Bankers urge discretion in Legco inquiry
Dennis Eng and Nick Gentle
Call to uphold city's financial reputation in minibonds probe
Bankers have called on legislators to be discreet in conducting their inquiry into the Lehman Brothers minibonds debacle, saying they should respect the confidentiality of business information and protect customers' personal data.
In a statement last night the Hong Kong Association of Banks said it respected legislators' decision to press ahead with an inquiry and would co-operate with it.
A spokesman for the Financial Services and the Treasury said it was disappointed with Legco's decision to pass a resolution empowering a subcommittee to investigate the minibonds saga, but the government would accommodate the inquiry.
'Our goal has been helping investors get back their investments at current market value,' the spokesman said. 'The banks have said they would study whether they can handle the buy-back of minibonds and the inquiry simultaneously.'
The association statement said discretion was needed 'to uphold Hong Kong's reputation as an international financial centre and the spirit of the rule of law'.
It said distributor banks would continue to 'make every effort' to handle the buy-back of soured Lehman Brothers products and hoped the inquiry would not affect progress in resolving the issue.
A banking source said earlier that banks might temporarily suspend the buy-back programme while the inquiry proceeded.
There were fears the probe, which will see bankers and finance officials summoned before lawmakers, could jeopardise the buy-back programme and delay the settlement of disputes with affected investors since the extent of Legco's special powers was unclear, the source said.
Lawyers familiar with the situation also pointed out that bankers could refuse to answer if the lawmakers' request was of a 'private nature' or if they might incriminate themselves.
These rights meant witnesses could remain tight-lipped and largely unhelpful to the investigation. Banks could also argue against submitting requested documents that contain commercially sensitive material.
Under section 13 of the Legislative Council (Powers and Privileges) Ordinance, anyone ordered to attend or give evidence can be excused by the president 'on the ground that (it) is of a private nature and does not affect the subject of inquiry'.
There is no definition of 'private nature' in the ordinance.
As in a court, witnesses have the right not to self-incriminate although there is an implication of guilt associated with refusing to answer.
'It would be surprising if anything substantive would be uncovered or result from this show,' Clifford Ng, a legal expert and partner at law firm K&L Gates, said.
'The Legco investigation is unnecessary. There are regulatory bodies with the responsibility and the expertise to investigate these matters. This is a PR exercise for Legco and I would expect the banks to co-operate for the same reason.'
Angus Ross, a litigation partner with Allen & Overy, said: 'People who have breached the rules ... should get what is coming to them.'
But Alan Ewins, a partner at the same law firm, said lawmakers needed to resist populist calls for retribution against bank managers.
In last night's statement the banks' association said it believed legislators would understand 'the interests of customers, shareholders and staff must be balanced in the handling of the Lehman incident'.
At a cost
The inquiry into the short-piling scandal at public housing estates in 2001 lasted 400 hours and cost about, in Hong Kong dollars, $14m
The 2003 probe into the Sars outbreak took a total of 440 hours at a cost of: $8.2m
The latest inquiry into the debacle involving Lehman Brothers minibonds is expected to last a year and cost at least: $1m