Bureau was warned about favouritism, inquiry told

PUBLISHED : Wednesday, 27 May, 2009, 12:00am
UPDATED : Wednesday, 27 May, 2009, 12:00am

A government bureau was cautioned against offering favours to developers over its handling of the sale of the Hunghom Peninsula housing estate in 2002, legislators heard yesterday.

The Financial Services and the Treasury Bureau advised the now defunct housing, planning and lands bureau that opening negotiations with the original developer of the former subsidised housing estate could lead to favouritism, legislator Lau Kong-wah said.

Mr Lau was referring to documents from the former bureau about the never-occupied estate that was left idle by the shelving of the government's Home Ownership Scheme.

He was speaking as the Legislative Council began the second stage of hearings in its inquiry into the post-retirement employment of former housing chief Leung Chin-man with New World China, a unit of property giant New World Development. Mr Lau challenged former deputy director of housing Marco Wu Moon-hoi over the bureau's insistence on pursing negotiations with the developer, despite the alarm raised by the Treasury.

Mr Wu said that at an internal meeting in August 2002, the bureau agreed to initiate negotiations with the developer to modify the lease conditions of the site, which involved payment of land premium, so that the developer could sell the flats on the open market.

'Given that the negotiation process was not made public, the Treasury at the time questioned if such a negotiation would result in offering privileges to one particular developer,' Mr Wu said.

'But we pointed out that there had been a long established mechanism determining a reasonable payment of land premium.'

Mr Wu said the option to negotiate with the developer could bring revenue for the government, adding that it was the most feasible among the three options being considered by the bureau at the time.

Some lawmakers suggested that the bureau chief at the time, current education minister Michael Suen Ming-yeung, and Mr Leung were involved in the negotiation of the payment of premium by the developer.

But Mr Wu said the Lands Department had carried out the negotiations and he believed the pair did not interfere in the process.

Mr Leung was heavily criticised when the government sold Hunghom Peninsula for barely half its asking price to a consortium including a New World subsidiary.

The inquiry will write to the developer next week, rejecting its request for a temporary adjournment of hearings featuring chairman Henry Cheng Kar-shun and executive director Stewart Leung Chi-kin.