Editor’s note: This column was co-authored by Larry Klayman and
Chris Farrell.

What does an inspection of the Bahamas, your online stock portfolio
investment service, half the electricity production and distribution in
Australia, Canadian oil, trans-Pacific fiber-optics, the Panama Canal,
and William Shatner’s horrible “singing” commercial endorsements of
Priceline.com have in common?

Li Ka-shing.

Careful examination of the Chinese tycoon’s growing empire and his
cozy relationship with the Communist Chinese government reveals the
potential for an insidious manipulation of Western ports, markets,
utilities and telecommunications that could apply crippling pressure to
the United States and her few remaining allies. Indeed, through Li
Ka-shing’s empire — a front for Communist Chinese expansion — the
Mainland does not need to invade Western democracies or launch missile
attacks against them to flex its muscle. It can simply threaten to shut
down public utilities and key industries which it now controls —
throwing Western markets into complete turmoil, if not disaster.

The frightening story begins in 1979, when Li Ka-shing purchased what
became the controlling interest in one of the oldest, 19th century
British trading houses, or “hongs” of Hong Kong, known as
Hutchison-Whampoa. Already a millionaire from real estate and property
management investments, Li launched a diversification program through HW
that involved trading, cargo and container operations, logistics,
warehousing, engineering and even retail sales. Today Li Ka-shing’s net
worth is estimated at a whopping $13 billion.

Li expanded into the utility and energy fields in 1985 by acquiring a
33 percent interest in Hong Kong Electric Holdings Ltd. Two years later
in 1987, Li expanded overseas again, this time by taking a 43 percent
interest in Husky Oil, an oil and gas company based in Canada. Since
then, Husky Oil ownership has shifted to 46 percent ownership by Li and
his family, 49 percent-owned by HW and 5 percent by the Canadian
Imperial Bank of Commerce. Husky ranks among Canada’s top producers of
crude oil, natural gas and recovered sulfur.

The 1990s brought continued diversification and expansion to Li’s
holdings. In 1993, Li became involved in a bidding war over Hong Kong’s
Miramar Hotel & Investment Company. Interestingly, Li’s partner in the
bid was CITIC Pacific, the Hong Kong-listed arm of the China
International Trust and Investment Corporation that is controlled by the
Communist Chinese government. His “opponent” (to whom he “lost”) in the
Miramar bidding was Mr. Lee Shau-kee — Li’s partner in many other joint
ventures. Li’s partnerships with CITIC and Lee in various investment
and development initiatives are frequent and diverse. Mr. Li’s interest
in hotels continued through 1994 when Hutchison International Hotels
entered into joint ventures with the Beijing government over two of the
oldest hotels in the capitol. The Chinese tycoon has also formed a
subsidiary called Cheung Kong Infrastructure, as a diversified
infrastructure company committed to the fast-growing Asian
infrastructure market, especially mainland China. CKI divisions

  1. CKI Materials, which is one of Asia’s most successful
    cement, concrete, asphalt and aggregates operators.

  2. CKI Energy, which has interests in power plants in four provinces
    in China, including Guangdong, Henan, Liaoning and Jilin.

  3. CKI Transportation, the portfolio of which comprises a variety of
    road transportation systems, ranging from a section of the National
    Trunk Highway System to city roads and ring roads.

Then there is the arguably largest “public works” project
in the world — the Panama Canal. Under the terms of the
Carter-Torrijos Treaty of 1977, the United States was due to relinquish
control of the canal and associated port facilities in a time-phased
process culminating in a complete turn over to the Panamanian government
on Dec. 31, 1999. In 1996, the Panamanian government of President
Ernesto Balladares opened bidding on the port terminal concessions at
both the Atlantic and Pacific entrances of the canal. Under bidding
practices and circumstances that were reportedly fraudulent, HW won the
bidding. HW subsidiaries Hutchison Port Holdings and the Panama Ports
Company now effectively control the Panama Canal.

HW has done well as the operator of Hong Kong International
Terminals, the world’s largest independently owned container terminal,
and, profits from HW port and related services totaled $3,097 million in
Hong Kong dollars. As the world’s biggest independent port operator,
Hutchison Port Holdings has invested in 17 ports, operates 79 berths and
handles about 10 percent of global container traffic. Operating ports
include Shanghai in China; Felixstowe, Thamesport, Harwich in the UK;
Freeport Container Port on Grand Bahama Island; and a 50 percent
interest in the Grand Bahama Airport Company, which comprises an
11,000-foot long runway capable of handling the world’s biggest
aircraft. This investment also includes a 780-acre tract of land between
the airport and container port. Plans are being prepared to develop this
into an industrial park, which will also contain a sea/air business
center. Other investments in the Bahamas include three hotels and two
golf courses.

