Rehab school cleared of graft claim

A Lantau drug rehabilitation school said it wants its long wait to relocate to Mui Wo to end, especially since a six-month probe by anti-graft officials recently cleared it of allegations of corruption and malpractice. But accountant Ernst & Young has pulled out of a project to split the accounts of the Christian Zheng Sheng College and its sponsoring body, the Christian Zheng Sheng Association. The only drug rehabilitation school in the city, the college was overtaken by a string of allegations concerning its operations last year. In August, the Independent Commission Against Corruption launched an investigation after it received a complaint. School supervisor Jacob Lam Hay-sing yesterday said the ICAC notified the school in a March 22 letter that the investigation had ended without uncovering any evidence to justify further investigation. 'The probe was a huge disappointment to us but life goes on, and they have now cleared our name,' Lam said. 'It is the best response to the public concerns over our operations.' He said the investigation had been thorough and detailed, and included the alleged use of students' government subsidies. ICAC officers had visited the school's projects on the mainland and in Japan and had looked into the financial statements of the association since its establishment in 1985. The ICAC refused to comment last night. School officials are keen to move operations to a vacant site in Mui Wo originally occupied by the Heung Yee Kuk Southern District Secondary School. The government halted talks on the proposed move amid the allegations of misdealings last year. Principal Alman Chan Siu-cheuk said the school could not afford more delays, as the rainy season was approaching. 'There is severe erosion on the slope above the school [where it is at present]. Who can guarantee the rubble will not fall in heavy rain?' Chan warned that the school may face closure if it fails to measure up to the standard stipulated in the licensing ordinance in 2002, after an eight-year grace period expires this year. The school is required to upgrade its facilities under the ordinance, and has been exempted from such an upgrade till now. He said the school's relationship with the Mui Wo community had improved over the past year, while the end of the ICAC investigation should have answered public concerns about its operations. The Narcotics Commission had been notified of the investigation results, he said. 'We have submitted all required documents concerning the relocation [to Mui Wo],' he said. 'It is now up to the government to decide.' However, a government spokesman yesterday said the administration needed more information despite supporting the school's relocation plan in principle. 'We hope the association will address the public concerns as soon as possible to notify the government on its progress before we can make a decision,' he said, adding that the additional information needed included the association's operating accounts, a detailed operation plan after relocation, and accountability issues. In an attempt to clarify any doubts about its finances, the association decided last year to split the accounts of the school and the association, its sponsoring body. The school has also applied to become a charitable organisation and is awaiting approval. Ernst & Young was appointed to do the accounts but decided to withdraw this year after preliminary reports. 'I regret their decision and it is unfair to us,' Lam said. He said Ernst & Young had given 'internal reasons' for its decision, and another agency was now being sought to take over the job. He said the decision by Ernst & Young was made before the ICAC ended its investigation. A spokeswoman for Ernst & Young said the firm pulled out of the project after a 'mutual agreement' with Zheng Sheng in April. 'The project did not pass our internal risk management assessment,' she said. 'One must not draw any inference that Zheng Sheng has not kept their books properly - they do not have any problems.' However, Chinese University department of finance associate professor Raymond So Wai-man said that although Zheng Sheng had been cleared of corruption, it did not mean that the association had kept its accounts clearly. 'For example, when you ask students to sell flags, should the costs incurred be counted as extracurricular activities, or charity fundraising?' he said. If the Inland Revenue Department disagreed with an accountanting firm's judgment, it could sue the firm for committing an administrative error which had led to a loss of tax revenue, So said. It was 'very uncommon' for accounting firms to pull out, but he believed Zheng Sheng would soon find another to complete the project. 'There are a lot of small and medium-sized local firms that would consider the project a lucrative deal,' he said. Accounting-sector legislator Paul Chan Mo-po said Ernst & Young's stated reason for withdrawal was not very convincing. 'They should have known all the risk factors before signing the contract,' he said. 'Suddenly terminating the project is unfair to Zheng Sheng.' He said the government should immediately approve Zheng Sheng's move to Mui Wo. 'Even if there are problems with the accounts, they are only administrative problems and should not affect the kids.' The key dates 1985 Jacob Lam Hay-sing establishes Christian Zheng Sheng Association 1998 Establishment of Christian Zheng Sheng College on Lantau Island 2007 Zheng Sheng asks for move to Heung Yee Kuk Southern District Secondary School in Mui Wo, which has been ordered to close because of low enrolment Early 2009 Renewed interest in college after a series of news reports about youth drug abuse June 2009 Some Mui Wo residents oppose college moving in August 2009 ICAC launches investigation into Zheng Sheng, after controversies and media reports over use of funds by association September 2009 College's account managed separately from that of association After Lunar New Year, 2010 Ernst and Young pull out of project to split accounts of college and association March 22, 2010 ICAC notifies that investigation into Zheng Sheng has ended, clearing the group of any corrupt practices or any misdealings