LEGISLATORS yesterday rejected the Government's funding proposal to pay $650 million for Shiu Wing Steel Ltd to relocate its plant from Tseung Kwan O to Tuen Mun on environmental grounds. Members of the Legislative Council's Finance Committee criticised the Government for pre-empting Legco by entering into a contract before seeking their approval. Although it was the second time the funding proposal had been discussed in the Finance Committee, legislators still voted 23 to 14 to defeat the funding request following a heated debate. The Government may then risk breaching a contract with Shiu Wing regarding payment of costs. The Chief Secretary and Chairman of the Finance Committee stressed that the Government and Shiu Wing had entered into the contract with good faith. She said the Government was under the impression that funds would be available to repay Shiu Wing when they had decided to reach an accord with the company. But the Government had later found out that they should seek funds from the Legislative Council, she said. Director of Lands, Robert Pope, stressed that the first payment was due but he declined to be specific on when the agreement had been struck with Shiu Wing. Mr Pope admitted that the Government had mismanaged the case. Legislators urged the Government to look into any possible damages incurred by breaching the contract to repay Shiu Wing as there had been no formal agreement between the administration and the company.