Hong Kong flat owners warned of new scam by bid-rigging syndicates

Bid-rigging syndicates for building maintenance and renovation contracts are dividing projects into smaller pieces in an attempt to conceal the total highly-inflated costs, a concern group says.

Chiu Yan-loy, a spokesman for the Property Owners’ Anti Bid-Rigging Alliance, said in a housing estate in Tsuen Wan, each household assumed they were paying about HK$30,000 for the renovation of the whole building and thought the price was reasonable. However, they later discovered they were only paying for the maintenance of the water pipe system, which cost HK$30 million, which was six times higher than the common price of HK$5 million.

Chiu said the syndicates would first work out how much households in a housing estate could afford to pay for a full renovation based on the housing estate’s location and price. They would then divide the project and the total cost into separate portions in an attempt to disguise the overall inflated price.

The syndicates typically involve building management or consulting companies and builders working together to ensure owners’ corporations sign up to renovation and maintenance contracts with big mark-ups, Chiu said. Because of this arrangement, flat owners and owners’ corporations, lacking professional knowledge, find it difficult to detect contract manipulation.

He said syndicates had changed their tactics because the government had been stricter in regulating the market and flat owners had become more aware of scams.

Bid-rigging became an offence under the 2012 Competition Ordinance, although smaller companies are exempt.