HONG KONG'S LI ARRESTED

AFP-Reuter

01/04/1988

HONG KONG: Former stock exchange chairman Ronald Li and two leading stock exchange officials have been arrested by Hong Kong's Independent Commission Against Corruption, the ICAC.

Li, Hong Kong Stock Exchange chief executive officer Jeffrey Sun Hon-Kuen, and Donald Tsang Tak-Hung, head of the listing department of the exchange, had been detained on Saturday, the ICAC said.

They were released on combined bail of more than $A2.5 million, although no charges were filed. The commission has 48 hours to question suspects before it decides whether to press charges.

The three were arrested by ICAC officers "in connection with inquiries by the ICAC into the operation of the stock exchange", the statement said.

A spokeswoman for the ICAC said the investigation began before the October stockmarket crash.

Mr Li first came to the attention of the Australian public after ejecting a Sydney Morning Herald journalist, Mr Eric Ellis, from a press conference in Hong Kong, held to give reasons for the market closure during the October crash.

Mr Ellis had been attempting to ask questions about Mr Li's private stockmarket dealings when he was removed at Mr Li's behest.

It was at his order that the exchange shut its doors during October's stock plunge, a move many brokers said worsened the near-shattering slide in share prices once trading resumed.

Hong Kong is still trying to restore its reputation from the closure.

Speaking of controversy surrounding the exchange's actions during October's world stock plunge, stock exchange chief executive Mr Robert Fell said: "We have come through a bad patch. Obviously, this doesn't help."

The exchange is not a happy place. Foreign brokers have complained bitterly that while they account for most of the trading, they have little say in how the exchange is run.

Mr Li, the exchange's best known and most controversial figure, stepped aside as chairman last month after the maximum two terms at the helm, during which he piloted the merger of four rival bourses into a unified market in 1986.

He has been a very active player on the market. He and his family have appeared on share applications for some of Hong Kong's most publicised floats

Some brokers said the arrests eventually could boost the colony's reputation.

"The Government has shown its resolve essentially to clean up and tighten regulations," said Mr Barry Yates, director of Hoare Govett Asia.

He and other brokers noted the Government appointed a top-level task force to review operations of the exchange and its regulatory bodies.

"In the end I think we are headed to a more regulated stockmarket," said one broker.

"The latest events may be a sign that Hong Kong is changing."