Hong Kong authorities have terminated at least six contracts with a company involved in an allegedly fraudulent water supply contract with the government, as well as firms linked to it.
The latest development in the procurement scandal saw various government departments terminate all of their contracts with companies tied to Xin Ding Xin Trading Co. (XDX), which allegedly misled the government into entering a fraudulent contract to supply drinking water for government offices in the city.
The police and customs authorities have arrested the Hong Kong couple that owned the company, Lui Tsz-chung and his wife Chan Pik-lam, over suspected fraud and providing false information. Investigations are ongoing and more arrests may be made, officers have said.
The termination of contracts came after the city’s treasury chief admitted to “inadequacies” by the government, as concerns grew over the government’s procurement processes.
Chemicals, data entry
A government spokesperson said in a Wednesday statement that the Government Logistics Department had terminated the drinking water contract as well as three other contracts for supplying chemicals with XDX.
The government on Saturday announced that the HK$52.9 million water contract had been “partially suspended.”
Following an order from the Financial Services and the Treasury Bureau, other departments terminated their contracts, including a chemical supply contract with the Drainage Services Department (DSD) and a data entry contract with the Fire Services Department (FSD), worth some HK$6 million and HK$5 million respectively.
Companies linked to XDX are those sharing its registered office address or having overlapping directors and shareholders, the government said.
The city government has said it is entitled to deduct a HK$1 million deposit from XDX under the now-terminated water supply contract, “to recover its losses arising from contract termination, and reserves all rights to take actions against XDX.”
“The GLD, DSD and FSD will continue to follow up seriously on the above contracts, including considering [recovering] the Government’s losses from the relevant companies in accordance with contract terms,” the spokesperson continued.
