The MTR, which is majority-owned by the government, owns and manages extensive commercial and residential estates on top of its rail business. Photo: Sam Tsang
Opinion
Opinion
by Mike Rowse
Opinion
by Mike Rowse
Hong Kong MTR’s troubles are rooted in its identity crisis
Is it a private company first or a public service provider? A rail operator or property developer?
The train crash last week, the latest in a string of scandals, indicates massive governance failure and brings home the need for a complete overhaul
The MTR’s test run of the new signalling system last week that resulted in two trains colliding was a fiasco – no other word does justice to what happened. Not only did the new system fail the test, all the backup systems specifically designed to ensure there could never be a collision also failed. Fortunately at the last moment, one of the drivers saw what was happening and applied the brakes. This reduced the impact or more serious damage and injury that might have been caused. So much for the superiority of artificial intelligence.
The chaotic scenes, in the following two days, as thousands of commuters struggled to get to and from work using the truncated service, were an embarrassment to Hong Kong.
If this had been a one-off incident, most people would probably have just shrugged and moved on. But it was merely the latest in a long string of serious episodes. The extensive delays and/or cost overruns that affected each of the four completed network expansion projects – South Island Line, Western extension of Island Line, Whampoa extension of the Kwun Tong Line, and the Hong Kong link to the national high-speed rail system – are a matter of public record.
And the fifth project – the Sha Tin to Central Link – is in a class by itself for incompetence. At the time of writing, we not only do not know when – or if – the line will ever open.
I’ll be frank here: I try to follow the news about how many inquiries are ongoing into these various scandals, and who is doing them and when they are due to report, but there are just so many I’ve completely lost track.
When things go wrong on this scale, there can be only one conclusion: there is a major crisis of governance. This extent of rot, after all, must start at the top. The MTR Corporation began as a statutory body but is now a private company listed on the stock exchange (though still a public body). We say “private” but the government owns 75 per cent of the shares. The truth is the corporation is neither fish nor fowl.
We need to sort this confusion out. There have been calls for the government to buy back the shares previously listed, but a better plan would be to sell off most of the balance of the government holdings so that it could become a minority shareholder.
The dual-personality disorder at the organisational level carries over onto the board of directors. The current chairman – Frederick Ma Si-hang, a former minister – is appointed by the government, which as majority shareholder also holds great sway over the appointment of other directors. In addition to four government officials on the board, three of the independent directors are retired civil servants.
The MTR Corporation’s outgoing chairman Frederick Ma (third from left) and other officials meet the media in Central last Tuesday. Ma is appointed by the government, which as majority shareholder also holds great sway over the appointment of other directors. Photo: Edmond So
How independent is such a board likely to be in practice? When the government asked the corporation to undertake five major engineering projects at the same time, and declined to set an order of priorities, how likely was such a board to demur?
Given the plague of scandals, both Ma and CEO Lincoln Leong Kwok-kuen are to bereplaced. In a less forgiving society, Ma would surely have been made to stand in front of a firing squad. Instead, when he submitted his resignation last year, he was offered a three-year contract, which he was sensitive enough to decline.
If you ask a financial reporter, he is more likely to tell you that the MTR is a property company
There are reports that, behind the scenes, the corporation and the signalling contractor brought in to upgrade the system are pointing fingers at each other over who should take responsibility. But, at the end of the day, who chose that contractor, despite the same company using the same software having had similar problems in Singapore two years ago? And given those circumstances, who was closely monitoring the contractor’s preparation work this time round?
If you ask the man in the street, he will tell you the MTR is a railway company. But, if you ask a financial reporter, he is more likely to tell you that the MTR is a property company with a small railway operation on the side. The truth is somewhere in the middle.
Because of the way our system evolved, with property developments on top of stations, the profits of which helped finance the railway itself, the MTR has been a major property developer and now owns and manages extensive commercial and residential estates. It also has a thriving offshore consulting business advising railways outside Hong Kong. Has the company lost its focus?
The time has surely come for a major overall review of the MTR: its status, ownership, governance and objectives. Now if only we had a minister for transport.
