XN000022-1983-08-10 — Page 4

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WEDNESDAY, AUGUST 10, 1983

IT WILL BE THE DUTY OF ANYONE WHO POSSESSES RELEVANT INFORMATION, TO COOPERATE WITH THE INVESTIGATION.

+THE SCOPE OF SUCH AN INVESTIGATION IS THUS CONSIDERABLY WIDER THAN THAT OF ANY EXAMINATION WHICH THE COMMISSIONER IS PERMITTED TO UNDERTAKE, SINCE THE COMMISSIONER IS CONFINED TO EXAMINING AN EXISTING DTC AND ONLY ITS PERSONNEL, SIR JOHN EXPLAINED.

AT THE SAME TIME, A +MODEST BUT IMPORTANT+ RELAXATION OF THE SECRECY PROVISION WAS BEING MADE TO PERMIT THE DISCLOSURE OF INFORMATION IN THE CIRCUMSTANCES OF CRIMINAL INVESTIGATIONS OR PROCEEDINGS, OR TO THE FINANCIAL SECRETARY IN PARTICULAR INSTANCES, SIR JOHN SAID.

+1 MUST EMPHASISE THAT THIS RELAXATION IS LIMITED TO WHAT 1 CONSIDER TO BE ABSOLUTELY ESSENTIAL FOR THE PROPER INVESTIGATION OF OFFENCES AND THE EXECUTION OF OUR RESPONSIBILITIES TO DEPOSITORS.

+IN GENERAL, DTC'S AND THEIR CUSTOMERS CAN REST ASSURED THAT THE CONFIDENTIALITY OF THEIR DEALINGS WILL CONTINUE TO BE ZEALOUSLY SAFEGUARDED, HE STRESSED.

ANOTHER NEW PROPOSAL IS THAT AN AUDITOR SHOULD REPORT TO THE COMMISSIONER IF, IN THE COURSE OF HIS DUTIES AS AUDITOR, HE BECOMES AWARE OF ANYTHING WHICH MAY ADVERSELY AFFECT THE FINANCIAL POSITION OF THE DTC TO A MATERIAL EXTENT, OR IF HE DISCOVERS CONTRAVENTIONS OF CERTAIN AREAS OF THE ORDINANCE.

HE NOTED THAT HE WAS AWARE THE ACCOUNTANCY PROFESSION HAD RESERVATIONS ABOUT THIS PROPOSAL.

+I WELL UNDERSTAND THEIR PREFERENCE FOR THEIR DUTY REMAINING SOLELY TO THE SHAREHOLDERS WHO APPOINT THEM.

+BUT I REALLY CANNOT ACCEPT THAT THIS MODEST REQUIREMENT, BASED ON EXISTING PRECEDENT AND AIMED AT ACHIEVING THE TIMELY REPORTING OF PROBLEMS, PARTICULARLY ONES THAT MAY HAVE ARISEN SINCE THE COMMISSIONER'S EXAMINERS WERE LAST LOOKING AT THE COMPANY, WILL IMPOSE A SIGNIFICANT BURDEN ON AN AUDITOR.

+MOREOVER, IT IS DIFFICULT TO ACCEPT THAT TIMELY REPORTING TO THE COMMISSIONER IS LIKELY TO BE CONTRARY TO THE INTERESTS OF THE MAJORITY OF SHAREHOLDER,+ SIR JOHN SAID.

THE PROVISION, HE ADDED, WAS +SURELY IN THE INTERESTS OF THE COMMUNITY+.

AS FOR THE BANKING (AMENDMENT) BILL, IT +MERELY INCORPORATES THOSE PROVISIONS OF THE DTC (AMENDMENT) BILL WHICH IT SEEMS APPROPRIATE TO APPLY ALSO TO BANKS+, SIR JOHN SAID.

THESE INCLUDED CLARIFICATION AND MODEST TIGHTENING+ OF CERTAIN LIMITATIONS ON LENDING, THE PROVISION FOR AN INSPECTOR TO BE APPOINTED TO CONDUCT AN INVESTIGATION, ESSENTIAL BUT VERY LIMITED+ EASING OF THE SECRECY RULES AND THE SAME PROPOSAL REGARDING AUDITORS, HE ADDED.

DEBATE ON THE BILLS WAS ADJOURNED TO OCTOBER 12.

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