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Residents revolt: Meet the communities fighting bid-rigging and mismanagement in Hong Kong’s residential buildings

For months leading up to January 31, Justin Ko caught barely more than three hours’ sleep each night in preparation for an upcoming election. Ko left no stone unturned: he campaigned at a street station, handed out promotional materials and maintained an active social media presence.

This was not any legislative or district council election, but the election for the owners’ corporation of Kwan Yick Building Phase 2 in Shek Tong Tsui. Built in the 1970s, the private housing complex sits at the heart of Western District surrounded by local eateries and tramway tracks and overlooking the harbour. Ko, a former bank employee, is one of the “indigenous” residents of Kwan Yick, having resided there with his family for over 40 years.

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Justin Ko. Photo: Karen Cheung/HKFP.

Journalists present at the meeting – hosted by the incumbent management and “assisted” by pro-Beijing DAB party District Councillor Loretta Lo – noted mysterious delays, attempts to turn voters away and confrontations between the existing management and supporters of the candidates.

Voting began at 11pm – three hours after the designated start time. It was a chilly evening and the meeting dragged on till the early hours, but the residents stayed behind with a defiant resolve. When the results finally came in, the chairman walked out in a stunned defeat: Ko’s team had won eight out of 11 seats on the building governing body.

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Ko and his team on the night of the election. Photo: In-Media.

To the general public, the election may seem inconsequential, but for Ko and a group of concerned residents, their victory marked the end of the 23-year reign of a management team that acted against the building’s interest and with dubious ties to pro-establishment forces.

For instance, around two years ago the owners’ corporation considered a ten-year fixed contract for lift repair services granting the company a five per cent raise per year regardless of performance, sparking outrage amongst residents when Ko revealed the matter after sitting in on a meeting.

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Photo: Karen Cheung/HKFP.

The building was also known to be a “voting base” for the DAB party: Ko said it was common for security guards to be seen inserting DAB party flyers into residents’ mailboxes during election season, while there are few traces of pro-democracy promotional materials. The office of Loretta Lo – who served as the legal consultant of the former owners’ corporation while the building considered questionable contracts – is also located inside Kwan Yick. HKFP has contacted Lo for a response.

Ko and his team are a group of self-organised residents determined to bring the building’s management back on track, and even more importantly, prevent the building from falling victim to bid-rigging – a phenomenon in Hong Kong’s housing flats where construction companies wins tenders for projects at suspiciously high rates. The firms collude with each other and, at times, the owners’ corporation and district councillors, leaving flatowners in the buildings to shoulder exorbitant amounts in repair fees.

The newly-elected owners’ corporation, of which Ko is now secretary, is hosting renovation crash courses for the residents so that they can be wary of signs that they are being ripped off in the future. They promise to make the building’s management as transparent as possible, as well as invite residents to express their views on issues relating to the estate. To foster a sense of community, they also organised activities such as couplet-writing over Chinese New Year so everyone could get to know each other.

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The new team organisted activities such as writing Chinese New Year couplets. Photo: Justin Ko.

The situation of mismanagement and corruption in Hong Kong residential buildings is so widespread that there are scores of “concern groups” on Facebook comprising residents across Hong Kong – from Allway Gardens in Tsuen Wan to Garden Vista in Sha Tin – that act as informal watchdogs. They spring up, as there is no centralised authority monitoring the issue. There is even a weekly online show hosted by Democratic Party on the topic.

Last year, investigative agency FactWire reported that the bid prices for estate repairs and renovations were “vastly inflated” and are more than twice the rated price, after studying a government reference books on rates and consulting an independent professional. One of the companies is currently suing the newswire for defamation over the report.

In 2016, former engineering firm proprietor Yau Shui-tin became the first in the city to be jailed for tender-rigging in relation to a project at Garden Vista: Yau had offered HK$45 million in bribes to three individuals involved in the bid, one of them the chairman of the incorporated owners. He pleaded guilty to charges of conspiracy to offer advantages to an agent.

Bid-rigging exercises would not be successful without the approval of a building’s owners’ corporation, which acts as the de facto legal entity of a building as well as its management team. Many of the owners’ corporation consists of elderly homeowners who have sat on the board for decades, such as in the case of Kwan Yick; they also tend to be friendly with local district councillors.

Lam Cheuk-ting, a corruption investigator-turned-lawmaker and spokesperson for the Property Owners Anti-bid Rigging Alliance, told HKFP that owners’ corporations may lack experience with matters such as building maintenance and which companies to pick for a particular construction project. They will often turn to district councillors for advice, inviting them to take part in meetings and serve as consultants.

Lam Cheuk-ting

Lam Cheuk-ting. File Photo: Democratic Party.

District councillors therefore yield a certain influence over the buildings’ management, Lam said, and he is aware of district councillors taking bribes to facilitate bid-rigging projects. While Ko believes that the vast majority of cases of bid-rigging relate to the pro-Beijing camp, Lam said that he has suspected even pro-democracy district councillors of involvement.

Ko also said that district councillors offer help to owners’ corporations on these issues with the implied understanding that the favour will later be returned: when it’s time for district or legislature elections, the owners would have to give the parties space to advertise.

