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Panel Report on the Allegations of Conflict of Interest Presented to the URA Board

The panel responsible for looking into the allegations of conflict of interest involving the Urban Renewal Authority's (URA) Chairman Dr Lau Wah-sum and Managing Director Mr Canice Mak presented its report to the URA Board at today's (30 August 2001) Board Meeting. Earlier, some press reports brought out that there might be a conflict of interest because Dr Lau Wah-sum and Mr Canice Mak were both shareholders of Sino Elite Limited, a company which owned a piece of farmland in Sai Kung.

The panel consisted of three URA Board members including Ms Maria Tam Wai-chu as the chairperson, Professor Cecilia Chan Lai-wan and Mr Michael Lai Kam-cheung. The panel was set up at the request of the URA management in early August to look into the allegations of conflict of interest. The panel's report will be submitted to the Planning and Lands Bureau (PLB) in response to a letter addressed to Mr Canice Mak by the Deputy Secretary of PLB Mr Stephen Fisher who requested a report on the allegation.

In order to have a better understanding of the issue, the panel decided to review registration documents of Sino Elite Limited and the company's annual return and profit and loss accounts. It also studied the land search record in respect of the land owned by the company and interviewed two shareholders of the company, who were not acquainted with the panel members and were chosen at random.

The report concluded that there was no conflict of interest because the information gathered showed that the shareholders of the Sino Elite Limited were a collection of persons having a common hobby of planting and not bearing a commercial business relationship. They were together in pursuance of social hobbies. This was not affected by the subsequent change of zoning of the land to "Village Type Development".

Ten people, some from Hong Kong University of Science and Technology, some from the former Land Development Corporation (LDC) including Dr Lau Wah-sum together with people from other fields joined to look for a suitable farmland for planting. The land was brought in April 1999. In order to purchase and hold the farmland, a company (i.e. Sino Elite Limited) was acquired and these 10 persons became shareholders of the company. Mr Canice Mak later bought his share in Sino Elite Limited from a former shareholder who decided to sell her holding when he was in the LDC.

The panel learned that there had been no activity of planting in the farmland because there was no access road and that shareholders were travelling or busy with their own occupations/professions. In late August 2001 photographs were also taken of the land in question and there is no development or business activities on it.

The report also found out that the company was not engaged in any commercial activities. Besides, the farmland (Lot nos. 846, 848 and 868 all in DD369) located in an area beyond Pak Tam Chung barrier gate is outside of URA's project areas and is therefore unconnected to the task of URA (or former LDC).

The annual return and profit and loss account of Sino Elite Limited for the year ending 31 March 2001 showed that the company had no trading or business activities.

Although the panel found that there was no conflict of interest in this episode, the panel believed that the concerns of the press and the public over the need of Board members and senior management staff to "avoid suspicion" must be addressed.

The panel suggested that URA Board members and senior management staff should avoid forming any business partnership which may affect the credibility of the URA. They must consult the Standing Committee of the URA on the question of whether the business partnership affects the credibility of the URA and not to make any judgement on their own. The Standing Committee can advise on appropriate measures to prevent a conflict of interest.

30 August 2001