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CE's transcript

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Following is the transcript (English portion) of the meet-the-media session given by the Chief Executive, Mr Tung Chee Hwa, on the report of the Panel of Inquiry on the penny stocks incident at the Central Government Offices today (September 10):

Reporter: Mr Tung, this report identifies a number of faults and a number of errors by officials, what action, if any? Are you going to take any action against any officials as a result of this report?

Mr Tung: It is a very, very comprehensive report and it details the causes of what brought this thing about and the consequences of it, and made a series of very good suggestions. And all these suggestions we have accepted and the relevant government groups or the Stock Exchange and the Securities and Futures Commission will actually look into these areas of suggestions and make the necessary improvements.

I think the issue here is this, that the report details very carefully where the responsibility lies. For instance, the responsibility of policy direction, of the need for policy, it rests with the Financial Secretary and also it rests with Fred Ma. When it comes to the implementation of these policies, I don't know whether you know or not, when the Davison report was first designed the purpose was to keep the government away as much as possible from the market operations, so there was established a Securities Commission. The purpose is to get the government further away from getting involved in the market place, whether as a regulator or as a market operator. So the government's involvement is, in fact, in the area of general policy direction and policy issues, and the implementation is left with the Stock Exchange and also with the Securities and Futures Commission.

So this is how the report has presented itself and therefore the question is: are these policies the right policies. And I think we all agree that Hong Kong needs to move ahead in these areas in dealing with the penny stocks. And so it is in the areas of implementation where we have found faults, where we have found areas we can improve upon, and these are the areas that the report has made suggestions and we will try to follow through each of these suggestions. And these suggestions, of course, relate more so to the Securities and Futures Commission as well as the Stock Exchange.

Reporter: So what concrete action are you going to take now?

Mr Tung: Well, as I said earlier on, the important thing is that there are these suggestions being made and we are going to follow through totally on these suggestions to make sure that we move forward on the issue, and secondly that similar events will not happen again in the future.

End/Tuesday, September 10, 2002

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