Donald Tsang

Judge Donald Tsang by his own rules on avoiding conflicts of interest, prosecution urges

Former chief executive faces bribery charge and two counts of misconduct in office

PUBLISHED : Wednesday, 11 January, 2017, 9:54am
UPDATED : Thursday, 12 January, 2017, 11:49am

This was SCMP’s real-time coverage of Day 2 of the prosecution’s opening address in the trial of former Hong Kong chief executive Donald Tsang Yam-kuen.

4.44pm – Trial ends for the day

The trial will resume on Thursday, when witnesses are expected to be called.

4.43pm – Tsang ‘claimed public expectations too high’

As public interest in the property grew, Tsang went on a radio programme to “shift the focus onto the public”, prosecutors alleged.

Days after the Shenzhen property was reported on, Perry said, Tsang went on Commercial Radio’s Beautiful Sunday programme to say that he found the public expectations on him rising higher and higher.

“He is shifting the focus to the public,” the prosecutor said.

“‘They expect too much. They are out of step. And they want us to be whiter than white’,” he added, in a bid to sum up what Tsang said on the radio.

3.50pm – Tenancy agreement ‘emerged because of Tsang’s panic’

The prosecution urged the jury to ponder why a tenancy agreement for the Shenzhen property only surfaced in 2012 after close media scrutiny, even though his interest in the flat dated back to 2010.

“In a simple word, it’s panic,” Perry said.

Perry said the “so-called tenancy agreement” did not emerge until local newspapers Oriental Daily and the Sun reported the casino banquet in Macau with reports and photographs questioning Tsang’s integrity in February 2012.

Press inquiries followed, with the two same newspapers and Sing Tao reporting Tsang having taken rides in his friends’ yachts to Macau.

“All of a sudden, when media started looking at his conduct, the tenancy agreement came into existence,” Perry said.

Perry said the defendant panicked because he realised there was a risk details of the property would also emerge.

3.40pm – Facilities built to order at Shenzhen penthouse

Perry read out a list of photographs depicting the facilities, made according to Tsang and his wife’s specifications, at the Shenzhen property about one month after Tsang stepped down in June 2012. They included:

- Master bathroom overlooking city of Shenzhen

- More storage space specially made for the flat

- Work area with a desk coming out of the wall overlooking city

- Entrance lobby

- Main living area

- Part of the interior staircases

- Kitchen

- Part of the roof terrace and garden

- Gym

- Guest toilet

- Library

3.20pm – Broadcasting chief kept in the dark

The head of the Broadcasting Authority had been kept in the dark by Tsang about his dealings, despite being told to examine the very radio station over which the former chief executive allegedly had a conflict of interest, the prosecutor said.

On November 5, 2010, it was announced at a press conference that Tsang, as the chief executive, had approved in principle the application for digital broadcasting licences for Wave Media, Metro Broadcast Corp and Phoenix U Radio.

Broadcasting Authority chairman Ambrose Ho Pui-him said at the time that his department had vigorously examined the three applications over a few months and had taken into account the views gathered through public consultation in formulating the recommendations for digital audio broadcasting licences to be granted.

Perry said: “What Ambrose Ho didn’t know was that the chief executive was closely linked to Wong Cho-bau, the director and shareholder of Wave Media, and on the day of that very conference ... the defendant and [Wong[ were on the mainland.”

2.55pm – Exco meeting exclusions

As the afternoon session began, Perry turned to the minutes for an Executive Council meeting on December 15, 2009, and said council member Ronald Arculli, being a shareholder of Wave Media, was excluded from a meeting discussing digital broadcasting licences for the station on the grounds of conflicts of interest and public perception in 2010.

“He has a significant interest financially in the decision,” the prosecutor said.

Arculli’s exclusion at the time was approved by Tsang.

Another Exco memorandum showed concerns were raised that members from the pro-democratic camp would accuse the government of favouring Wave Media over other community radio stations.

In another meeting relating to the Wave Media licence applications in April the following year, Arculli was allowed to be excluded again, this time by then acting chief executive Henry Tang Ying-yen.

During another council meeting in 2011 to discuss Wave Media’s appointment of Arthur Li Kwok-cheung as a director, Arculli was out of town.

2.40pm – Trial back underway

The hearing resumed after a short break due to technical problems. Tsang had interrupted the afternoon session to complain he could not hear the audio feed of the proceedings through his headphones.

2.35pm – Technical issues

Tsang stood up to interrupt proceedings at the start of the afternoon session, saying in English: “Your Honour, I can’t hear anything from here.”

