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Following is a question by the Hon Albert Ho and a reply by the Chief Secretary for Administration, Mrs Carrie Lam, in the Legislative Council today (October 29):
Question:
The incumbent Chief Executive (CE) announced his resignation from DTZ on November 24, 2011 to stand in the CE election. It has recently been reported by some Australian media that a few days before his resignation took effect in December of the same year, CE signed an agreement with UGL Limited (UGL), which was then planning to acquire DTZ, undertaking not to poach employees from or compete with DTZ as well as to act as referee and adviser to UGL, within two years after the acquisition was completed. Under the said agreement, CE received a remuneration of 4 million pounds in two tranches in December 2012 and December 2013 (i.e. after he had taken office as CE on July 1, 2012). In addition, it has been reported that CE currently still holds shares in DTZ Japan (the Japanese branch of DTZ), and that the major shareholder of an important client of that company is also the major shareholder of a television company in Hong Kong. As such, some members of the public have queried whether there has been a conflict of interests in the vetting and approval of the applications for domestic free television programme service licences (free TV licences) on the part of CE. In this connection, will the Government inform this Council:
(1) whether, under the existing mechanism for declaration of interests for CE pursuant to Article 47 of the Basic Law, CE is required to declare, upon assumption of office, to the Chief Justice of the Court of Final Appeal such remuneration which is receivable but has not yet been received by him under private agreements; if he is required to do so, of the relevant dates and contents of such declarations made in the past two years; if not, the reasons for that;
(2) whether, under the existing mechanism for declaration of interests for Members of the Executive Council (ExCo), CE as the President of ExCo is required to declare at the beginning of his term of office and annually thereafter such remuneration received by him under private agreements; if he is required to do so, of the relevant dates and contents of such declarations made in the past two years; if not, the reasons for that; and
(3) whether any declaration made by ExCo Members (including the President of ExCo) in the course of vetting the three applications for free TV licences in the past two years involved personal interests in that item under consideration; if so, of the details, and whether the Members concerned had withdrawn from the discussion for this reason?
Reply:
President,
My reply to Hon Albert Ho's question, after consulting the Chief Executive's Office, is as follows.
Mr C Y Leung was the Asia Pacific Director of DTZ before he stood for the Chief Executive (CE) election. He announced his resignation from DTZ on November 24, 2011. In view of his resignation, UGL, which was at that time acquiring DTZ, concluded with Mr Leung a resignation agreement on December 2, 2011. Under the agreement, UGL undertook to make payments to Mr Leung over a two-year period and to underwrite for DTZ the payment of outstanding agreed bonus to Mr Leung, subject to key personnel remaining with DTZ during the two years subsequent to Mr Leung's resignation. As pointed out by UGL, the agreement was simply a non-compete arrangement which was to ensure that Mr Leung would not move to a competitor, set up or promote any business in competition with DTZ, or poach any people from DTZ, and hence to ensure that the business retained its value after the acquisition by UGL. Such agreement was a confidential commercial arrangement and a standard business practice.
As evident from the above, the agreement and payments concerned arose from Mr Leung's resignation from DTZ, not any future service to be provided by him. Under the current system of declaration of interests by members of the Executive Council (ExCo), there is no requirement for Mr Leung to declare the said resignation agreement. Moreover, both Mr Leung's resignation from DTZ and conclusion of the agreement with UGL took place before he was elected as the CE, and at the material time, he had already resigned from ExCo.
As confirmed in UGL's public statement, Mr Leung has not provided any service to UGL after signing the resignation agreement.
My reply to the specific parts of the Member's question is as follows.
(1) Article 47 of the Basic Law stipulates that the CE, on assuming office, shall declare his or her assets to the Chief Justice of the Court of Final Appeal of the Hong Kong Special Administrative Region (CJ), and that this declaration shall be put on record. On assuming office, the CE made such declaration to the CJ in accordance with the Basic Law. The term "assets" is not specifically defined under the Basic Law. The relevant declaration is confidential.
(2) As President of ExCo, the CE observes the system of declaration of interests for ExCo members, including the requirement for regular declarations. The CE has declared his registrable interests annually for public inspection. He has also made declarations on his financial interests annually on a confidential basis deposited with the Clerk to ExCo. As with other ExCo members, the CE would notify the Clerk to ExCo of any changes to the interests declared in accordance with the system.
Regarding the payments mentioned in the Member's question, as I have mentioned just now, there is no requirement for Mr Leung to declare such payments under the current system of declaration of interests by ExCo members. Moreover, both Mr Leung's resignation from DTZ and conclusion of the agreement with UGL took place before he was elected as the CE, and at the material time, he had already resigned from ExCo.
Regarding DTZ shares held by the CE, the CE has transferred all his shares of DTZ Holdings Plc and its subsidiaries to a trust. The trustee is a practising accountant. The CE has declared such interests according to the system of declaration of interests by ExCo members, and the relevant declaration has already been uploaded to the ExCo website.
(3) In line with the principle of confidentiality of ExCo, the Government does not disclose the content of ExCo discussion or the related declarations of interests. However, we would like to point out that the Government has put in place an effective system to check potential conflict of interests on the part of the CE and other ExCo members in dealing with ExCo business. The system includes the following:
(a) the responsible bureau or department submitting an item to ExCo and the Clerk to ExCo will, in exercising due diligence, examine whether the CE or any ExCo Member may have an interest in the subject matter; and
(b) where available information shows that the CE or any ExCo Member may have an exclusionary or declaratory interest in the matter, the Clerk to ExCo will, prior to the relevant ExCo meeting, draw the CE's attention to that interest for the CE to consider whether the interest should be declared at the meeting and how the ExCo discussion should be handled.
Ends/Wednesday, October 29, 2014
Issued at HKT 11:52
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