Treasury forced to shoulder HK$22m losses

PUBLISHED : Tuesday, 02 January, 2007, 12:00am
UPDATED : Tuesday, 02 January, 2007, 12:00am

Final accounts include 12 cases of theft, fraud or negligence

The government was forced to write off debts and other losses or hand out compensation worth almost HK$22 million in the past financial year, according to Treasury Bureau records.

The amount covered bad debts, embezzlement of public funds by civil servants, cash losses from burglaries, overpayments and other unexplained cash losses, and the loss of property by police and other departments.

The government's final accounts for 2005-06, published late last year, listed a total of 12 cases involving five departments under the category 'losses of cash and valuables due to theft, fraud or negligence'. Some were unsettled cases carried forward from previous years, while four happened in the fiscal year ending March 2006.

For the fourth consecutive financial year, the Social Welfare Department overpaid social security to recipients, ranging from HK$88,724 to HK$2.1 million.

Police reported 137 cases involving bail money embezzled by staff last year, totalling HK$438,345. Six mobile phones worth a total of HK$14,910 that were being held by police during investigations were also reported missing during the year.

Over the past years, the loss by police and other disciplinary forces of prisoners' belongings or property being held during investigations saw the owners receive compensation of more than HK$1.4 million.

In 2005-06, the Leisure and Cultural Services Department wrote off HK$4,718 after cash was lost in a burglary. Separately, it reported that department cash was found to be HK$279,195 short, but the government's accounts gave no further explanation.

The largest amount of money written off in 2005-06 involved a debt of HK$17 million after a company hired to auction obsolete government supplies and confiscated goods failed to pay the proceeds to the government in 1998 and eventually folded.

The problem was only reported after the company's contract expired. A senior accounting officer was disciplined with a salary reduction for one year as a result. The government had to seek Legco approval in June 2005 to write off the debt.

Civic Party legislator Mandy Tam Heung-man, who represents the accounting sector in Legco, criticised the government for lacking stringent internal controls.

'Compared with the multi-billion-dollar government account, the losses might look like a small drop in the ocean but they reflect the culture of managing public funds,' she said. Ms Tam called for an urgent review of internal procedures to prevent further losses of public money.

A government spokesman said the Public Finance Ordinance empowered the financial secretary to write off losses of public money or stores without financial limit.

For cases involving fraud or negligence, however, the finance chief's power is limited to HK$500,000.

Financial and accounting regulations require controlling officers to report any fraud, theft or loss of public money and valuables, and include recommendations and steps to prevent similar deficiencies, the spokesman added.

Defending its overpayments, the Social Welfare Department said: 'It is unavoidable that overpayment will arise in cases of changes in circumstances that were not reported in time by the recipients.'

A spokeswoman said the department took seriously its duty to safeguard the public purse and would seek the recovery of overpayments in all cases.

'The write-off of overpayments will be considered only in cases where there is no prospect of recovery,' she said.