Chan under pressure to resign over flats scandal

PUBLISHED : Tuesday, 07 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 11:07pm


Pressure mounted on Secretary for Development Paul Chan Mo-po yesterday to step down after he backtracked on earlier statements that he knew nothing about illegally subdivided flats owned by a company controlled by his wife.

Candidates for next month's Legislative Council elections said it was no longer appropriate for Chan to stay as head of a bureau that supervises buildings and he should resign as soon as possible.

This followed a dramatic midnight response by Chan to weekend media reports that sub-leasing had been part of sales agreements for three blocks of flats bought by Harvest Charm Development at a time when he and wife Frieda Hui Po-ming were both directors.

Hui - the nominal controlling shareholder of the company - was also found to have sold a flat with sublease contract in 2009, implying the couple should have known about the unauthorised division of the flats.

It contradicted their earlier comments that neither knew about the rental arrangements and raised questions about Chan's integrity in the latest blow to scandal-plagued Chief Executive Leung Chun-ying's efforts to regain public trust.

Urged by Executive Council convenor Lam Woon-kwong to give a full account on Sunday, Chan responded by issuing a statement at 11.59pm that day - bringing fresh accusations that he had timed the statement to attract the least media attention.

He said that when he said he had 'no knowledge', he meant he did not know the 'present situations', adding that the flats, bought in Tai Kok Tsui between 1994 and 1996, were a long-term investment and rental income was secondary.

He has also pledged that during his tenure as minister neither he nor his wife will invest in property except for personal use.

Election candidates including James Tien Pei-chun and Miriam Lau Kin-yee from the pro-government Liberal Party, did not accept his explanation and urged him to step down.

'Subdivided flats are directly under him in his portfolio, but Chan had a well-planned business model to run the subdivided flats,' Tien said.

'Worse still ... it is an integrity issue because he said earlier that it was none of his business but [on Sunday] he admitted it himself, so it is no longer appropriate for Chan to stay.'

He added that Chan's continued presence would hamstring the bureau's work.

Lau said she also believed Chan should step down, 'because it will be hard for him to move on'.

Two pan-democratic candidates joined in the calls for Chan's resignation. Democratic Party chairman Albert Ho Chun-yan said that without a clear explanation that could convince the public Chan had not lied, 'the only way ahead for him is the way out'.

Independent Pamela Peck Wan-kam said: 'It would be best if Chan resigned as soon as possible.'

Ho and Peck are among candidates for the five newly created district council 'super seats', which will be decided by a citywide ballot of the 3.2 million voters who do not have a vote in any other functional constituency.

Other super-seat candidates who called on Chan to give a full public explanation included Lau Kong-wah and Starry Lee Wai-king from the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), as well as Beijing-loyalist Federation of Trade Unions' (FTU) heavyweight Chan Yuen-han.

But they sidestepped questions on whether the minister should quit.

The Hong Kong Journalists Association slammed Chan for limiting press reaction by releasing his statement at a time when most newspapers had passed their deadlines.

Despite the calls, acting chief executive Carrie Lam Cheng Yuet-ngor remained tight-lipped on the issue.

'That is not something I need to handle at the moment,' said Lam, who was busy explaining the government's late handling of an environmental hazard caused by Severe Typhoon Vicente.

Chief Executive Leung Chun-ying is on holiday.

Political analyst Sung Lap-kung warned that any further delay in coming clean would put the whole government in a credibility crisis and further reduce the chance of having the government's restructuring plan - under which Chan was tipped to be the deputy financial secretary - passed by lawmakers.

Flat-out confusion

July 30 Paul Chan appointed development secretary

July 31 Apple Daily reports that an empty flat in Tai Kok Tsui, in which Chan's wife, Frieda Hui Po-ming, has an interest, was subdivided without authorisation. She was a director of the company that owns the flat, Harvest Charm Development (HCD).

Aug 1 Apple Daily reports that Hui owns two other flats with illegal subdivisions, in Tai Kok Tsui and Jordan. It questions whether Hui evaded tax by understating the selling price.

Chan says HCD was owned by his wife and her family and that he resigned as a director in 1997. Hui says she didn't know the rental details, while Wu Ho-yin, the principal tenant of the two flats, said the subdivisions were his work.

Aug 2 Ming Pao reports a fire safety route is blocked at the Jordan flat.

Aug 3 News reports say Hui is the sole owner of Orient Express Holdings, the major shareholder of HCD. Her signature appears on a 2009 land rent agreement for the Jordan flat, showing she was involved in the property's management.

Chan denies his wife is a controlling shareholder, saying she planned to sell all her shares in the company. Husband and wife deny any knowledge of rental details.

Hui - contrary to her previous statement that the firm was a family business - says she is not a controlling shareholder, although nominally she was.

Aug 4 News reports say the Tai Tsui flat was already subdivided when HCD bought it in 1994 - when Chan was still a director. Hui reportedly sold a flat with a rental contract in 2009, strongly suggesting she knew it was subdivided.

Aug 5 News reports say five out of 10 flats owned by HCD in 1994-1996 were subdivided, so Chan might have known about them.

Chan releases a statement at 11.59pm qualifying his earlier remark that he had 'no knowledge' of illegal subdivisions in two of the properties. He had meant to say he did not know about their 'present situations'. He vows that he and his wife will not invest in property during his tenure as secretary, except for personal use.