JSM Indochina Ltd Chief Executive Craig Jones visited shareholders in Europe on Tuesday in a bid to shore up support following a leadership challenge by San Francisco-based hedge fund Passport Capital LLC.

The board of the Vietnam- and Cambodia-based residential and retail property developer also published a letter Monday hitting back at allegations by the hedge fund that it had underperformed, underinvested and suffered from “serious corporate governance failures”.

Passport, which owns 13 percent of JSM Indochina’s shares on the London Stock Exchange’s AIM board, called on October 16 for an investor meeting to replace Jones, Chief Financial Officer Rowell Tan and Chairman Michael Tanner over concerns that the developer has been slow to invest.

[IT is] an attempt by one shareholder to obtain a short-term gain.

“Following repeated unsuccessful attempts to address our concerns to the company and the manager, we believe that the company needs a reinvigorated board to examine its investment strategy,” Passport Chief Investment Officer and founder John Burbank III said in a statement on October 20.

The meeting must be held within 42 days, according to UK rules.

Jones said he was in a meeting in Europe when contacted by the Post on Tuesday. He did not respond to a request for comment. However, in a response to the Passport allegation published late Monday, JSM Indochina denied any wrongdoing, casting it as “merely an attempt by one shareholder to obtain a short-term gain through a cash return at the cost of the future sustainability and growth of the company, and at the expense of fellow shareholders”.

The letter to shareholders said that investing in properties in the region last year and the early part of this year would have lost them money. It added that existing cash holdings had already been allocated.

JSM Indochina raised US$220 million as of July 2007 to invest in property developments in Vietnam and Cambodia which it planned to spend within 12 months. So far it has only invested $65.5 million, according to Passport.

The annual management fees paid to Jones, which amount to 2 percent of the company’s assets, were inappropriate when such a high proportion of assets are still in cash, Passport said.

Passport said in June 2008 it had assets of about $4.5 billion. It now oversees $2 billion, according to its Web site.

Lehman Brothers Holdings Inc owns 31.3 million shares in JSM, making it the second-largest investor behind Jones.

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