Appleby, Spurling & Kempe has locked horns with a UK law firm that is threatening to sue the Bermuda firm for allegedly libelling a Hong Kong fund manager.

Last month AS&K issued the notice in question onto the Singapore and Irish exchanges on which its client China North Industries Investment (CNII) -- one of the largest Chinese mainland direct equity investment funds -- is listed.

The announcement alleged that the former managers of the $114 million fund -- Hong Kong-based China North Industries Investment Management -- were sacked for "substantial breaches'' of its management deal with the fund.

It is understood that Haldanes, the UK law-firm acting for the former managers, promptly fired off a letter to AS&K threatening legal action against the firm unless an apology was issued and a tidy "damages'' sum was paid.

But AS&K managing partner Dianna Kempe last night vowed to fight the threat tooth and nail.

She said her firm's lawyers had acted properly at all times, and she had informed the British law firm of that stance.

"We have disputed the claim. At this point it is only a threat and we don't consider we've done anything whatsoever wrong,'' she said.

The nasty affair would probably have remained a private law-firm spat but a copy of the furious letter was leaked to Hong Kong newspaper the South China Morning Post, sparking an interesting report in yesterday's edition.

AS&K faces possible suit It quotes directly from the curt letter in which Haldanes gave AS&K until last week to respond to the complaint that its announcement was "completely untrue and constitutes a grave libel''.

The fund management company has strongly denied the claim that they were sacked for "substantial breaches'' of their contract, the leaked letter said.

And Haldanes ordered AS&K to issue a new announcement on the Singapore and Irish exchanges including a "suitable clarification, withdrawal and apology'' that meets their approval.

They also demanded the Bermuda-based law firm pledged that the original allegations in the announcement would never be repeated.

And Haldanes insisted AS&K hand over a generous "offer by way of damages to compensate our client for the injury that it has suffered'' as well as paying all legal costs.

"You will be aware that if you were involved in the drafting and publication of the announcement then your actions are not protected by client privilege and you have personal liability in this matter.'' The leaked letter threatened that Appleby, Spurling & Kempe's failure to meet the deadline would trigger legal proceedings by China North Industries Investment Management for substantial damages.

AS&K faces possible suit It quotes directly from the curt letter in which Haldanes gave AS&K until last week to respond to the complaint that its announcement was "completely untrue and constitutes a grave libel''.

The fund management company has strongly denied the claim that they were sacked for "substantial breaches'' of their contract, the leaked letter said.

And Haldanes ordered AS&K to issue a new announcement on the Singapore and Irish exchanges including a "suitable clarification, withdrawal and apology'' that meets their approval.

They also demanded the Bermuda-based law firm pledged that the original allegations in the announcement would never be repeated.

And Haldanes insisted AS&K hand over a generous "offer by way of damages to compensate our client for the injury that it has suffered'' as well as paying all legal costs.

"You will be aware that if you were involved in the drafting and publication of the announcement then your actions are not protected by client privilege and you have personal liability in this matter.'' The leaked letter threatened that Appleby, Spurling & Kempe's failure to meet the deadline would trigger legal proceedings by China North Industries Investment Management for substantial damages.

BUSINESS BUC COURTS CTS