Editorial | Probe into Hong Kong’s water procurement scandal must restore trust

An initial review by the city’s Audit Commission found human error may have been a factor. The watchdog discovered that the Government Logistics Department (GLD) had repeatedly failed to follow up on suspicious signs while awarding a contract to a company. Secretary for Financial Services and the Treasury Christopher Hui Ching-yu, who chaired a task force set up in the wake of the scandal in August, also announced six recommendations to improve the procurement process. They include stipulating specific due diligence rules, expanding the logistics department’s audit team role and revising contracts to encourage site visits.

Two months ago, the GLD terminated a three-year HK$52.9 million (US$6.8 million) contract with Xin Ding Xin Trade. The company allegedly used fraudulent documents to secure approval to supply bottled drinking water to some government offices.

Investigators suspect the firm of scamming the department and breaching the Trade Descriptions Ordinance. Hui acknowledged a need to improve the system in a complex business environment increasingly plagued by scams, but the incident revealed that alertness among officers was “obviously below reasonable expectations”.

The audit found evidence that the logistics department had repeatedly ignored signs of fraud during the vetting process and the initial stage of contract operations. It also did not conduct sufficient tests to guarantee the safety of the water supplied. The commission has called for authorities to determine if the problems stemmed from “human errors, inadequate training and/or procedural shortcomings”. Hui wants to ensure procurement does not become a “robotic” process of checking boxes. It is encouraging that investigators seem to be not only focused on assigning blame. The inquiry must help civil servants rise to the challenges they face.