Following the departure of The Link Reit's former chief Paul Cheng Ming-fun in January, chief executive Victor So Hing-woh is also stepping down. It is apparent Mr Cheng and Mr So were forced out, although both claimed that they resigned for personal reasons. They were originally appointed to The Link Management by the government to balance the interests of public housing tenants and The Link's shareholders. However, the aggressive British hedge fund, The Children's Fund Investment Management - The Link Reit's largest shareholder - is seeking to reap excessive profits quickly, regardless of public interest or the rights of public housing tenants.
With the reshuffle of its board of directors, The Link Reit is certain to undergo dramatic change.
I had expected that the operation of The Link Reit, as a market-driven company, would conflict with the rights of public housing residents. That is why, from the start, I opposed the sale of the Housing Authority's entire assets. I wanted the government to at least retain a strategic stake in The Link Reit, or restrict single major shareholders to a stake of less than 5 per cent.
With the listing of The Link Reit, the government should in no way try to interfere in its operation, even if it tries to maximise profits at the expense of public housing tenants' rights. Any intervention would put Hong Kong's status as a free economy and an international financial hub in jeopardy.
To prevent the controversy from developing into a political crisis, and to maintain Hong Kong's long-term prosperity and stability, the government must contemplate buying back The Link Reit's controlling shares. The Link Reit's assets are valued at HK$38.5 billion. The authority, which has a cash balance of HK$50 billion, could buy a 25 per cent stake. That, together with a 10 per cent premium, would cost about HK$10.5 billion.
Chief Executive Donald Tsang Yam-kuen told the Legislative Council on Thursday that the government had no plan to buy back any of The Link Reit, calling the move a nationalisation of private properties. However, such a purchase would only be done to ensure The Link Management carries out its corporate social responsibilities. The government is reluctant to do so, possibly because many believe it would suffer heavy financial losses.