TR EMERITUS

From The Newsroom Team An online article on the Straits Times "Breaking News" section under "Top story" on 22 July 2009 had mysteriously disappeared. Entitled "HK banks agrees to compensate minibond investors up to 70% of their losses", it was an adaption of an original reuters article. (read article here) However, the article was not found anywhere in the same section. Instead, a shorter article from AFP was published in an obscure corner of the "Business' section. The news about the HK authorities pressurizing the HK FIs to compensate the investors surfaced as early as the beginning of July in the South China Morning Post. Nothing was reported in the local papers. The Straits Times published Minister of Trade and Industry Mr Lim Hng Kiang's statement defedning MAS's decision to impose a sales ban of credit-linked products on the FIs. Below are excerpts of Mr Lim's speech in Parliament: "I have previously set out in this House the regulatory regime for the offer and distribution of financial products in some detail and explained that our regime is in line with practices in other jurisdictions. So I will not set this out at length again.  However, let me respond on the specific issues raised." "However, MAS' reviews are not intended to, and cannot, replace the primary role of the Board and senior management of financial institutions to ensure that the controls and processes put in place to meet regulatory requirements are implemented robustly by all staff in all their dealings with customers, at all locations.  MAS does not, and cannot, micro-manage financial institutions in their operations, including the sale of structured products. " [Source: MAS] If MAS's regime is indeed in line with other jurisdictions such as Hong Kong, how can one explain the discrepancy in the way the two countries have handled the fiasco? In the absence of reports on Hong Kong's developments by the mainstream media, Singaporeans will not be able to make a fair and unbiased comparison and judge for themselves the adequacy of MAS's measures. Many will be misled to accept Mr Lim's assertation that MAS has done whatever it could within its jurisdiction short of forcing the FIs to compensate the investors. The deliberate news blackout on the HK buy-back scheme is another example of how state control of the media has enabled the ruling party to continue to masquerade itself as a "good" government in the eyes of the people. This piece of important news should have been highlighted and publicized by the Straits Times on the frontpage to attract the immediate attention of readers, Without any alternative voices in the country, the truth will never be known and Singaporeans will forever be blinded by the propaganda churned out daily by the state media to preserve the interests of the ruling party. Singaporeans should know about HK's compensation of their minibond holders which will inevitably lead them to ask why the Singapore FIs are given only a slap on their wrists by MAS.  Read More →

By Regina Leung from South China Morning Post The Securities and Futures Commission (SFC) said on Wednesday most minibond investors who suffered losses when Lehman Brothers went bankrupt, could recoup up to 70 per cent of their money. SFC chief executive Martin Wheatley announced on Wednesday that the commission had reached an agreement with the Hong Kong Monetary Authority and 16 banks. He said they had agreed to re-purchase Lehman Brothers minibonds from eligible investors in a scheme that will be implemented in two stages. During the first stage, the banks will re-purchase minibonds at a price equal to 60 per cent of the original principals for investors below the age of 65, or 70 per cent for those 65 or above. “Once the banks have received any money on the value of the collaterals, they would pay eligible investors an additional amount as a second-stage payment,’’ Mr Wheatley explained. “We believed it is a reasonable agreement and one [that is] in the public interest,” he added. HKMA deputy executive director Choi Yiu-kwan said he estimated the total compensation would total around HK$6.2 billion. But he said banks were still calculating the value of the Lehman Brothers’ collaterals. Mr Choi estimates about 29,000 investors would accept the compensation. He said the bank would inform investors soon. If they accept it, the banks will need to deposit the full amount of compensation into investors’ bank accounts. While Lehman Brothers investors met with the SFC on Wednesday afternoon, over 30 Lehman Brother investors launched a protest outside SFC headquarters. They demanded banks give them full compensation. In January, Sun Hung Kai Financial agreed to fully repay more than 310 clients the sum of HK$85 million. In April, KGI Asia fully repaid five investors their HK$1.6 million in investments. In June, the Bank of China (Hong Kong) said it would offer customers a 60 per cent buyback price, with an additional five per cent payable after Lehman’s liquidation. It is estimated about 48,000 Hongkongers lost at least HK$20 billion that they had invested in credit-linked derivatives, such as minibonds. This occurred atfer Lehman Brothers went bankrupt in September 2008. EDITORS' NOTE: The contrast cannot be clearer. The Hong Kong minibond investors will be compensated to up to 70% of their losses by the Financial Institutions while most Singapore investors will get none. Even then, 30 HK investors still protest outside the HK SFC headquarters to demand for full compensation! Had the Hong Kong government not stepped in and exert pressure on the FIs to compensate the investors, would they have done so? In Singapore, the FIs are under absolutely no pressure from the government to compensate the investors. MAS only imposed bans on the sales of credit-linked products ranging from 6 to 24 months. Minister for Trade and Industry Lim Hng Kiang proclaimed that the settlement was "fair and adequate". With no political competition, the ruling party can well afford sit on the sidelines and ignore the plight of the aggrieved investors without having to pay any price. That's why PM Lee is so enamored with a one party system because it makes life so easy for him and his party. It is the ideal system for the PAP, but not for Singaporeans. The minibond investors will not be treated so shabbily by the government if there is an alternative party in Parliament to fight for their rights as in the case of Hong Kong. The ruling party will be forced to make some concessions in order to not to lose votes in the next elections. What happened to the minibond holders may happen to us one day for we are at the complete mercy of the ruling party and its apparatus.  Read More →

