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Jane Moir

An insider dealing tribunal has been appointed by the Financial Secretary to probe accusations of illicit dealings in China Apollo Holdings shares.

Two implicated parties will appear before the tribunal at a preliminary hearing on September 1.

The tribunal - chaired by Mr Justice Michael Hartmann and two lay people - must determine whether the pair profited or made a loss as a result of trading with the benefit of inside information.

The Financial Services Bureau declined to give further details of the case, having just approved the appointment of the two lay people to sit on the tribunal.

It is understood, however, that the alleged insider dealing took place a number of years ago.

China Apollo is principally engaged in the development, manufacture and sale of tonic and health-drink products in the mainland.

Shortly after its December 1995 listing, it hit the headlines when the stock exchange forced it to clarify events which had sparked a 30 per cent slide in its shares in the course of two days.

Chairman Lok Fai issued a statement denying suggestions that directors knew at the time of the company's December 1995 listing that the company would not be able to meet the profit forecast made in the prospectus.

Press reports at the time speculated directors had sold their stakes in the company in the run-up to the disappointing profit figures.

Mr Lok confirmed in his announcement that four directors had exercised options on March 12 in respect of 5.1 million shares between March 19 and 21.

The directors had been granted the options in respect of 10 million shares on March 4.

Shares in the company plunged after the release of the 1995 profit figures, prompting a stock exchange investigation.

The probe set out to determine why the firm could not meet its profit forecast and whether it had promptly informed the public and shareholders of underlying circumstances.

China Apollo posted an attributable loss of HK$38.6 million in the year to December 31, 1998. This was a significant improvement on the previous year's HK$159 million in losses.

Last June, the company said it had HK$97.6 million cash on hand and was looking for acquisitions.

Hong Kong's last insider dealing case found former Hanny Magnetics (Holdings) boss Wong Sun liable for illicit trades.

Following nearly a year of hearings, Mr Wong was ordered to pay HK$47.4 million as a penalty.

This was the highest penalty imposed by the tribunal.

It far outstripped the HK$10 million slapped on Albert Yeung Sau-shing in 1998 for insider dealing in Emperor (China Concept) Investment shares.



Tribunal probes pair's involvement in 'illicit' China Apollo trades