Both the Hong Kong Special Administrative Region government and the city’s ombudsman are probing the suspected fraudulent procurement of bottled drinking water for civil servants.
A full-scale review of the government’s procurement system is currently under way.
Speaking after the inaugural meeting of the dedicated task force on Thursday, Secretary for Financial Services and the Treasury Bureau Christopher Hui Ching-yu told media that the government will submit a report in three months and promised that rectification measures will be announced before the end of November.
Hui confirmed the investigation will focus on critical vulnerabilities exposed by the scandal, including the tender bidding process, contract management protocols, and personnel accountability. He pledged to act swiftly and with transparency.
"We will not wait for the final report before we act,” he said, adding that interim findings and initial corrective measures will be announced midway through the process.
The review followed the arrest of two people for allegedly falsifying tender documents to win a contract supplying bottled water to government departments across Hong Kong Island and the Outlying Islands.
The couple’s company, Xin Ding Xin Trade Co (XDX), stands accused of falsely claiming its product was manufactured by a Chinese mainland company — Robust Group’s Guangzhou branch — a key requirement in the bidding process.
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XDX was awarded a three-year contract for bottled drinking water valued at HK$52.94 million ($6.77 million). They began providing the service at the end of June; the government had yet to pay the full bill before the scandal was exposed in mid-August.
On Aug 18, the Government Logistics Department terminated a further three contracts relating to two separate companies involving the company’s executive director. The three contacts, supplying bleaching water or powders, were valued at over HK$2 million.
Prior to re-tendering, a temporary supply contract was awarded to AS Watson Group (Hong Kong) Ltd for HK$7.1 million for four months’ supply.
Director of Government Logistics Carlson Chan Ka-shun apologized for the incident, admitting the department’s procurement procedures’ had been inadequate.
The incident has sparked public concern over the government’s procurement process while civil servants have questioned the safety of drinking water supplied to them, Chan said.
During the review, the department will also aim to raise the vigilance of its staff to prevent such an event happening again.
The government on Wednesday said it had immediately terminated all other contracts with those companies, including a contract, valued at around HK$6 million, for the supply of chemicals awarded by the Drainage Services Department and another, worth approximately HK$5 million, for data entry services awarded by the Fire Services Department.
In the meantime, the HK$1 million deposit for the drinking water contract will be confiscated in accordance with the contract’s terms.
The three government departments will continue to follow up on these contracts, aiming to make good the government's losses.
Chief Secretary for Administration Eric Chan Kwok-ki said earlier on Thursday that authorities are treating the incident with the utmost seriousness. He revealed that the initial suspicion points to fraudulent acts, specifically involving false documents and certificates.
He confirmed that a joint investigation is being conducted by the police and relevant authorities. In parallel, the Audit Commission has initiated a review of the tender and procurement process to identify systemic weaknesses.
When questioned on whether any government officials would be held accountable for the oversight, Chan pointed to the established civil service mechanism. “We will handle this strictly in accordance with that mechanism."
