PolyU sets up inquiry into HK$900m loss

PUBLISHED : Thursday, 11 March, 2010, 12:00am
UPDATED : Thursday, 11 March, 2010, 12:00am

Polytechnic University has set up an independent panel to review the operation of its commercial subsidiaries after 18 lawmakers asked the Audit Commission to look into the record deficit of HK$904 million it reported last year.

The publicly funded university last night named three members to scrutinise 22 subsidiaries, nine associate companies and seven jointly controlled entities.

The chairman will be Dr York Liao, head of Council for Accreditation of Academic and Vocational Qualifications and a council member of the University of Hong Kong. The other members are Andrew Lo, managing director of private equity firm China Renaissance Capital Investment, and veteran lawyer Vincent To, senior partner of W K To & Co Solicitors.

The panel will meet for the first time this month to review the operations of the 38 companies established by PolyU and is expected to report within three months.

It would place particular emphasis on the procedure for determining membership of the companies' boards of directors on which senior university managers and council members now sit, the university said. The panel would also look into investment decisions, management structure and financial control.

The decision came after a group of pan-democratic legislators called on Director of Audit Benjamin Tang Kwok-bun to investigate the university's finances. Citing an open letter written by a group of PolyU staff to university council chairwoman Marjorie Yang Mun-tak last week, they said the finances were chaotic.

In the letter, lecturer in applied social sciences Dr Fernando Cheung Chiu-hung and colleagues called on the council to investigate the 2008-09 deficit - largely caused by a HK$504 million loss on investments - and other matters including the university's dealings with its subsidiaries.

PolyU president Timothy Tong Wai-cheung said there was a need for the university to set up private companies to foster collaboration between industry and academia. 'I am confident the panel will be able to come up with valuable recommendations for our reference,' he said.

Issues raised by the staff included a loss of more than HK$25 million from PolyU Modern TCM Research Institute Ltd, a subsidiary the university founded in 2003 with four council members to develop and market traditional Chinese medicine. It was sold for HK$1.1 million.

Former university president Poon Chung-kwong, who retired in December 2008, said the inquiry would show that the actual loss on the company was not as large as reported.

'The accounts showed the loss to be more than HK$20 million,' he said. 'But in fact the university only put a sum of about HK$100,000 in the company. The remaining HK$20 million was the market value of the technology developed.'

Poon said he would also welcome any Audit Commission inquiry. 'This will give us justice. I have done nothing against my conscience and will welcome its investigation.'

Closer look

The number of companies established by PolyU that the panel will review: 38