The Marine Department has found no evidence that former chief executive Donald Tsang Yam-kuen paid for a trip with his wife on a luxury yacht to Macau, despite Tsang's claims he did.
The finding comes a year after the incident came to light.
It was revealed that Tsang travelled on the yacht with tycoons, sparking an uproar that he appeared to be accepting favours from them.
Tsang, who is being investigated by the Independent Commission Against Corruption, said at the time that he had paid the yacht owner the price of a ferry ticket for the trip.
This brought claims that the boat owner and coxswain might have violated shipping law by accepted a fare on a pleasure vessel.
The department launched the investigation after receiving a complaint.
The department said yesterday its inquiry had found "no evidence … that any fare has been taken by the owner or the coxswain". It had interviewed both and found no violation of the law.
The case had been concluded, it said.
According to marine laws, a pleasure vessel should be used exclusively for pleasure purposes and should not be used for hire or reward.
Democratic Party lawmaker James To Kun-sun said the result was "expected". "The power of the department only allows it to ask the parties, but they have the right to maintain silent," he said.
"So why would the boat owner admit taking money? And Tsang might maintain his silence to protect his friend. This is the expected outcome."
Tsang was embroiled in a series of scandals before his term ended last year. He said last month that he turned down an invitation to join the Chinese People's Political Consultative Conference because he was being investigated by the ICAC.
He admitted he had enjoyed two holiday trips on private jets and two others on yachts during his years in office, but denied any conflict of interest.
The tycoons involved include Sing Tao News Corp chairman Charles Ho Tsu-kwok, mainland property tycoon Cheung Chung Kiu and managing director of Lifestyle International Holdings Thomas Lau Luen-hung.
Tsang has also admitted failing to declare his plans to lease a Shenzhen penthouse from mainland property tycoon Bill Wong Cho-bau at a bargain rent.
He apologised in the Legislative Council later for the loss of public confidence in his government as a result of his alleged cosy dealings with business tycoons. He said he had "fallen short of public expectations".
Tsang survived three attempts to launch a Legco inquiry into the matter, and he also escaped becoming the highest-ranking city official to suffer a vote of no confidence among lawmakers.