April 23, 2009 / 1:29 PM / 10 years ago

NEWSMAKER-David Webb, a fly in HK's corporate ointment

HONG KONG, April 23 (Reuters) - David Webb says he has received plenty of congratulations since a court in Hong Kong blocked Richard Li’s buyout bid for PCCW (0008.HK), in a move aimed at protecting minority shareholders in the stricken telecoms group. [ID:nHKG148241]

“I got a lot of congratulatory e-mails from the general public,” said Webb, a British-born investment banker turned activist investor who has lived in Hong Kong for 17 years. “No one said ‘damn you’; maybe some hedge funds are thinking that.”

Webb earned his place as hero in this David vs Goliath tale after he first alerted the local securities watchdog to allegations of vote-rigging in the deal back in January.

“Whenever we think of investor protection, we think of David Webb,” said Christine Loh, who runs the independent thinktank Civic Exchange and who was a colleague of Webb’s on the board of the city’s stock exchange. “We’ve always said he’s like a single white knight.”

Wednesday’s verdict on PCCW may have come as sweet vindication for Webb, who might have become less effective as a voice of shareholder activism after giving up his stock exchange post last year.

In a scathing resignation letter, Webb pulled up Hong Kong Exchanges & Clearing (0388.HK) for its ineffectiveness in regulating listed companies.

Far from quietening down, Webb took on Abraham Shek, a local legislator, earlier this year in a debate over a proposed trading ban on company directors ahead of corporate earnings announcements.

He exposed details of Shek’s links to 15 companies where he was a paid director after the lawmaker accused a senior regulator of being on Webb’s payroll.

Webb says he divides his time between his pro-bono work, detailed through colourful narratives on his webb-site.com, and his investment portfolio which consists of “undervalued but well governed” companies.

“The conflict of interest allegation is often levelled against me, especially when I make my Christmas stock pick,” said Webb, whose annual Christmas selection of a “well-managed, mid-cap stock” often affects its shares.

“What I say is, if the professional analysts in town were forced to invest their bonuses in the stocks they recommend, we might actually see the quality of recommendations improving.”

LONG TUSSLE

Webb and PCCW’s Li, son of Hong Kong’s richest man Li Ka-shing, also go back a long way.

In 1999 Webb exposed an investigator with Kroll Associates, an investigative firm, who was posing as a reporter from Seattle probing a large property development project in Hong Kong.

The project, Cyberport, had been awarded to Richard Li’s Pacific Century Group and Webb had railed against the circumstances under which it had been handed to the company.

An articulate stickler for financial detail, Webb has long been a thorn in the side of Hong Kong Inc and regularly stirs up shareholder meetings held by Hong Kong’s blue-chip companies, where he often succeeds in wresting greater transparency and disclosure from flustered executives.

One journalist recalls seeing a company official shudder at the sight of Webb walking into an annual meeting. “He asks too many questions,” she remembers the spokeswoman saying.

Functioning as a one-man watchdog, Webb has won plaudits and enemies and has evoked mixed feelings in the local media, but he remains committed to speaking out for private investors in a city whose tycoons wield significant influence and power.

“There are individuals we know in the market who’ve been quite critical of how things are, but they haven’t made it their career to fight from a civic corner like David,” Loh added. (Editing by David Holmes)

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