Hong Kong and Venality in High Places

The trial for corruption of the former number two official in the Hong Kong government is telling voters in vivid detail what they have long suspected: the unhealthily close relationship between officials and the clique of mega rich men who dominate the local property market.

The proceedings against Rafael Hui Si-yan and the top executives of Sun Hung Kai Properties, Thomas and Raymond Kwok, and two others, has only just begun and is likely to last many weeks. The matter of guilt to various charges has yet to be determined. But evidence to date already displays the eagerness of the corporate executives to be in constant contact with top officials, and the officials’ willingness to respond to such contacts.

Hui became number two in the government following the abrupt departure of Tung Chee-hwa, the first chief executive of the SAR government. Tung was succeeded by the chief secretary for administration, lifelong bureaucrat Donald Tsang, who proceeded to appoint fellow bureaucrat Hui to his position.

Hui was at that time managing director of the Mandatory Provident Fund Schemes Authority, a body which supervised the territory’s compulsory savings scheme – but in a way that provided massive profits for select providers to the disadvantage of savers facing extraordinarily high costs. Previously Hui had been secretary for financial services but resigned from the civil service to take up this even more highly paid position in a quasi-government institution. The prosecution alleges that he began receiving money from the Kwok brothers of Sun Hung Kai while with the MPF.

Hui was chief secretary until retiring in 2007 but remained on the Executive Council, the territory’s top policy-making body until 2009. He was arrested in 2012. He was a classic Hong Kong insider, a steward of the Jockey Club, a private club which operates a gambling monopoly. Stewards are a super elite group of officials and businessmen. (An old Hong Kong saying has it that the territory is “Run by the Jockey Club, the Hong Kong Bank and the Governor/Chief executive – in that order.”). Current stewards include Hui’s successor as Secretary for Financial Services, Stephen Ip Shu-kwan.

The allegations against Hui, which include cash payments through various intermediaries, as well as other advantages, appear rather crude compared with assumptions from legal, media and other sources that payoffs to senior officials are mostly made after the latter have left office and can be disguised as appointments to well-paid sinecures on boards, or property deals transacted through offshore companies. But possibly Hui had more urgent cash needs. Among other extravagant expenses detailed by officials was the problem of providing “vast amounts of mash and carrots”for his racehorse.

What is supremely obvious is that the top 10 richest Hong Kong people are all property developers and that they got to the top not merely but being in the right place at the right time but by being able to influence government officials in their favor. There have been numerous examples of “mistakes” or “new interpretation of rules” by officials which have enabled developers to profit inordinately, as well as broader policies on land sales and pricing, development rights, plot ratios, etc., which have created huge profits for a few developers (and revenue for government) at the expense of households and non-property businesses.

Despite much smoke, until the Hui case the Independent Commission Against Corruption never quite seemed able to find evidence for prosecution either of senior officials or big name developers. Possibly officials became complacent as a result and 2012 saw an avalanche of big and small scandals.

Hui’s successor as chief secretary for administration and leading candidate to succeeded Tsang as chief executive, Henry Tang, was revealed to have created a massive illegal basements under his house, including a theatre, gym, wine cellar and wine-tasting room. He blamed this structure on his wife. The couple eventually got away with a small fine, continuing to prove that officials are favored by the law, but his political career was ruined.

Almost at the same time, information leaked out that chief executive Tsang had himself been in the habit not merely of hobnobbing with some very rich business people including Macau gambling bosses, but had been accepting what seemed to be advantages in the form of transport and access to property. These matters are still supposedly under ICAC investigation but the matter is taking an absurdly long time, suggesting cover-up, – as is an investigation into the high spending of a former head of the ICAC itself.

The ICAC is supposed to be independent but in reality it has just become another civil service posting, and often one for those still looking for further promotion. Thus it is not hard to imagine that mutual protection and a sense of omerta runs strongly through is ranks.

The thread connecting all these incidents, as with Hui, is the senior civil service connection. Although the top bureaucrats enjoy very generous salaries and conditions, often get well paid sinecures after retiring, and enjoy powers little challenged by a political system in which they are embedded, some still feel a need to be able to be on a par with the business elite when it comes to spending money: to buying million dollar-watches, owning a racehorse or two, and with a wine cellar full of the most expensive vintages.