The former chief executive had been listening to an audo feed of the proceedings through headphones.

Mr Justice Chan dismissed the court to allow time for the technical issues to be fixed.

1.00pm – Strict requirements for declarations

Tsang was deepening his connection with the major shareholder of radio station Wave Media, to which he is accused of having granted a licence without declaring his interest, just as he was warning another Executive Council member that the conflict of interest rule should be interpreted strictly.

At that time in 2010, rural strongman and Exco member Lau Wong-fat, had declared land he directly owned, but failed to declare property owned by his companies.

Tsang, Perry said, released a statement in September 2010 saying “declaration requirements should be interpreted in a strict manner”.

Meanwhile, a payment of 800,000 yuan (HK$895,620) was made by Tsang and his wife in November that year to a company connected with Wave Media director Bill Wong, with the arrangement of that payment coinciding with the start of the public consultation for the broadcasting licence decision.

Perry said the payment was made in a time deposit on September 30, being converted from Hong Kong dollars to yuan between September and November, when it was paid.

On November 5, Tsang and his wife, together with Wong, all went to the mainland, Perry said.

“When [Tsang] was making this statement about the need for greater scrutiny in declarations, arrangements were being put in place,” the prosecutor said.

The hearing will resume at 2.30pm after a lunch break.

12.55pm – Contrasting actions

In contrast to Tsang’s not revealing his relationship with Wave Media during the relevant Exco meeting, the prosecution cited fellow council member Ronald Arculli’s declaration that he was one of the radio station’s shareholders.

Perry noted that the chief executive’s office at that time ordered that Arculli be excluded from the relevant meeting in July 2008 when discussing the licence application from Wave Media.

Arculli also did not receive the relevant papers circulated to other Exco members.

12.52pm – ‘Trivial’ conflicts vs important ones

If Tsang had declared trivial conflicts of interest, why had he not declared a more important conflict, the prosecutors went on to ask the jury.

Perry said Tsang had declared that he held a few honorary positions in some statutory bodies when the Executive Council was to discuss exemptions for those bodies from the city’s anti-competition regulations.

“This is rather trivial,” Perry said.

However, Perry argued, notwithstanding Tsang’s failure to declare his interest in the Shenzhen property to Exco, the former leader went on radio programme Beautiful Sunday to deny there was any conflict of interest.

“If he’s declaring these matters, why is he not declaring the more important interest?” the prosecutor asked.

12.38pm – Tsang’s declarations of conflict of interest

The prosecutor said that although Tsang had made a large number of declarations in the Executive Council over the years, he failed to declare the conflict of interest concerned in the current case.

For example, Perry said, Tsang made 69 declarations in 44 meetings in 2005, some of which concerned him being a recipient of pensions when matters relating to pensions were discussed, and him being a member of the Hong Kong Jockey Club during the discussion about equestrian games in the 2008 Olympics.

But Tsang, the prosecutor said, made no declaration when it came to the decision to grant Wave Media a digital audio broadcasting licence, during the same meeting at which he declared he was a patron of the Hong Kong Institute of Architects when the council was charged to discuss the development of private land at Peel Street and Graham Street in Sheung Wan.

“Now, members of the jury, you may want to ask yourself one question: if you are at that meeting, what do you think would be more important to know?” Perry said.

“Whether [Tsang was a] patron of the Institute of Architects or whether he was granting a licence to Wave Media while he was about to go to the mainland with one of the directors to discuss the flat he was moving into when he stepped down as the chief executive.”

12.27pm – Prosecution quotes Tsang on ‘cronyism’

In the 2009/2010 policy address the defendant made as chief executive, the prosecutors said, Tsang specifically said the government should avoid “cronyism” between the government and the business sector.

Tsang said during his address on October 14, 2009, that while the government needed to cooperate with important industries in Hong Kong, it should keep its policy discussions highly transparent, according to Perry.

“We also need to dispel the misconception that collaboration between the government and the business sector is cronyism in disguise,” the prosecutor cited Tsang as saying.

Perry laid out the challenge for the jury: “You will have to decide whether [Tsang] did live up to what he said in these speeches and conduct himself in an open and transparent manner.”

12.20pm – Setting benchmarks on accountability

Perry said Tsang had openly accepted the vigorous accountability introduced in 2012, as the prosecution turned after the morning break to the press statements made by Tsang during his term as chief secretary.

In a speech in April 2002, Tsang placed his faith in the system, which he believed would make the government more open and accountable, the prosecutor said.

