22 April 2019
Leung Chun-ying did not declare the US$7 million payout because the deal was made before he became chief executive, his office said. Photo: HKEJ
Leung Chun-ying did not declare the US$7 million payout because the deal was made before he became chief executive, his office said. Photo: HKEJ

Pan-democrats round on Leung over US$7 mln Australian payout

Chief Executive Leung Chun-ying, who received a US$7 million payout from an Australian company, has come under scrutiny from the pan-democrats.

Civic Party chief Alan Leong said the pan-democrats may start an investigation under the Powers and Privileges Ordinance, Ming Pao Daily News reported Thursday.

Leong said if there is sufficient evidence, there could be an impeachment.

Democratic Party chief executive Lam Cheuk-ting said the incident looks like an illegal kickback, according to the report.

Lam, a former investigator at the Independent Commission Against Corruption, questioned if the interests of shareholders at DTZ Holdings had been sacrificed in the 2011 payout deal. Leung was a director and chairman of the Asia-Pacific operations of DTZ, the property services firm acquired by Australian engineering company UGL in the deal.

Leung received £4 million (US$7 million) from UGL over two installments in 2012 and 2013, when he was already serving as Chief Executive of Hong Kong, but did not declare the income, according to Ming Pao, citing a report by Australia-based Fairfax Media.

The deal, which was agreed when Leung was running for the top job in Hong Kong, was for Leung to support UGL to develop its business in Asia and act as a consultant, after UGL agreed to acquire DTZ.

The office of the chief executive said in a reply to media enquiries that no declaration was necessary because the agreement was entered into before Leung became chief executive.

The office said Leung never provided any services to UGL and therefore the payout did not constitute any deferred compensation.

UGL offered £77.5 million to acquire DTZ in December 2011. Leung announced he was running for chief executive on November 27. The acquisition was completed on December 4, and on the same day, Leung resigned from DTZ as director and Asia-Pacific chairman.

According to Australian media, UGL president Richard Leupen made a guarantee that a £1.5 million bonus will be handed out to Leung before DTZ was officially acquired by UGL, and Leung will receive another £4 million provided that he does not set up a new company to directly compete with UGL or poach any management member for 24 months.

The office of the chief executive said it is a common practice in the commercial world to have a separation agreement agreed with senior management members and it is not classified as deferred compensation. The agreement was entered into in case Leung was not elected chief executive.

Sources close to Beijing said news about Leung’s compensation at a sensitive time like this is a clear indication of foreign powers attempting to upset the prosperity and stability of Hong Kong.

UGL has been a supplier for the MTR Corporation since 2002. In 2008, MTRC purchased 22 light rail transit trains designed by UGL. 

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