At the heart of the PCCW controversy is the issue of whether the vote at the shareholders meeting on a HK$16.38 billion privatisation bid was influenced by the giveaway of 500,000 shares. According to Winston Poon, the Securities and Futures Commission (SFC) barrister, the privatisation plan was only approved because hundreds of people were given shares in exchange for voting in favour of the plan.
Inneo Lam Hau-wah, regional executive director of Fortis Asia, bought 500,000 PCCW shares and distributed them to his insurance agents, who in turn voted for privatisation. This is called share-splitting. It is not illegal, but the SFC says it is not fair. Mr Poon argues that it violates the interests of minority shareholders.
The SFC also argues that, according to the law, 50 per cent of shareholders at the shareholders meeting have to vote in favour of the plan, but not anyone connected to the privatisation bid. It says that the distributor of the shares was connected to the bid.