The city's anti-graft agency said last night it will launch a corruption investigation into its former chief Timothy Tong Hin-ming.
He becomes the first head of the graft-busting agency to face a criminal probe in the Independent Commission Against Corruption's 39-year history.
The inquiry was announced by the Department of Justice and the ICAC. The commission said the probe would be led by Tong's successor Simon Peh Yun-lu.
The move follows claims that Tong, 63 - head of the ICAC from 2007 until last year - spent lavish sums of public money entertaining mainland officials.
It is alleged he splashed out hundreds of thousands of dollars from the public purse on receptions, gifts and duty visits.
Some of the spending exceeded official limits but was approved by Tong himself.
The announcement of the criminal inquiry came after Tong and Peh agreed to appear before the Legislative Council's Public Accounts Committee on Saturday. The hearing is due to focus mainly on two lavish dinners Tong approved for mainland officials in 2011. The dinners, revealed in audit report last month, were said to have exceeded the permitted budget.
The Department of Justice said it usually did not comment on individual cases, but was addressing the issue because of the nature of the case and the public's concerns.
It said: "There is sufficient basis to warrant a criminal investigation into allegations of possible offences under the Prevention of Bribery Ordinance and the common law offence of misconduct in public office." Democratic Party lawmaker James To Kun-sun, who has suggested the police could investigate the case, said it was "barely acceptable" for the ICAC to be the sole agency for the inquiry.
He also urged Tong to "come clean" at Saturday's Legco meeting as evidence heard would not be used for criminal inquiry.
The justice department said the ICAC, not the police, was the specialist body when it came to corruption cases.
Civic Party lawmaker Alan Leong Kah-kit urged the ICAC to conduct an unbiased probe that would address public concerns.
But former ICAC deputy director of operations Alex Tsui Ka-kit said: "I am a little worried the relationship [between investigating officers and Tong] at an administrative level would constitute a conflict of interest ... Their contracts were approved by Tong."
An ICAC spokesman said Peh would lead a team from the internal investigation and monitoring group. He said the team would seek legal advice from Director of Public Prosecutions Kevin Zervos SC and report to the operations review committee.
He added that investigating officers were required to declare conflicts of interest.