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What is CY Leung up to? Edits to UGL document look like bid to steer the probe committee

By Charles Tsang

Last week, lawmaker Holden Chow stepped down from a legislative committee after being found to have allowed Chief Executive Leung Chung-ying to amend the scope of an inquiry into a controversial HK$50 million payment he received from Australian firm UGL. What was Leung possibly trying to do?

Holden Chow Leung Chun-ying

Holden Chow and Leung Chun-ying. Photo: HKFP/GovHK.

The Legislative Council Secretariat proposed that the committee should investigate four aspects: the background, nature, and details of Leung’s agreement with UGL; declaration requirements applicable to Leung; conflict of interests; and taxation issues.

The chief executive mainly focuses on two areas with the 30-plus edits he made to Chow’s document: the authenticity of the agreement, and the timing of the payment.

Authenticity

First, Leung wanted the committee to look at the authenticity and completeness of his agreement “as disclosed by Australian media.” He also wanted lawmakers to look at the authenticity of UGL’s 2014 press release, in which the firm claimed: “During the two year period between 2011 and 2013 and subsequent, UGL did not request Mr. Leung to undertake any task whatsoever on our behalf, nor did Mr. Leung offer to perform any tasks.”

LegCo select committee

Some of CY Leung’s edits in the document. Photo: HKFP.

Leung has never disputed the genuineness of publicly available materials on the UGL scandal. He has also never alleged that the pan-democrats are adducing forged material for the purpose of establishing a case against him.

If Leung has changed his mind and wants to bring the issue of authenticity before the committee, he is always welcome to present his case before the legislature in his own capacity, rather than secretly editing lawmakers’ documents.

Timing

Timing has always been the crux of Leung’s “defence.” For instance, Leung said in his blog post on February 22: “I was not a director of DTZ when I signed the non-compete and non-poach agreement with UGL in early December 2011.”

When responding to lawmakers’ question on the matter in October 2014, then-chief secretary Carrie Lam relied on the explanation given by Leung’s office: “The agreement and payments concerned arose from Mr. Leung’s resignation from DTZ, not any future service to be provided by him… There is no requirement for Mr. Leung to declare the said resignation agreement. Moreover, both Mr. Leung’s resignation from DTZ and conclusion of the agreement with UGL took place before he was elected as [chief executive].”

cy leung chun-ying

CY Leung. Photo: Legislative Council.

Before looking at Leung’s edits, here is the timeline to bear in mind: Leung signed the agreement with UGL in December 2011 – three months before he won the election. Under the agreement, he was to receive the first installment payment in December 2012, and the second one in December 2013. In other words, Leung would have received the payments after he took office.

Leung did two things to Chow’s document. First, he wanted the committee to consider whether he had been elected as chief executive when he signed the UGL agreement – the answer is no.

Second, in the section on conflict of interest in Chow’s document, Leung deleted a clause “during the term of office of the chief executive” and focused instead on whether the UGL payment constituted a declarable interest under Article 47 of the Basic Law, which requires the chief executive to declare his assets “on assuming office.”

By the time Leung received the HK$50 million payment, he had already assumed office. This is the basis on which Leung can argue that he did not have to declare any interest over the UGL payment to the Chief Justice at the time of assuming office as required by Article 47.

LegCo select committee

Some of CY Leung’s edits in the UGL document. Photo: HKFP.

Further, Leung maintained that he did not preform any active duty for UGL after assuming office. He must rely on this to explain why he was not required to make any declaration to the Executive Council during the term of his office as required by the council rules.

However, if the committee sticks to the investigative scope originally proposed by LegCo Secretariat, lawmakers may seek records from all parties in order to find out all promises and undertakings Leung has made in exchange of his monetary entitlements – other than the ones exposed by media. He will also have to explain whether he received more rewards on top of the HK$50 million payment.

More questions

More questions have been raised as scholars, journalists and commentators are trying to solve the puzzle.

Eric Cheung, who heads the legal clinic of the University of Hong Kong, has asked Leung to confirm whether DTZ – of which Leung was a board member – turned down more competitive acquisition offers from other companies. This question is important because Leung was the only person who benefited from the lesser offer given by UGL.

eric cheung

Eric Cheung Tat-ming. File photo: HKFP.

Meanwhile, Citizen News journalist Kevin Lau is trying to track down the whereabouts of Leung’s 30 per cent stake in DTZ’s subsidiaries in Japan following UGL’s acquisition. UGL estimated that Leung’s shares were worth at least HK$2.3 million.

The two aspects were identified when the investigative committee was formed. If Leung’s edits are to be accepted, the committee will have to refocus on the authenticity of Leung’s agreement with UGL and UGL’s 2014 press release. If it considers them to be “authentic,” it will be difficult to find out the real intention behind the agreement and rebut the explanation as stated in UGL’s press release.

This will likely lead to a conclusion favourable to Leung: that no obligation was imposed on him except for UGL’s non-compete and non-poach requirement.

By focusing on the timing of the events, Leung can prevent the committee from finding out what happened after he won the leadership race in March 2012. Without knowing what happened between March 2012 and the expiry of UGL’s agreement, the committee will have no choice but to accept UGL’s claim that Leung did not provide the firm with any service that warranted remuneration.

pan-demcrats

Pro-democracy lawmakers is seeking to impeach Leung over the probe scandal. Photo: Apple Daily.

If that is the case, this may to a certain extent support Leung’s contention that he was not in breach of any rules regarding the declaration of interest.

Based on the changes Leung made to Chow’s document, the chief executive seemed to be trying to lead the committee to arrive at a conclusion he wants by altering the investigative scope.

Charles Tsang formerly worked as a legal clerk at several law firms, the Department of Justice and the Legal Aid Department. He blogs about law-related issues at Charles Not A Lawyer and holds an LLB degree from the University of London.

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What is CY Leung up to? Edits to UGL document look like bid to steer the probe committee