1985 — Page 109

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HONG KONG URBAN COUNCIL

CHAIRMAN (in English):---The meeting is called to order. The debate on the Statement of Aims for 1986 which was adjourned from Tuesday's meeting will

now resume.

MR. L. H. KWAN (in Cantonese):—Mr. Chairman, in the three years that I have been working in an Urban Council Ward Office, I have assisted in more than 2000 cases which include complaints from hawkers and complaints about liquor vendors, indecent establishments, estate management, housing, the law and environmental hygiene etc. Most of the cases have been solved and I would like to take this opportunity of thanking the government departments concerned.

Five of the cases involved complaints about deposit-taking companies and of these complaints, 103 involved the collapse of the Current Finance Ltd.; 13, the America and Panana Finance Ltd.; and 2, the Advanced Finance Ltd., all of which were registered deposit-taking companies.

Following the Hang Lung Bank affair in mid-June 1983, there came another incident in July last year---the Overseas Trust Bank debacle. Consequently, I received a complaint jointly signed by 631 people and directed against the former directors of the Bank, the Banking Commission, the Securities Commission and the Financial Secretary who is in charge of banking and financial affairs in Hong Kong.

These deposit-taking companies which collapsed in 1982 and 1983 had something in common: improper management and inadequate monitoring. The Hang Lung Bank affair in 1983 and the Overseas Trust Bank debacle in 1985 were due to the same reasons. Hence the complaints by the public of improper management and inadequate monitoring of the banks.

The money involved in the collapse of the deposit-taking companies in 1982 amounted to about $10 million. The number of victims varied from dozens to one or two hundred. The Overseas Trust Bank debacle affected the whole economy of Hong Kong. The latest report has it that the money involved exceeded $2 billion. The victims are the former small share-holders of the bank. It is believed the Government will draw $2 to $3 billion from its tax earnings or reserves to assist the Overseas Trust Bank.

At present, we have separate ordinances (Chapters 328 and 155) governing the monitoring of deposit-taking companies and banks. But the contents of the two ordinances are more or less the same. The officers involved are of the same office, whose Chief holds the dual post of Commissioner of Banking and Commissioner of deposit-taking companies.

Since 1982, the Commission of Banking and of Deposit-taking Companies has never issued a comprehensive report on the aftermath of the collapse of the banks and finance companies in Hong Kong, the result of its investigations, nor the effects on Hong Kong's economy consequent on the collapse of these undertakings.

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An enlightened government should provide the public with a proper account

of the situation.

I shall avail myself of the opportunity, on behalf of the 631 former small share-holders of the Overseas Trust Bank and the innocent public who have paid $2 to $3 billion to boost the funds of the bank, to demand the Central Government to revise its policy on banking and on deposit-taking companies, and inquire into any negligence in monitoring. The Central Government should also explain the situation to the public and assure them of the soundness of Hong Kong's financial system.

Lastly, I would like to reflect to the Government the following wishes of the

public:--

(1) that the small share-holders do not desire to see the current Financial

Secretary continue at his post;

(2) that the new Financial Secretary, after taking office, will reform Hong

Kong's banking and financial systems.

Mr. Chairman, with these remarks, I support your motion.

(Messrs. LEE Chik-yuet and Augustine S. K. CHUNG arrived at this point-2.33 p.m.)

MR. JOSEPH Y. S. CHAN (in Cantonese):—Mr. Chairman, I would like to discuss today the following four issues:

(i) Financial condition of the Urban Council;

(ii) The U.S.D. taking over the cleansing of streets, and management of markets, street traders and parks in housing estates of the Housing Department;

(iii) Consultation on market and street trader policies; (iv) Development of library services.

The first issue I would like to talk about is our financial condition. The Council has been troubled since 1981 by a succession of budget deficits, with the reserves dropping at one time to a level which is just enough to cover Council expenditure for seven weeks. Despite the fact that we expect a surplus of over $26 million next year due to an increase in rates, the shadow of deficits still looms before us. Worsening of financial condition will ultimately affect services provided by the Council and may lead to large increases in rates. The Council should therefore try hard to increase revenue and reduce expenditure, so as to maintain its services without increasing the burden on the public.

To improve our financial condition, I have five suggestions:—

(1) Donations to the Council or its performing companies should be exempt from tax. Let us look at the Hong Kong Philharmonic Orchestra which spends quite a lot every year. It does not belong to the Council but we help making good its deficits. The exemption arrangement will encour- age people to donate to the Orchestra. When the Orchestra does not