David Li's resignation in best interests of HK

PUBLISHED : Monday, 18 February, 2008, 12:00am
UPDATED : Monday, 18 February, 2008, 12:00am

David Li Kwok-po has done the honourable thing in resigning from the Executive Council. Sadly, given the circumstances of his settlement of an insider trading case in the US, there was no other course open to him in the best interests of Hong Kong and the government.

The US Securities and Exchange Commission accused Mr Li of being the source of information in the case. The information allegedly allowed a close friend to make US$8.1 million by selling Dow Jones shares he had bought through his son-in-law and daughter ahead of the public announcement of a takeover bid by News Corporation.

Such an accusation against a cabinet member, lawmaker and senior member of the city's business establishment attracted publicity and comment at home and abroad that did not reflect well on the operation of the Hong Kong market. Mr Li accepted a court order to pay an US$8.1 million civil penalty, without admitting or denying insider trading. The terms of an agreement with the SEC do not permit him to comment on the allegations against him. So he is not able to give his side of the story. As a result, we will never know the full details of the allegations or Mr Li's response.

From what has been revealed, however, the public is entitled to the view that he did something wrong. If not, they will ask, why did he agree to a substantial settlement on terms that bound him to remain silent?

In public life, unfortunately, perceptions can be damaging. Unless addressed, they had the potential to undermine Hong Kong's status as an international financial centre and its reputation for upholding the rule of law and the highest level of probity in public life. Mr Li has acknowledged that his position had also put Chief Executive Donald Tsang Yam-kuen - a close friend - and the government under growing pressure for him to be held accountable for his actions.

Mr Li did the right thing to put a stop to these concerns by tendering his resignation from the Executive Council. Members of Exco are political appointees. They become privy from time to time to sensitive market information. There is therefore no room for doubt about their integrity. It is arguable, perhaps unfairly, that Mr Li's settlement with the SEC leaves the door open to doubt.

The consequences for Mr Li, after many years of service to the community, are personally sad. Hong Kong, however, has nailed its colours to the rule of law. It seeks to be known above all else as a society that plays by the rules. Anything that might give rise to the perception that leading members of the community might not always observe the highest standards of integrity, has the potential to harm the city's interests. This is not to say Mr Li may be culpable in a legal sense. He should not have disclosed privileged, market-sensitive information. It seems that he might have done so inadvertently. But we cannot say for sure, on the available evidence, that he had any criminal intent.

Mr Li has represented the banking constituency in Legco since 1985. Some take the view he should resign from that body too. Although his attendance record is not unblemished, he has left his mark by speaking out on big issues. That he has always been re-elected shows he enjoys the confidence of the banking sector. There is an argument that his future is best left to the voters.

In settling with the SEC, Mr Li may have spared his family, business and the city a potentially damaging fight to clear his name. In resigning, he has accepted the consequences of his actions.