Only fair to put property crooks in locked 'homes'

PUBLISHED : Thursday, 17 June, 2010, 12:00am
UPDATED : Thursday, 17 June, 2010, 12:00am

More than six months after Henderson Land trumpeted the sale of 24 flats at a luxury Mid-Levels block, it now says 20 of the deals have fallen through - among them the world-record HK$439 million sale of a top-floor duplex.

The news prompted calls from professionals and lawmakers from across the political spectrum for an investigation into the handling of the sales at 39 Conduit Road. Some called for a law against property-market manipulation to be passed.

SCMP, June 16

Good idea. And let's not have just any law. Let's have a really tough one, a criminal one, something we can use to stick these manipulators in jail. I suggest prison sentences in the range of 33 to 36 months.

In passing such a sentence, I know exactly what I would say if I were the judge. I would look at these crooks straight in the eye, wag a finger in their faces and lecture them as follows:

'When it comes to protecting the investors and restoring public trust in the financial markets, the court cannot pass the buck and should be very tough by passing sufficiently deterrent sentences against any market manipulators.

'Market manipulation should not be tolerated if the law were really meant for the protection of individual investors. Unless the market manipulators are deterred, the investors cannot be said to be sufficiently protected.'

It is an easy lecture to copy. Yes, copy. I just copied it straight from the website of the Securities and Futures Commission. It is what deputy district court judge Sham Siu-man said last month when sentencing two warrant traders to jail, one to 33 months and one to 36.

Their heinous, unspeakable crime had been to flip an illiquid warrant between themselves on the stock market in order to fool the public into thinking that it was a worthwhile security to buy.

And now tell me, yerawnah, what precisely distinguishes this felonious misdeed from what Henderson Land Development did in the property market?

Ah, I have it. There is a law against it in the stock market and there is not a law against it in the property market. How silly of me not to have realised. There is a world of difference between the two. Anyone can see that.

In the property market, it's perfectly legal and fair game to stir up public interest by transferring some of the flats in a new development to Caribbean shell companies and then striking, or pretending to strike, opaque deals for the further onsale of these properties to buyers whose identities are kept secret while the prices they supposedly paid are trumpeted to the world.

It's a time-honoured practice and, from all appearances, it works, particularly with potential buyers from across the border. It fools them into thinking there has been heavy demand for the new development. It also dupes them into paying high prices because others have paid up and this price level must therefore represent the market.

Why, however, blame Henderson Land alone for doing it? Almost every developer in Hong Kong has done it on the sale of a big new development. It is established practice and developers can quite truthfully claim that it is no different from the practices of car dealers and slimming salons.

But in the stock market?

Why, there it gets you three years' jail for trying it with a tiny warrant on which you could never even dream to bilk the public for as much money as a developer can bamboozle out of buyers on a single project.

What is more, a roof over your head is a necessity of life. Owning warrants is not. Why then is it a big crime for warrant traders but not for property traders?

Okay, okay, I know, we haven't yet passed a law making it a crime for property traders. We'll get around to that eventually, maybe a few eons after the Second Coming.

But in the meantime, I have a suggestion for our judiciary. When these warrant traders' case comes up for appeal, and it surely must if there is any justice left in this town, let's have you appeal court judges strike the irons of these two fellows and set them at liberty with an amended sentence of time served and nothing more.

Oh yes, and if the SFC tries to argue for the 33 and 36 months' sentences, then please do Hong Kong a favour and award the costs of the appeal against the commission.

You will be doing Hong Kong a favour because we pride ourselves on practising rule of law with a fair and even hand. It is one of the pillars of our town's prosperity.

But if these warrant traders are sent back to jail when their counterparts in property are not even brought to justice, well, we may still say we have rule of law here, iron fist law, letter of the rulebook law.

But as to justice administered with a fair and even hand, I think I shall have a new entry for the book of the world's 100 best jokes.