Motion on “Combating Acts of Bid-Rigging in Repair Works of Private Residential Buildings” (2015.12.02)

MR CHAN KIN-POR (in Cantonese): Bid-rigging is a big headache to everyone indeed. Most people in Hong Kong get up to work at sunrise and just want to have some good rest at home after work, but it would be difficult for them to live in peace if they have to worry about the sky-high cost of repair works. I once heard some victims say that apart from money losses, the matter was so worrisome that they felt restless at home every day and did not sleep well at night, which is absolutely a mental ordeal to the affected victims. Thus, it is necessary for the Government to solve the problem with powerful means as soon as possible.

Despite the many options explored by the Government, and actions taken by the Independent Commission Against Corruption (ICAC) and the Police, and coupled with the fact that the Competition Ordinance will soon come into effect, bid-rigging remains a difficult task to solve because building repair and maintenance works is a highly lucrative business which brings in more than tens of millions of dollars. Worse still, the current system is riddled with of loopholes, which if left unplugged, would encourage people to take risks.

Having been served as the chairman of the owners’ committee of a large residential estate for years, I have gained first-hand experience of the huge loopholes in the property management system, which is particularly vulnerable to exploitation by lawbreakers. The formation of the owners’ corporations (OCs) and the mechanism under which the OCs pass resolutions, just to name a few, have never been subject to any regulation.

We have put forward a lot of proposals today. While I agree with many of them, I think we need to get to the root of the problem by plugging the loopholes at source. As pointed out in many analyses, in view that a large number of buildings is in a state of dilapidation in recent years, the Government has encouraged property owners to form OCs and take up the responsibility of repair. And, to facilitate the formation of OCs by property owners, the Government has adopted a very lax approach. However, this well-meant arrangement has been exploited by lawbreakers. They first colluded with some property owners to form an OC under the lax mechanism, and then conspired with contractors and awarded building maintenance contracts to them at sky-high prices by means of bid-rigging. The entire process is not only lacking in transparency but is also not subject to any regulation, thereby ending up benefiting the lawbreakers.

The Government is currently reviewing the Building Management Ordinance and the relevant consultation exercise has already been completed early this year. What is more, I have time and again relayed opinions to Policy Bureaux and the ICAC, and a final decision is now pending from the Government. At present, the quorum of the OC meetings at which the voting of resolutions on large-scale maintenance projects took place is just 10% of the property owners, and only a majority vote is required for the granting of maintenance contracts. That is to say, the lawbreakers may grant maintenance contracts by simply securing support from 5% of all the property owners. To plug this loophole, an effective way is to raise the threshold. In the consultation document, the Government has also proposed to raise the quorum of OC meetings from 10% to 20% or 30%. I support this proposal for it would arouse greater awareness of building maintenance among property owners and prevent lawbreakers from stepping in, thereby providing greater protection to the owners. I hold that while raising the threshold is certainly an effective means, it should not be too high, or else it will be difficult for the maintenance projects to get passed in the future.

Another major loophole is the system of the instrument of authorization, which is commonly known as “proxy”. Currently, proxies are permissible at meetings at which voting of resolutions on the forming of OCs or the endorsement of maintenance projects took place. However, problem may arise if no stringent regulation is imposed on the use of proxy instrument. Under the present system, the convenor is responsible for both implementation and monitoring. So, should he have any evil intention, the consequence could be catastrophic because building operation and management involves vast sums of money, and may reach as high as hundreds of millions of dollars in some residential estates, which has provided great incentives for corrupt practices. In order to get this “fat meat”, lawbreakers would not hesitate to forge proxy instruments to have an OC established. Also, they might make use of the forged proxy instruments to have a resolution on maintenance project endorsed. Given that both implementation and monitoring lie in the hands of the same person, the making of forged proxy instrument is just a piece of cake for lawbreakers, and it is also difficult to trace.

In fact, the Government also acknowledged this problem and has therefore put forward a series of proposals in the consultation document, which include tightening the original arrangements for the collection and verification of proxies. I basically agree to this point, but there are other problems in certain elements. For example, a third-party verification mechanism should be put in place to enable, say, mediators, auditors or lawyers to verify the proxies by means of making random telephone calls to the property owners concerned, with a view to stamping out the possibility of forged proxy instruments. Moreover, under the present system, the convenor is empowered to declare certain proxy instruments void without giving any explanation to the property owner concerned. In the future, the convenor should make available sufficient time for informing the property owner concerned, so that appeals can be filed against the decision.

Although the above-mentioned measures may plug some of the loopholes and make the life of lawbreakers more difficult, the Government has implemented some of the recommendations, such as tightening the arrangements for proxy instruments, by means of guidelines. There is concern that the measures, which have no legal effect, will be reduced to a “toothless tiger” as no one would observe them. Nor do they have any deterrent effect on people who harbour ill intentions. In my view, the Government must be determined and make comprehensive efforts to impose criminal liability for certain key elements, such that all the loopholes can be plugged.

Lastly, I would like to talk about some other proposals as well. I hold that enhancing the flow of information is one of the most effective solutions to the problem as bid-rigging per se is nothing but a practice to dupe property owners. Owners will naturally stay alert if they know that the same project costs only a few million dollars in other housing estates but ten million dollars in their housing estate. Should there be credible organizations to provide information and details about the market price of various projects, I trust that this would be genuinely helpful to property owners.

I so submit.

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