- The Washington Times - Tuesday, February 26, 2002

HONG KONG The bid by tycoon Li Ka-shing's conglomerate, Hutchison Whampoa Ltd., to rescue bankrupt Global Crossing Ltd. has come under fire for national-security concerns and from shareholders who object both to Mr. Li's ties with China and to the structure of the proposed deal.
Hutchison and Singapore Technologies Telemedia Ltd. offered to pay $375 million each, or $750 million, for equal shares in a 79 percent stake in Global Crossing, which owns the world's most far-reaching fiber-optic network.
Contending that Mr. Li's close relations with Beijing should disqualify him from ownership of the telecommunications giant, Rep. Dana Rohrabacher, California Republican, has sent letters demanding an inquiry to President Bush, Attorney General John Ashcroft, the Defense Department and the General Accounting Office, the investigative arm of Congress.
It's not the first time government officials have criticized Mr. Li for his Beijing connections.
After Panama awarded 25-year concessions to Hutchison in 1997 to operate seaports at both ends of the Panama Canal, some U.S. lawmakers and former military officers accused China of seeking to control the strategic waterway through Mr. Li's companies.
The U.S. State Department has said it does not view Hutchison's operations in Panama as a threat to national security.
However, because Global Crossing's customers include the Pentagon, the State Department and Microsoft, Hutchison's proposed bailout of the company has raised some of the same concerns.
Hutchison denies it is controlled in any way by the Chinese government or military.
"We are a multinational conglomerate. We have businesses not just in mainland China, but also in 35 other countries around the world. Allegations such as these just don't warrant a comment," said Hutchison spokeswoman Laura Cheung, adding that the company is aware its deal must be cleared by various U.S. regulators.
The conglomerate's interests span the globe ports, energy companies, retail chains, properties and telecommunications networks.
Mr. Li does have close connections to Chinese leaders. He belongs to a powerful national advisory council, the Chinese People's Political Consultative Conference, and has investments in mainland ports and properties.
When Chinese leaders visit Hong Kong, they stay at his Harbour Plaza Hotel. His business backed the construction of Beijing's Oriental Plaza, a hotel-office-residential complex the size of five football fields located a block from Tiananmen Square.
However, Hutchison is a product not of China, but of 19th-century British colonial Hong Kong, which reverted to Beijing's control in 1997. The conglomerate's more than 90 companies are spread over five continents; only a handful are in China.
"I have not seen any indication whatsoever that China is involved in any way in calling Hutchison's shots," said Bob Broadfoot, director of the Economic and Political Risk Consultancy, based in Hong Kong.
"Li is a patriotic businessman," said Andrew Nathan, a China specialist at New York's Columbia University. "But to say that [Hutchison] is a Chinese government front is going beyond the evidence."
Hutchison's plan would give Global Crossing's creditors the remaining 21 percent equity in the firm, $300 million in cash and $800 million in notes, in exchange for forgiving its $12.4 billion debt.
Shareholders, who would receive nothing, have a plan of their own.
On Friday, New York-based KAB Group LLC, a financial consulting firm, filed an alternative rescue plan on behalf of shareholders that proposed raising $5.5 billion over three years by issuing warrants that would give buyers a majority stake in the company.
Some shareholders have seized on Hutchison's dealings with China as another cause for complaint. Their Web site, www.globaldoublecrossing.com, accuses Global Crossing of "selling out to the Commies."
Worries over foreign control of telecommunications networks have cropped up elsewhere.
The acquisition of VoiceStream Wireless by Deutsche Telekom, Europe's largest phone company, was delayed until U.S. regulators made a precedent-setting ruling in April allowing foreign ownership of a U.S. telecommunications company.
Many Hong Kong residents worry that Mr. Li's family, whose companies represent about 15 percent of the value of the Hong Kong stock exchange, may be too powerful.
Known in his home country as "Superman," Mr. Li added Hutchison to his growing empire in 1979. He is now Hong Kong's richest man, with a fortune estimated by Forbes magazine at $12.6 billion, 18th largest in the world.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide