Mr Cheng said he had not passed on any confidential government or Legco documents to his clients over the past two years, nor did he believe his clients had gained advantages through his Legco membership.

Asked if Mr Cheng should withdraw from the Legco elections because of the revelations, Chief Executive Tung Chee-hwa said yesterday: 'I think it is important now for Mr Cheng himself to explain his position to the community as a whole.'

He said the Government was looking into claims that confidential documents had been leaked.

Mr Cheng leads the DAB ticket in the Hong Kong Island constituency for next month's poll.

The Apple Daily yesterday reported that Mr Cheng had two consultancy firms, Gary Cheng Kai Nam's Public Relations Consultants and Asia Ford Consultants.

But only the former was declared when he was elected to Legco in May 1998. The newspaper claimed he passed on confidential information.

The undisclosed company was also said to have listed Cathay Pacific, the Kowloon and Canton Railway Corporation and the Hongkong Electric Company among its clients. Records in the Company Registry did not show the name of Mr Cheng, who admitted he held majority shares in Asia Ford.

Yesterday, he said he had 'no strong awareness' to declare the company because it did not have much business when he became the major shareholder in early 1998.

'I emphasise that I have made a mistake. I didn't declare my interest in Asia Ford. That's my fault,' Mr Cheng said.

He said he had never lobbied on behalf of his clients, nor would he depart from the party line on a vote to benefit his clients. Mr Cheng conceded he had never declared his interests before discussions or voting over the past two years but said his consultancy work had not posed any conflict of interest.

He conceded that as a lawmaker it was easier to obtain information. But he had disclosed his status as a consultant when he approached government officials. 'They know what hat I'm wearing. It would be up to them to decide how much they will tell me,' he said.

Mr Cheng said he had never obtained any confidential information relating to his clients, saying he only gave them information that was publicly available. But there were some occasions where he would give an analysis and suggestions to his clients based on ideas gleaned from officials.

Mr Cheng said he would not withdraw from the poll and, if elected, would report the incident to the new Legco president and the Committee of Members' Interests when the legislature was formed in October.

He admitted the party's election campaign had been undermined and he would seek to restore voter confidence in the run-up to the September 10 poll.

DAB chairman Tsang Yok-sing said the party accepted Mr Cheng's explanation of his failure to declare his second company.

He said allegations about the leaking of party information and collaboration with large companies were unfounded.

The DAB Disciplinary Committee would decide what action to take against Mr Cheng, hopefully before polling day, to restore public confidence.

Cheung Kong (Holdings) Ltd said it had never engaged the services of Mr Cheng's companies. Hutchison Whampoa said it had used the services of Asia Ford to conduct employee seminars on general information on government structure and legislature procedures.

Hongkong Electric Company said the services provided by Asia Ford were no different from those provided by many other public relations firms.