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Hong Kong MTR

No rewards for outgoing MTR bosses, Hong Kong leader Carrie Lam says

Chief executive vows top executives leaving the railway firm over a construction scandal will not receive golden handshakes, unlike past practice

PUBLISHED : Wednesday, 08 August, 2018, 11:33pm
UPDATED : Thursday, 09 August, 2018, 2:26pm

Hong Kong’s leader on Wednesday vowed there would be no golden handshakes for the departing CEO and four managers of the city’s embattled rail operator who left over a construction scandal, but she spoke up in defence of top brass staying on, rejecting calls for their heads to roll as well.

“Paying someone to leave like a few years ago, that cannot happen again,” Chief Executive Carrie Lam Cheng Yuet-ngor said, making it clear the departing executives had not fulfilled the terms of their contracts and should not be rewarded with any gratuity payments.

She was referring specifically to the early departures in 2014 of then-MTR Corporation CEO Jay Walder and projects director Chew Tai-chong over their mishandling of delays and cost overruns at the cross-border express rail project.

There was public outrage when it was later revealed that Walder was paid a “contractual settlement” of HK$15.7 million, while Chew pocketed a performance-related remuneration of HK$400,000.

Lam said she had instructed the MTR Corp’s board to “learn from history” in handling such payments, a day after it was announced that current CEO Lincoln Leong Kwok-kuen would leave early, while projects director Philco Wong Nai-keung and three others had left immediately. They were held accountable for unauthorised design changes and substandard construction work at the Hung Hom station of the HK$97.1 billion (US$12 billion) Sha Tin-Central Link, the city’s most expensive railway project.

Paying someone to leave like a few years ago, that cannot happen again
Carrie Lam

Lam defended her refusal to accept MTR Corp chairman Frederick Ma Si-hang’s resignation, saying: “People want all heads to roll, but we have to be reasonable and take the appropriate actions ... when we talk about responsibility and accountability, there are different levels.”

Lam insisted that Ma and the rail operator’s board of directors, including transport minister Frank Chan Fan, had exercised due diligence, but were “kept in the dark”.

Lam also revealed the government’s plan to take “regulatory action” against the main contractor involved in the shoddy work, Leighton Contractors (Asia), which has remained silent throughout.

Leighton is accused of making unauthorised modifications to diaphragm walls that support station platforms.

Under the current penalty system for public works contractors, the government could temporarily bar an offender from bidding for tenders for a period of time.

MTR has to get back on track now that heads have rolled

The government, which owns 75 per cent of the MTR Corp, has asked police to investigate “huge discrepancies” and “conflicting reports” in the rail giant’s submissions on the project.

The police investigation, which Lam said could look into allegations of using false instruments, will also cover staff no longer working at the firm.

A police source said officers had received additional documents and information from the Highways Department last week, after it first filed a report in June regarding the construction problems.

Investigators had been combing through the documents since June, the source said, but admitted a lack of concrete evidence.

“Both the MTR Corp and the contractor needed to sign site inspection records,” the source said. “But now the construction is different from the design and contradicts the inspection records. So did someone make a false statement? That will be in the scope of our investigation.”

MTR’s HK$97.1 billion link scandal: consequences, loopholes and solutions

The chief executive also revealed the government was sending three former government officials – Lau Ching-kwong, Hui Siu-wai and Wong Hok-ning – over to the rail operator to review and improve management of the Sha Tin-Central Link.

Lawmakers of major parties remained sceptical about the justification for allowing the MTR Corp chairman to stay on in his post until a new CEO was appointed in six to nine months.

“Maybe his role is to ensure a smooth transition, but at the very least, Ma should not be chairing the selection for the next CEO,” said Edward Lau Kwok-fan of the Democratic Alliance for Betterment and Progress of Hong Kong.