Teresa Cheng

Hong Kong leader Carrie Lam backs under-fire justice chief Teresa Cheng as mortgage deed raises new questions

Chief executive calls for more tolerance and discloses permission given to minister to wrap up private practice cases, drawing further condemnation from opposition lawmakers

PUBLISHED : Thursday, 11 January, 2018, 1:11pm
UPDATED : Tuesday, 23 January, 2018, 12:39pm

Hong Kong’s leader on Thursday ­appealed for more tolerance ­towards her new justice minister, Teresa Cheng Yeuk-wah, over the scandal involving illegal ­structures at her house, even as a mortgage deed for the property emerged, raising ­suspicions of a cover-up.

The controversy further escalated after Chief Executive Carrie Lam Cheng Yuet-ngor told lawmakers that she had “permitted” Cheng to continue handling six outstanding arbitration cases from her private practice, as Cheng did not have enough time to complete them before she joined the government last week.

Opposition pan-democrats condemned Lam’s approval of Cheng’s “moonlighting”, saying it was “absurd” and warned of a possible conflict of interest while several pro-establishment figures held back from voicing full support for Cheng.

At her first question-and-answer session this year, Lam told the Legislative Council that she believed Cheng did not intentionally cover up the issue and rejected calls for the new minister to resign, insisting that she was still the right person for the job.

This was despite a new revelation on Thursday that a mortgage document signed in 2008 for Cheng’s Villa De Mer home in Tuen Mun did not mention the existence of a basement.

Top Hong Kong officials who were caught out over illegal structures

A sales and purchase agreement, signed in 2012 by Cheng’s husband, Otto Poon Lok-to, for the house adjacent to hers, also did not mention a basement there. The basements were among the 10 illegal extensions found in the two houses by Buildings Department officers earlier this week. Poon had no comment.

The mortgage document, which was obtained by the Post, was signed on October 23, 2008, between Cheng’s company, Sparkle Star Development, and Standard Chartered Bank (Hong Kong). The deed described Cheng’s home as “House No 4 … comprising a ground floor, a first floor, a second floor, and a roof together with the garden and carport”.

Cheng did not respond to the Post’s questions relating to the mortgage deed.

She earlier said she had not made any alterations to the house after she bought it and had been too “busy” with work to notice the illegal extensions. Nor had she thought of hiring a qualified professional to check until she was alerted by the Buildings Department last week.

Opposition pan-democrats weighed in on the scandal during Lam’s 90-minute question-and-answer session.

Tanya Chan of the Civic Party warned that the omission of the basement in the mortgage document suggested that Cheng might have “lied” to the bank. “With her legal knowledge, she should understand what she was doing at the moment,” Chan said.

Fellow opposition lawmaker Helena Wong Pik-wan, of the Democratic Party, accused Lam of setting a bad example for other civil servants, as they might think the chief executive would shelter them from having to answer for their mistakes. She also doubted if Cheng could be ignorant about the illegal structures because she once chaired the Appeal Tribunal Panel (Buildings) that handled complaints on illegal structures.

Speaking after the session, pro-establishment legislator Paul Tse Wai-chun, also a solicitor, warned it was a criminal offence to hide information from the bank when applying for a mortgage.

Lam told lawmakers: “I understand that the public would have higher expectations of our senior officials. I also understand that it might not be good enough to say [that] such overlooking is due to being too busy … I hope councillors can be more tolerant.

“I hope Teresa Cheng can be allowed more room to deal with the illegal structure saga and after that she can start her work as secretary for justice.”

But Lam was quick to add that it did not mean she would tolerate any government official knowingly breaking the law.

Lam reiterated that the decision to appoint Cheng to succeed Rimsky Yuen Kwok-keung as the new justice minster was made in a short time and that when she recruited Cheng, she agreed for the prominent legal figure in arbitration to finish up about six arbitration cases from her private practice that were set to be concluded soon.

“Therefore, I hope people can handle this issue in a more tolerant manner. I might not be able to bear such workload and pressure if I were in a similar situation,” Lam said.

Cheng has promised to surrender the income generated from the cases to the government. “Of course, it will be donated to charities,” Lam said.

The Chief Executive’s Office issued a statement shortly before midnight on Thursday, saying the approval of the six arbitration cases was given because of the exceptional circumstances involved.

The statement said the six cases had reached the adjudication stage and were expected to be concluded in a few months, and that it would be irresponsible for Cheng to drop the cases at this point as this would cause inconvenience to the parties involved and not be conducive to the development of Hong Kong as a regional arbitration centre.

The statement quoted Cheng as saying that the cases did not involve her job as justice minister, the government or any public institutions.

The office further revealed that Lam had allowed Cheng to finish her teaching job for a spring course at Tsinghua University in Beijing.

It said the course involved only three weekends, and Cheng was not paid for the job. It added that she had quit the other relevant posts for this course.

The statement also said Cheng had quit the directorship and transferred her 75 per cent share of a company she set up to provide secretarial services for her private practice. It said the company would be closed after Cheng had cleared the outstanding work.

Justice chief admits lack of political sensitivity but refuses to resign over illegal structures scandal

Democratic Party lawmaker James To Kun-sun, speaking after the question-and-answer session, said: “It is a very wrong step and a very bad precedent for which the chief executive should be held accountable.”

New People’s Party chairwoman Regina Ip Lau Suk-yee, a member of Lam’s cabinet and the city’s former security minister, also described it as a “rare practice” as she called on the government to disclose more details of the cases.

The Department of Justice did not respond to the Post’s enquiries on the details of the six cases and whether Cheng would handle them during working hours.

Later in the day, a group of activists from the Labour Party made a police report alleging that Cheng had made a false statement to the bank in the mortgage document. They said police had initially classified the case as “request for police investigation”.