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Hong Kong justice minister under fire as illegal structure revelations worsen

Husband signed deal for Teresa Cheng’s luxury HK$62 million Repulse Bay flat with full knowledge of illegal structures

PUBLISHED : Monday, 22 January, 2018, 10:21pm
UPDATED : Tuesday, 23 January, 2018, 1:26am

The illegal structure debacle threatening to derail Hong Kong’s justice minister’s career widened on Monday as new evidence emerged that she had bought a HK$62 million (US$8 million) luxury flat in Repulse Bay with a deed clearly specifying illegal extensions on the property.

Secretary for Justice Teresa Cheng Yeuk-wah is also believed to have bought the flat last year as a first-time buyer, avoiding a stamp duty of HK$6.7 million through a legal loophole, as she already owned companies that had earlier bought at least three other properties in Tuen Mun and Sha Tin.

The damning revelations added to mounting pressure on Cheng, as lawmakers across the political spectrum urged her to come clean on her properties and address the Legislative Council, after she deferred a previous meeting.

On Sunday, after she hinted in a morning radio interview there could be problems with more of her properties than previously exposed, Cheng’s office issued a late-night statement admitting there were three illegal structures in a flat she owned in Southern District.

Land Registry records showed Cheng had bought a third-floor flat in Block A of Sea Cliff Mansions at 19C Repulse Bay Road last September.

The Post found the sale and purchase agreement specified that the buyer, by signing the agreement, acknowledged that the property “contains illegal structures, alterations and unauthorised additions”.

The agreement added that there were no applications or approvals for any of these structures.

Pressure mounts on Hong Kong justice chief Teresa Cheng as lawmakers urge her to come clean on illegal structures

“The vendor will not warrant on the legality of the relevant conditions and the purchaser is willing to accept the property on its present state and condition,” the agreement said.

The document was signed by Cheng’s husband, Otto Poon Lok-to, on her behalf but it specified Cheng as the buyer.

[The controversy] would affect Chief Executive Carrie Lam Cheng Yuet-ngor’s governance, because the government works as a team
Pro-establishment Liberal Party leader Felix Chung Kwok-pan

It also showed that Cheng paid HK$2.635 million in stamp duty – she would have had to shell out HK$9.3 million if she had not bought it as a first-time buyer.

Practising solicitor Raymond Tse Tin-leung, who specialises in property matters, said owners of properties with illegal structures would often include similar clauses as in Cheng’s agreement to prevent buyers from cancelling the deal or requiring the owners to take further responsibilities such as removing the extensions.

Tse added that the law allowed Cheng to purchase a home as a first-time buyer if her other properties were held by companies.

Sammy Po Siu-ming, chief executive of Midland Realty’s residential division, said the government could consider banning sole shareholders of companies holding properties from exploiting the loophole as first-time buyers.

Cheng took the helm at the Department of Justice on January 6 just as news emerged of unauthorised extensions to her home in Tuen Mun’s Villa De Mer estate.

Buildings Department inspectors later confirmed 10 illegal additions had been found at her house and her husband’s home next door. But Cheng insisted the structures were already there when she bought the three-storey property in 2008 and that she had no idea they were illegal.

Lawmakers from the pro-establishment Liberal Party and the New People’s Party, as well as the opposition Civic Party and Democratic Party, all condemned Cheng for her less-than-upfront conduct.

Democratic Party chairman Wu Chi-wai called on the justice minister to “seriously consider” stepping down, as her performance “has been very disappointing”.

Pro-establishment Liberal Party leader Felix Chung Kwok-pan said Cheng should have told the public about her property in Southern District on her first day of appointment.

Don’t rush to judge Hong Kong justice chief Teresa Cheng over her illegal structures scandal

“[The controversy] would affect Chief Executive Carrie Lam Cheng Yuet-ngor’s governance, because the government works as a team,” Chung said.

The pro-democracy camp will table a motion on January 31 to summon Cheng to the legislature to testify over the illegal structure scandal. Opposition lawmakers will need to win over at least eight pro-establishment counterparts to pass the motion, but Chung said his party had yet to discuss the move.

In the pan-democratic camp, Civic Party lawmakers said it was more important for Cheng to answer lawmakers’ questions first than to step down.

Cheng failed to turn up at a Monday Legco meeting of the panel on administration of justice and legal services. According to panel chairwoman Priscilla Leung Mei-fun, Cheng turned down the request because she was not yet ready to brief lawmakers on her work plans, but promised to attend the next meeting on February 26.

Civic Party lawmaker Dennis Kwok said Cheng’s absence was “regrettable”.

“What kind of attitude it is to attend a radio show but not a Legco meeting?” Kwok said.

Cheng also released her declaration of interests on the Executive Council’s website on Monday, revealing that she owned six properties, while her husband owned one.

The six properties include an industrial unit in Sha Tin, a flat in Sha Tin for occupation by family members, a residential unit in Tuen Mun, a flat in the Southern District for lease, a property in Beijing for occasional self-occupation, and a vacant unit in Yunnan.

Queries to the Chief Executive’ office went unanswered on Monday.

Additional reporting by Jeffie Lam