The politics of yes-men
With his overflowing head of white hair and a liking for expressing his views in public, Joseph Yam Chi-kwong is atypical of Hong Kong's civil servants. There has been much to disagree with him about in the 14 years he has been in charge of the Monetary Authority, including a salary which makes him the world's highest-paid central banker.
Nonetheless, there is cause to be concerned about the reasons for his ousting in 2009 by Chief Executive Donald Tsang Yam-kuen. Officially, it is because he has reached the retirement age of 60 but, by that measure, Mr Tsang himself (now 63) should already have made way for a younger person.
There is no doubt that Mr Yam wanted to stay on, and there was no pressure from the financial sector here or abroad to suggest that a new face was needed. Nor is there any indication that his removal will lead to fresh thinking at the authority. Indeed, rather the opposite. His replacement is, according to all reports, to be a former deputy.
There are three possible reasons for Mr Yam's demise. They are not mutually exclusive, so all may have played a part. None reflects well on Mr Tsang.
First, there are policy issues, the currency peg and the 'through train' for H and A shares. Mr Yam, who was a middle-ranking official of the then tiny Exchange Fund office at the time of its creation in 1983, has always been a stout defender of the peg to the US dollar.
However, he is also a sufficiently well-informed observer of currency history to know that such things do not last forever. It is necessary to think of when change may be to Hong Kong's advantage, and how that could be achieved without being disruptive.
Mr Yam may even believe that, if there needs to be a peg, it would be more sensible (as I wrote before its 1983 adoption) to link it to a basket of currencies such as the Special Drawing Rights - the International Monetary Fund's unit of account. However, Mr Tsang has a bureaucrat's fear of change, particularly if it seems to involve loss of face on the part of officials who keep saying it will not change.
Beijing, likewise, is opposed to change for political reasons, as it has shown in its own reluctance to shift from a US dollar link. It would also rather that we stuck to the US dollar until such time as we can be pegged to the yuan, rather than see the Hong Kong dollar flourish more independently.
Mr Yam may also have made himself unpopular in Beijing for pushing too hard for the through train. It was a bad idea, given the mainland's need to keep control of its own opening up of financial markets rather than have it pushed for Hong Kong's benefit.
And Hong Kong should not have been seen to be asking for the special favours that the through train represents. But Mr Yam was trying to help the city. So, Mr Tsang himself cannot escape blame for the through-train wreck, given the attention he accorded financial market integration in his policy speech.
The second reason for Mr Yam's demise could well be Mr Tsang's apparent need to surround himself with subservient underlings in the same way that he has always been a faithful servant of his superiors. Like-minded civil servants or politically neutered heirs to vast fortunes are his preferred appointees. Mr Yam was always brighter and bolder than his peers, rising up the ladder faster even than Mr Tsang, becoming head of the Exchange Fund in 1991 and first head of the Monetary Authority when it was set up as a semi-independent body in 1993. Though Mr Tsang was older, he was then only director of trade. But, subsequently, Mr Tsang played a successful game of civil service musical chairs and sovereignty politics, while Mr Yam was stuck out on a limb, albeit a well-paid one, at the Monetary Authority.
Third is the suggestion in many quarters that Mr Tsang wanted to reward Norman Chan Tak-lam with the highest-paid job in government. Mr Chan had long been one of Mr Yam's deputies, but is reported to have felt frustrated by his boss' long tenure, leaving the authority in 2005 for a very brief career with Standard Chartered Bank. He recently returned to the government to take charge of the Chief Executive's Office. He has also been involved in two highly political positions, as chairman of the Bauhinia Foundation and as a member of the governance and political development panel of the Commission on Strategic Development. There is a special relationship between Mr Chan, 53, and his mentor.
Call it cronyism or call it politicisation, it adds up to a reduction in the independence, limited though it is, of the authority. Such centralisation suits Mr Tsang's thirst for personal power, and his need for a praetorian guard of yes-men, rather more than it suits Hong Kong as a financial centre.
Philip Bowring is a Hong Kong-based journalist and commentator