IN the wake of the bad publicity on the announcement of a government investigation into the corporate affairs of Allied Group, the Riady family came to Lee Ming Tee's rescue, agreeing to take shares in Asia Securities International off his hands.
On September 17, 1992, in an unconditional agreement, Allied Group sold 193.2 million shares in, or 33.35 per cent of, Asia Securities International to Hongkong China/EIE.
This was done at $2.60 a share each, representing a premium of 62.5 per cent over the stock market price.
In a letter on September 28, 1992, Stephen Riady of Lippo told regulators: ''The idea of the proposed acquisition was first discussed by Stephen Riady with John Lee on September 4, 1992, and Stephen Riady approached Lee Ming Tee on September 5, 1992, to discuss the possibility of the proposed acquisition.'' Stuart Crosby, the Securities and Futures Commission's (SFC) investigator in the case, said: ''When interviewed in July 1993, Mr Riady said that the transaction originated around September 1992 when Mr Lee Ming Tee telephoned him and asked whether he was interested in buying a listed company.'' Mr Riady claimed Mr Lee definitely made the approach and the letter of September 28 narrated discussion that took place internally after Mr Lee approached him with the proposal.
Mr Riady added: ''We fail to see any inconsistencies between Stephen Riady's account of the events in his letter to the SFC of September 28, 1992, and his interview in July 1993 which spell out this chronology of events quite clearly.'' But Mr Crosby concluded: ''These representations are not consistent with the terms of the letter that passed between the SFC and Mr Riady in late September 1992. Clearly, one of the accounts given by Mr Riady was inaccurate.'' Mr Riady gave a number of reasons for paying the mega stock price premium on the shares, which were said to have net asset value of $2.92 each, according to Allied Group, or between $2.54 and $2.72, according to Lippo's own due diligence work.
The shares were crucial because it gave control of the company, it gave the group a $1.5 billion company in one fell swoop, and Asia Securities International assets complemented those of EIE's.
