Pressure on Citic Pacific bosses to quit
Citic Pacific shareholders are expected to call on chairman Larry Yung Chi-kin and managing director Henry Fan Hung-ling to step down amid doubts about their credibility in handling the company's massive investment losses.
The call is expected to come today at an extraordinary general meeting being held to obtain approval from shareholders for a rescue package that management proposed.
Democratic Party lawmaker James To Kun-sun said shareholders were angry with Mr Yung and Mr Fan. Shareholders authorised Mr To and party chairman Albert Ho Chun-yan to attend the meeting and ask questions.
'They wonder if Mr Yung and Mr Fan are still covering up something regarding the massive investment losses,' Mr To said. 'Only if the top management is replaced by new blood will shareholders have a clearer picture of what has been happening in the company.'
The losses stem from 'foreign currency accumulator' bets on the Australian dollar that oblige the firm to buy dollars at a fixed price up to 2010. The rapid decline in the currency means the firm is paying far more than market value, and forced it to look to its mainland parent, Citic Group, for extra funding.
Noting that the Securities and Futures Commission's investigation of the company was still under way, Mr To expressed doubts whether the rescue package would be resolved today. A postponement would remove shareholders' doubts about the effectiveness of the rescue package if the commission discovered mismanagement, he said.
The lawmakers will attend the meeting today with a group of people who hold small numbers of the shares.
The shareholders are prepared to question the management's responsibility and handling of its six-week delay in making an announcement about its losses, put at more than HK$18 billion.
The Democratic Party has been collecting signatures from Citic Pacific shareholders, as 100 signatures can cause the financial secretary to launch a broad investigation of the company's management.
Citic Pacific's share price rose yesterday 12.9 per cent to HK$8.25.