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LCQ4: Strict reporting system to ensure fairness

     Following is a question by the Hon Emily Lau Wai-hing and a reply by the Secretary for Constitutional and Mainland Affairs, Mr Raymond Tam, in the Legislative Council today (February 22):


     It was reported in the press at the end of last year that an Executive Council (ExCo) Member, who is also a Legislative Council Member, and his family members reduced holding of their assets in Hong Kong, including 13 residential units and seven lots, during the period from September to December last year. There were public comments expressing concerns whether the ExCo Member reduced holding of such assets because he had obtained inside information, arousing concerns among members of the public whether the authorities could ensure that ExCo Members would not reap excessive profits because they had access to sensitive inside information. Furthermore, in 2010 when the ExCo Member and his family members gained profits by way of "confirmor sale" prior to the launching of anti-speculation measures for residential properties by the authorities, public comments already suspected whether this was a result of his access to inside information, yet the authorities did not conduct any in-depth investigation into the matter. In this connection, will the Executive Authorities inform this Council:

(a) since the incident of the ExCo Member and his family members gaining profits by way of "confirmor sale" in 2010, whether they have tightened the system of declaration of interests by ExCo Members to enhance transparency and accountability;

(b) whether in the past three years when ExCo discussed sensitive issues such as housing and land, it had on the ground of conflict of interests prohibited any Member holding a large amount of properties and lots from obtaining the papers and participating in the discussions on such issues; if it had, of the details; and

(c) of the number of declarations of interests made by ExCo Members to the Chief Executive and ExCo in the past three years because conflict of interests was involved; of the details of cases in which ExCo Members had to declare their interests in relation to the issues of housing and land, as well as those in which they had withdrawn from the relevant discussions?



     I shall answer the questions raised by Hon Emily Lau on behalf of the Administration.

     The main purpose of the system of declaration of interests for the Executive Council (ExCo) is to ensure that the ExCo Members are fair, disinterested, impartial and unbiased in providing advice to the Chief Executive. Under the current system, the ExCo Members are required to declare their interests at specified intervals, so that members of the public as well as the Administration can monitor whether any ExCo Member has obtained benefits in his/her official capacity, who has access to undisclosed information.

     Specifically, all ExCo Members are required to register their personal interests annually which mainly cover remunerated directorships of companies, remunerated employments, land and property owned in Hong Kong and overseas, ownership of more than one per cent shares in the issued capital of a company etc. Any changes to their registrable interests should be reported within fourteen days. All these information will be uploaded to the ExCo website for public inspection.

     The ExCo Members are also required to declare to the Chief Executive in confidence greater details of their financial interests including shareholdings (irrespective of the amount) in companies as well as futures and option contracts held. Any changes to the interests declared as well as any currency transactions exceeding HK$200,000 should be reported within two trading days after their occurrence.

     In addition, under the current system of declaration of interests, in case an ExCo Member has material personal interests in an item to be considered by the ExCo, he/she should withdraw from the discussion. This can effectively prevent him/her from obtaining benefits with the access to undisclosed information.

     Hon Emily Lau asked about the so-called benefits from "confirmor sales" by an ExCo Member in 2010. The Administration must make it very clear that after the incident was reported in the media, the Administration immediately launched an in-depth investigation to examine and analyse all details on property transactions declared by the Member, the discussions relating to land or property at the ExCo meetings during the relevant period and the relevant documents. The analysis indicated that the property transactions did not constitute direct conflict of interests in the items discussed by the ExCo and also there was no evidence to suggest that the Member had used the ExCo's confidential information for his personal interests. The Administration's findings were reported to the Legislative Council on November 15, 2010. The Chief Executive's Office wrote to Hon Emily Lau on the same day to explain the ExCo's declaration system and reported on the detailed examination and analysis.

     Hon Emily Lau also pointed out that the ExCo Member concerned reduced holding of certain land and property last year. The Administration again conducted an examination and found no evidence to suggest that the reduction of such assets was related to any confidential information obtained from the ExCo meetings.

     On the three specific questions raised by Hon Emily Lau, our reply is as follows:

(a) The current reporting system is strict and effective. The Administration has examined the relevant requirements after the incident concerning the omission to declare interests in relation to properties in 2010 and considered it necessary to make the provisions clearer to avoid any misunderstanding. Since the technical issues involved are complicated, we need more time to conduct analysis and draft the provisions before consulting the ExCo Members. The Administration is at the final stage of its work and we plan to finish it before the end of the current-term Government.

(b) I just pointed out in the reply that the main purpose of the system of declaration of interests is to ensure that the ExCo Members can provide impartial advice to the Chief Executive. If a particular Member has direct and material interests in an item to be discussed by the ExCo, he/she is required to withdraw from the discussion and would not be issued with relevant papers. Direct and material interests refer to:

(i) Significant personal pecuniary interests which might be materially affected by the decision of the ExCo;
(ii) Directorship, partnership or advisory positions of companies which might be materially affected by the decision of the ExCo;
(iii) Professional positions held by the ExCo Members in advising or representing any individual or association in connection with the item under discussion; and
(iv) Other close or substantial interests which, if they are known publicly, might lead members of the public to consider that an ExCo Member's advice might well have been motivated by or associated with his/her personal interest rather than by the duty to give impartial advice.

     Based on the above principles, the amount of property or land owned by an ExCo Member is not crucial in determining whether he/she should withdraw from any discussions. In the event that the Member has only one property but that may be materially affected by the ExCo's decision, the Member is required to withdraw from the discussion.

(c) Statistics for the past three years on declaration of interests or withdrawal from discussions by the ExCo Members in respect of specific items for discussion (including those relating to housing or land) at the ExCo meetings are set out in the Annex.

Ends/Wednesday, February 22, 2012
Issued at HKT 15:55


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