MTR saga highlights governance and accountability issues
Events at the MTR are becoming increasingly curious. In May, shortly after we were told about the delay to the cross border express rail project, it was announced that MTR CEO Jay Walder would not renew his contract, but MTR chairman Raymond Chien Kuo-fung said the decision was made last year and was not related to Walder's handling of the express rail project.
At Wednesday's meeting when the MTR announced the findings of its internal enquiry it was also revealed that Walder would be leaving next month and Chien again added the phoney assurance that his departure had nothing to do with the report. Clearly Walder's departure has everything to do with the report. Wednesday's announcement was an exercise in damage limitation.
First the timing of the meeting was not insignificant, coming a few days after the Legislative Council session which meant the government and the MTR weren't subject to critical headline grabbing blasts from that direction. Blame was restricted to the two figures that had already been singled out, Walder and project director Chew Tai-chong. The hope is that by making Walder the principal fall guy, this will deflect attention from the Secretary for Housing and Transport, Professor Anthony Cheung Bing-leung, and Walder presumably will be well paid to do so. Cheung does not come out of this affair with any distinction.
When the delay to the cross border express was announced on Tuesday, April 15, his initial reaction was, "I was totally caught by surprise," adding that he had only heard of the delay a few days earlier. But documents were subsequently leaked showing that his bureau was aware of the delays in November, and exposed Cheung for being, shall we say, conservative with the truth.
However, the government does not want another high-profile departure from its ranks so is hanging on to him. But clearly the government's oversight for the project has been abject and even when it did learn about the delays it chose to keep quiet. This, as our colleague Jake van der Kamp has noted, raises governance questions since it is a publicly listed company and is supposed to announce sensitive information to the stock exchange and thus to the holders of its stock. This matter appears to have been brushed under the carpet. Clearly the MTR has been overstretched and has taken on too many projects at once.
It would be interesting to know its response when the government first discussed embarking on the high speed rail project. The Hong Kong government was directed to build it by the central government, but who determined the completion deadline - the government or the railway? How should minority shareholders feel about having politically defined projects thrust on the company? The MTR has become a political football ever since its partial privatisation in October 2000.
The then financial secretary, Donald Tsang Yam-kuen was looking to realise HK$30 billion from the sale of part of its stake in two tranches, in order to fill a gaping budget deficit of about HK$40 billion. In any event, one tranche was sold for HK$10 billion. The merger with the Kowloon Canton Railway in 2006 was made for political rather than economic reasons.
The upshot is that the MTR now is neither fish nor fowl. Despite being a listed company it doesn't have the freedom to operate in the best interests of its shareholders. It is neither accountable to its shareholders, and because it has a board that is largely appointed by the government, it doesn't - as events have shown - appear to have a handle on what is happening within the company.
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