Hong Kong Chief Executive Leung Chun-ying, pocketed millions in secret fees from a listed Australian company in return for supporting its Asian ambitions, Australia’s The Age newspaper reported Wednesday.
The arrangement is outlined in a secret contract dated Dec. 2, 2011, before he was elected chief executive, the report said citing an investigation by Fairfax Media.
It said Australian engineering company UGL agreed to pay Leung £4 million (US$7 million). The payments were made in two instalments — in 2012 and 2013 — after he became Hong Kong’s top official.
The payments relate to a deal in which UGL bought DTZ Holdings, an insolvent 200-year-old British property services firm, whose prospects depended on Leung’s network of managers and clients in Hong Kong and mainland China.
Leung has defended his action not to declare the payments when Fairfax brought them to his attention, the report said.
The sale left Leung with a secretive financial windfall – including an additional guarantee that UGL would pay to him a £1.5 million bonus owed by the insolvent firm – but left DTZ’s other shareholders and unsecured creditors with nothing.
The arrangement wiped out investments and debts worth tens of millions of dollars, the report said.
Leung’s side deal was equivalent to to more than 5 per cent of the purchase price.
A statement from Leung’s office said the payments related to past, not future, service and they were agreed at a time when he held no official position and before he was elected chief executive.
“The payments therefore arise from Mr Leung’s resignation from DTZ, not any future service to be provided by him,” Leung’s spokesman, Michael Yu, said.
“Both the resignation from DTZ and conclusion of the agreement with UGL took place before Mr Leung was elected chief executive,” he said.
“There is no requirement under our current systems of declaration for Mr Leung to declare the above.”
Leung’s statement added that he had stepped down as a member of Hong Kong’s executive council on Oct. 3, 2011 before DTZ’s sale to UGL.
Leung was a director of DTZ and chairman of its Asia-Pacific operations when he and fellow board members decided to appoint administrators to sell the company’s assets to UGL for £76 million, the report said.
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