Exchange bribery trial told seat rules vague

The Hong Kong Stock Exchange provides guidelines rather than laws on possible conflicts of interest by members of its seat selection committee, the High Court heard yesterday during the bribery trial of former vice-chairman Chen Po-sum.

Exchange company secretary Tsang Chiu-wan told the jury the selection and transfer of A-share seats was not an area covered by hard and fast rules with strict penalties.

He was being questioned over eight bribery charges faced by Ms Chen relating to $1.6 million she allegedly solicited and accepted for the transfer of A-share stock exchange seats in 1993 and 1994.

Chen, 65, denies the allegations.

'These are only guidelines,' defence barrister Kevin Egan said.

'They don't have the same effect as rules of law.' Mr Tsang agreed the guidelines were 'really expressed in vague and general terms'.

He conceded there was 'no penalty, as far as the stock exchange was concerned, for anybody acting in conflict of interest', during the appraisal period, or approval, for the transfer of floor seats.

It is alleged Ms Chen received $800,000 for supporting a 1994 bid by the Japanese securities giant Nomura Securities (Hong Kong) to buy a seat on the Exchange from On Wah United Securities Co.

She is also alleged to have accepted another $800,000 for the transfer of three A-share seats from Shing On Securities to Emperor Securities.

The 'gifts' were allegedly accepted during her tenure as vice-chairman of the exchange and convenor of the exchange's membership committee.

Mr Tsang told the court the guidelines did not cover 'someone acting as a go-between' for companies involved in the buying and selling of A-share seats.

The trial before Mr Justice Pang Kin-kee continues today and is expected to last two weeks.