The West Kowloon Cultural District Authority (WKCDA) admitted on Monday that it paid some key subcontractors directly, bypassing the main contractor Hsin Chong Construction (HCC).
In a statement, the authority said it has been aware of “the difficult financial position facing HCC and its parent company” since late 2016.
WKCDA’s board, acknowledging HCC’s situation, had approved various measures that were aimed at mitigating risks, including a decision to “pay key subcontractors directly”, the Authority pointed out.
The direct payment was to ensure that subcontractors and over 1,600 workers were paid for their certified work done on the arts hub project, it added.
This will also give confidence to involved parties on the project that they will be paid according to the contracts, WKCDA said.
The payments were then deducted from the contract sum payable to HCC by the Authority.
“The payment arrangements were explained in the LegCo Finance Committee meetings in December 2017 and in January 2018 in response to members’ concerns about payments to workers on the project,” the Authority claimed.
“Such arrangements are unusual but not exceptional,” it noted.
Civic Party lawmaker Jeremy Tam Man-ho slammed WKCDA and its head Duncan Pescod, accusing them of lying and misleading the LegCo as Pescod is said to have denied paying the subcontractors directly during the legislature’s finance panel meetings.
Lawmaker Edward Lau Kwok-fan, chairman of LegCo committee overseeing the West Kowloon Cultural District Project, said he is worried that direct payment to the subcontractors will obscure work responsibility if problems occur.
The vice-chairwoman of the committee, Tanya Chan, said the measure deviated from the usual practice, which is to re-tender the contract if contractors face financial difficulties.
“If the Authority can’t even trust HCC with the money, how could the Authority trust HCC to monitor the construction work?” she said.
Lawmaker Lo Wai-kwok, who sits on the WKCDA board, said the Authority has gone through in-depth discussions on contractor payment issue, and that the measure is suitable as it helps mitigate the potential loss if the main contractor fails to continue its operations.
WKCDA chairman Henry Tang Ying-yen also confirmed that direct payment was approved by the board and known to the government, according to a Ming Pao report on Monday.