“He concludes his speech by saying it will be up to all of [them] involved in government to live up to expectations [they] have created. [They] have put down some benchmarks on which [they] can be judged,” he said.

Another press release in May 2002 that shed light on the discussions by government officials over the accountability system also talked about conflicts of interest. Tsang, Perry noted, said principle officials failing to comply had violated the terms and conditions of the employment contract.

11.50am – Surprise visit by former justice minister

Wong Yan-lung SC, who was secretary for justice in Tsang’s administration, made a surprise visit and sat in the public gallery for an hour this morning.

He later accompanied Tsang to a conference room as the court hearing was adjourned for a short morning break.

The pair chatted for about five minutes before Wong left the court.

“I will not comment to the press today. I hope you understand,” he said when approached by the media.

11.42am – ‘Obvious’ conflict of interest

Tsang also wrote the 2004 guidelines for civil servants on the principles of avoiding conflicts of interest, the prosecutors said.

Perry said: “If you have a flat decorated for free by a businessman or a company connected ... who is seeking a licence from government, that is as close a case as it can get.

“You have to confront the obvious conflict of interest.”

The prosecutors also cited other guidelines for civil servants and Exco members, including the Civil Servant Bureau Circular.

“The chief executive is at the top of the system, and everyone looks to him to set the standard,” Perry said.

11.30am – Letter of thanks

After a trip to the mainland, Tsang wrote a letter to Wong Shun-yuen at the Regency Hotel Shantou thanking him for his hospitality.

The letter, dated April 11, 2011, was also copied to Bill Wong.

Tsang was in negotiations with Bill Wong over the renovation of a luxurious Shenzhen property where he planned to retire. Wong was also the major shareholder of Wave Media, a company whose broadcasting licence application Tsang approved.

Travel records show Tsang and his wife left Hong Kong on March 31, 2011 and returned on April 4. Bill Wong left on March 30, and returned on April 2. Perry said the holiday was only a week or so after an Exco meeting where the council confirmed a decision to give Wave Media its broadcasting licence.

The following is the text of the letter to Wong Shun-yuen:

Dear Mr Wong,

I write to express (my) gratitude for your enthusiastic and hearty hospitalities during (our) visit to Shantou days ago.

My wife and I are blissfully pleased with the sumptuously decorated Regency Hotel which offers services and food meeting the highest standard of quality. By the seashore with splendid views, Shantou is definitely a great place for pleasure and vacations. There is no question that the local hotel business will continue to flourish foretelling a prosperous future.

May (your) hotel business flourish and many more successes in business.

(signed) Tsang Yam-kuen

Chief executive, Special Administrative Region

11.25am – Connections to Wave Media examined

The prosecutors also painted a clearer picture of Wave Media, the radio station embroiled in this case, during the opening remarks.

Perry said the radio station was incorporated on February 2, 2006, featuring a list of shareholders including Albert Cheng, David Li, Arthur Li and former Executive Council convenor Ronald Arculli.

He noted that Arculli withdrew from Exco’s decision on Wave Media’s application.

“And who was notified of that fact and agreed that that person should withdraw? The defendant,” Perry said.

“[Tsang] knew all that but made no mention of his own connection with Wong,” the prosecutor added.

Meanwhile, Perry said, the major shareholder of the company that allegedly paid designer Barrie Ho’s fee for the decoration of the Shenzhen property was Bill Wong, who held 70 per cent of East Pacific Holdings’ shares.

Wong, mentioned in the case because of his directorship of Wave Media, was also the chairman of the Shenzhen East Pacific Group, which was engaged in real estate development connected to East Pacific Garden in Shenzhen, where the property concerned in the case was located.

11.15am – Travel details revealed

On the second day of their opening remarks, the prosecutors continued to mention the movements of the parties involved in this case, including Tsang, his wife, Wave Media’s Bill Wong Cho-bau and Bank of East Asia chairman David Li Kwok-po.

The court heard on Tuesday that on one occasion, the four were on the mainland together following a press conference to announce the approval of Wave Media’s licence applications.

On November 5, 2010, Perry said, Tsang and his wife Selina Tsang left Hong Kong for the mainland following the press conference and returned two days later from Macau at about 10.40pm.

Meanwhile, Li left Hong Kong for the mainland on November 6 and returned home from Macau on the same night the pair did, also at 10.40pm.

“David Li came back just eight seconds later,” Perry said.

