IT is Hong Kong's most expensive commercial investigation, with legal costs on all sides exceeding $100 million. Yet more than seven years after the initial transactions took place, investigations into the Allied Group and its flamboyant founder, Malaysian tycoon Lee Ming Tee, remain inconclusive. No criminal charges have been levelled. No director of the concerned firms has been asked to pay compensation or banned from office. Nearly two years after the publication of the initial report on the group, the company said investigations into the company and its management were fizzling out. Allied Group chief executive Brian O'Connor said after last week's annual general meeting: 'There's been no real activity on the investigation.' Comments by company officials that investigations into the company are less active are backed by the sharply declining legal fees paid by the firm. They amounted to just $4.4 million last year. When the investigation started in 1992, the company spent more than that each month. Mr Lee, the group's founder who arrived in the territory in the mid-1980s, had a shrewd eye for property deals and made his companies grow rapidly. He took control of his first company on the Hong Kong stock exchange in 1986 and subsequently diversified into a range of businesses, including eel farming and electronic gadget manufacture. Soon he had eight companies in his fold. Hidden within the empire were two financial institutions based on Cook Islands, a unit trust company, Prudential Securities Investment Fund and First South China Bank. Although they sound like subsidiaries of other well known finance companies they were, in fact, captive institutions controlled by Allied Group and its subsidiaries. The company admitted more than two years ago that the captive institutions formed part of complex chains of companies through which the group ended up investing in its own shares, making it easier to control a large company while owning a relatively small number of shares. The two Caymans Islands firms also provided a route by which companies could transfer cash between each other. Normally this requires shareholder approval but by routing cash through the offshore channel, this requirement was circumvented and at least a third of a billion dollars, which was supposed to have been operating at arm's length, moved silently between companies. None of this was public knowledge when on August 11, 1992, Financial Secretary Sir Hamish Macleod announced he was appointing an inspector under Section 143 of the Companies Act to investigate the dealings of the nine main companies in the Allied Group and dozens of their subsidiaries. Nicholas Allen of accountants Coopers and Lybrand was given the job and it was soon apparent that costs would escalate as the investigations progressed. News of the investigation sent shares in the group tumbling. Six months into the investigation, the company's report to shareholders revealed that the money previously transferred through the offshore bank and unit trust companies had been moved back again. There were no provisions that indicated cash had gone missing. Indeed, no public document has indicated that any cash was removed from the group. Although the company was forced to admit that the previous sets of accounts were inaccurate and incomplete, the bottom line was not affected by the changes. By the time Mr Allen finalised his report in September 1993 the Government's own costs had reached at least $46 million and legislators were asking questions about value for money. By apparent coincidence, six of the companies in the group were sold off in a frenzy of corporate activity. The main businesses were whittled down to property and China trade, which remain the backbone of its business, and $1 billion was raised from the sales as a useful side-effect. An advance copy was sent to Sir Hamish, triggering the famous police raids. Starting at 9.30 pm on September 15, 1993, teams of officers and accountants raided 100 offices, taking away truckloads of documents. The Police Tactical Unit was involved in the main raid as officers with search warrants descended on the group's Wan Chai headquarters. The job was made more difficult by Allied's demand that many of the key documents be photocopied before removal. Two days later an abridged version of the report was issued to the public and copies were sent to the Hong Kong Society of Accountants, the stock exchange, the Securities and Futures Commission and a few other bodies. It confirmed details about the offshore firms and several other unusual transactions. Names appearing in the public report included the Riady family, which controls Lippo Group, and legislator Chim Pui-chung. However, the 688-page report was incomplete, with some sections removed to avoid prejudicing potential court proceedings. Those sections remain closed to public scrutiny. On November 11, 1993, a month later, the Secretary for Financial Services said he expected to see some developments 'over the next month or two'. A police statement mentioned a 'protracted investigation' and that no further statements would be issued until major developments. In public, at least, matters have moved little in the past two years. Last month saw the only results of regulatory action: two former directors of the company, Chan Chun On and Tse Chu-fia, were censured by the exchange. Mr Chan is understood to have left for Taiwan on the day the inspector was appointed and has not been traced since. However, neither has been formally barred from being a company director nor has paid any form of penalty. At the Hong Kong Society of Accountants, director of professional conduct Raphael Ding Wai-chuen stated last week: 'As far as we're concerned, the case is closed.' The society set up a working party to look into audits provided by Deloitte Touche Tohmatsu but the only conclusion was that a change in the Companies Ordinance would help investigate other cases in the future. The stock exchange referred inquiries to the SFC. SFC spokesman Bill Weeks said: 'We don't have a date when things will be known. The report was very large and detailed. 'There's always frustration at the length of time they take. But when you take a good look at what's involved, you know why it takes the length of time it does.' Stephen Fisher, principal assistant secretary in the Financial Services Branch, said though there appeared to be no activity, 'a lot is happening underneath the surface'. However, an apparent slowdown in activity is revealed by the falling legal costs shown in Allied Group's accounts. From $37.2 million in four months of 1992, they fell to $9.5 million in 1993, and to $4.4 million last year. Since the report was released there has been a change in the top brass at the SFC. The man who formally started proceedings, Sir Hamish, is retiring and Tam Wing-pong, then Deputy Secretary for Financial Services, who handled much of the work associated with the project, was transferred to another department about six months ago. Of the original figures associated with the non-police side of the probe, only Mr Cartland remains. Mr Lee resigned shortly after the report was published, though trusts set up by him remain Allied Group's largest shareholder. 'Much of what the company did was common at the time,' an accountant said. 'I think the report had an effect, in that it showed the Government had the resolve to mount a major investigation. 'However, I think the strategy now is to mount smaller, more timely investigations quickly with not so much fanfare.'