Jardine given cold shoulder: Disdain greets once-mighty hong's decision to delist

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The Independent Online
THERE used to be a time when working for the Princely Hong guaranteed you special status in Hong Kong.

Synonymous with the colonial establishment and all its trappings, Jardine Matheson afforded its employees access to all the right people and the right clubs. Indeed, Jardine men were the right people.

But as Britain's influence in the colony fades and China's strengthens in the run-up to 1997, the so-called Noble House founded by the Scotsmen William Jardine and James Matheson on the opium trade in the 1830s has become just another big hong.

With that rebuke rammed home by the colony's corporate watchdog, Jardine last week decided to pack its bags and leave the Hong Kong stock exchange at the end of this year.

Ten years ago, such a vote of no confidence in post-1997 Hong Kong by one of its largest trading houses would have sent shock waves through the colony - as happened when Jardine shifted its official domicile to Bermuda in 1984.

Last week, the reaction was more one of disdain. On the day of the announcement, the Hang Seng share index jumped by 5 per cent, while Jardine Matheson shares plunged 8 per cent as investors switched into rival hongs.

The media attacked the move in both Chinese and English. Particularly scathing was the new Eastern Express newspaper, which declared in an editorial that March 23 was 'a great day in Hong Kong's corporate history'. It went on: 'One of the territory's most notorious corporate bullies had its bluff called.'

In a reference to Jardine's stated reasons for leaving, the newspaper accused directors of 'a stunning level of arrogance in expecting the public to swallow this amount of nonsense'.

China, the perceived bogeyman from which Jardine is seen to be distancing itself, has so far been restrained in reaction. It has merely called the group 'irresponsible'.

In a rare event for China and Jardine, which have had uneasy relations for years, Peking even agreed with Jardine director Sir Charles Powell's sentiments at last Tuesday's press conference. 'This is not a drama,' he said. 'I don't think it's a great tragedy. Life goes on. I think the company will continue to flourish.'

Wu Jianmin, spokesman for Peking's Foreign Ministry, said: 'We have much more important things to worry about.'

In the absence of a representative from the ruling Keswick family - owners of 5 per cent of Jardine - Sir Charles, Margaret Thatcher's former adviser on foreign affairs turned Jardine troubleshooter, fielded virtually every question at the packed conference.

But just as he failed to persuade the Securities & Futures Commission to exempt it from Hong Kong takeover rules, he also failed to convince anyone that Jardine is delisting just because it wants to live under one set of rules in Bermuda.

Two weeks ago, when rumours of a delisting emerged, a group spokesman admitted that Jardine wanted to be regulated by a British-style system. To its credit, the group is actually taking a stand on a concern that many British companies share but will not discuss publicly: the uncertainties of corporate regulation after 1997.

Still haunted by the experience of having its Chinese assets appropriated by the Communists in 1949, Jardine fears the potential arbitrary use of power by Peking in the event of a takeover bid for one of its companies. 'It is a scar on the management pysche,' one broker said.

Since 1992, when it adopted London as its primary stock market listing, Jardine has been furiously lobbying regulators. It is even said to have gone to Government House to be afforded special treatment.

It has asked Bermuda to fashion a code, modelled on London's, for its five companies. This comes into force in July.

It says the big difference between the London and Bermuda codes and the rules in Hong Kong is that the former are interpreted by a court rather than by an administrative panel.

But the SFC does not share its worries and, despite considerable pressure, has stood firm, refusing to treat Jardine as the unique case Sir Charles claims it to be.

Robert Nottle, the SFC chairman, says even now that the delisting will not change a thing: Jardine will remain under the code, listed or not.

In the marketplace, the general consensus seems to be that the move will harm Jardine more than Hong Kong, from which the group has been gradually disentangling itself anyway.

Reacting to the media attacks, Sir Charles remarked that Jardine was the company 'everyone loves to hate' and added: 'But we do keep you all amused.'

One SFC insider, referring to the ultimate sanction that can be imposed under Hong Kong's code - the cold shoulder provisions that limit a company's ability to do business - seemed to sum up the impact of Jardine's move.

'Out of fear of being cold- shouldered after 1997, Jardine cold-shouldered themselves in 1994,' he said.

(Photographs omitted)

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