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West Kowloon M+ museum main contractor fired over alleged insolvency

The main contractor of M+, the West Kowloon Cultural District’s contemporary art museum, was fired by the government-appointed management authority on Friday owing to alleged insolvency.

In a press statement, the West Kowloon Cultural District Authority (WKCDA) said it has terminated its contract with Hsin Chong Construction Company Limited over the troubled project. Hsin Chong was awarded the HK$5.9 billion contract for multiple buildings in September 2015 after a selective tendering process.

M+ building construction west kowloon

The M+ building under construction. Photo: WKCDA.

“The decision to terminate the contract has been forced upon the Authority due to the insolvency of [Hsin Chong] which has been caused by the severe financial troubles facing its parent company, Hsin Chong Group Holdings Limited,” the statement read.

“In addition, the poor management performance of [Hsin Chong] has led to significant delays in the work on site, for which the Authority has not received substantiated claims for extension of time,” it added.

The WKCDA said it has been aware of the financial difficulties faced by Hsin Chong and its parent company since late 2016.

The WKCDA was discovered last month to have bypassed Hsin Chong and paid construction subcontractors directly. Construction work at the West Kowloon Cultural District is funded by public money, and originally the government was to pay Hsin Chong, who would in turn pay subcontractors.

Duncan Pescod

WKCDA CEO Duncan Pescod. Photo: HKFP.

Hsin Chong said at the time that WKCDA paid subcontractors in lieu to ensure they remained confident in the project and would continue their work.

The WKCDA said on Friday that an urgent tendering exercise is underway for a new contractor, and is expected to take six to eight weeks. It also said it hopes to retain all current subcontractors.

‘Not based on valid reason’

Hsin Chong Group Holdings, the parent company of the construction contractor, issued a statement on Saturday disputing the WKCDA’s version of events.

“First, there is no evidence that [Hsin Chong] was insolvent. Secondly, the financial condition of Hsin Chong Group Holdings, [Hsin Chong’s] parent company, was irrelevant insofar as the Main Contract is concerned,” the statement read.

The parent company said that the termination of the contract was not based on any valid reasoning, and was therefore “incorrect.”

M+ building

Artist rendition of the M+ museum. Photo: West Kowloon Cultural District Authority.

It also said that it had not, up till Saturday, received any formal notification of the termination from the WKCDA.

“The Group is disappointed with WKCDA’s approach towards the matter and their action. The Group has been in frequent and open discussions with WKCDA on how our delivery of the project can be further improved… Yet, without first notifying us, WKCDA unilaterally chose to speak to the public,” the parent company said.

In a follow-up statement on Sunday, the WKCDA responded to Hsin Chong by saying that a notice of contract termination was in fact delivered. The notice was sent to Hsin Chong’s address and the company acknowledged receipt at 5:26 pm on Friday, the WKCDA said.

West Kowloon M+ museum main contractor fired over alleged insolvency