Dickson Concepts (International) has come under severe criticism for its failure to disclose a HK$130 million consultancy agreement with a company wholly owned by group executive chairman Dickson Poon. Analysts and industry commentators attacked the upmarket retailer for poor transparency and questioned the history of business dealings between Mr Poon's private and listed arms. 'They adopt the minimum disclosure policy,' one analyst said. Under the agreement, dated December 30 last year, Mr Poon's Dickson Management Consultancy (DMC) was to provide consultancy and professional services to Dickson Cyber Concepts, the group's e-commerce arm which it proposes to spin off on the Growth Enterprise Market. The services, for which DMC is entitled to a fixed fee of HK$130 million, relate to the establishment and development of a physical and cyber mall. In addition, Dickson Cyber is obliged to buy hardware and software from DMC's recommended suppliers for HK$110 million. Dickson Concepts executive director Raymond Lee said the board had believed the agreement represented a 'provision of services' which was not disclosable under the listing rules. However, during discussions with the stock exchange over the proposed spin-off, the exchange ruled the deal was a connected transaction and subject to disclosure and shareholders' approval, Dickson Concepts said. The exchange had reserved the right to take action against the company, it said. Under listing rules, a connected transaction normally must be disclosed if the total consideration is higher than HK$1 million or 0.03 per cent of a company's net tangible assets. Deals more than HK$10 million or 3 per cent of net assets require independent shareholders' approval. The consultancy fee represents 4.38 per cent of Dickson Concepts' net assets of HK$2.96 billion at its last balance sheet date of March 31. Analysts slammed the group's failure to disclose the agreement in a timely manner. 'I think it stinks,' said David Webb, editor of Webb-Site.com and a vocal advocate of minority shareholders' rights. Mr Webb said the consultancy firm was effectively part of the group and shareholders were paying twice for the same service. 'Obviously, they are saying it will be a fair price but who's there to judge?' an analyst at an international securities house said. She also asked why the consultancy firm was not part of the listed company. 'There are so many transactions between the listed company and the private company. It's getting confusing.' She pointed to the purchase in 1997 of a HK$240 million stake in luxury fashion retailer Shiamas by a company privately owned by Mr Poon's family. Dickson Concepts had intended to buy the stake but decided against it due, Mr Poon said, to a downturn in the retail climate. Last year Mr Poon bought out Dickson Concepts' non-Asian assets, including London department-store operator Harvey Nichols, saying it would release the group from the burden of funding the businesses. Although minority shareholders approved the transaction, some complained that he was buying the group's most valuable assets. John Brewer, a former chairman of the Hong Kong Institute of Company Secretaries and editor of Corporate Governance International, said of the failure to disclose the consultancy agreement: 'This is an extremely unfortunate incident.'