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Link senior managers Hubert Chak, left, and Eric Yau. Photo: Felix Wong

Public groups in Hong Kong demand more than lip service from chief executive over Link Reit

Watchdogs demand immediate action from Leung Chun-ying after he condemned the real estate investment trust’s profit-driven model in running shopping malls

Public groups have demanded immediate action from the city’s leader to scrutinise and provide competition to property giant Link Reit after he verbally took on the listed company last week.

They said Chief Executive Leung Chun-ying should not just pay “lip service” in condemning the private corporation’s profit-driven business model.

This came after Leung, in an exclusive interview with the Post, questioned whether the real ­estate investment trust linked its senior management’s compensation with rental revenues to maximise profit, and called on the Link to be socially responsible in ­serving public housing estate tenants, who needed affordable shopping facilities.

But Professor Raymond So Wai-man, dean of Hang Seng Management College’s business school, said it was normal for private and listed companies to base the major part of remuneration packages on executives’ performance.

He added the government should not have privatised its public housing estate malls and fresh food markets in the first place if it now felt unhappy about the trust’s operating model.

The Housing Authority raised HK$34 billion for further public housing projects by privatising 180 shopping and car parking facilities by listing the trust.

The facilities are managed by the private Link Asset Management Limited without any government share in the trust or the company.

The public has since been criticising the company for raising rents and driving out small shops from the malls and ­markets.

Sophia So Lok-yee, chairwoman of concern group the Link Watch, said the profit-driven model was the result of a lack of scrutiny in preparing for the properties’ privatisation.

She urged the government to buy back the trust or at least ­become its majority shareholder to allow it to regulate trust operations.

“What Link Reit has done today was all written in its offering circular,” So said. “But at that time the officials kept coming out to persuade people to support the privatisation.”

Lee Wing-tat, former legislator and chairman of land and housing think tank Land Watch, criticised Leung for just paying “lip service” in condemning the reit.

He said instead of trying to change a private corporation’s way of doing things, the government needed to first do what it could to provide alternatives, such as setting up more shopping facilities to compete with the Link.

But he said it would be difficult for the government to use public money to buy back the trust, with a market capitalisation of around HK$120 billion.

“I don’t quite understand why [Leung] mentioned [the managers’] pay,” Lee said. “What do you want them to do?”

In a surprising fightback on Wednesday, the Link’s senior management said handing out “social welfare” was not part of its corporate social responsibility, which would primarily be creating sustainable returns for its stakeholders, and that the trust, which operated 78 out of more than 200 wet markets, was not a monopoly.

But Sophia So disagreed with the reit’s comment. “If the social responsibility is just to generate returns, where is the ‘social’ part in the responsibility?” she asked.

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