The Securities and Futures Commission suffered another setback in its bid to block Richard Li Tzar-kai's controversial HK$15.8 billion PCCW buyout yesterday as the Court of Appeal rejected its new evidence as irrelevant. The SFC lost the first stage of the protracted legal battle in the Court of First Instance last month. Within minutes of the start of yesterday's hearing, the judges rejected affidavits from two new witnesses submitted by the regulator's barrister, Winston Poon SC. Mr Poon repeated the arguments he made to the lower court alleging that Fortis Insurance's Asia chief, Inneo Lam Hau-wah, and his former colleague Francis Yuen Tin-fan, a deputy chairman of Pacific Century Regional Developments - through which Mr Li controls PCCW - attempted to rig the vote in Mr Li's favour. Mr Lam split 500,000 PCCW shares among 494 of the company's insurance agents a few weeks before the buyout meeting. He ordered the shares minutes after talking on the phone to Mr Yuen, the court heard. Yesterday's disallowed witness statements alleged new details about Mr Lam's financial situation. The SFC will today continue to argue before the three appeal court judges, led by Mr Justice Anthony Rogers, that the Court of First Instance ruling was wrong. PCCW's long-term minority investors have objected to Mr Li's HK$4.50 privatisation proposal. There were 1,404 votes for the buyout and 859 against. Most of the 494 Fortis agents' votes were in favour of the bid and could have swung the deal. The 500,000 shares were valued at HK$3.51 on the day Mr Lam ordered them. The insurance executive may not have told agents to back the buyout, Mr Poon added, but he did not need to. 'If you throw a piece of meat to the dog, you don't then have to shout 'eat!' he said. 'You don't need to tell them [the agents] to vote. Its an extension of human nature.' Mr Poon told the appeal judges they should discount agents as true shareholders. Madam Justice Susan Kwan Shuk-hing, in the Court of First Instance, had rejected Mr Lam's association with Mr Yuen as circumstantial evidence of vote-rigging. But Mr Poon yesterday revealed the SFC may have more evidence. Since the Court of First Instance ruling, the regulator has contacted Lesley Wai, Mr Yuen's personal assistant. Mr Lam's sister obtained the proxy forms the Fortis agents signed in favour of the deal directly from Ms Wai. Anything Ms Wai may have said to the regulator could clarify why this happened. Mr Lam has claimed the shares were a Lunar New Year bonus to agents. Mr Poon dismissed this as 'window dressing', claiming Mr Lam's motive for buying the shares was his relationship with Mr Yuen. Madam Justice Kwan ruled earlier this month there was nothing wrong with share-splitting, even though this legal loophole allows speculators to exploit the city's rule on takeovers by doling out stock to accomplices.