Hong Kong regulators move to block $2B buyout of leading phone company PCCW

Hong Kong's securities watchdog sought to block Thursday a controversial plan to privatize the territory's leading phone company, saying the deal was marred by vote-rigging.

A lawyer for the Securities and Futures Commission told a court reviewing the $2 billion buyout of fixed-line provider PCCW Ltd. that February's shareholder vote was unfairly manipulated so the deal would win passage.

The deal — led by PCCW Chairman Richard Li, son of Hong Kong billionaire tycoon Li Ka-shing — has drawn fierce criticism from opponents who accuse Li of dramatically undervaluing the company.

The regulator's attorney, Winston Poon, said an executive at Fortis Insurance Company (Asia) Ltd. doled out about half a million PCCW shares to Fortis employees as a way to sway votes in favor of the deal.

"It is a manipulative device to amplify the number of people voting," he told a Hong Kong judge Thursday.

He said the employees would never have been registered to back the deal if the company executive had not supplied their shares in the days before the vote.

PCCW and its partners have denied any involvement, with their attorneys criticizing the SFC probe as biased and incomplete.

A ruling in the case could come this week.