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By JONATHAN CHENG and CARLOS TEJADA
HONG KONG -- Police raided the offices of Hong Kong conglomerate Citic Pacific Ltd. on Friday as part of an investigation into sharp losses the company took on foreign-exchange bets last year.
The police are investigating alleged offenses including false statements made by company directors and conspiracy to defraud, according to a company filing late Friday. It comes a week after Citic Pacific reported a full-year 2008 loss of $1.63 billion, largely because of the foreign-exchange losses.
The company's filing doesn't mention which statements were being investigated, saying only that the company and its directors were required to hand over "certain information" about foreign-exchange contracts made in 2007 and 2008, as well as company announcements made between July 2007 and March 2009. The statement said no charges or arrests had been made.
A police spokesman said Friday night that officials wouldn't comment on individual cases. A Citic Pacific spokeswoman declined to comment further.
The police raid marks the second significant move by Hong Kong officials in a week to step in where they suspect wrongdoing, following criticism for the way they regulate financial markets. The Securities and Futures Commission, the city's market regulator, on Thursday publicly asked a court to block the $2.1 billion privatization of local telecom heavyweight PCCW Ltd., alleging tampering in a February shareholder vote. The commission, known as the SFC, is pursuing a separate investigation into Citic Pacific's foreign-exchange losses.
Shares of Citic Pacific were halted Friday on Hong Kong's exchange, and the company said it had applied for trading to resume Monday. "There should not be any material impact to the operations of the company as a result of investigation," Citic Pacific said in its statement.
The police investigation raises the stakes for a high-profile Hong Kong conglomerate that has been under scrutiny since it shocked the business community with an estimate of big foreign-exchange losses last fall.
In October, Citic Pacific saw its market capitalization fall by three-quarters in the days after it disclosed roughly $2 billion in potential losses from what it said was an unauthorized bet on the Australian dollar, which slid in value against the U.S dollar as financial markets seized up. It also said it knew about the potential losses six weeks before they were disclosed. Last month, Citic Pacific confirmed losses of $1.89 billion for 2008 from that position.
In November, Citic Group, an affiliated Chinese investment company controlled by the central government, said it would assume more than $1 billion in Citic Pacific liabilities. In exchange, Citic Group took effective control of the company.
Critics of Hong Kong's generally light regulatory touch have pointed to Citic Pacific's six-week silence on the foreign-exchange losses as one of several recent signs that the city needs a regulatory revamp.
—Yvonne Lee contributed to this article.
HONG KONG -- Police raided the offices of Hong Kong conglomerate Citic Pacific Ltd. on Friday as part of an investigation into sharp losses the company took on foreign-exchange bets last year.
The police are investigating alleged offenses including false statements made by company directors and conspiracy to defraud, according to a company filing late Friday. It comes a week after Citic Pacific reported a full-year 2008 loss of $1.63 billion, largely because of the foreign-exchange losses.
The company's filing doesn't mention which statements were being investigated, saying only that the company and its directors were required to hand over "certain information" about foreign-exchange contracts made in 2007 and 2008, as well as company announcements made between July 2007 and March 2009. The statement said no charges or arrests had been made.
A police spokesman said Friday night that officials wouldn't comment on individual cases. A Citic Pacific spokeswoman declined to comment further.
The police raid marks the second significant move by Hong Kong officials in a week to step in where they suspect wrongdoing, following criticism for the way they regulate financial markets. The Securities and Futures Commission, the city's market regulator, on Thursday publicly asked a court to block the $2.1 billion privatization of local telecom heavyweight PCCW Ltd., alleging tampering in a February shareholder vote. The commission, known as the SFC, is pursuing a separate investigation into Citic Pacific's foreign-exchange losses.
Shares of Citic Pacific were halted Friday on Hong Kong's exchange, and the company said it had applied for trading to resume Monday. "There should not be any material impact to the operations of the company as a result of investigation," Citic Pacific said in its statement.
The police investigation raises the stakes for a high-profile Hong Kong conglomerate that has been under scrutiny since it shocked the business community with an estimate of big foreign-exchange losses last fall.
In October, Citic Pacific saw its market capitalization fall by three-quarters in the days after it disclosed roughly $2 billion in potential losses from what it said was an unauthorized bet on the Australian dollar, which slid in value against the U.S dollar as financial markets seized up. It also said it knew about the potential losses six weeks before they were disclosed. Last month, Citic Pacific confirmed losses of $1.89 billion for 2008 from that position.
In November, Citic Group, an affiliated Chinese investment company controlled by the central government, said it would assume more than $1 billion in Citic Pacific liabilities. In exchange, Citic Group took effective control of the company.
Critics of Hong Kong's generally light regulatory touch have pointed to Citic Pacific's six-week silence on the foreign-exchange losses as one of several recent signs that the city needs a regulatory revamp.
—Yvonne Lee contributed to this article.
