20 Feb 2009
Paggie Leung
Secretary for Financial Services and the Treasury Chan Ka-keung is expected to face tough questions over policies and regulation of financial products today when he makes his first appearance at the Legco subcommittee investigating the Lehman Brothers minibonds fiasco.
Professor Chan, who will be the first to face the 22-member subcommittee set up to study issues arising from Lehman Brothers-related products, will attend a three-hour open hearing from 10am.
The chairman of the subcommittee, Raymond Ho Chung-tai, said yesterday that questions would focus mainly on the government's regulatory framework for structured financial products and dealings in securities, the sale of minibonds, and its policies on investor protection.
"The minister will be accompanied by a legal adviser - Department of Justice deputy law officer Cathy Wong Pui-ming - and Cheng Yan-chee, deputy secretary for financial services and the treasury," Dr Ho said. A written statement that had already been submitted by Professor Chan would be made public after the secretary confirmed it as evidence.
Peter Chan Kwong-yue, chairman of Allied Victims of Lehman Products, hoped the investigation would force the government to take responsibility for its role in the debacle. "Until now, the government has not shown accountability," he said. "Why were all these high-risk derivatives allowed to be marketed and sold as low-risk financial products?"
Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt in September 2008. Minibonds are not corporate bonds, but consist of high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies.
Mr Chan said the chief executive and the financial secretary, who urged banks to buy back all the minibonds, should also be summoned.
Professor Chan's deputy, Julia Leung Fung-yee, and the heads of the Monetary Authority and the Securities and Futures Commission will also testify. Witnesses will testify under oath.
Professor Chan, who will be the first to face the 22-member subcommittee set up to study issues arising from Lehman Brothers-related products, will attend a three-hour open hearing from 10am.
The chairman of the subcommittee, Raymond Ho Chung-tai, said yesterday that questions would focus mainly on the government's regulatory framework for structured financial products and dealings in securities, the sale of minibonds, and its policies on investor protection.
"The minister will be accompanied by a legal adviser - Department of Justice deputy law officer Cathy Wong Pui-ming - and Cheng Yan-chee, deputy secretary for financial services and the treasury," Dr Ho said. A written statement that had already been submitted by Professor Chan would be made public after the secretary confirmed it as evidence.
Peter Chan Kwong-yue, chairman of Allied Victims of Lehman Products, hoped the investigation would force the government to take responsibility for its role in the debacle. "Until now, the government has not shown accountability," he said. "Why were all these high-risk derivatives allowed to be marketed and sold as low-risk financial products?"
Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt in September 2008. Minibonds are not corporate bonds, but consist of high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies.
Mr Chan said the chief executive and the financial secretary, who urged banks to buy back all the minibonds, should also be summoned.
Professor Chan's deputy, Julia Leung Fung-yee, and the heads of the Monetary Authority and the Securities and Futures Commission will also testify. Witnesses will testify under oath.