just manner…….."

"What is the true essence of common law? When there is no precedent case to refer to, the court has to rely on empathy, reason, regulation, fairness and justice. Indeed, such a trial can be said to be a form of public trial."

"What the three judges have done is exactly what should be done to uphold Hong Kong’s precious rule of law foundation. If we allow a group of unscrupulous profiteers to cunningly manipulate the spirit of law, then Hong Kong really has no future."

"How do words like ‘pathetic’ and ‘outrageous’ differ from words like ‘reasonable’ and ‘legal’ used by the High Court judge? Aren’t they all just adjectives? I wouldn’t say the High Court judge ‘empathize’ with the major shareholders – I would say that she buys the major shareholders’ arguments."

"Once this trial comes to an end, it will become a precedent. If circumstantial evidence substantiates that vote-rigging did occur, and the Court still awards judgment in favor of the major shareholder, then it is equivalent to endorsing privatization at an undervalued offer price by means of vote-rigging."

"It’s not a matter of whether vote-rigging is legal or not. It’s a matter of the majority shareholder transforming itself into small shareholders (through share splitting) and rendering the minority shareholder protection law ineffective, thus defeating the original intention of the law. This is the key point. Therefore, the major shareholders’ action is illegal."

"If PCCW decides to appeal to the Court of Final Appeal, I’m worried that we’ll see an anticlimax. In that case, there only remains the option of bringing criminal charge."

"Major shareholders like Richard Li say that the purpose of privatization is to let small shareholders have a chance to cash in. This is the logic of a bandit. The real purpose is to force the small shareholders to let go of their property, so that the major shareholders can obtain it at a below-market price. They use their advantageous position in the voting procedure to take control of the situation and to get what they want. If such a game plan becomes the norm for listed companies, then Hong Kong is just a Madoff scam……."

"It’s despicable that the rich should pull a financial stunt on the poor."

"I just saw a Cable TV report showing a small shareholder expressing his feelings: 'In the last 20 years, I have invested over HK$3 million in Hong Kong Telecom (PCCW). I don’t expect to get back my investment. But I have learned an important lesson in corporate governance. This judgment has given vindication to the small investors.'"

"To Francis Yuen Tin-fan, former chairman of the HKEx: 'Greed corrupts; absolute greed corrupts absolutely.'"