Wong left Hong Kong on the same day the pair did but returned one day earlier.

Perry cited another trip in March 2011, saying that Wong left the city for the mainland on March 30, a day before the Tsangs did.

Subsequently, a letter dated April 11 that year was written to address the “hearty hospitality” of a man appearing to be connected to East Pacific, a company Wong held, and a hotel in Shantou.

And on February 26, 2011, Perry said, Tsang and his wife left Hong Kong and returned on the following day. Wong left Hong Kong on February 25, but also returned on the same day the pair did, Perry said.

Designer Barrie Ho left the city on the same day as Wong, but returned on the day Tsang left.

10.49am – Tsang’s sons and brothers also involved

Tsang’s family members, including his sons and brothers, were also connected to the Shenzhen flat and the interior designer at the centre of the case, the prosecutor said.

Perry said Tsang had two sons, Simon and Thomas Tsang, one of whom’s address was listed on a lease in 2012, which the prosecution contended was fake.

The prosecutor said Tsang’s two bothers had commissioned Barrie Ho Chow-lai, whom Tsang allegedly nominated for a medal of honour in return for his role in refurbishing the Shenzhen property, to do work in 2008.

He noted that “what is interesting” was that one of the directors of Wave Media – his relationship with which Tsang was accused of failing to declare as a conflict of interest – also commissioned Ho.

The prosecutor said the evidence appeared to suggest that there was contact between the defendant and Bill Wong Cho-bau, then major shareholder of Wave Media, in 2010, 2011 and 2012.

10.43am – Judge Tsang by his own rules, prosecutor says

Perry said an accountability system was introduced for civil servants in 2002, while Tsang was chief secretary.

The defendant, the prosecutor said, was responsible for creating some of the documents that shed light on the responsibilities of civil servants to declare conflicts of interest.

“He was giving the directives on what is good ethical behaviour for civil servants in Hong Kong,” Perry said. “He told people what they should be doing. He too should be judged [accordingly].”

10.40am – Rising through the ranks

Prosecutor David Perry QC began the second day of his opening remarks by giving the jury a recap of government positions Tsang had held since he became a civil servant in 1967.

After joining the government, he went on to become the Civil Service Branch’s principal assistant secretary in 1978.

Tsang received training at Harvard University three years later and returned to become the director of trade in 1991.

In 1995, he ascended to the office of financial secretary before becoming chief secretary in 2000 and chief executive in 2005.

10.25am – Tsang calm in the dock

In addition to his trademark bow tie, Donald Tsang sported a matching pocket square.

The former chief executive also wore headphones providing an audio feed of the proceedings. He looked calm, and sat expressionless in the dock.

Wong Yan-lung, who served as secretary for justice while Tsang was chief executive, was in the court’s public gallery watching proceedings.

10.20am – Judge urges employers to comply with Jury Ordinance

Before today’s hearing commenced, Mr Justice Andrew Chan Hing-wai said he received a letter from a juror saying that his or her employer had made a scene about the employee being on the jury.

The High Court judge said jurors should not be discriminated against due to their jury service. Employers failing to comply with the Jury Ordinance could be held liable for a criminal offence, he said.

“The employer can be sent to jail for that. I hope this is clear,” Chan said, adding that he would write a letter to the employer concerned.

He also said the juror released on Tuesday for a lack of English skills – after she failed to properly pronounce the word “almighty” in her oath – would be added to the Chinese jury list.

9.05am – Tsang arrives

Former chief executive Donald Tsang Yam-kuen, who will hear the prosecutor’s opening remarks for a second day as the allegations against him are laid out at High Court this morning, chose a navy blue bow tie with red and white polka dots.

Tsang, as he did at previous court appearances, held his wife Selina Tsang Pou Siu-mei’s hand as they set foot inside the court building in Admiralty.

Yesterday, the High Court heard that Donald Tsang Yam-kuen failed to disclose a total of HK$3.35 million worth of benefits in relation to a three-storey penthouse in Shenzhen that he once wanted to move to after retiring as Hong Kong’s leader in 2012.

His wife withdrew part of the payment – HK$350,000 – from the Bank of East Asia’s headquarters in Central in 2010. The money was allegedly provided by the bank’s chairman David Li Kwok-po, a shareholder in Wave Media, the company at the heart of the case.

The prosecution also revealed the design plan for the luxury flat, which the Tsangs had hoped would be fitted with a library, a greenhouse and a calligraphy room among an array of customised facilities.

The prosecution is expected to reveal more details on the charges in the court session today.