Report on the Lehman-related Securities (4)

(1. Introduction ....... continued)

There is evidence showing that from 2003 to 2008 the HKMA had kept on asking the banks
to adhere to the codes, presumably without any sign of success despite repeated attempts year
after year. No regulator can perform its statutory duties by exhortation alone. We have no
reason to believe that the HKMA has ever been so hamstrung during the material time as to
render it impotent to police the banks. This being the case, one cannot help wondering why
HKMA should tolerate the banks to indulge in malpractices inclusive of taking no heed of the
warnings from the regulator. Hong Kong has a shameful history of pervasive corruption on a
massive scale. We should not entertain the implausible and groundless assertion of the
HKMA that it has performed its duties diligently. Deeds usually speak louder than words, and
this is truer in law enforcement than in other circumstances. The fact that HKMA is incapable
of moving beyond mere words speaks volume of the insincerity of its statements.

More in-depth analysis on the responsibilities of the HKMA and SFC in the scam will appear
in the pages to follow. In Chapter II, the ‘piggybacked structure’ will be explained in greater
detail in order to prepare the uninitiated for the following two chapters where the crucial
questions relating to the total regulatory failure will be discussed.

In sum, the Lehman-related securities are not caused by the recent credit market crisis, or the
‘mis-selling’, or the design of the ‘piggybacked structure’ alone. Rather it is the banks
implicated in the scam together with the ‘regulatory capture’ that bring about the tens of
thousands of tragic stories of the victims. Looking further afield, one could justifiably say
that the scam is symptomatic of the socio-political malaises that enable the banks to disregard
the regulators, and in turn the regulators to disregard the public. What is outrageous is not
only that the regulators failed in their statutory duties over the last few years, but also their
persistent refusal to respond to reasonable requests, whether they are for information or
action, from the victims of this scam. These are the grounds on which we found our
accusation of abdication against these two bodies.

Extract From: "Exposure - the Truth About Lehman-HSBC Fraud"