The Hong Kong Stock Exchange has censured CNOOC Ltd, China's third biggest oil company, for improper disclosures and money transfers.

The exchange said CNOOC's former Chief Financial Officer Mark Qiu made a comment that "the profit for the first nine months of 2002 is US$700 million odd" during a teleconference with fund managers and reporters on October 25 that year, ahead of a report to the exchange.

It said Qiu told nearly 30 analysts on July 28, 2003: "Investors can expect upside on the dividend...in the form of a special dividend."

The company's shares surged after Qiu's comments were carried in major newspapers. They rose a total of 11.7 percent on July 28 and July 29, 2003, after the dividend payout policy was disclosed.

CNOOC filed statements on October 25, 2002, and July 29, 2003, saying the profit estimate "was not a definite figure" and no decision had been made to pay a special dividend.

But on September 4, 2003, the company announced an interim dividend of 14 Hong Kong cents a share and a special mid-year dividend of 18 cents a share.

The exchange also said CNOOC placed cash deposits at CNOOC Finance, a subsidiary under parent China National Offshore Oil Corp, between June 2002 and March 2004, before the move was approved by shareholders in May, 2004.

The amount transferred was as much as 6.6 billion yuan (US$814 million), which represented 16.6 percent of the net tangible assets of CNOOC at that time, the exchange statement said.

"There is nothing more corrosive of market confidence than the feeling that some investors are excluded from an inner circle of privileged counterparts," Richard Williams, head at the exchange's listing department, said in the statement.

CNOOC stepped into the limelight in June when it offered US$18.5 billion to take over United States-based Unocal Corp but dropped the bid in August amid opposition from US lawmakers.

Fu Chengyu, CNOOC chairman and chief executive officer, said in an Asian Wall Street Journal interview in July that CNOOC was recognized as being well ahead of most Chinese businesses on financial management and corporate governance.

Irregular information disclosures are relatively common among Chinese mainland listed companies — part of the reason stock markets hit eight-year lows this year. Comparatively, overseas bourses such as the Hong Kong exchange have a more mature censure system.

CNOOC's case is the latest in a series of scandals and misconduct involving Hong Kong-listed mainland firms.

Beijing Media Corp said on Monday police had detained six of its employees, some facing allegations of bribery.

Waste-management company China Sciences Conservational Power Ltd said that Hong Kong's anti-graft agency had arrested its chairman and two executive directors on corruption charges.

(Shanghai Daily October 8, 2005)