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Enoch Yiu

Chinese Estates Holdings chairman Joseph Lau Luen-hung has strenuously denied he made an illegal multi-million dollar profit by trading in his company's shares and warrants ahead of a big property deal in 1996.

 It is understood a Securities and Futures Commission investigation concluded Mr Lau made $15 million trading on privileged information prior to Chinese Estates' sale of Entertainment Building in 1996.

 Mr Lau appeared yesterday before the Insider Dealing Tribunal, where his counsel rebutted the accusation.

 'Mr Lau denies insider dealing of any kind. He strenuously denies it,' John Griffiths SC told the inquiry.

 According to the insider dealing ordinance, Mr Lau could be ordered to repay the profit made and be fined up to three times that amount, opening the way for a potential $60 million fine plus costs - one of the largest ever.

 The investigation hinged on share purchases made by two brokers on Mr Lau's 'personal instructions' prior to the Entertainment Building sale, the inquiry heard.

 The tribunal was told Mr Lau purchased 9.356 million Chinese Estates shares and two batches of warrants amounting to 132.48 million and 182.4 million.

 The transactions occurred between November 19 and 21 that year, one day before the $3.64 billion Entertainment Building sale to Hysan Development was announced in the press.

 Chinese Estates' share price rose sharply and turnover increased significantly one week before the transaction was announced.

 It rose from $7 a share early in the month to $9 on the day of the announcement and increased further to $9.10 after the announcement.

 A company controlled by Mr Lau, Golden Game Overseas, was used as a 'holding vehicle' for the securities and could also be subject to investigation, counsel for the tribunal, Peter Davies. said.

 Mr Lau was not directly involved in the Entertainment Building transactions but the tribunal heard he was in constant touch with his brother Thomas and would ultimately have made some of the relevant decisions himself.

 'Joseph Lau kept abreast of what was happening, he was involved in decision-making himself,' Mr Davies said.

 He continued: 'Joseph Lau is a professional man. If he had relevant information, he must have known it was relevant. It does appear he was also an insider dealer.'  The co-accused, Nation Properties managing director Johnson Lam Yee-ming, was a go-between in the Entertainment Building negotiations, dealing with Joseph Lau's brother, Thomas, on the Chinese Estates side.

 Mr Lam allegedly made a profit of $1.7 million after purchasing a million Chinese Estates shares on November 19 and selling them three days later.

 The tribunal is chaired by Mr Justice Michael Hartmann, with public accountant Eric Ng Kwok-wai and Simon Lam Siu-lun - replacing Felix Chow Fu-kee - as laymen.

 Mr Chow has withdrawn as a member of the tribunal, citing personal reasons.

 The inquiry will resume this morning, with Mr Griffiths outlining his case. Mr Davies will call 17 witnesses during the course of proceedings.



Lau denies profiting illegally in sale of Entertainment Building