“Where there is smoke, there is fire.” Similarly, where there is “big money, there are opportunities for corrupt practices”. Finance is obviously a sector that involves big money. Another, and closer to home and to recent memory, is property renovation jobs under the Mandatory Building Inspection Scheme launched in 2012.
In the United States, the spectacular rise and demise of FTX is a similar case in point. Sam Bankman-Fried started FTX, a trading platform in cryptocurrencies, in 2019. Supercharged by marketing campaigns with big names, customers kept streaming in to open accounts on FTX to trade cryptocurrencies. By January 2022, the valuation of the company reached $32 billion. With client money siphoned off for private use, Bankman-Fried was eventually convicted of fraud and money laundering and sentenced to 25 years in prison. It took only about 10 days for the company to collapse. In Hong Kong the rise and subsequent fall of JPEX, another cryptocurrency platform, followed a similar script. Like FTX, JPEX very rapidly gained patronage due to effective marketing helped by some big names. More than 2,600 people filed reports to the police and total losses exceeded HK$1.6 billion ($206 million).
The launch of the Mandatory Building Inspection Scheme created huge opportunities for big profits for those in the business of inspection and renovation work. On paper, property owners should have no worries, because a registered inspector will carry out the prescribed inspection and supervise relevant repair works found necessary of the common parts, external walls and projections or signboards of the buildings. Where a repair is required, the owners concerned must appoint a registered contractor to carry it out under the supervision of a registered inspector. Since both contractors and inspectors are registered with the Hong Kong Special Administrative Region government, what is there to worry about?
Unfortunately, human nature being what it is, not all registered inspectors and registered contractors are candidates for sainthood. It is well known that some professionals like accountants, lawyers, engineers, doctors, police officers — and even professors — are susceptible to corruption and unethical practices. The government should not assume that requiring registered or authorized persons to take charge of key responsibilities is enough.
The Wang Fuk Court fire will be remembered as a blot on Hong Kong’s history. The lessons from the tragedy must be learnt. It must never happen again. Corrupt practices must be rooted out
Given that there are many residential buildings older than 30 years, the number requiring renovations is huge. The government, moreover, also offers up to HK$80,000 for elderly people who meet the means test for a renovation subsidy. The temptation for bid rigging is huge, simply because there is big money involved.
Rigged bidding is a phenomenon known to the public for a long time. Because of intertwined interests and the technical complexities involved in construction and innovation projects, members of owners’ corporations in private developments face huge challenges in identifying corrupt practices. Even when they suspect problems, they are powerless to do much.
The Garden Vista case is a rare bid rigging case that has led to arrests. A contractor was the whistleblower and he was jailed for 35 months. This contractor turned himself in to the police in 2014. If he had not done so, the case would never have come to light. The management company was eventually investigated by the Independent Commission Against Corruption, leading to further arrests, but no further convictions were reported apart from the whistleblower’s. The Competition Commission in 2016 issued a statement saying that “Bid-rigging is a matter of grave public concern and the Garden Vista case in Sha Tin has been closely followed. The successful prosecution of the defendant drives home the message that participants in building renovation and maintenance projects should steer clear of bid manipulation practices.” Yet the conviction of the whistleblower — and not the key decision makers in the case — fell short of public expectations.
Josiah Lam Wai-kuen, the judge in the Garden Vista case, said that as a homeowner himself, he agreed that the Mandatory Building Inspection Scheme is a great idea, but supervision from regulators had been ineffective, allowing unlawful businessmen opportunities to divide benefits among themselves. He urged the government to establish an effective supervisory organization comprising well-trained professionals to ensure that the bidding process is free from corrupt practices.
The government has now set up an independent committee to investigate the deadly fire at Wang Fuk Court in Tai Po, which left 161 people dead. Chaired by Judge David Lok, the committee has already started work, and is expected to complete the investigation in nine months. If deemed necessary, the committee will also be given the statutory power to subpoena individuals to help with the investigation.
It is hoped that the committee will address the systematic problems that have contributed to the tragedy. Bid rigging is a form of corruption. Whether there was bid rigging in the Wang Fuk Court renovation work has yet to be looked into. But we now know that the fire alarm was not functional and that the scaffolding nets were substandard and contributed to the rapid spread of the blaze. Whoever was responsible for these blunders must be held to account. The committee will focus only on fact-finding and recommendations for policy actions. Establishment of legal responsibility and judicial proceedings will be left to law enforcement authorities.
The Wang Fuk Court fire will be remembered as a blot on Hong Kong’s history. The lessons from the tragedy must be learnt. It must never happen again. Corrupt practices must be rooted out.
The author is an honorary research fellow at the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University, and an adjunct professor at the Academy for Applied Policy Studies and Education Futures, the Education University of Hong Kong.
The views do not necessarily reflect those of China Daily.
