The HKU saga started at the height of the pro-democracy Occupy protests in October last year when leaked emails of Occupy founder Benny Tai Yiu-ting were sent to the media by unknown sources, revealing Tai had handled HK$1.45 million in donations for HKU, and Chan also handled part of the money.

The next month, pro-Beijing newspaper revealed that HKU's governing council was considering appointing Chan, a former law dean, as a pro-vice-chancellor in charge of academic staffing and resources. Then in January, the newspaper ran a scoop on a local research assessment exercise, alleging that under Chan's leadership, HKU's law school research performance had declined. The opprobrium heaped on Chan continued.

After much controversy and delay, the council voted on Tuesday 12-8 to reject a search committee's recommendation for Chan's appointment. A month before the vote, pro-establishment "bad boy" lawmaker James Tien Pei-chun claimed Beijing's liaison office and the Hong Kong government lobbied members to block Chan's appointment.

The council has refrained from spelling out the reasons for its decision, other than saying it was in the long-term and best interests of the university. But pro-government members were "exposed" by a student representative as having cited reasons in the closed-door meeting, from Chan not having a doctorate to having "little" to show by way of research and achievement.

The consensus is that the saga will make it ever harder to find talent, not just at HKU but other institutions.

Ip Kin-yuen, the education sector lawmaker who led an alumni group to urge the council to endorse Chan's appointment, says talented personnel will hesitate to come forward if decisions become politicised or the council itself is proven to be political.

"First-rate academics, local or international, have so many choices where to go," he says. "Why must it be the University of Hong Kong, and why must it be Hong Kong's universities?"

Ip notes that two of four shortlisted candidates for the No 2 HKU post of provost have withdrawn their applications in the past few months. It was also revealed in Tuesday's council meeting, he says, that Patrick Poon Sun-cheong, an insurance industry veteran, declined an invitation to fill a council vacancy as he was "too busy".

"If it's difficult even for the council to find people - a councillor used to be an honour - the case for the university management can only be worse."

Lawrence Pang Wang-kee, who leads another alumni group calling for respect for the council's decision, agrees recruitment will be difficult. But he believes it will not be too tough to fill the post because "after all, not every scholar is as controversial as Professor Chan".

Dr Ng Shun-wing, head of the Institute of Education's department of education policy and leadership, fears people with a different mindset to university governing councils may be deterred from applying to join.

It also boils down to how a divided Hong Kong has made it more difficult for a university to select candidates for senior management posts, a member of the HKU search committee that recommended Chan told the .

"We only assessed managerial skills and academic qualifications. Public recognition of the candidate, which turned out to be some council members' concern, was not among our considerations," said the member, who did not want to be named.

Public recognition may become a new factor in the selection process but it can also be a problem, the member added.

"The choice of any candidate is unlikely to please everybody - unless the candidate has no views on public affairs and is only concerned with his career advancement. But is this the kind of candidate we want? I don't think this is practical or desirable."

Rather than the council decision, it was students' "violent behaviour" such as storming a council meeting in July and disregarding confidentiality rules that will damage HKU's image and deter talent, pro-establishment lawmaker Christopher Chung Shu-kun says.

Chung rejects the view that Chan was turned down because of his pro-democracy background. He says council members had their reasons, alluding to comments on Chan's qualifications and credentials.

Veteran China-watcher Johnny Lau Yui-siu believes the university and Chan were both targets. "One only needs to look at the macro-picture of the recent history of HKU to reasonably believe that," Lau says.

The most memorable incident of political interference dates back to 2000, when Dr Robert Chung Ting-yiu, director of HKU's public opinion programme, alleged he had faced pressure from an aide of then chief executive Tung Chee-hwa through university heads to stop his popularity polls on Tung.

An investigation panel concluded there were "covert attempts" to pressure Chung, resulting in the resignations of vice chancellor Cheng Yiu-chung and one of his deputies.

"It is a common view on the mainland that Hongkongers are yet to embrace the motherland now that it's 18 years since the sovereignty handover," Lau says. "It seems to me Beijing wants to, putting it in a mainland term, 'extend from specifics to general', i.e. use the appointment incident to assert its presence in the city."

Chief Executive Leung Chun-ying has denied any interference by the government in the decision-making process. And Rita Fan Hsu Lai-tai, the city's sole deputy to the National People's Congress Standing Committee, has challenged those who alleged Beijing's interference to prove it.

The spotlight cast on Chan has also put the focus on the role of public intellectuals in society.

Ivan Choy Chi-keung, a political scientist at Chinese University, says: "This time, a vocal scholar is denied a promotion. This has cast a shadow and put pressure on young people in academic circles. They may become hesitant to speak up on political and social affairs, especially if they haven't secured tenure for their teaching positions."

If this does happen, then everyone - from media to decision-makers - may want to pause and think about the lessons to be drawn from this episode.

READ MORE: 'A deliberate attempt to vilify': University of Hong Kong scholar Yash Ghai's full statement in support of Johannes Chan

Timeline of events leading to vote against Johannes Chan becoming University of Hong Kong pro-vice-chancellor

An anonymous person sent to several media organisations hacked emails and documents from the three founders of pro-democracy movement Occupy Central, revealing Benny Tai Yiu-ting, one of the three, had handled donations totalling HK$1.45 million for HKU. Former law dean Johannes Chan Man-mun handled part of the donations.

Pro-Beijing newspaper revealed that the HKU council was considering appointing Chan as a pro-vice-chancellor. The paper heavily criticised Chan for his links with Tai.

ran a scoop reporting the results of the University Grants Committee assessment exercise, saying under Chan's leadership, the HKU law school had fallen behind that of Chinese University.

Chan wrote an article in , saying the leftist press attacks might have to do with "rumours" that he had been recommended for the managerial post.

The council voted 12-6 to defer the appointment of Chan, saying it needed to wait for the post of the supervising provost to be filled so that person could give "input" over the appointment. The council also voted to accept the findings of an audit report, which said Tai's use of some of the donated money "deviated" from the stated purpose, while Chan's conduct as Tai's then supervisor "fell below expected standards".

Angry students stormed a council meeting after the council again voted 12-8 to defer Chan's appointment. During the chaos, council member Dr Lo Chung-mau, who backed the deferral, collapsed.

The council voted 12-8 against appointing Chan.