The Executive Council, which advises and assists the chief executive in policymaking, has the highest executive authority in Hong Kong. And because of its power, members are bound by the rules of confidentiality and collective responsibility. The conduct of each member affects not only the image and reputation of the council but also that of the government.
Earlier this week, Ming Pao reported that Exco member Lau Wong-fat had failed to disclose to the council that he had bought three houses in Yuen Long's Palm Springs in April through an investment company in which he holds a 40 per cent stake. The omission contravenes Exco's rule that members should declare any change in property ownership within 14 days.
More seriously, Lau bought 16 flats at Yoho Midtown, also in Yuen Long, through companies linked to him, either shortly before or on the day the government introduced policies to curb speculative activities to cool the overheated property market. The Palm Springs purchase was also initiated around the time of the announcement, on February 24. Some of these properties were sold in so-called confirmor transactions before the government made another announcement on August 13 to clamp down on the practice, in which a property is resold before the transaction is completed.
Not only is this a potential conflict of interest, it could be a possible case of abuse of public office.
The Exco rule of requiring members to declare all registrable interests is not legally binding. However, the rule clearly stipulates that members need to declare any change of property ownership within 14 days. It is therefore unreasonable to play with words to try to cover up a wrongdoing, whether deliberate or not.
It is unacceptable for Lau to try to defend himself by saying that a change of ownership means the transaction has to be completed with all payment cleared and does not include the signing of a sale agreement at the initial stage. He certainly shouldn't shirk his responsibility by blaming his staff for failing to report the matter.
Even though it could have been a genuine oversight, the act of using confirmor transactions as a sales tactic is, in itself, speculative behaviour, which is unbecoming of a member of Exco.
As an executive councillor, Lau has access to confidential inside information with regard to government housing policy. He shouldn't have allowed companies linked to him and his family to conduct property-related business activities around the time when sensitive policy announcements were made, and then reaped big profits.
Most of us remember the 'Lexusgate' scandal in 2003 in which former financial secretary Antony Leung Kam-chung was severely criticised after he bought a HK$790,000 Lexus just weeks before he raised the first-time tax for new vehicles in his budget. Leung eventually resigned amid mounting public pressure.
Lau's case is far more serious than just a personal oversight; it involves relatively large-scale speculative activities in property transactions and has dealt a serious blow to the government's credibility. Chief Executive Donald Tsang Yam-kuen must deal with this seriously and get to the bottom of the matter.
Exco members are the backbone of the government's inner circle of top advisers. Their credibility and reputation are vital. The public has high expectations and holds them accountable for their actions, expecting them to be whiter than white. The general perception is that the Tsang administration's hands are tied over many issues and policy matters. The chief executive must show he means business, especially in areas that concern the economy and people's livelihood.
More importantly, Tsang should clear the air by letting the public know whether Exco had recently discussed measures to crack down on property speculation and whether Lau was present in those sessions. Ultimately, Lau should resign in order to contain the damage.
Albert Cheng King-hon is a political commentator