Eight held over $190m tendering scam

PUBLISHED : Saturday, 16 September, 2000, 12:00am
UPDATED : Saturday, 16 September, 2000, 12:00am

The ICAC has arrested eight people in connection with a $190 million tendering racket involving 83 Housing Authority contracts since 1997.

Investigators from the Independent Commission Against Corruption said the scam targeted authority contracts worth a total of $470 million.

They said it involved nine companies supplying metal security grilles for flats that met and decided on a bogus 'lowest bid' before the end of the main contractor's tendering process. The other eight would submit bids higher than the bogus one.

The lowest bid was the normal price inflated by 60 per cent. On completion, the nine companies would share out the surplus after depositing it in the bank accounts of two shelf companies.

ICAC investigators said the 'major owners' of the seven suppliers and an employee of one of the companies were among those arrested. All those detained are suspected to have offered bribes to employees of various main contractors to help in the scam, understood to have started in April 1997. The eight, aged between 39 and 58, were expected to be released on bail last night.

The ICAC investigation began after an allegation that employees from different main contractors were receiving advantages to turn a blind eye to the racket.

Investigations showed that the companies allegedly agreed that when the 'surplus' in the bank accounts reached $4 million, the money would be taken out and shared, the ICAC said.

Between November 1997 and March this year, inquiries revealed they had successfully secured from main Housing Authority contractors 83 contracts worth $470 million.

Last night the Housing Department said it was co-operating with the ICAC and added that as of June this year, in a move to boost competitiveness, main contractors had been allowed to choose their own suppliers.

The spokesman declined to say if the additional costs the racket had placed on the main contractors had been passed on to the Housing Authority.

'No Housing Department staff have been arrested and we will examine whether disciplinary action should be imposed on any of the suppliers,' he said.

The ICAC investigation, which is continuing, follows a string of inquiries into housing projects, which brought about the eventual downfall of former authority chairwoman Rosanna Wong Yick-ming.

On July 3, main contractor Zen Pacific was permanently banned from authority piling and demolition projects for its role in a short-piling scandal involving blocks of flats in Sha Tin.

The same month, three employees of another piling contractor were charged in connection with substandard piling at a Housing Department project in Tung Chung.

The scandals led to a Legco vote of no confidence in Ms Wong and Director of Housing Tony Miller. Ms Wong resigned before the vote against her. Mr Miller remains in his position.