Adviser for troubled Octopus firm
Operator to provide auditor's report on add-value EPS service
The Hong Kong Monetary Authority has appointed an independent business management expert to advise Octopus Cards Limited following reports of wrongful deductions from the bank accounts of Octopus smartcard holders.
The authority said in a news release yesterday that it had appointed Chinese University business administration professor Andrew Chan Chi-fai under the Banking Ordinance to the advisory role. It had also required Octopus to provide an independent auditor's report on its operation of add-value services.
Last Friday, Octopus reported that there were 571 failed add-value EPS transactions involving its Octopus cards at MTR and KCRC rail stations, involving HK$142,400. It later reported that were more incidents, including one in which money was wrongfully deducted from a cardholder's bank account using an add-value machine at a shopping mall in Mong Kok.
According to the Monetary Authority, Octopus thought that the problems were associated with an upgrade in December of its operating system. But yesterday it said that there had been other incidents before the 571 cases reported by Prudence Chan Bik-wah, chief executive of Octopus Holdings. On Friday, Ms Chan apologised to cardholders and said they would be refunded within a week.
Octopus Holdings is owned by Hong Kong's major bus and rail companies and, through Octopus Cards, operates a form of electronic currency that it describes as 'the world's leading contactless smartcard payment system'.
The Monetary Authority said yesterday that Professor Chan, who is also chairman of the Hong Kong Deposit Protection Board, would advise Octopus Holdings on the management of its affairs, business and property, including but not limited to the charging and add-value transaction processes.
A Monetary Authority spokesman said last night that although the problem appeared to be restricted to only a limited number of EPS add-value transactions, it had been decided to call for an independent review of Octopus's operations and the appointment of an adviser to ensure cardholders' interest were safeguarded.
In response to the authority's announcement, Octopus' sales and marketing director, Cindy Cheng, said the company would co-operate fully with both Professor Chan and any independent audit. She denied that there had been cover-up involving wrongful EPS transactions before the December system upgrade.
Octopus has suspended until further notice all its add-value EPS services, after first suspending only those at rail stations.
Democratic Party lawmaker Andrew Cheng Kar-foo, who chairs the Legco transport panel, welcomed Professor Chan's appointment.
'Confidence and credibility are important elements for an electronic currency,' Mr Cheng said.