BUYOUTS

HK$2.4b feud over Peak properties centres on power of attorney

Document signed by ill Paladin shareholder now at heart of family dispute over HK$2.4b in properties as validity of paper is questioned

PUBLISHED : Monday, 18 August, 2014, 4:01am
UPDATED : Monday, 18 August, 2014, 11:33am

A disputed power of attorney now appears central to a continuing family feud over a HK$2.4 billion property portfolio on the Peak.

Paladin - a listed investment firm run by Michael Chen Te-kuang, the son of former socialite Lilian Oung Hsiao-mei - last month dismissed an unsolicited offer worth HK$254.6 million by a British Virgin Islands-registered company, Gold Seal Holdings. Paladin's board argued the offer was less than a sixth of the firm's net asset value.

Gold Seal is controlled by Chen's aunt and uncle, Margaret Uon and Andrew Oung Da-ming.

The two siblings became Gold Seal directors on March 17, 2011, just days after their sister Lilian Oung was admitted to hospital following a stroke, according to a copy of company documents.

Chen's mother is "unable to make complex decisions" and is chair-bound, according to a doctor's letter dated this year.

On April 1, 2011, a power of attorney (POA) prepared by Baker & McKenzie lawyer Angela Lee gave Uon authority to act for her sister, including control over her business affairs.

The document was signed in a scratchy, childlike signature, the result, says Lee and a family source, of Chen holding his mother's hand.

The now 37-year-old Chen contests the document.

In a recent exchange of letters, Chen's lawyers question Lee's role and asked whether the global law firm followed procedure. Did Lee ensure that Lilian Oung understood the document and was medical advice sought, asked Chen's lawyers.

Baker & McKenzie replied saying that Lee and Lilian Oung were friends and no fee was charged for the service. Instructions were relayed to Lee by Andrew Oung and Lee explained the POA to Lilian Oung during a private bedside visit, wrote Baker & McKenzie.

"It was very appropriately done. I was satisfied that she was willing to do it before I allowed her to sign," Lee told the South China Morning Post. Lee said she was surprised to learn that Chen now questioned the document.

Chen, Uon and Andrew Oung all declined to comment for this article. Gold Seal's financial adviser, Anglo-Chinese Corporate Finance, did not respond to written questions. The POA took on a new significance soon after the Gold Seal offer, said a family source.

On June 14 this year the directors of Goldenfield Equities - a Paladin corporate shareholder - held a board meeting in Lilian Oung's room at the Hong Kong Sanatorium.

Despite Chen and his mother controlling 80 per cent of Goldenfield, and Lilian Oung's status as a director alongside her brother Andrew, company documents show the board appointed a proxy opposed to Chen to represent Goldenfield at an upcoming Paladin special general meeting, where Chen's position as Paladin chief executive was on the ballot.

A month later and the POA again came into question.

Key to control of Paladin is stock owned by Five Star Investments, in which Lilian Oung was listed as a director owning a one-third stake. The remaining Five Star shares were held by the estate of the late Oung Chin Liang-fung, wife of the Hualon founder. She died last December without a will and no application for managing the estate was made in either Taiwan or Hong Kong, said a family source.

On July 18, Five Star was transferred to another BVI firm called Basurto Holdings. Basurto shares are held "in trust" by Andrew Oung, according to exchange filings, and his registered stake in Paladin went from 15.34 per cent to 69.71 per cent on the day of the transaction.

A family source said they do not know how Five Star shares were moved or how any "trust" was set up, adding the POA may have been used to effect the changes.

Chen is taking legal action in the BVI to "restrain" his uncle from "disposing off, dealing with, or diminishing" the value of the Five Star shares, according to an exchange filing.

Both sides to the dispute now claim to speak for Paladin's board.

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