The Financial Secretary has appointed Mr Richard Henry Farrant, former Chief Operating Officer of UK's Financial Services Authority, as the inspector under section 143(1)(a) of the Companies Ordinance (Cap. 32) to investigate into the collapse of the Peregrine group of companies.
Announcing the appointment, the Secretary for Financial Services, Mr Rafael Hui, said the appointment was made pursuant to the order granted by the Court of First Instance today (April 22) and will take effect on May 3, 1999.
"On March 31, the Financial Secretary filed an application to the Court of First Instance for an order to appoint an inspector under section 143(1)(a) of the Companies Ordinance to investigate the affairs of Peregrine Investments Holdings Ltd. (PIHL) and Peregrine Fixed Income Ltd. (PFIL), both in liquidation," Mr Hui said.
The application was heard on April 22 before Justice Le Pichon and was approved on the same day. "We are glad to receive the Court's approval and will proceed on the investigation as soon as possible," Mr Hui added.
Mr Richard Farrant is an experienced regulator in both banking as well as securities sectors in one of the leading international financial centres in the world. He has more than 20 years experience in the Bank of England and joined UK's Securities and Futures Authority as Chief Executive since 1993. Prior to his appointment as inspector, Mr Farrant was the Chief Operating Officer of the newly established Financial Services Authority of the UK.
Mr Farrant has had exposure to Hong Kong's financial market during his two years secondment from 1984-1986 as consultant and adviser to the Hong Kong Banking Commissioner. He also took part in the reform of banking supervision at that time. Mr Farrant may engage fixed income experts and other professional advisers to assist him in the investigations.
The investigation will cover, inter alia, the reasons and events that led to the collapse of PIHL and PFIL, clarify if anyone should be responsible for their collapse, and ascertain whether any offence had been committed. It will also look into the relevant disclosures of PIHL and PFIL to shareholders and the investing public and identify lessons to be learnt from the case for the financial institutions and for Hong Kong's regulatory and supervisory regime.
Mr Hui explained that the scope of investigation would focus on areas of prime concerns identified by an earlier limited inspection by the Securities and Futures Commission. The terms of reference was drawn up on the basis of best information available relating to the collapse of Peregrine. If warranted by new evidence uncovered during the investigation, the terms of reference could be further expanded as appropriate, Mr Hui said.
The investigation is estimated to cost less than HK$10 million, which includes professional fees of the inspector and those for other professional advisers that he may engage to assist him in the investigation, incidental costs such as travelling and accommodation, as well as contingency. Should it become necessary, the Government will make application to the Finance Committee of the Legislative Council for additional funding for the investigation.
The investigation is expected to take about six months to complete.
End/Thursday, April 22, 1999