Lehman criticism played down
Dennis Chong and Ada Lee
Two senior government officials should not be held politically accountable for the Lehman Brothers investment fiasco of 2008, the head of a legislature subcommittee on the issue said yesterday.
Dr Raymond Ho Chung-tai was responding to criticism of the two men - Financial Secretary John Tsang Chun-wah and Secretary for Financial Services and Treasury Professor Chan Ka-keung - as his subcommittee report, issued this week, mentioned them.
'The criticisms [of the two men, in the report] were not heavy. They were the slightest [criticisms],' he said yesterday on a Commercial Radio programme.
The report, which said the city's mechanisms to supervise the banks' securities business had been largely ineffective, criticised Tsang and Chan for not initiating 'improvements to the regulatory framework' in the years before Lehman's collapse.
The report also said former Hong Kong Monetary Authority chief Joseph Yam Chi-kwong should bear the 'ultimate responsibility' for investors' losses over irregularities in Lehman's minibonds and structured financial products, as he was chief of the banking watchdog at the time.
Meanwhile, a former senior manager at the Securities and Futures Commission (SFC) urged incoming chief executive Leung Chun-ying to review the compensation that should be paid to investors who lost money. The panel's report said it was unjust to exclude experienced investors from compensation.
Harold Ko Ping-chung said: 'The fact authorities did not force banks to provide a complete recovery of losses, for investors, implied that officials knew of their own fault,' he said.
The remarks came as some Lehman investors, who have received no compensation offers from banks, said they would continue with weekly protests at banks in Central.
Professor Chak Wong, a Chinese University economist, said: 'Why can't this issue be resolved in the courts instead of through this populist approach' of protesting.
Dr Billy Mak Sui-choi, associate professor in finance and decision sciences at Baptist University, said the Lehman debacle was a lesson for the city to balance financial innovation with investor protection.
About 43,000 investors in Hong Kong who bought Lehman-Brothers-related financial products, amounting to HK$20.2 billion, suffered huge losses.