Hong Kong's tainted water scare

Tendering ban imposed on four contractors linked to Hong Kong's lead-in-water scandal

Contractors ruled out of projects to build 18,000 flats, but punishment may raise costs

PUBLISHED : Thursday, 01 October, 2015, 12:01am
UPDATED : Thursday, 01 October, 2015, 4:58am

Four companies have been punished for the lead-in-water scandal at public housing estates by being barred from seven new projects to build 18,000 flats.

But the Housing Authority is still pondering whether to suspend them from submitting tenders for other developments, as doing so may increase costs and delay the supply of new flats.

The sanction was announced yesterday by Cheung Tat-tong, chairman of the authority's tender committee, after a four-hour special meeting behind closed doors.

It came a week after a review committee of the authority, which was also chaired by Cheung, concluded that soldering materials on fresh water pipes were one of the main sources of excessive lead found in supplies at public housing estates.

"Since we won't consider these companies' bids, we may not always be able to pick the proposals that ask for the lowest prices … An extra HK$1 billion of public money may be spent as a result," Cheung said after the meeting.

The contractors are China State Construction Engineering (HK), Yau Lee Construction, Paul Y Engineering Group and Shui On Building Contractors.

Drinking water samples taken at 11 estates they built were found to contain lead levels in breach of World Health Organisation safety standards.

The decision rules them out of tendering for seven contracts involving construction of 18,000 flats. The authority originally expected they would cost a total of HK$14.4 billion.

"As for whether the authority should still invite these contractors to submit tenders in the future, members had a heated discussion and have yet to reach consensus," Cheung said. The committee will continue the debate tomorrow.

Citing a plan to launch tenders for eight contracts involving 15,000 new flats in the coming six months, Cheung said the authority might need to pay an extra HK$1.2 billion on top of the HK$12 billion original budget if the four companies were further barred from making bids.

"We have to be very prudent in our consideration because public money is involved. From past experience, these four companies have been the best performing contractors in Housing Department projects. They completed jobs on time and their work was fine," he said. "We also have to consider public housing applicants' wish to be allocated flats in a timely manner."

Civic Party lawmaker Dennis Kwok, a committee member, said the penalty was insufficient. But he warned that a further suspension might allow other companies to raise their prices, thus costing more public money.

He suggested the four contractors be required to set up a fund for the authority to compensate residents in the event of lawsuits and to pay for new pipes.