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LCQ2: Measures to prevent conflicts of interests involving Politically-Appointed Officials

     Following is a question by the Hon Kenneth Leung and a reply by the Secretary for Constitutional and Mainland Affairs, Mr Raymond Tam, in the Legislative Council today (November 7):


     It was uncovered earlier that there were unauthorised alterations in two properties owned by Harvest Charm Development Limited (the Company) in which the wife of the Secretary for Development (SDEV) had a stake and that the properties had been used to operate sub-division of flat units (commonly known as "sub-divided units"). Moreover, while SDEV has said that he and his wife do not hold any shares of the Company at present, it has been reported that SDEV might still have control over the Company through two overseas registered companies. Some members of the community have pointed out that SDEV has a duty to tackle the problems of "sub-divided units" and housing for members of the public, yet the Company in which his wife has a stake is suspected to have carried out unauthorised alterations and operate "sub-divided units", they are therefore concerned about whether the integrity checking mechanism for Politically-Appointed Officials (PAOs) and the existing measures can effectively prevent conflicts of interests. In this connection, will the Government inform this Council:

(a) whether it had conducted checking on the integrity and sources of assets of the candidates for nomination as SDEV and their family members; if it had, of the details of the checking mechanism, and whether checking was conducted under the mechanism on the candidates or their immediate family members to see if they were involved in unauthorised alterations and the operation of "sub-divided units", and whether they could pass the integrity checking when they were so involved; whether the Government has reviewed and improved the mechanism in the light of the aforesaid incident; if it has, of the details;

(b) as it has been reported that the relatives of SDEV were engaged in investment activities of trading old buildings, and SDEV needs to handle policies on urban renewal and land supply, whether the authorities have assessed if there are any loopholes in their measures to prevent conflicts of interests; and how they ensure that the private affairs of the various PAOs and their family members will not lead to conflicts of interests with the official duties concerned; and

(c) whether the existing declaration system requires the various PAOs to declare the shares in overseas registered companies indirectly held by them and their spouses and to declare if they receive any bonuses from those companies; if so, of the details of the relevant declarations; and whether the Government will take the initiative to ascertain if the relevant declarations are true; if it will not, of the reasons for that?



     In response to recent media reports concerning the investment in old buildings by Harvest Charm Development Limited (the Company) which the Secretary for Development's wife had a stake and the related discussions in the community, the Secretary for Development (SDEV) has explained the case to the society by issuing written statements, as well as meeting the media and responding to their enquiries since August this year. SDEV has never held any share of the Company. The shares of the Company held by his wife through an overseas registered company have all been sold already. In accordance with the Company Ordinance (Cap. 32), the relevant changes in shareholdings will be reflected in the 2013 annual return of the Company. As a Politically-Appointed Official (PAO), SDEV must comply with the Code for Officials under the Political Appointment (the PAO Code), which requires PAOs to avoid conflict of interests. In SDEV's statement issued in August, he has already undertaken that during his tenure as SDEV, he and his wife would not be involved in the Hong Kong property market, except for personal usage. The Administration will not further provide supplementary information and comment on this case.

     In consultation with the Chief Executive's Office and the relevant bureaux, I would like to respond to the remaining parts of the question raised by the Hon Kenneth Leung on behalf of the Administration as follows:

(a) All PAOs need to undergo extended checking. The Administration will provide extended checking questionnaires to prospective candidates for nomination to become PAOs. The content of this questionnaire is the same as the one being used in the civil service. The subject undergoing extended checking needs to fill in his/her detailed personal particulars, education background, social activities, employment history, family members, etc. The subject also needs to nominate two referees to facilitate understanding of his/her background, work, family and other relevant situations. The Police are responsible for the checking. Inputs from other law enforcement agencies will be sought as necessary. The checking comprises interviews with the subject, his/her referees and supervisors as well as record checks.

     The effectiveness of the extended checking system is based on trust and cooperation of all the parties involved. It is therefore essential to uphold strict confidentiality of the stipulated arrangement or case content, or the relevant detailed information of the checking system.

(b) According to the requirements of the PAO Code, PAOs shall observe the highest standards of personal conduct and integrity at all times; ensure that there is no actual or potential conflict between his official duties and personal interests; avoid putting themselves in a position where they might arouse suspicion of dishonesty, unfairness or conflict of interest; refrain from handling cases with actual or potential conflict of interest; and report to the Chief Executive any private interest that may influence, or appear to influence, their judgement in the performance of their duties.

     According to the requirements of the PAO Code, PAOs of all ranks shall declare their different kinds of investments and interests by filling in the prescribed form. The open parts of their declarations are placed on the websites of their respective offices/bureaux for public inspection. The relevant parts also require the PAOs to provide the names and occupations of their spouses. In the confidential parts of the declarations, PAOs of all ranks are required to provide the names of the organisations which their spouses work for.

     Apart from the above, PAOs, as public officers, would be prosecuted if found committing the common law offence of misconduct in public office. At the same time, PAOs are regarded as "prescribed officers" under the Prevention of Bribery Ordinance (Cap.201) (the POBO). They are therefore subject to the relevant provision in the POBO applicable to the "prescribed officers". Section 2(2) of the POBO states that a person is soliciting or receiving an advantage if he, or any other persons acting on his behalf, directly or indirectly demands, invites, asks for or indicates willingness to receive, any advantage, whether for himself or for any other person. To remind the PAOs, the relevant provision is included in the PAO Code.

(c) The current declaration system requires PAOs of all ranks to declare their investment, shareholding or direct or indirect interest in any company; their directorships, proprietorships or partnerships in any company; and, if any, the specific details concerning their participation in any private company's affairs. They are also required to declare any investment and interest held by himself/herself or in the name of his/her spouse, children or other persons, agents or companies, but are actually acquired on his/her account or in which he/she has a beneficial interest. As mentioned in part (b) of my reply, the names and occupations of the spouses of PAOs of all ranks are mandatory items to declare.

     PAOs of all ranks are responsible for ensuring that their declarations made according to the requirements of the PAO Code are accurate.

Ends/Wednesday, November 7, 2012