Pledge by public servants

I visited the Parliament building of the provincial government of British Columbia. There was a display showing the pledge taken by the public servants. Some key elements of the pledge are:

1. To serve the people of British Columbia

2. To loyally obey the Government who are the elected representatives of the people

3. To serve the public interest over personal interest and avoid conflict of interest

4. To uphold confidentiality

This pledge recognises that it is the people who are supreme, and that the current Government is there only as the elected representatives of the people, and that the Government can be changed, if the people so desires.

It is quite refreshing to know that this is what democracy and legitimacy of Government really is.

Survey - social benefits and taxation

Do you prefer the state (i.e. Government) to provide less social benefits and reduce taxes, or to provide more social benefits (to be funded by higher taxes). Give your views in this survey.

Here are the survey results.

Running a business on sound principles

Lessons to be learned about operating a business on sound principles. Read this article.

SCMP:Authority suspected banks of mis-selling

The Monetary Authority suspected three banks of mis-selling credit-linked products before Lehman Brothers collapsed but did not check more banks or alert the public to its findings, its chief executive, Joseph Yam Chi-kwong, told a legislative inquiry yesterday.

There was "not sufficient information to show it was an industry-wide problem", he said.

Credit-linked derivatives, most of them minibonds issued or guaranteed by Lehman, lost much or all of their value after it collapsed last year amid the global financial crisis. Some 48,000 Hongkongers had invested HK$20 billion in such products.

Mr Yam said the authority set out to investigate 11 banks selling such products - including Lehman-linked ones - in February last year because of their high risks. But only four banks were investigated and that process was disrupted when Lehman Brothers collapsed.

Of the four, three were suspected of mis-selling, Mr Yam said. One has since been found guilty of misconduct in connection with the sale of credit-linked products; the other two are still under investigation.

Mr Yam said the inquiry last year identified problems with the way these banks' frontline staff explained to clients the nature of the products and their main risks, staff understanding of the products and staff management systems; and found sales documents were faulty and did not give detailed risk assessments for the products.

Lawmakers criticised the authority for not widening the investigation or alerting the public in time.

"There were about 20 banks selling Lehman products. Why did you not investigate all other banks immediately when you found three out of four problematic?" Ronny Tong Ka-wah of the Civic Party asked.

Independent Regina Ip Lau Suk-yee said: "What you identified in the probe were critical problems. If you had called a halt to such malpractice across the industry in time, and informed the public about that, you'd have saved many people."

Mr Yam said the authority did not have enough information at the time to show there was industry-wide malpractice. He also said the authority was investigating four complaints from bank staff about "oppressive" managements who based incentives solely on sales volume, regardless of any malpractice.

The authority considered having investigators pose as customers to check banks' sales practices, but did not do so since the Securities and Futures Commission did not use the practice and "we have to conform with their standards", Mr Yam said.