Tsang vows to get justice for minibonds investors
Bonnie Chen, Diana Leeand Beatrice Siu
Friday, October 17, 2008
Chief Executive Donald Tsang Yam- kuen has pledged to help those caught up in the Lehman Brothers minibond row get justice if any criminal or civil liability is identified.
"Officials found guilty of misconduct in handling the Lehman Brothers minibond saga will be punished but it is not an appropriate time to see who should be responsible - all efforts should be focused on tackling the matter," Tsang said in response to a question by financial services legislator Chim Pui- chung in the Legislative Council.
Much as he hopes litigation could be avoided, he promised to pursue cases to the end. "If cases are found to have criminal liability, we will follow up seriously," he said.
Banks involved in the case are expected to respond today to Tsang's ultimatum on a buyback proposal.
Also, the Hong Kong Association of Banks will announce the appointment of Ernst & Young to evaluate the value of all Lehman-related products, including minibonds and equity-linked notes, or ELNs. The ELN evaluation is expected to be completed next Friday.
Meanwhile, DBS Bank (Hong Kong) has reportedly settled with two clients. In one case, a man surnamed Chan said his 84-year-old mother and 50-year- old brother had bought HK$560,000 worth of ELNs from the bank.
Chan declined to disclose the amount of compensation but said the bank told his family that it was a capital preservation product that would have interest paid every three months. He said the bank staff admitted they realized his brother had a mental illness.
A spokeswoman for DBS Bank (Hong Kong), however, clarified that as of yesterday, "the bank has not made any settlements with any parties on the grounds of alleged mis-selling."
Tsang reiterated the administration will inject capital to the Consumer Legal Action Fund if necessary. "But I hope banks will not seek litigation. Reputation is an invaluable asset to banks. It will be shameful and troublesome to banks if they go to court and it is time-consuming too," he said.
Tsang rejected Chim's idea of setting up a special court to handle the Lehman saga as impractical. Neither did he accept Civic Party chairwoman Audrey Eu Yuet-mee's suggestion of settling the problem through arbitration.
Tsang said both parties had to agree on arbitration or the case will have to be handled by the court. The Hong Kong Monetary Authority, he said, will also set up a mediation group for this purpose.
Spokesmen for the Bank of East Asia, ABN Amro, ICBC (HK) and Dah Sing Bank said they are considering the buyout proposal.
Consumer Council chief Connie Lau Yin-hing declined to say whether the current HK$16 million litigation fund would be enough to help people caught up in the Lehman scandal. She also hoped the problem could be solved by mediation.
Up to yesterday, the council had received 1,702 complaints from investors, involving a total amount of HK$12
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