The Fall From Grace
Mr George Tan Soon Gin’s Number Two was Mr Bentley Ho.
He was the most-trusted lieutenant.
He was loyal, right down to his shoelaces.
He telephoned me one day and asked if I had time. He wanted, urgently, to talk to me.
In the coffee shop of The Park Lane Hotel in Causeway Bay, he burst into tears within 5 minutes of my arrival:
‘I only made one mistake in all this time! – And it is likely to be my last one for me … and for Mr Tan.’
For some reason, which I never, really understood, Mr Bentley Ho trusted me although I had only met him, briefly, on a limited number of times in the offices of Carrian Investments Ltd.
He told me that banks were calling in the loans of the entire Carrian Group of Companies.
He said that there was no way for him to meet the cash calls.
His mistake had been to arrange short-term financing for the acquisition of long-term assets.
Soon after this emotive meeting, Bankers Trust lodged a Winding-Up Petition in the Hongkong High Court, naming Carrian Investments Ltd as its Debtor.
Bankers Trust claimed that it was owed about $HK90 million plus interest and costs.
Along with Carrian Investments Ltd, its 56 subsidiaries were, also, named in the Winding-Up Petition.
The application for the winding-up of these companies was Heard on September 10, 1983.
That Hearing followed one entire month of negotiations between Wardley Ltd, a subsidiary of The Hongkong and Shanghai Banking Corporation, and Hambros Pacific Ltd in an effort to try to affect a Scheme of Arrangement under Chapter 32, The Companies Ordinance.
Everybody wanted to try to save The Carrian Group of Companies from sinking beneath the weight of its debts because it was in the best interests of every lender as well as the Government of Hongkong so to do.
The Carrian Investments Ltd Group of Companies, that is the publicly listed companies and Mr George Tan Soon Gin’s major, private holding company, named Carrian Holdings Ltd, was, at this time, filling the rice bowls of something in the region of 40,000 people of Hongkong.
There were fears of what might happen if the Hongkong Government allowed The Carrian Group to go into Liquidation.
I recall talking, at the time, to the Chairman of The Bank of East Asia Ltd, Mr David Li Kwok Po, about the situation.
It was Mr David Li Kwok Po’s contention that The Carrian Group of Companies would not be permitted to be wound up because it was just too big and that the tidal wave, which surely would be created by its liquidation, could well be disturbing to a number of people and companies in addition to the embarrassment that it would cause to the Government of the day.
As events unfolded, it became generally known that the Government of Malaysia, not the Hongkong banking fraternity or the international banking syndicates that had been funding, in part, The Carrian Group of Companies, would be the biggest loser if this group of companies was permitted to go to the wall.
I remembered Mr George Tan Soon Gin, having told me that he had come from the Perak State of Malaysia: Things started to click in my mind.
Even the company that had purchased Gammon House had the name of Perak Pioneer Ltd.
With the investing public, being told of the situation with regard to the problems of what had become the ‘darling’ of the stock markets of Hongkong, one nagging question was being raised:
Had there been sufficient objective and impartial reasoning, between 1980 and the latter part of 1982, in the manner in which Carrian Investments Ltd had been able to conduct its lightning-like activities in the territory in the property market as well as in respect of its takeovers of publicly listed companies, in part or in their entireties?
The suggestion was that the horses had bolted because somebody forgot to lock the gate.
Mr Bentley Ho was being blamed for not locking that gate.
During this period, everybody and his cat were singing the praises of Mr George Tan Soon Gin and very few people were analysing, exactly, what was really happening, from where was the finance coming, who or what were the beneficial owners of Carrian Investments Ltd, and many other pertinent questions.
Newspapers were happy to accept the advertisements of The Carrian Group of Companies and, for the most part, newspaper reports were decidedly positive in their write-ups of the man who had started this Group.
On the surface, everything about Carrian Investments Ltd appeared to be squeaky clean even when it purchased an asset from one of Mr George Tan Soon Gin’s private companies.
In fact, for the most part, assets, acquired by the publicly listed companies within The Carrian Group of Companies from one of Mr George Tan Soon Gin’s private companies, were paid for by the issuance of new shares in the publicly listed company(ies).
No cash changed hands.
An example of this was when, on March 18, 1982, Carrian Investments Ltd entered into an agreement with Carrian Holdings Ltd whereby, for a consideration of $HK275,081,680, Carrian Holdings Ltd sold to Carrian Investments Ltd, its interest in certain subsidiaries and associated companies, those companies, holding property interests in Hongkong and Singapore, the consideration was by the issuance to Carrian Holdings Ltd of 69,116,000 New Shares in the Issued and Fully Paid-Up Share Capital of Carrian Investments Ltd.
On the same day, Carrian Holdings Ltd entered into another agreement with its 2 quoted subsidiaries, Grand Marine Holdings Ltd and China Underwriters Life and General Insurance Company Ltd, whereby, for a consideration of $HK100,930,280, Carrian Holdings Ltd sold to these 2 companies, certain property and transportation assets.
Again, the consideration for the sales was satisfied by the issuance of New Shares in the 2 subsidiaries.
No cash changed hands.
The modus operandi of Mr George Tan Soon Gin appeared to be that he would make deals in his name or that of his private companies and, then, if the deals proved to be successful, he would sell the assets to the publicly listed companies for shares on those companies.
In this fashion, the publicly listed companies were never drained of cash and, at the same time, their assets bases and profits continued to grow – to the delight of the investing public.
As long as funding was in place, as long as dividends were being paid, as long as one saw continued growth in the publicly listed companies, there appeared to be no cause for concern.
In all cases, valuations, made by impartial third persons, determined the fair market price of the assets, sold by Mr George Tan Soon Gin’s companies to one or more of the publicly listed companies.