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| Type | Listed company |
|---|---|
| Founded | 1990 |
| Headquarters |  Hong Kong Island, Hong Kong |
| Area served | Hong Kong |
| Key people | Chairman and Managing Director: Mr. Chang Zhenming |
| Industry | Conglomerate |
| Parent | CITIC |
| Website | CITIC Pacific Limited |
CITIC Pacific (traditional Chinese: 中信泰富, SEHK: 0267,OTCBB: CTPCY) is a Hong Kong-based conglomerate holding company headquartered in the CITIC Tower, Admiralty, Hong Kong. It is 29% owned by the state-owned Citic Group [1].
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Business areas
CITIC Pacific is engaged in special steel manufacturing and iron ore mining, which supplies the raw material needed in the making of special steel and property development in mainland China. CITIC Pacific's operating segments include special steel, iron ore mining, property, aviation, civil infrastructure, power generation and other business areas.
CITIC Pacific's subsidiaries include Dah Chong Hong Holdings Limited (DCH Holdings) and CITIC 1616 Holdings. DCH Holdings is a distributor of motor vehicles, food and consumer products. CITIC 1616 owns and operates a telecoms hub that provides interoperability, interconnections and value-added services.
2008 foreign exchange losses controversy
In October 2008, the Chairman Larry Yung disclosed that the firm lost HK$15 billion (US$2 billion) due to "unauthorized trades".[2] The unauthorised trades were hedges with a contract value of AUD 9 billion against the Australian dollar, taken out to cover against a AUD 1.6 billion prospective acquisition and capital expenditure. Losses were incurred on the contracts when the currency declined from 98.5% against the US dollar to less than 70%.[3] Its parent company, CITIC pledged its support to this subsidiary.[2]
The board became aware of this on 7 September 2008, and disclosure was made to the financial markets after trading in its shares was suspended on 20 October. The company and the Hong Kong Securities and Futures Commission faced questions by legislators about the severe delays in its disclosure,[4] considering the company made a [5] pursuant to a proposed acquisition, that as at 9 September 2008, "the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007".[4] When the shares resumed trading, the share price had fallen by some 75% since the previous close.[6]
As a result of the revelations, two officers were forced to resign in disgrace.[7][8] Due to her involvement in the loss, the chairman's daughter was demoted. The chairman claimed his daughter Frances Yung had not informed him about the situation before its discovery.[2] Managing Director Henry Fan temporarily stepped down from the Executive Council and the chairmanship of the Mandatory Provident Fund Schemes Authority, and all other major public positions he held with effect 24 October 2008.[9]
On 3 April 2009, trading in CITIC Pacific shares was once again suspended,[10] and the Hong Kong Police searched the company's office as part of an investigation into whether the company directors had made false statements about the foreign-exchange contracts, as well as company announcements made between July 2007 and March 2009, or had conspired to defraud.[6] On 8 April, chairman Larry Yung resigned, citing the effect of the Commercial Crimes Bureau's visit to the company on public opinion; Managing Director Henry Fan resigned at the same time. They were replaced by Chang Zhenming, the vice-chairman and president of the CITIC Group.[11]
References
- ^ Katherine Ng (21 October 2008) "Heads roll as $15.5b losses loom", The Standard
- ^ a b c Carol Chan (22 October 2008) "Daughter demoted", Pg A1, South China Morning Post
- ^ Maria Chan (22 October 2008) "Company exposed itself to high levels of risk", Pg A3, South China Morning Post
- ^ a b Dennis Eng & Fanny Fung (22 October 2008) "SFC urged to launch Citic Pacific probe", Pg A3, South China Morning Post
- ^ CITIC Pacific (16 September 2008) "DISCLOSEABLE AND CONNECTED TRANSACTION", HK Ex
- ^ a b Jonathan Cheng & Carlos Tejada (6 April 2009), Citic Pacific Raided Over Currency Bets, Wall Street Journal
- ^ Associated Press (21 October 2008) HK's Citic Pacific faces US$2B loss on forex bets, International Business Times
- ^ "CITIC Pacific warns potential $2 billion forex losses" Reuters (20 October 2008)
- ^ Nickkita Lau (29 October 2008) Under-pressure Fan steps further out of public eye, The Standard
- ^ Mandy Lo (6 April 2009), Possible CITIC reshuffle may hit share price, The Standard
- ^ CITIC Pacific chairman resigns in management reshuffle, Xinhua, 8 April 2009
External links
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