Vultures close in on media whizz-kid

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Hong Kong

Hong Kong whizz-kid Yu Pun-hoi had it all. At the age of 33 he won control of Ming Pao, one of the most famous newspapers in the Chinese-speaking world, he had investments in property, hotels and retailing, and had ambitions to become the Ted Turner of Chinese-language broadcasting. Now, at 37, Mr Yu's world is falling apart.

Not only is he likely to loose control of Ming Pao, but the foundations of his other investments are looking increasingly shaky.

In the past week the Ming Pao Enterprise company, in which Mr Yu holds a 43.2 per cent controlling interest, has seen its auditors querying the accounts, had its shares suspended and suffered the humiliation of its bankers calling an emergency meeting to establish the security of their loans. Now talks are underway for Mr Yu to sell his stake.

In the space of just four years Mr Yu has come a long way from being "Yu Pun-hoi who ?", as one newspaper headline put it, to being "that man with the criminal record who was forced to step down from the chairmanship of Ming Pao".

It is still not entirely clear why Louis Cha, Ming Pao's founder, decided to sell control to Mr Yu in 1991. Chinese readers throughout the world know him for his kung-fu novels, and China's paramount leader Deng Xiaoping is one of his fans. As Yu Pun-hoi tells it, he managed to engage Mr Cha's interest with a cold call after realising that he was thinking of retirement and looking for a successor.

Mr Yu did not wait long to launch some ambitious projects under the Ming Pao umbrella. He thought he could create an international 24-hour Chinese language news service along the lines of Ted Turner's CNN. Some US$20m was earmarked for start up costs but the project has been largely stillborn.

Even more disastrous was the launch of a tabloid daily called Hong Kong Today, which swallowed up over HK$60 million (about pounds 6m) before being shut last year. It lasted only seven months.

Mr Yu claimed to have impeccable connections in China, after developing a number of hotel and property developments there. It looked as though he would be among the chosen few able to use these connections to pursue his publishing interests. A stake was acquired in the Guangzhou-based Modern Mankind magazine, which was seen as a forerunner of a number of Chinese projects. But last December the magazine was forced to close by the authorities.

Earlier in the year Ming Pao reporter Xi Yang was jailed for twelve years for allegedly stealing state secrets. Mr Yu's handling of this disaster achieved the rare distinction of angering both the Chinese authorities and his own staff, who were furious over Mr Yu's claim of Mr Xi's guilt.

Worse was to come: a newspaper report revealed that Mr Yu had acquired a criminal record while studying in Canada and been convicted of credit card fraud and possession of an unlicensed weapon. In the fallout he was forced to resign as chairman of Ming Pao, his place being taken by the Singaporean wheeler-dealer Oei Hong-leong.

Earlier this year Mr Oei was advocating that Mr Yu resume his post, but his views are becoming increasingly academic. First, it became known that Mr Yu had failed to pay an instalment due to Mr Cha for his shares in Ming Pao, then rumours swirled around the market as the company failed to file accounts on time.

The delay was caused by the auditors' inability to satisfy themselves about the security of loans totalling HK$300 million, nearly 30 per cent of the company's share capital.

At a meeting last week bankers received some explanation for the unsecured loans, although the identity of the Chinese borrowers and their relationship with Mr Yu is obscure. It is hard to know what is really happening with Mr Yu, but two things are clear: he badly needs money and the vultures are moving in to relieve him of his stake in a company which retains a high reputation, despite his efforts.