Leung Chun-ying

CY Leung denies wrongdoing in accepting HK$50m in UGL deal

Pan-dems accuse CE of misleading the public and press for investigation

PUBLISHED : Monday, 13 October, 2014, 6:37am
UPDATED : Monday, 13 October, 2014, 10:54am

Chief Executive Leung Chun-ying said he did not feel he had done anything wrong, morally or legally, by accepting HK$50 million in a deal with Australian engineering firm UGL.

Speaking to the media for the first time yesterday since an Australian newspaper revealed last Wednesday how the contract was made in 2011, Leung sidestepped key questions, such as why he did not declare the payment to the Executive Council.

The deal - made two days before Leung resigned from insolvent property firm DTZ, of which he was a director, and completion of the takeover - stipulated the money would be paid in two instalments in 2012 and 2013. UGL and Leung said it was to prevent him from forming or joining a rival firm within two years.

"[Whether] as a member of the Executive Council or chief executive, I have fully followed the [declaration of interest] mechanism [of Exco] to decide whether declaration is necessary," he said.

He said he had not provided any service to UGL and therefore there was no conflict of interest. He also denied tax evasion.

"Because this [income] is to compensate me for not competing with it [UGL] or poaching its staff, under the taxation system of Hong Kong there is no need to pay any tax," he said.

Leung said the decision was reached after consulting his tax adviser, who had provided written advice. Asked if he could make public the document, Leung gave an indirect answer.

"Such advice did exist. Over the past one or two days it has become clear that what matters is that [what is stipulated] in the contract is not income. The Australian firm also clearly stated that the money was not paid in exchange for any service. Rather, it was paid [to guarantee] what I wouldn't do, which is to compete with it and poach its staff."

He said he would not speculate when asked what he made of the timing of the exposé.

The Democratic Party and Civic Party have proposed using Legco's Power and Privileges Ordinance to investigate if any conflict of interest is involved.

Lam Cheuk-ting of the Democratic Party said Leung's agreement with UGL to be an adviser might be treated as receiving an advantage as stated in the Prevention of Bribery Ordinance.

Party lawmaker Sin Chung-kai said if they could not invoke special powers to probe Leung's dealings, the pan-democratic camp would consider moving a motion to impeach him.

Separately, in his blog on Thursday, former HSBC chairman David Eldon said the revelations might lead to pressure from Beijing for Leung to step down.

"President Xi Jinping has made very clear his abhorrence of corruption, and if there is the slightest unpleasant smell about this, what better way than to remove an unpopular official?

"The departure will not have been the result of student pressure … and should see the temporary installation of an altogether more popular person in the shape of Carrie Lam," he wrote.

Meanwhile, Labour Party lawmaker Cyd Ho Sau-lan warned of a possible conflict of interest when earlier this year Leung rejected HKTV's application for a free TV licence. Leung holds shares in DTZ Japan, of which HKR International is a client, and HKR's boss Payson Cha Mou-sing is an ATV shareholder.

In a statement, HKR International said it would adhere to the principles of fairness and justice when choosing its consultancies. "HKR International has always upheld a high level of corporate governance and its operation is independent and unrelated with the ATV business," it said.

Additional reporting by Tony Cheung