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Tung faces Cyberport pressure

Chief executive asked to explain how project was awarded soon after top official queried key issues

Chief Executive Tung Chee-hwa is under pressure to explain how a decision to award the controversial Cyberport project to Richard Li Tzar-kai's Pacific Century Group was made soon after a top official queried five key issues.

The issue was raised after the government released to lawmakers 24 letters it exchanged with the Pacific Century Group. Their release was part of the administration's efforts to prove an absence of collusion with the business sector.

The documents showed that former secretary for information technology and broadcasting Kwong Ki-chi, in a letter to Mr Li on January 26, 1999, asked why the project should be given to Pacific Century Group and not to another developer or awarded through an open tender. He also asked why Telegraph Bay was picked as the site, why the development included a residential component, and why Cyberport and the information technology sector were selected in the first place.

Written responses from Pacific Century Group dated January 27 and February 3, also released yesterday, did not address these concerns, although the first said: 'We agree that residential property is an integral part of the Cyberport design.' The second response did not address any of the five concerns.

However, on February 11, Mr Kwong wrote to Mr Li, saying: 'The government fully endorses the proposed development of the Cyberport.' A detailed cash flow analysis was included in the letter.

Democratic Party chairman Lee Wing-tat said yesterday: 'Something must have happened.'

The party's vice-chairman, Albert Ho Chun-yan, said lawmakers might invoke special powers to seek government answers.

Secretary for Commerce, Industry and Technology John Tsang Chun-wah defended the decision at a special meeting of the Legislative Council's information, technology and broadcasting panel.

But he insisted that he was not in a position to disclose any further documents, including discussions in the Executive Council.

Mr Ho said the 25 pro-democracy legislators were threatening to invoke special powers under the Legislative Council (Powers and Privileges) Ordinance to force the government to disclose the information.

He added that he would push for a Legco select committee to be set up to further investigate the matter.

'Tung's family has close relations with Cheung Kong and Li Ka-shing and their business links have long been established, from London to Sydney and Beijing. What was his role in all this?' Mr Ho said. 'We have strong doubts that he gave the final go-head for the project, including the transferral of benefits.'

Mr Tung, who discussed collusion between the government and business in his policy address last month, travelled to Israel on January 31, 1999, on a three-day information technology fact-finding mission. He was accompanied by a number of business leaders, including Richard Li.

During yesterday's Legco meeting, Mr Tsang sidestepped demands from lawmakers that he reveal how many times Mr Tung had met Mr Li over the Cyberport matter. He stressed that in the 11 months to January 2000, the government consulted Legco 20 times, six of which were before an agreement was reached with Pacific Century Group and 14 after. A Letter of Intent, covering the final deal, was signed on March 2, 1999.

Legislator Emily Lau Wai-hing said: 'All along, there is a well established policy of open tendering. As there has been a deviation from this, the government needs to disclose the details so as to ensure that there is no collusion.' She accused the government of being run like a triad society. Legislators also targeted the administration's decision to waive an agreement by Pacific Century Group to lease 50 per cent of Cyberport's total gross floor area in the event that no tenants could be secured. Mr Tsang explained that as between 80 and 90 companies were looking to lease space there, a decision was made to unconditionally release the developer from this obligation.

Both the Liberal Party and the Democratic Alliance for Betterment of Hong Kong also supported the call for greater disclosure.

Questions, Answers and Action

January 26, 1999

Former secretary for information and technology Kwong Ki-chi sends letter to Pacific Century Group (PCG), raising five questions on the Cyberport project:

- Why PCG?

- Why not an open tender?

- Why Telegraph Bay?

- Why residential property?

- Why this development; why this sector?

January 27, 1999

PCG replies to Mr Kwong without addressing his questions

January 31, 1999

Chief Executive Tung Chee-hwa arrives in Jerusalem for three-day visit with a number of businessmen, including PCG chairman Richard Li Tzar-kai, to study hi-tech industries

February 11, 1999

Mr Kwong writes to PCG with comprehensive plan for Cyberport project. The questions he raised earlier are not mentioned

March 3, 1999

Former financial secretary Donald Tsang Yam-kuen announces Cyberport project

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