My Take

Corruption in bids for building renovation can no longer be denied

This practice – exposed by the Competition Commission – has been going on for far too long; it’s about time the government got its head out of the sand

PUBLISHED : Thursday, 26 May, 2016, 10:59pm
UPDATED : Thursday, 26 May, 2016, 10:59pm

Many people who have lived in Hong Kong for a while have heard horror stories about estate renovation works. Many might even have experienced them on their own estates. These last for months, sometimes years, and cost flat owners tens to hundreds of thousands of dollars, not to mention the health hazards of being exposed to construction materials and chemicals in your own home over an extended period.

Allegations of corruption and bribery are common. A new study by the Competition Commission has at last confirmed what everyone has long suspected: bid rigging and manipulation are, if not widespread, at least not infrequent in the residential renovation and maintenance market.

Bid rigging revealed in renovation work for Hong Kong residential buildings

The commission went over 700 tender records from 500 maintenance projects provided by the Urban Renewal Authority and the Housing Society and found patterns consistent with bid rigging and manipulation.

The works were all subsidised by the government under the HK$3.5 billion Operation Building Bright (OBB) scheme. Introduced in 2009, the scheme targets buildings that are at least 30 years old.

The scheme has been a gold mine for bid rigging, though the government has taken an ostrich approach. Chief Secretary Carrie Lam Cheng Yuet-ngor has insisted there was no problem with the OBB scheme.

Clean up buildings renovation sector, Hong Kong Institute of Surveyors says

Actually, the problem goes well beyond the scheme and exists in private estates not covered by it. Since 2012, it has been mandatory to carry out inspection on all private buildings older than 30 years.

The one we need to thank for confirming the existence of market corruption is not the commission, but a renovation subcontractor named Yau Shui-tin.

Yau pleaded guilty last year to conspiracy charges after teaming up with others to offer HK$45 million in bribes to win tenders at two projects, one of which involved HK$260 million of renovation works at Garden Vista, a Sha Tin private estate.

He was the first person to be convicted for building management irregularities in recent memory. He appeared to feel genuine remorse when he confessed to conspiring with the ex-chairman of the estate’s owners’ incorporation, and the former heads of the estate’s management company, a consultancy, an engineering firm and an architectural firm.

Now that we have documented evidence of market malpractice and corruption from the commission, it’s time for the government to get its head out of the sand.