HONG KONG - HONG Kong lawmakers slammed HSBC for helping to sell Lehman Brothers bonds in the Chinese territory, questioning if Europe's largest bank should have done more to protect local investors from products that may be worthless in the aftermath of the Wall Street firm's collapse.

More than 40,000 Hong Kongers bought Lehman-backed investment products through banks, with the total outstanding value of the products estimated at HK$20.2 billion (S$3.7 billion), according to the Hong Kong Monetary Authority, which is the territory's de facto central bank. The majority of the investments, about HK$12.6 billion, are so-called 'minibonds.'

Investors - among them retirees who invested their life savings - have complained that bank salespeople were misleading and failed to fully explain the product's connections to Lehman Brothers Holdings, which sought bankruptcy protection in September.

At a legislative hearing on Tuesday, legislators turned their attention to HSBC Holdings, one of the most respected banks in Hong Kong.

Lawmaker Abraham Shek said HSBC had 'betrayed' investors.

London-headquartered HSBC provided the directors for the company that was set up to issue the mini-bonds and the bank also served as the trustee that held the collateral that backed the investment products. Other Hong Kong banks, not HSBC, sold the mini-bonds to retail investors.

HSBC officials told the hearing that the bank wasn't involved in designing the minibonds and didn't have a responsibility to ensure their quality.

The company created to issue the bonds, known as a special purpose vehicle, was 'for all intents and purposes a creature of Lehman's design,' said Susan Sayers, deputy head of legal for the Hongkong and Shanghai Banking, HSBC's Hong Kong unit.

'It is not our responsibility as trustee to comment or have any view on the product that is being sold,' she said.

But legislators argued that HSBC bore more responsibility to the investors.

'You said you are not a designer of that scheme, but knowing that as a bank, an experienced bank, an international bank, you must be aware that this is a product that is an entrapment of people,' said Mr Shek.

'To society, you cannot really wash your hands of the entire matter ... You are the director,' said another legislator James To.

HSBC's Ms Sayers said Lehman Brothers had a high credit rating when the minibonds were sold and that the Hong Kong government had approved the products.

'None of us, unfortunately, had the benefit of foresight to know what terrible circumstances would happen,' she said. -- AP