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Jess Ma

Hong Kong lawmakers have warned of potential loopholes that bid-riggers can still exploit despite a government proposal to tighten proxy votes, owner attendance at renovation meetings and other oversight issues in its review of building maintenance rules after the Tai Po fire.
Their warnings on Thursday coincided with the announcement of a second round of raids by the Competition Commission in connection with a bid-rigging case involving 28 housing estates and buildings, and contracts with an estimated total value of about HK$500 million (US$63.7 million).
The government has stepped up enforcement against problematic contractors and strengthened building maintenance procedures since the catastrophic blaze at Wang Fuk Court that killed 168 people last November.
Authorities on Wednesday began a consultation, which is set to last a month, to gather feedback on five major proposed amendments to the Building Management Ordinance.
“The overall direction is correct and has responded to residents’ concerns, but the key point is how to bolster building management protections for individual owners to avoid management problems, while balancing the fact that not many owners can attend the meeting for general matters,” lawmaker Bill Tang Ka-piu told a radio programme a day later.
Issues of building management and owner governance came under intense scrutiny during an independent committee hearing into the cause of the Tai Po fire, with testimonies raising allegations of bid-rigging and proxy vote collection.
In a consultation document released on Tuesday, authorities laid out five major directions for proposed amendments to the Building Management Ordinance, which regulates incorporated ownership in buildings.
The five suggestions comprise imposing a higher attendance requirement and voting thresholds for decisions on large-scale and high-value maintenance procurement; improving the proxy vote system; optimising the process for declaration of interests; strengthening authorities’ powers; and clarifying meeting procedures.
The review of votes called for introducing a ceiling on the number of proxies that a person can hold.
In buildings with 50 flats or fewer, a person may only hold one proxy, whereas in buildings with more than 50 flats, a person may be allowed to hold 20 proxies, or less than 2 per cent of the total number of flats.

Tang said he was concerned about whether the new proxy vote regulations would also cover other issues, apart from large-scale maintenance projects.
“There are [other] issues in the community that have gained much attention, such as switching management companies and incorporated owners’ elections,” he said.
The lawmaker said authorities should also consider the relationship between owners and their proxies, and whether owners could authorise individuals other than their family members or other owners to vote on issues that were unrelated to large-scale maintenance.
Under the government’s proposal, a new three-tier system for forming a quorum and in-person voting thresholds will be introduced to raise attendance requirements at incorporated owners’ meetings.
The planned revamp will require 10 per cent of owners to attend such meetings, with at least 5 per cent or 100 owners voting in person for projects with a procurement value of HK$30,000 per flat.
For projects worth HK$80,000 per flat, 15 per cent of owners will need to attend the meeting, with at least 8 per cent or 150 owners voting in person.
For those worth over HK$120,000 per flat, 20 per cent of owners will need to attend the meeting, while 10 per cent or 200 owners would need to vote in person.
Tang agreed to the addition of the two higher tiers for the proposed quorum and voting rules, but said more discussion was needed to determine if extra tiers were necessary and whether they were suitable for middle-class housing estates with lower density.
He said dividing quorum and voting requirements by price could potentially be exploited for bid-rigging, creating a loophole that allowed corrupt contractors to push down project prices or divide work to meet a lower threshold.
“If some contractors deliberately divide the project and suppress the price during the procurement stage, and then change the engineering works and demand that additional steps be taken later, wouldn’t that be evading the new rules?” Tang said.
In a separate segment on the programme, lawmaker Chris Ip Ngo-tung said authorities would need to implement rules to verify proxies and prevent bid-rigging syndicates from using false instruments to obtain votes.

Ip supported the proposed amendment to restrict proxies to owners’ family members or fellow owners, but raised concerns about whether limiting the number of proxies would affect voting processes in old buildings.
“Some owners may trust the incorporated owners’ chairman or secretary. Some owners could also have their ways to secure proxies. Limiting how many proxies a person can hold cannot solve the problem,” he said.
Ip added that a relationship restriction for proxies could be hard to implement, as some elderly owners may not have relatives available to vote on their behalf.
On Thursday, the Competition Commission also announced that it had raided 12 premises in its second round of enforcement action related to a bid-rigging case that began in January.
The case covered maintenance projects at 28 housing estates and buildings across Hong Kong. It also involved contracts estimated to be worth about HK$500 million in total.
During the first round of enforcement action, the commission unearthed a series of suspicious text messages exposing another hidden bid-rigging syndicate.
Upon further investigation, the contractor was found to have engaged in anti-competitive practices across multiple maintenance projects, including disseminating instructions on bidding prices to manipulate tender results.


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Hong Kong’s Tai Po fire tragedy

Lawmakers flag gaps in proposed building management rules after Tai Po fire

Last November's fire at Wang Fuk Court in Tai Po killed 168 people and displaced nearly 5,000 others. Photo: Jelly Tse

Lawmaker Bill Tang (centre) has called on the government to consider whether owners can appoint proxies who are not family members to vote on non-renovation-related issues. Photo: Edmond So

Lawmaker Chris Ip has cautioned that a relationship restriction for proxies could be hard to implement, as some elderly owners may not have available relatives who can vote on their behalf. Photo: Facebook

Authorities conducted searches at 12 premises on Wednesday pertaining to a bid-rigging case involving 28 estates and contracts valued at around HK$500 million. Photo: Competition Commission

8% of owners at fire-hit Hong Kong estate yet to accept buy-back as deadline nears

Wang Fuk Court home owners leave after attending an extraordinary general meeting at Kai Tak Community Hall on July 19. Photo: Edmond So

Chief Executive John Lee meets the media after the town hall at Kowloon Tong Government Primary School. Photo: Edmond So

Tai Po fire: contractor’s 2 directors deny all allegations in witness statements

Prestige director Hau Wah-kin denied allegations of bid-rigging in his witness statement. Photo: Sam Tsang

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Hong Kong

Society

Tightening proxy votes and strengthening oversight are moves in ‘correct’ direction, but legislators cite potential drawbacks and loopholes


Tightening proxy votes and strengthening oversight are moves in ‘correct’ direction, but legislators cite potential drawbacks and loopholes.


Hong Kong society

Hong Kong fires and safety

Legislative Council of Hong Kong (Legco)

Lawmakers flag gaps in proposed building management rules after Tai Po fire

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Tightening proxy votes and strengthening oversight are moves in ‘correct’ direction, but legislators cite potential drawbacks and loopholes

Tightening proxy votes and strengthening oversight are moves in ‘correct’ direction, but legislators cite potential drawbacks and loopholes