THE report into the Allied Group has documented a whole series of takeovers that raised questions in the mind of Nicholas Allen, the government inspector appointed by the Financial Secretary. In the second of a series of articles on the Allen Report, Business Post looks at the acquisition of shares in UK-listed Cresta Holdings, led by Brian O'Connor. Mr O'Connor became chief executive of Allied after the investigation into the group was launched. In November 1990, Mr O'Connor, who was then chairman of Cresta, allegedly put Allied chairman Lee Ming Tee in touch with Tom Forrest, the owner of Cresta shares and a business associate of Mr O'Connor. Mr Lee agreed to buy Cresta shares at 60 pence each from Mr Forrest, well above the market price of about 30 pence. Mr Allen said: ''One can conclude that in Lee Ming Tee's view the Allied Group was agreeing to pay Tom Forrest a substantial premium over the market value of the shares in order to be able to take a significant shareholding in the forthcoming rights issue at a discount.'' Neither Mr O'Connor nor Mr Forrest agreed that this was the deal, said Mr Allen. In December 1991, GBP1 million (about HK$11.84 million at the current rate) was remitted to Britain. In separate letters, accountants were told to use half the money to buy 1.6 million shares at 30 pence each, not the 60 pence agreed. Of the remaining GBP500,000, the second of the two letters said: ''This should be held to the instruction of Brian O'Connor and/or Tom Forrest. It will be used by them for investment in various ventures on which they will liaise direct with us.'' Mr Forrest told Mr Lee he had control of these shares but did not own them. It was agreed that GBP500,000 was to be paid to the owners of the shares at 30 pence each. The other GBP500,000 went to Mr Forrest personally as a profit undisclosed to the owners of the shares he controlled. Mr Allen said: ''I have not been able to confirm independently the ultimate recipient of those funds.'' Mr Allen said there was no need for the two letters as the remittance could have been split on the basis of one instruction. There was also no need for Mr Forrest to tell Mr Lee he was making a secret profit. Given his knowledge of Mr Lee's approach to business, Mr Allen said: ''I cannot accept he would allow such a gratuitous profit at Allied Group's expense. ''I have concluded that the original intention was to acquire Cresta shares at 30 pence with the first GBP500,000 transferred, and the second amount of GBP500,000 was a facilitating payment by Mr Lee on behalf of Allied Group to obtain a participation inthe sub-underwriting of the forthcoming rights issue and so obtain a substantial shareholding in Cresta.'' The question remained, what happened to that second GBP500,000? All this happened while Mr O'Connor was leading the Cresta group. As for the shares, the Allen report shows some 1.49 million shares were taken by Mr Lee in January 1991.
