Pledge by public servants

I visited the Parliament building of the provincial government of British Columbia. There was a display showing the pledge taken by the public servants. Some key elements of the pledge are:

1. To serve the people of British Columbia

2. To loyally obey the Government who are the elected representatives of the people

3. To serve the public interest over personal interest and avoid conflict of interest

4. To uphold confidentiality

This pledge recognises that it is the people who are supreme, and that the current Government is there only as the elected representatives of the people, and that the Government can be changed, if the people so desires.

It is quite refreshing to know that this is what democracy and legitimacy of Government really is.

Survey - social benefits and taxation

Do you prefer the state (i.e. Government) to provide less social benefits and reduce taxes, or to provide more social benefits (to be funded by higher taxes). Give your views in this survey.

Here are the survey results.

Running a business on sound principles

Lessons to be learned about operating a business on sound principles. Read this article.

SCMP:Authority suspected banks of mis-selling

The Monetary Authority suspected three banks of mis-selling credit-linked products before Lehman Brothers collapsed but did not check more banks or alert the public to its findings, its chief executive, Joseph Yam Chi-kwong, told a legislative inquiry yesterday.

There was "not sufficient information to show it was an industry-wide problem", he said.

Credit-linked derivatives, most of them minibonds issued or guaranteed by Lehman, lost much or all of their value after it collapsed last year amid the global financial crisis. Some 48,000 Hongkongers had invested HK$20 billion in such products.

Mr Yam said the authority set out to investigate 11 banks selling such products - including Lehman-linked ones - in February last year because of their high risks. But only four banks were investigated and that process was disrupted when Lehman Brothers collapsed.

Of the four, three were suspected of mis-selling, Mr Yam said. One has since been found guilty of misconduct in connection with the sale of credit-linked products; the other two are still under investigation.

Mr Yam said the inquiry last year identified problems with the way these banks' frontline staff explained to clients the nature of the products and their main risks, staff understanding of the products and staff management systems; and found sales documents were faulty and did not give detailed risk assessments for the products.

Lawmakers criticised the authority for not widening the investigation or alerting the public in time.

"There were about 20 banks selling Lehman products. Why did you not investigate all other banks immediately when you found three out of four problematic?" Ronny Tong Ka-wah of the Civic Party asked.

Independent Regina Ip Lau Suk-yee said: "What you identified in the probe were critical problems. If you had called a halt to such malpractice across the industry in time, and informed the public about that, you'd have saved many people."

Mr Yam said the authority did not have enough information at the time to show there was industry-wide malpractice. He also said the authority was investigating four complaints from bank staff about "oppressive" managements who based incentives solely on sales volume, regardless of any malpractice.

The authority considered having investigators pose as customers to check banks' sales practices, but did not do so since the Securities and Futures Commission did not use the practice and "we have to conform with their standards", Mr Yam said.

Second Lehman-backed catastrophe bond defaults

LONDON (Reuters) - A second Lehman Brothers-backed catastrophe bond is in default after issuer Ajax Re Ltd failed to repay principal in full at maturity, according to credit rating agencies.

The $100 million bond, issued in April 2007 to give Bermuda-based Aspen Insurance Holdings Ltd cover against losses from earthquakes in California, had been expected to default following the collapse of Lehman, its effective guarantor.

Credit rating agency Standard & Poor's said in a May 11 statement that it had lowered its rating on the bond to D, signifying default, and withdrawn the rating.

It said Ajax Re had paid all the interest due on the bond, "but the ultimate payment of principal was not made in full on May 8, 2008 due to a shortfall in the realizable value of the collateral assets under the TRS (total return swap)."

S&P had said a default was likely despite a timely payment of interest on March 16.

The deal is among four catastrophe bonds that used a unit of Lehman Brothers as TRS counterparty, contracted to ensure the collateral backing the bonds was sufficient to meet interest and principal repayments, and to make up any shortfall.

When the U.S. investment bank filed for bankruptcy on September 15, investors were left with direct exposure to market losses on the collateral assets, and the bonds were downgraded.

Another of the bonds, issued by Willow Re with Allstate Corp as ceding insurer, was already in default after Willow failed to make in full a February 2 interest payment.

Another rating agency, insurance specialist A.M. Best, also said it had downgraded the Ajax Re notes to "d" following the failure to fully repay the principal at redemption.

Insurers have used catastrophe bonds since the 1990s to manage their exposure to natural disasters such as hurricanes and earthquakes by transferring potential losses to investment funds. Investors receive a high rate of interest but risk losing part or all of their principal if a catastrophe occurs.

(Reporting by Catherine Evans; Editing by Simon Jessop)

British Columbia, Canada

In the province of British Columbia, Canada, there is a Vancouver City, Vancouver Island, Victoria City and Victoria Island. Here are some interesting facts:

> Vancouver City is not on Vancouver Island

> Victoria City is not on Victoria Island.

Victoria City (capital of British Columbia province) is on Vancouver Island and Vancouver City is on the mainland Canada. Victoria Island is not in British Columbia but is near the North Pole (quite far away).

Victoria Island is the largest island in North America and is bigger than Taiwan.

Photos from the Canadian Rockies

At a high point in Banff, overlooking the mountains of the Canadian Rockies.

You need a vehicle like this to travel in the glacier. The tourists uses a Snowmobile (like a bus with big wheels).

It is cold and windy at a glacier.