MTR chief Jay Walder to exit a year early in wake of cross-border rail link delay

Internal report criticises chief executive and projects director for 'poor judgment' over problems with HK$67b high-speed link

PUBLISHED : Wednesday, 16 July, 2014, 5:04pm
UPDATED : Thursday, 17 July, 2014, 7:21am

MTR Corporation chief executive Jay Walder will step down next month - a year earlier than scheduled - after an internal report yesterday criticised him for "poor judgment" over the delayed cross-border rail project.

The decision was a "mutual agreement" that would be "beneficial" to the company and had nothing to do with the report, MTR Corp chairman Raymond Chien Kuo-fung said.

We are not saying at all that Mr Walder is not competent

Walder will leave on August 15, after saying in May that he would not renew his contract when it ended next year. His deputy, Lincoln Leong, will serve as acting chief executive during a global search for a replacement.

Walder's hastened departure comes at the end of an inquiry by a committee of MTR board members into the two-year delay of the HK$67 billion dollar high-speed rail link to Guangzhou.

The MTR announced in April that construction problems had pushed completion back to 2017.

The report put the most blame on projects director Chew Tai-chong for not informing other executives and the board when he became aware of a possible delay. But the report also said Walder should have "exercised more critical judgment" in overseeing the project.

"[Given] the CEO's knowledge of the sustained delays in the project programme and particularly given the importance of the project to the government, and the level of public interest in it, the [committee] believes that the CEO should have exercised more critical judgment in respect of monitoring the progress of the project as a whole," it said.

The report said the MTR had last year mulled a "partial opening" of the line, putting six of 15 platforms in use by the project's initial 2015 deadline.

"[The committee] finds that the failure to report the partial opening proposal by the executive committee to the board reflects poor judgment in particular on the part of the projects director [Chew] and the CEO [Walder]," the report said.

Chew has said he will leave in October, more than a year before his contract ends, but that has not stopped calls for management changes. The government will soon announce three new board appointees, raising the number of non-executive members to 18.

Chien said Walder's early exit would allow better continuity in tackling reforms and other challenges.

"We are not saying at all that Mr Walder is not competent to handle the CEO duties," Chien said. "It's an agreement between Mr Walder, the board and the corporation that having someone who can commit to the corporation beyond 2015 and provides strong continuity is in the best interest of the company."

Walder said he had discussed the idea of an early exit "for a little while". The committee "had done a fair job", he said. Neither man would be drawn on the payout Walder would receive, citing a confidentiality clause.

All five of the MTR's major works projects are now delayed. The report recommended forming a capital works committee on the MTR board to oversee projects and make quarterly reports on their progress and budgets.

Additional reporting by Stuart Lau and Phila Siu

'Poor judgment' by MTR boss over high-speed rail

The MTR Corporation's projects director sensed delays to the high-speed railway six months before informing the company's executive committee, an investigation has found.

Chew Tai-chong, 62, showed "poor judgment" in handling the concerns, according to a 93-page report released yesterday by a committee set up by the company's board.

The committee found that Chew had e-mailed the general manager of the projects team in November 2013 to say "the figures and achievement of each contract remain a serious concern".

"I am sure you have a plan or two to [get back on schedule]," Chew wrote.

"If we are now in serious doubt about this commitment, I want to be sure that we have a plan to first inform the board and executive [as soon as possible]."

In the same month, Chew discussed the delay in detail with officials from the Transport and Housing Bureau.

In that meeting, it was suggested that the opening date for the railway be pushed back to early 2016, rather than 2015 as originally scheduled.

The bureau subsequently advised the projects team to inform the public of the delay as soon as possible, suggesting an upcoming Legislative Council meeting later that month.

But no announcement was made at that meeting, even though Chew appeared to have become increasingly concerned about the project's limited progress.

"I have on a number of occasions tried to come to some clearer understanding with all the progress and challenges associated with [the project]. But I have totally failed," Chew wrote in another e-mail to the general manager, also in November.

"As you know, many of our planned targets and production rates have failed to materialise and if anything, the pressure on cost/contingency is increasing."

In March this year the project's contractor made it clear to Chew that the railway to Guangzhou could not be completed before 2017.

And even then the information did not get passed on to a board of directors meeting on April 7 or to an executive committee meeting on April 9.

It was not until April 12 that the executive committee was informed.

Chew, from Malaysia, has 30 years of experience, including with the Singapore Land Transport Authority. He is due to retire in October this year.

Polytechnic University transport analyst Dr Hung Wing-tat suggested the MTR find Chew's replacement from within the company.

"For projects so big, it's hard to make everything work if you find an outsider [as the leader] … you need a local who has connections with the consultants and companies here. Otherwise, there will be further delays."

To Guangzhou, the long way

2010 Construction starts on fully underground, 26km Hong Kong section of high-speed railway to Guangzhou.

March 2013 MTR projects programme team realises work on northern part of West Kowloon terminus and tunnel linking Mai Po and Shenzhen's Huanggang Park is significantly behind schedule. MTR decides work is on track for completion in 2015.

April Contractors estimate terminus will be finished only in June 2016. MTR urges them to look for solutions to catch up with schedule.

June MTR realises 2015 target can be met only if it opens terminus in stages, putting just six of 15 tracks into use initially.

July MTR executive committee agrees with partial opening.

September Highways Department is briefed on partial opening. It does not indicate agreement, but asks MTR for more information. Plan was never announced to the public.

October MTR asks contractors for proposal to finish project in 2015, based on partial-opening plan.

November Government intends to tell Legislative Council of possible delay, but MTR chief executive Jay Walder calls Secretary for Transport and Housing Professor Anthony Cheung Bing-leung and says deadline is still feasible. At Legco railways sub-committee meeting, Cheung's undersecretary Yau Shing-mu says major works can be finished in 2015, but tests and trials will take another six to nine months. After the meeting, MTR presents schedule towards completion to government, which says it is too brief.

February 2014 Contractors tell MTR that even with partial-opening plan, terminus will not be ready until June 2016.

March Severe rainstorm causes serious flooding in Yuen Long tunnel and damages tunnel-boring machine.

April MTR and Cheung say railway will not open until 2017. Cheung says he is taken by surprise. Projects director Chew Tai-chong decides to retire early. MTR announces internal investigation.

May Cheung sets up expert panel to investigate project and government's role. Chief Secretary Carrie Lam Cheng Yuet-ngor announces that Mr Justice Michael Hartmann will chair the panel.

June Legco agrees to set up select committee to look into delay.

July MTR releases internal report.

Phila Siu