Once again we have occasion to raise grave questions about whether the stock exchange treats breaches of its own rules seriously enough to be allowed to regulate itself. The case involves a connected party transaction in the Mansion House Group, a HK$100 million loan that amounted to about 71 per cent of the company's net tangible assets and that caused the company to report a loss for 1998 when the loan went wrong. The exchange may have dealt in the past with cases that involved greater amounts of money but Mansion House is a small company and the impact on its shareholders of this breach of trust by their directors was enormous. Yet all that the exchange has imposed as punitive measures is the publication of a notice of censure. There were no fines, no restrictions on further dealings, the company continued to do business throughout, no directors were told that they were banned from holding directorships in the future and the case was not referred to police or other authorities for possible further action. It makes a mockery of all the talk we have heard recently about bringing better corporate governance to the SAR. What is the point of making righteous noises in public about the standards expected of directors when a flagrant proven breach of those standards has resulted in what can hardly even be termed a rap across the knuckles? Here we are making a great fuss about the Medical Council because it refuses to ban doctors from using mobile phones during operations when doctors have at least occasional reason for doing so. We even have legislators now forming a sub-committee to review the mechanisms for medical complaints. But where is the legislative sub-committee that has now been appointed to review whether the stock exchange is a fit and proper entity to regulate itself? As a case of a public entity that is too much of a soft touch in disciplining its members it easily outranks the Medical Council. Here we have an instance of directors of a listed company approving a loan of HK$100 million to the relatives of one of them so that those relatives could play the stock market more actively and when that trading went sour and it all came to light, the penalty the exchange imposed was effectively a whimper. Where is that legislative committee? Let us be frank about it. A notice of censure does not mean much. Doctors may find their livelihood severely affected if any hint of malpractice attaches to them but we have plenty of cases in the market of directors who were censured and continued to do business as ever before. It is particularly so when the notice of censure comes only in the form of an advertisement of dense wording tucked into the bottom of an inside page of the business section of a newspaper. Did you see it on page 2 yesterday? I make a practice of reading the newspaper closely but my eyes tend to glaze over when ploughing through the myriad notices and I missed it on this occasion. It took a friend to alert me and even that friend did not pick it up on first reading although being aware of the investigation and waiting for the results. The exchange as a private profit-making entity responsible to its shareholders is not in a position to regulate itself. The entirety of that job should long ago have been passed to the Securities and Futures Commission. This incident only serves to make the point again. Any talk of corporate governance is entirely idle if the penalties for breaching standards of corporate governance are so paltry. This Mansion House case needs to be taken a good deal further and it should now be taken out of the hands of the stock exchange.