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FRIDAY, JUNE 7, 1985
NOW THIS QUESTION OF INSOLVENCY, COMPENSATION FUNDS AND DEPOSIT INSURANCE, IS NOT QUITE SO EASY AS IT SOUNDS. I THINK MR CHAM, WHO'S EXTREMELY KNOWLEDGEABLE IN THIS AREA, KNOWS THAT WHILE THERE MAY BE SQUABBLES AMONG ALL THE BANKS IN HONG KONG, THERE IS NO SQUABBLE SO BITTER OR DEEP-SEATED AS THAT BETWEEN THOSE WHO WANT DEPOSIT INSURANCE AND THOSE WHO DO NOT. THERE TENDS TO BE AN ARGUMENT, OF COURSE, BETWEEN THE BIG AND THE POWERFUL AND THE SMALL AND NOT SO POWERFUL, BECAUSE SUCH INSURANCE WOULD NORMALLY NOT BE PAID TO THE SMALL BUT BE PAID TO THE BIG. AND THE BIG, WITH SOME REASON, THINK THAT A SYSTEM OF INSURANCE OF THIS NATURE MIGHT PERSUADE THE SMALLER BANKS TO BE EVEN LESS PRUDENT THAN THEY ARE NOW, TO BE PERHAPS, A LITTLE UNWISE AND OFFERING TOO HIGH DEPOSIT RATES, TO TAKE RISKS BECAUSE THEY KNOW THAT DEPOSITS WERE INSURED.
NOW, I AM NOT FOR A MINUTE ACCEPTING THAT ARGUMENT.
ALL I AM SAYING IS THAT THERE ARE TWO ARGUMENTS. AND I THINK YOU ALL KNOW THAT THE COMMISSIONER OF BANKING IS SET, WITH THE GOVERNMENT, ON IMPROVING THE WHOLE SUPERVISORY LEGISLATION. ONE OF THE AREAS IN WHICH HE IS LOOKING IS THIS QUESTION OF DEPOSIT INSURANCE AND DON'T THINK IT WOULD BE SENSIBLE FOR ME TO PROCEED ANY FURTHER IN THESE COMMENTS BECAUSE WE HAVEN'T FINISHED EXAMINING THE ARGUMENTS ON BOTH SIDES. BUT THAT THERE ARE ARGUMENTS ON BOTH SIDES, I'M AFRAID WE MUST ACCEPT.
MR CARL TONG AS AN EXPERIENCED CHARTERED ACCOUNTANT ASKS A SERIES OF VERY DIFFICULT QUESTIONS. HE WILL NOT EXPECT ME TO ANSWER THEM. ALL I CAN SAY IS THAT I AM PERHAPS MORE DISTRESSED THAN HE IS. I AGREE IN AN IDEAL WORLD WE WOULD HAVE SPOTTED THIS TROUBLE EARLIER. I AGREE THERE SHOULD HAVE BEEN TELL-TALE SIGNS, BUT IF I MAY REMIND HIM OF WHAT I SAID IN MY SPEECH, WE'RE NOT TALKING SO MUCH, IN FACT WE'RE NOT TALKING AT ALL, ABOUT MANAGEMENT INADEQUACY: WE'RE TALKING HERE ABOUT A MANAGEMENT THAT SEEMED TO US DELIBERATELY TO SET OUT ON A SERIES OF ABSOLUTELY TOTALLY DISGRACEFUL CRIMINAL ACTIONS.
I DON'T SEE HOW YOU CAN CATCH THEM WHEN THEY'RE BEING DONE- YOU CATCH THEM AFTERWARDS. THERE MUST BE A DEGREE OF TRUST, GIVEN BY THE GOVERNMENT, BY THE COMMUNITY IN SENIOR OFFICERS OF BANKS, AND IF YOU'RE A VERY SENIOR OFFICER OF A VERY BIG BANK AND YOU'VE GOT THERE DESPITE THE FACT THAT YOU'VE SHOWN CRIMINAL TENDENCIES, I'M AFRAID IT IS VERY POSSIBLE TO LEAVE HONG KONG AND DEPART FOR OTHER PLACES WHERE THERE ARE NO EXTRADITION TREATIES WITH HUNDREDS OF MILLIONS OF DOLLARS. THIS IS A FACT OF LIFE. I DON'T THINK IT HAPPENS VERY OFTEN. AS FAR AS WE KNOW, IT HAS HAPPENED ONLY TWICE IN HONG KONG, AND I CANNOT POSSIBLY GUARANTEE IT WON'T HAPPEN AGAIN.
/NOW, SIR
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