Not satisfied with controlling Britain’s three principal seaports and
the Panama Canal, Li’s European expansion includes a $357 million plan
to acquire the continent’s largest container handler, Europe Combined
Terminals in Rotterdam, Holland. The European Commission launched a
four-month investigation into the proposed deal, ending with a
determination to allow HW to negotiate a 35 percent stake in ECT.

In further bids to “diversify,” Li has purchased all of South
Australia’s electricity distribution and retail assets, also pledging to
acquire a 25 percent stake in the Bangkok Transit Systems Company’s
“Skytrain” project — costing Mr. Li between $100 and 200 million.

Following in his father’s footsteps, Richard Li, at 35 years old, the
second son of the patriarch, has made his own mark in the business
world, wheeling and dealing with the likes of the ubiquitous Intel
Corporation and telecommunications giant Global Crossing. Richard Li
has an affinity for high-tech ventures and has expanded the family’s
business accordingly. He launched, developed, and then sold the
Asia-wide StarTV satellite television network, thanks to mutually
supportive network infrastructure contracts let by his father’s HW

However, Richard Li’s high-tech corporate incubator is the Pacific
Century Group, a company which has been granted a seaside “campus” on
scarce Hong Kong real estate by the Beijing government, valued at $775
million to create “Cyperport.” The $1.74 billion project is backed by
campus tenants Hewlett-Packard, IBM, Softbank and Pacific Convergence
Corporation (a joint venture between Pacific Century Group and Intel).
Interestingly, a similar high-tech campus called “The City of Knowledge”
has been proposed by Panama’s quasi-governmental “Inter-oceanic Regional
Authority” (ARI) for the former U.S. Southern Command’s Fort Clayton.
ARI representatives suggest that “Chinese entities” conceived of and are
interested in bidding on the project this summer.

Richard Li’s subsequent acquisition of the telecommunications firm
Tricom Holdings Ltd. has been rolled into the Pacific Century Group
operation to create Pacific Century CyberWorks PCCW. In an effort to
bring high-speed Internet access to Asia, Intel has invested an
additional $50 million into Richard Li’s PCCW, giving the American firm
a 13 percent stake. In a bit of seemingly “circular promotion,” PCCW’s
participation in Cyberport is being touted as a reason for additional
outside investors to join the project.

The Li family’s continued business conquest of shipping, utilities
and communications infrastructure recently continued with yet another
acquisition. In a move that some say highlights the wholly integrated
relationship between the Li family and Communist China, Richard Li’s
nine-month-old PCCW strangely outbid communications leviathan Singapore
Telecommunications to acquire Cable and Wireless HKT. This acquisition
represents Asia’s largest-ever takeover bid. The Hong Kong government
denies any involvement in the transaction, but it does appear to have
intervened on behalf of its Mainland Chinese benefactors — as it would
have been unlikely that Li’s young company would have prevailed.

Long-term rivalries between the two historically powerful Asian
economic powerhouses made the idea of the Singapore government having
partial ownership of the local phone company “unacceptable” on a number
of levels. Interestingly, after the deal was announced, the share value
of PCCW plummeted, since investors likely sensed the company itself did
not have the assets to complete the deal. It is therefore likely that
Beijing is the source of the cash to finance the transaction.

Meanwhile, the elder Li has joined with U.S. telecom company Global
Crossing in a $1.2 billion dollar joint venture to link Hong Kong to the
United States by submarine fiber-optic cable to offer high-speed
trans-Pacific network service for corporations. Within the last two
weeks, Li announced the formation of a 50-50 joint venture with
Donaldson, Lufkin & Jenrette Inc. (“DLJdirect”) to launch and manage an
online investment service. He has also forged a new alliance with Web
travel discounter Priceline.com.

We have only been able to sketch a fraction of the Li family
holdings in this article. In a future article we will expand our
analysis to detail the Communist Chinese penetration of our capital
markets. But for now, we hope the reader gains an awareness and
understanding of the Li family’s enormous wealth and control of critical
utilities, industries and telecommunications technologies around the
globe, within the context of the Li’s relationship to Beijing as a
“successful commercial agent” of the Communist Chinese government.

If reports that Li Ka-shing is a de facto ministry-level
official of the Communist Chinese government are true, it would explain
much of China’s aggressive posturing on the world stage and provide a
stark warning to a seemingly complacent American public — the same
Americans who yawned at Chinese arms dealers buying access to President
Clinton and seem willing to accept candidate Gore’s iced tea-sodden
claims of “no controlling legal authority” concerning his relationship
with convicted felon Maria Hsia.

Will Americans continue to stand by idly as their sovereignty, and
the public infrastructure of their allies, is sold to the highest
Communist Chinese bidder?

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