If you think paying top dollar to top people can get you anywhere, think again!
Australian engineering and property firm UGL seems to have learned this lesson the hard way.
The firm wrote a HK$50 million (US$6.44 million) postdated cheque to Leung Chun-ying shortly before he was elected Hong Kong’s chief executive in 2012, in exchange for his support of the sale of DTZ, his commercial real estate services firm, to UGL.
It is now reported that UGL is withdrawing from Hong Kong next month after 22 years in the city.
That’s because the firm has not secured any contracts from its long-term partner, government-controlled MTR Corp. (00066.HK) since October 2014, the Hong Kong Economic Times revealed.
UGL will complete its maintenance contract for the MTR’s Kwun Tong Line, its only Hong Kong contract, in June, one month ahead of schedule.
The firm has about 70 employees in Hong Kong, including 10 senior management, 10 professional engineers and 50 frontline staff.
Apparently the highly publicized and controversial link to the city’s chief executive was considered a liability to UGL, because any of its efforts to win business in the public sector might be subject to extra scrutiny.
It would be particularly sensitive now, as Leung is trying hard to secure a second term next year.
The imminent closure of UGL, revealed in a political column in the Leung-friendly newspaper, follows a political commentary in Hong Kong Economic Journal that said Beijing has completed a report on Leung in regard to the UGL payment.
The report is the result of at least four months of research and opinion collection by the Central Committee of the Communist Party of China, directly under the instructions of President Xi Jinping.
While the details are not known, it is understood that the report includes the views of a heavyweight legal expert on the likelihood of a charge being laid against Leung by the city’s Independent Commission Against Corruption, as well as the risk of investigations by Britain and Australia.
In 2011, UGL acquired London-listed DTZ, which acquired US firm Cushman & Wakefield last year. The merged entity uses the Cushman & Wakefield brand.
The DTZ issue was raised last week by Civic Party lawmaker Alan Leong Kah-kit and three other pan-democratic legislators during their meeting with Zhang Dejiang, chairman of the National People’s Congress Standing Committee, on his visit to the city.
The report on Leung and DTZ may be a two-edged sword.
On one hand, it could clear up any potential damage Leung would suffer before his re-election campaign.
On the other, it could be used as a secret weapon to persuade Leung to drop out should there be any negative findings.
In the meantime, Beijing is keeping us guessing.
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