Although bid-rigging is illegal under the Competition Ordinance that came into effect in 2015, the government has yet been able to effectively crackdown on syndicates: Lam said that there is yet to be a successful prosecution under this ordinance on bid-rigging.

Lam added that there is a legal loophole in that the current Building Management Ordinance fetches no penalty. There is also lax regulation of proxy votes, and falsifying votes is a common occurrence in owners’ corporation meetings – where motions for approving maintenance contracts are put to a vote.

According to Lam, the bid-rigging issue involves government departments such as the police and the Independent Commission Against Corruption, the Buildings Department, the Home Affairs Department, Competition Commission, and others. But he proposes a single entity to oversee the problem, given its complexity. Politician Chiu Yan-loy, who fights bid-rigging alongside Lam in the alliance, has said that criminal syndicates work with building consultants and builders to create elaborate plans to divide the cost of the project into separate portions, in order to mask the inflated price for maintenance works.

“We feel that with a criminal syndicate that operates with such organisation and precision, taking up significant shares in the market and involving great public interest… the government should have a legal supervision entity to regulate the whole market: the fairness of the bidding process, the professionalism of contractors, and the quality of maintenance,” Lam said.

But things have looked up in recent years, he said. In the past, few property owners would attend owners’ corporation meetings, and would only notice individual irregularities while failing to understand the full picture of why a certain maintenance project was particularly expensive.

Lam said that he first spoke to the media about the issue in 2013, and since the formation of the anti-bid-rigging alliance and their efforts to inform the public of the issue, owners have become more aware. They take note when the owners’ corporations lack transparency or the numbers don’t add up in the books.

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Dragon Court in Tin Hau. Photo: Wikicommons.

“The residents have come together and united to become a more powerful force,” Lam mused. He himself lives in Garden Vista, where residents had took to the streets in 2014, setting up street stations in the neighbourhood and displaying banners to raise awareness of a HK$260 million renovation project.

Dragon Court in Tin Hau, for example, also made headlines in September 2016 when the building maintenance quotation attracted a price of HK$150 million, even though the estimate three years’ prior was HK$60 million. But after learning about the matter, angry residents turned up to the owners’ corporation meeting and voted to suspend the project. Self-organised residents of the building also came together to form a concern group and successfully kicked out the owners’ corporation in December that year.

Kwan Yick was another such instance. Back in Western District, Ko is a recognisable figure in the building, both online and offline: he runs the Facebook page “Friends of Kwan Yick Phase 2” in order to build a virtual community amongst residents. And in real life, he is affectionately known to neighbours as the “bald chubby guy with the dog.”

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Kwan Yick Phase II. Photo: Justin Ko.

This, too, is strategic: “The leader must be easily recognisable to the neighbours – and there must also be professionals in your core team. We have an environmentalist, a surveyor experienced in taking down illegal structures, and a former student leader,” Ko said.

Ko said he first noticed something amiss back in 2008 with a broadband antenna and server installation project on the roof of the building: residents concerned about the possible health effects this could bring forced the owners’ corporation to hold a meeting over the matter.

The project was shelved for that particular block, but Ko later found that the owners’ corporation went ahead and allowed the installation on a neighbouring block – defying the wishes of the residents. He has since then observed owners’ corporation meetings.

But he did not take an active interest until 2014, when he lost his job for voicing opposition to the anti-Umbrella Movement stance of the bank he worked at. Ko said that he visited the Admiralty protest site as an observer, and saw Lam Cheuk-ting giving a talk on building management at a mobile classroom. “That was when I really started feeling like I had to devote more time to where I live,” he said.

Towards the end of 2014, when the ageing building was up for compulsory maintenance – a golden opportunity for bid-rigging – Ko insisted on joining the meeting again. He sought to ensure that the owners’ corporation picked a contractor diligently. But a more long-term means of resistance was needed, he realised.

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Ronald Tsoi and Justin Ko. Photo: Karen Cheung/HKFP.

Slowly throughout the course of three years, Ko recruited other residents in the community – such as Kwan Yick residents Ronald Tsoi and Wong Ching-fung – who would observe owners’ corporation meetings and keep a close eye on developments relating to the building. They paid extra attention when it involved hiring contractors and consultants for maintenance, in order to ensure that the bidding exercise was fair, and procedures were followed.

According to Wong, the bids received by the former owners’ corporation for compulsory maintenance were much higher than the market rate, and there was little difference in price between between the bids submitted by different companies – a key sign of bid-rigging, Apple Daily reported. They finally decided to run for the owners’ corporation to put an end to the circus once and for all.

When it has become increasingly difficult to push for real change within the legislature – from the disqualification of elected lawmakers over their political stance to the Chinese national legislature’s Basic Law interpretation – Ko said that it was still possible to advocate for such change in the districts.

“The roots of a civil society have to start here. If you go into ideologies, residents may not easily understand that,” Ko said. “It could be too detached from the realities of their lives.” He believes that if one could first take care of their own interests and take part in the building that they live in, they could grow to care about the community.

“It’s our home – we’ll save it ourselves,” Tsoi added.

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Residents revolt: Meet the communities fighting bid-rigging and mismanagement in Hong Kong's residential buildings