December 09, 2004

You are on the invidual archive page of The wrong investors. Click Simon World weblog for the main page.
The wrong investors

I almost spat my Cheerios across the kitchen this morning when I read this in the SCMP:

The Legislative Council commission has decided to invest up to HK$10 million in the Link - the Housing Authority's controversial real estate investment trust - because it believes the deal is a bargain...The 13 member commission, an independent statutory body that support's [sic] Legco's operations thruogh the council's secretariat, comprises legislators from various parties and is chaired by Legco President Rita Fan.

"Some legislators have repeatedly said the trust will be sold at a knockdown price. That means it will be a very good deal," she said.

With Legco's workload like to increase, the more the commission could on on investments the better services it could provide Legco members and the public, Mrs Fan said.

The commission has reserves of HK$160 million, three-quarters of it held in bank time-deposits with the balance invested in financial markets. Mrs Fan said it had been the establish practice for the comission to nivest in bonds with high stability and good returns.

It's hard to know where to begin. Let's set aside the sub-editor's over-fondness for apostrophes. There are a number of issues here, any one of which would normally be a scandal.

1. Why are legislators investing taxpayer money in the Link REIT? It is effectively paying itself. If normal practice, according to Rita Fan, is to invest in bonds, why suddenly invest in Link? Mrs. Fan says it is because Link has bought its assets cheaply. That's great for the IPO. It's not so great for the Government-owned Housing Authority that is selling the assets. Mrs. Fan is confirming the widely held view that the Housing Authority is selling these assets for below their fair value. That's a scandal.

2. Why does Legco have a financial reserve of HK$160 million? Normally running costs would be paid of out of revenue on an ongonig basis. Any money saved should be returned to those who paid it in the first place: the taxpayer. Giving Legco an investment fund make absolutely no sense. If extra funds are needed to provide better services, pay for them through the budget. That's a scandal.

3. Why are our esteemed Legco politicians investing any public money at all? There is a massive conflict of interest. If Legco must have a financial reserve it needs to be managed by an independent advisor at arms-length from the Legco. Having 12 legislators on the investment panel borders on unethical. That's a scandal.

Will we hear more about this? I doubt it. That's a scandal, too.

posted by Simon on 12.09.04 at 10:44 AM in the


TrackBack URL for this entry:

Send a manual trackback ping to this post.

Pixels are mightier than the pen
Excerpt: I've doubted the influence blogs can really have...until now. Yesterday I pointed out the scandalous proposed HK$10 million investment by the LegCo Commission in the Link REIT. Today in the SCMP:The Legco Commission yesterday dropped its plan to invest...
Weblog: Simon World
Tracked: December 10, 2004 09:10 AM


In the US the US government takes taxpayer's money and buys US government bonds and then the US government uses the money for general expenditures purposes.

It's called Social Security.

Not as egregious as this fraud, but along the same lines, just not as brazen (or is it just fraud with a better veil?).

We're from the government and we're here to help you...

posted by: kennycan on 12.09.04 at 11:40 AM [permalink]

Post a Comment:


Email Address:



Remember your info?