Mak Chai-Kwong, born in 1950, began his civil service career in Hong Kong in 1976. He held a series of high-ranking government engineering jobs. Mak was appointed by Chief Executive Leung Chun-ying as the Secretary for Development in July 2012, but was soon forced to resign when allegation surfaced that he was involved in a housing subsidy fraud more than 20 years ago. He was formally charged with cheating on government rent allowances in October 2012.
Call for amnesty over flat leasing
Civil servants’ union says judge’s ruling that cross-leasing scheme was legal isn’t enough to stop members fearing they may be next
The ruling in the rental fraud case of former development minister Mak Chai-kwong has brought some measure of reassurance to civil servants who in the past claimed housing allowance while cross-leasing their flats.
But their union wants the government to go further and grant amnesty for those who participated in the scheme, to put some "anxious" senior civil servants' minds at ease.
In his ruling, District Judge Johnny Chan Jong-herng yesterday accepted testimony by former secretary for civil service Joseph Wong Wing-ping that cross-leasing in itself was not seen as illegal.
Under the Civil Service Bureau's scheme, employees could obtain rent subsidies even if they were living in a flat they had cross-leased from another employee. They would use the rental income to pay the mortgage on a separate flat they had bought. The scheme was widely viewed at the time as having many loopholes and was stopped in 1990.
"While I accept the evidence of Mr Joseph Wong that cross-leasing by civil servants has never been illegal and civil servants who cross-leased would not discuss it openly, I see no reason why Mak and Tsang should take positive steps to conceal their identities as co-owners and used only their wives as landlords in the leases," Chan said.
He found Mak and assistant highways director Tsang King-man guilty of defrauding the government of HK$700,000 in housing allowances using two properties in which they had a financial interest. They leased them to each other in the names of their wives, concealing their financial interests.
The Federation of Civil Service Unions urged the government to close the door on any future prosecutions of employees who had cross-leased.
"We hope the government will reconsider granting amnesty to those who had cross-leased," said the union's chief executive, Leung Chau-ting. "Those who are now at the senior level are anxious. We don't know how many more would be subject to finger-pointing in the future. The situation is worrying," Leung said, without detailing how many civil servants might be affected.
Wong told the court earlier that the scheme, which began in the late 1970s, had "structural deficiencies" under which cross-leasing "might be very common". Wong had proposed that changes should be made and a home financing scheme was introduced in 2000.
Wong declined to comment on the ruling, but said people should be held liable if they had acted illegally. Civil servants who rented each other's flats must not have had a financial interest in the flat in which they lived.
"While cross-leasing was common in the past, the case [of Mak] involves financial interest. That's a difference," he said. An amnesty was unnecessary, and the judge's statement "should have cleared their worries", he said.