Hong Kong’s logistics director has apologised for his department’s oversights, breaking his silence on a bottled water supply scandal that has engulfed the administration this month.
Speaking to the press on Thursday morning, after meeting a new task force set up to address the procurement scandal, Director of Government Logistics Carlson Chan vowed to review the government systems.
“I understand that this incident, this hoax, has raised huge public concerns over government procurement and caused concern for our colleagues in the government about the water supply. In this respect, we feel that there were indeed inadequacies in our procedures and I would like to apologise to everyone on behalf of the Government Logistics Department (GLD),” Chan said in Cantonese.
The GLD, headed by Chan, supplied drinking water from a firm that secured a HK$52.9 million contract through allegedly fraudulent means. The director and his department are under fire over what the city’s treasury chief has called ”inadequacies” in the procurement process.
Chan’s statement came a day after government departments suspended six contracts with the company, Xin Ding Xin Trading Co. (XDX) and other firms linked to it, including chemical supply and data entry contracts. A Hong Kong couple that owns the company have been arrested over suspected fraud and providing false information.
Earlier on Thursday morning and the night prior, reporters from local media waited at the lobby of Chan’s residence for a comment. Leaving the building in the morning, Chan said only: “Good morning.”
‘Red flags’
Treasury chief Christopher Hui, at the same press conference, said that the task force would review the government’s procurement regime and issue interim investigation results with suggested measures ahead of a full report expected in three months.
The task force’s interim report will look into potential “red flags” such as the due diligence required in the procurement process as well as issues of contract management and quality control, Hui said.
On Thursday, Chan admitted that fraudulent elements slipped under the department’s radar, saying that XDX may have utilised “improper” means to acquire legitimate documents, or that they may have used forged documents to meet tender requirements and secure the government contract.
As a result, GLD officers were not able to detect any forgeries in time when they examined the documents, Chan said: “During this review, we will pay special attention to how we can help our colleagues be more vigilant so that these scams will not happen again.”
As for the HK$2,268 the government had already paid XDX, the sum would be deducted from a HK$1 million deposit paid to the GLD, Chan said.
Asked about the government’s criteria for choosing water supply contracts, Chan on Thursday told reporters that the department adhered to the “lowest bidder wins” principle, as it did for its last contract with a different company.
The GLD also considers the supplier’s licenses, the tender terms, independent water quality reports, and ISO certifications, among others factors, he added.
