Lai See

PUBLISHED : Thursday, 05 July, 2012, 12:00am
UPDATED : Thursday, 05 July, 2012, 12:00am


Citibank grants a happy ending, albeit with a bitter taste

We bring you a cheery banking story. Earlier this year Yan Yan goes out for a meal at a Wan Chai restaurant and signs for it with her Citibank credit card. She later gets a bill that includes a fraudulent item for HK$694 from the same evening. Not a lot in the grand scheme of things but she's been defrauded. So she calls Citibank to claim and is told she should deduct that amount from her next settlement and will receive a dispute form. Two weeks later the dispute form arrives and is duly filled in and sent back.

A month later Yan Yan receives a credit bill with the fraudulent charge still showing, plus interest. She calls again and is told the dispute form has not arrived. So she e-mails her copy of the form. At this stage there is a series of phone calls and in one of them Yan Yan says she was told by Citibank that the second slip clearly carried a forged signature. Indeed, the difference is so apparent that she wonders how the slip came to be cleared for payment.

Although the bank told her the signature was forged, Citibank now tells her that since the dispute form arrived late, that is, more than 60 days after the event, they must take the money from her, pending investigation, but it will be 'interest-free'. Yan Yan is told she might get her money back, but only after a full investigation, which might take six months.

Last week Lai See got to hear of this and told the bank that we were running the story, and invited it to comment. 'The case is under investigation and we are confident it will be resolved shortly with a full refund ... we need to conduct a full investigation to determine the facts of any case. In the meantime, no charges are being accrued on the balance relating to this incident.'

Well, from that point, the investigation accelerated rapidly and we are pleased to say that on Tuesday, Citibank told Yan Yan it had refunded the money since it was clear that the slip carried a forged signature, and apologised for the bother they had put her through. So a happy ending, perhaps with a slightly bitter taste. The bank was aware some time ago that the signature was a forgery. This leads us to wonder how many other people have their money locked up in similar disputes.

Corporate mythology

We see that it has taken listed gaming company Amax the best part of 18 months to decide whether it owns 49.9 per cent or 24.8 per cent of Macau casino Greek Mythology. In a stock exchange announcement last week, the company, whose major shareholder is Ng Man-sun, said that as of March 2010, Amax owned 49.9 per cent of Greek Mythology. But the following year, Greek Mythology paid down a shareholder's loan by issuing new shares to another shareholder. As a result, Amax was told its holding had been diluted to 24.8 per cent.

The announcement says that despite this, and with the advice of legal advisers, it continued to regard its equity interest as 49.9 per cent. However, its accountants, now previous, took a different view and qualified the accounts saying the stake should be 24.8 per cent. In March this year, following a meeting with Greek Mythology shareholders, Amax agreed it owned 24.8 per cent of the casino and adjusted its profits from HK$1.2 billion to HK$555.3 million. However, Amax's website continues to state it owns 49.9 per cent of Greek Mythology. The investor relations person we spoke to said she hadn't had time to update the website.

Memory lane

Hindsight can be a terrible thing. Angela Knight, the outgoing chief of the British Bankers' Association, was giving evidence to British Treasury Select Committee in 2008 and was asked about Libor, The Times reported. 'Libor has stood the test of two decades,' she said.

'You will have seen that Libor has drifted up and is, in sterling and euro terms, significantly higher than the base rates. That does not mean that that is a problem with Libor. What that does is say this is what is happening in the market.'

You're Nicked

Ex-jailbird Nick Leeson, the man who brought down Barings, says the Libor scandal shows the need for tougher sentences. The Daily Telegraph reports that Leeson, who was sentenced to six-and-a-half years in Changi Prison in Singapore for trying to cover up trading losses that ballooned to such a size that it brought about the collapse of Barings Bank, was quoted as saying British financial regulation was too reactive. 'If you look back at the financial scandals in America, there have been so many prosecutions and so many people going to jail for insider trading and blatant fraud,' he said. Asked if criminal prosecutions were the only way to stop traders stepping out of line, he answered: 'Absolutely.'