At a disciplinary hearing by the Listing Committee, a disciplinary (review) hearing by the Listing Committee and a further disciplinary (review) hearing by the Listing Appeals Committee held on 18 July 2000, 14 November 2000, and 5 June 2001, respectively, the Listing Committee and the Listing Appeals Committee of the Exchange conducted disciplinary hearings into the conduct of Mr. Vincent Ngai, former deputy chairman and executive director of the Company, who pleaded guilty to and was convicted of intentionally creating false and misleading appearance of active trading in the Companys shares from 15 September 1998 to 19 January 1999, contrary to section 135(1)(a) of the Securities Ordinance, at the Western Magistracy on 14 December 1999.

In respect of the conviction, Mr. Vincent Ngai was found to have arranged and/or instructed a group of eight nominees to open accounts at different brokers to trade in the shares of the Company during the relevant period. The eight nominees were relatives, friends of Mr. Vincent Ngai or employees of the Company. As a result of these nominees trading activities, their purchases and sales dominated the market and had the effect of creating a false and misleading appearance of active trading in the shares of the Company at the relevant time.

The Listing Committee determined that:-

1. By intentionally creating a false and misleading appearance of active trading in the Companys shares during the period from 15 September 1998 to 19 January 1999, Mr. Vincent Ngai had been in continuing breach of:-

   1. the Directors Undertaking to comply to the best of his ability with the Exchange Listing Rules and the securities laws and regulations from time to time in force in Hong Kong;

   2. Rule 3.08 of the Exchange Listing Rules in failing to fulfil his fiduciary duties to the Company and to fulfil duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law; and

   3. Rule 3.09 of the Exchange Listing Rules in not having the character and integrity commensurate with his position as a director of a listed issuer.

2. During the period from 15 September 1998 to 19 January 1999, Mr. Vincent Ngai had intentionally or wilfully and persistently failed to discharge his responsibilities under the Exchange Listing Rules.

3. The retention of office by Mr. Vincent Ngai as a director of the Company is prejudicial to the interests of investors.

The Exchange is and has been under a statutory duty, previously under section 27A of the Stock Exchanges Unification Ordinance and now under section 8 of the Exchanges and Clearing Houses (Merger) Ordinance, to ensure, so far as is reasonably practicable, an orderly and fair market in the securities traded on or through the facilities of the Exchange. Rule 2.01 of the Exchange Listing Rules provides that the principal function of the Exchange is to provide a fair and orderly market for the trading of securities.

Intentionally creating a false and misleading appearance of active trading in the Companys shares is inimical to an orderly and fair market. In discharge of the Exchanges statutory duty and its principal function as stated in Rule 2.01 of the Exchange Listing Rules, the Listing Appeals Committee decided at the hearing that the appropriate sanction to be imposed on Mr. Vincent Ngai is a public statement under Rule 2A.09(7) of the Exchange Listing Rules that in the Exchanges opinion the retention of office by Mr. Vincent Ngai is prejudicial to the interests of investors.

Accordingly, the Exchange hereby states publicly that, in the Exchanges opinion, the retention of office by Mr. Vincent Ngai was prejudicial to the interests of investors.

For the avoidance of doubt, the Exchange confirms that in relation to this matter it is not making any public statement concerning the Company, or any present or former member of the Board of Directors of the Company, save for Mr. Vincent Ngai.