Union Hospital received up to HK$300 million for giving part of its site to Henderson Land to develop a luxury property project, the hospital chief admitted yesterday.
Chief hospital manager and medical director Anthony Lee Kai-yiu said the land transaction took place because the private hospital in Sha Tin was facing financial difficulty as a result of poor demand in the 1990s, when the government spent heavily to strengthen the public hospital system.
"At the time, the operation was difficult. We [also] studied transforming the hospital into an elderly home or for other purposes," Lee said in a Commercial Radio programme. He said the hospital was given between HK$200 million and HK$300 million for the transaction, and the money was to develop the hospital. "Private hospitals are investments," he added, stressing that the hospital was not built on free land.
But critics questioned how the 1.92-hectare site - which was first acquired for health use by the hospital operator for HK$60 million in 1982 - could be turned into luxury flats. The Director of Audit had on Wednesday issued a report criticising the government for not monitoring whether operations of private hospitals were in line with the conditions stipulated in their land grants.
Although the land was acquired in the early 1980s, Union Hospital started operating only in 1994, providing about 410 beds. But the hospital operator has repeatedly made applications to the authorities to embark on property development on the site since 1986.
That year, it wanted to turn the whole site into flats. It was only 15 years later in 2001 that the authorities finally approved about half the land on the site to be made available for property development.
Lee said yesterday he was unfamiliar with the background to the repeated attempts to change the land use prior to 1996, when he took over as hospital chief.
Legislator Kwok Ka-ki urged the Independent Commission Against Corruption to investigate whether there was any improper transfer of benefits. He said the ICAC should look into why both the Town Planning Board and Executive Council approved the plans for land use change although there were suggestions of hospital shortage in the district at the time.
"We need to look at whether any malpractice or [transfer of] interests were involved, especially in the face of recent cases of former officials being criticised of not being clean," said Kwok.
Media reports quoted a Henderson Land executive as saying earlier this year that the property developer churned out a revenue of about HK$3 billion through the sale of the property built on the site. The property, named Hill Paramount, was packaged as a luxury development at "Sha Tin's Mid Levels". The audit report said some HK$610 million in land premiums was paid for the land use change.
In a separate case, the report said a hospital gave HK$303 million and HK$180 million in fees and donations respectively to its grantee and relevant companies between 2009 and 2010.
Central Kowloon's St Teresa's Hospital, which according to the Department of Health was the hospital mentioned, declined comment yesterday. The auditors accused the Department of Health of failing to make sure such profit transfer by the non-profit-making hospital was in compliance with conditions of the hospital's grant.