"cast the first stone", page-10

Sour Grapes Part 3

Fortescue investor revealedChalpat Sonti

April 25, 2009 .

SYDNEY man Kie Chee Wong is the mystery investor who Fortescue Metals Group claims was told to sell his shares in the company because the Chinese were about to teach it a lesson.

His identity was finally revealed in the Federal Court in Perth yesterday. The court heard Mr Wong, formerly Fortescue's largest private shareholder, who bought about $1 million of Fortescue stock in 2003 at adjusted prices of between 1c and 3c a share.

He asked a friend, Hong Kong money man Lawrence Xin, to fly to Perth in 2005 to find out what was behind Chinese threats to pull out of deals with Fortescue.

Mr Xin, who gave evidence via videolink from Tokyo in civil proceedings brought by the Australian Securities and Investments Commission, told the court the Chinese vowed an "underground war" against Fortescue and its founder Andrew Forrest.

ASIC contends Fortescue and Mr Forrest misled the market by referring to three agreements signed with Chinese companies to finance and build its Pilbara iron ore operations as "binding contracts" when it knew they were memoranda of understanding - no deal could be done until the issue of equity in the company was sorted out.

The court earlier heard the Chinese deals started to unravel in late 2004 as the Chinese sought a majority equity stake in Fortescue. Mr Forrest refused.

Mr Xin said he told Mr Forrest he knew the deputy director of the powerful National Development and Reform Commission, He Lianzhong, an old friend, and would try to find out what was happening.

Three days later, he phoned Mr He, who told him in Mandarin that the Chinese were launching an "underground war" against Fortescue. "He was very hostile," Mr Xin said. "I told Andrew, 'You're in trouble, he's so angry at you people."'

Mr Xin said Mr He told him in Beijing the following month that the Chinese companies had been "stupid" to agree to spend $2 billion on Fortescue's project without having control.

Meanwhile, Justice John Gilmour provisionally allowed statements given by Mr Forrest and Fortescue executives Graeme Rowley and Alan Watling to ASIC investigators to be admitted as evidence.

Mr Forrest did not claim privilege against self-incrimination.