The Hong Kong Special Administrative Region government has announced the immediate termination of all contracts with Xin Ding Xin Trade Co, citing the company’s anticipated failure to fulfill its contractual obligations to supply bottled drinking water to various government offices.

This decision, announced in a statement released late Wednesday, follows earlier government actions to partially terminate the HK$52 million ($6.66 million) contract.

The company also faces accusations of misrepresenting its water-sourcing practices. The director and his wife, a shareholder, were arrested on suspicion of fraud related to the bidding process for the water-supply contract. The couple allegedly submitted false documents to secure the contract.

The two are also accused of violating the Trade Descriptions Ordinance, according to the Customs Department.

During a media briefing on Wednesday, police said that investigations in Shenzhen and Dongguan, Guangdong province, uncovered discrepancies between the claimed and actual sources of the water. Samples involved in the government water supply issue will be sent to Hong Kong’s Government Laboratory for testing.

The terminated contracts also include a HK$6 million chemical supply contract with the Drainage Services Department and a HK$5 million data-entry services contract with the Fire Services Department.

The government said it is entitled to recover its losses from the company’s HK$1 million deposit, and the government reserves the right to pursue further action. The Government Logistics Department will continue to fully cooperate with law enforcement investigations.