Secretary for Development Mak Chai-kwong resigned yesterday after just 12 days in the job, and was arrested by the corruption watchdog over his claim for housing allowance while a civil servant in the 1980s. Also held were Mak's partner in a cross-leasing deal and both men's wives. Lawmakers across the political spectrum saw Mak's arrest as a blow to the authority of the new administration, which is already plagued by illegal-structure scandals involving at least three officials and Chief Executive Leung Chun-ying. Without naming the suspects, the Independent Commission Against Corruption issued a statement yesterday saying: 'The head of a government bureau, an assistant director of a government department and two other persons have been arrested for allegedly violating the Prevention of Bribery Ordinance in relation to government housing allowances.' A government source confirmed that those arrested were Mak (pictured), assistant highways director Tsang King-man and their wives. The arrest came a week after Apple Daily reported that Mak and Tsang had bought - then leased to each other - flats on adjacent floors in City Garden, North Point, for 27 months between 1986 and 1988. They both collected a civil servants' rent subsidy. The two couples were taken from their homes to the ICAC headquarters in North Point soon after daybreak. About half an hour before the ICAC's statement, the government announced Mak had resigned and his work was being taken up by Financial Secretary John Tsang Chun-wah until further notice. The Highways Department would not comment on whether Tsang King-man would step down. Asked if he had requested Mak's resignation, Leung said it would be inappropriate for him to comment. Fanny Law Fan Chiu-fun, executive councillor and former head of the chief executive-elect's office, was more forthcoming. She said Mak 'has to take responsibility for his behaviour', although she regretted what happened to him. His resignation would unavoidably affect the government's operation, she said. Secretary for Justice Rimsky Yuen Kwok-keung has delegated Mak's prosecution to the director of public prosecutions, Kevin Zervos SC, the Department of Justice said. This was done 'in order to avoid any possible perception of bias or improper influence'. Zervos had no connection with the arrested people, it added. Under the Prevention of Bribery Ordinance, it is an offence for any employee, including a public servant, to use any receipt, account or other documents to deceive or mislead his employer. The maximum penalty is a fine of HK$500,000 and seven years in jail. Mak could also lose his pension if found guilty. Lawmaker James To Kun-sun said criminal cases involving housing allowances depend on documentary evidence. 'Judging from the ICAC's speedy arrests, they seem to be quite confident about the case,' To said. Mak, who was earlier backed by Chief Secretary Carrie Lam Cheng Yuet-ngor, had denied scheming or breaching any rules, but more evidence then emerged. A power-of-attorney authorisation for Mak's flat, and two sale agreements for Tsang's flat, showed that each man acted as the 'lawful attorney' for the other when they sold their flats in the 1990s. They gave each other the right to sell the other man's flat for any price they thought fit. Both were found to have applied for mortgages at the same credit company on the same day in 1985. A lawyer who declined to be named said there would be no criminal liability if the two had merely cross-leased their properties without authorising each other to sell. But the power of attorney 'showed you are the real owner of the flat you rented'. Lawmaker Lau Kong-wah, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said: ' I hope Leung Chun-ying will [nominate] someone to take up [Mak's] post as soon as possible, to rebuild people's confidence.'