Watchdog thinks $20m is in bag for Lehman fund

Phila Siu
Tuesday, August 25, 2009

The Consumer Council is confident it will get HK$20 million from the government to beef up its litigation fund as it prepares to take its first Lehman Brothers minibond case to court. The extra cash will increase its litigation fund to HK$35 million.
Chief executive Connie Lau Yin- hing said the Consumer Legal Action Fund will also be used for other litigation.

The first minibond case seeks to recover HK$500,000, but the council declined to name the bank involved and would not provide any information about the investor.
The council has received 11,919 minibond complaints so far and resolved 1,169 cases.

Lau said 20 cases were originally ready to proceed to litigation, but were settled out of court. She said the extra HK$20 million is needed because more cases will emerge if the test case is satisfactory. "Feedback from the government about the application is very positive. We are waiting for the approval," Lau said.

She said looking for a suitable lawyer took some time because many have connections with the big banks, and were not willing to represent the minibond investors.
The first case to go to court had to be carefully chosen because it has to be representative of most cases.

She also said staff have been working around the clock because getting the required documents from banks took a long time. "There are constraints, we cannot force the banks to give us the documents and information we need," she said.

But legislator Kam Nai-wai did not accept Lau's reason for the delay. He said the council's slow reaction has given the public the impression that the council is a toothless tiger.

"The council should have applied for funds long ago. It should have known Chief Executive Donald Tsang Yam- kuen has promised the government will do everything it can to help the minibond investors," Kam said. But he said he knew getting the documents from banks can be a headache as he had dealt with many angry investors.