From The Newsroom Team ex-NTUC INCOME CEO Mr Tan Kin Lian has launched another online petition, this time, to the Prime Minister on behalf of the minibond victims. (sign or read the petition here) Mr Tan made an impassionate appeal to the Prime Minister "to ask the Monetary Authority of Singapore and/or other relevant body to request the financial institutions to make a similar offer of compensation to the investors who are still pursuing their claims for compensation for being ill-advised and/or misrepresented on these products." He quoted the example of Hong Kong to buttress his case for the Singapore Financial Institutions to reach a general settlement with the minibond investors. Whereas Singapore's MAS has imposed only symbolic bans on the FIs to sell structured products ranging from 6 to 24 months,  the financial institutions in Hong Kong, who have sold similar products to the investors in Hong Kong under similar circumstances, are discussing with the regulators in Hong Kong to pay an immediate compensation of 60% of the invested sums and 40% of the proceeds of the investment on its maturity. In his latest blog post, Mr Tan wrote that he has sent an email to journalists of major papers to update them on the progress of the petition in the hope that they will write a report on it. However, he has yet to receive a reply from them. Mr Tan came into prominence last year when he organized a series of gatherings at Hong Lim Park to organize the aggrieved minibond investors in their quest to press for compensation from the FIs. He now holds the record for the most number of events held at the Speakers' Corner and for the largest turnout (estimated to be more than 1,000). In spite of his relentless efforts to seek justice for the minibond holders, the authorities were lukewarm in their responses. Three petitions sent to MAS Chairman Mr Goh Chok Tong last year did not receive even a reply. According to the petition, the investors were disappointed to see their request for compensation totally rejected by the financial institution, or to receive an unacceptably low offer, being less than 20% of the invested amount in most cases. It is highly unlikely that the Prime Minister will yield to public pressure and ask MAS to intervene in the dispute by mandating the FIs to compensate the investors. His father, the Minister Mentor had earlier encapsulated the government's stance on the matter when he chided the investors for "going in with their eyes wide open" thereby placing the responsibility for the loss solely on them. On the other hand, the Securities and Futures Commissions of Hong Kong cannot afford to treat the investors so shabbily as MAS did. Though Hong Kong is a Special Administrative Region of China, there is a strong opposition present in the Legislative Council to exert continued political pressure on the government to act in the interests of the investors. No such pressure exists in Singapore - the opposition has been mute on the fiasco so far. Besides, the affected Hong Kong investors will surely not accept being brushed aside by the FIs like that without any compensation. They will probably take to the streets and protest vehemently which will affect the image of Hong Kong as a financial centre. In Singapore, a law was passed recently to outlaw even a solo protest (except in Hong Lim Park). Singaporeans are too timid to voice their displeasure against the authorities openly. Given the all the papers in Singapore are controlled by the government, it is no surprise that no journalists will dare to publicize Tan Kin Lian's cause in defiance of the wishes of their political masters. Even if Tan Kin Lian were to organize another 10 protests at Hong Lim Park, it will make little difference as the matter is destined to be brushed under the carpets. The only solution left for the investors is to take the FIs to the (Singapore) courts and even then, the chances of them getting adequate compensation for the hassle are slim.  Read More →