Hong Kong can’t let its construction sector be captured by bad actors

Hong Kong should be very concerned about the recent flurry of cases involving misbehaviour in the construction industry. It would be too easy to write them off as isolated incidents when they could just as easily be straw in the wind, indicating a serious underlying malaise. One high-profile case is the Anderson Road quarry redevelopment by CK Asset Holdings. The Independent Commission Against Corruption (ICAC) arrested 10 suspects earlier this year for allegedly paying or receiving bribes in connection with steel reinforcement work which may not have been carried out properly. The Buildings Department has since initiated 205 prosecutions against six individuals and two companies. The case is serious on at least two counts: it involves six residential towers providing nearly 3,000 flats which would represent a major contribution to Hong Kong’s housing stock; and the project is being undertaken by one of the city’s largest and most experienced property developers. If even one of the best can be misled, what could be happening lower down the ladder? Another case involved the use of counterfeit building materials in MTR Corporation’s Tung Chung East station project. Though of seeming lesser importance, ensuring the use of genuine products is a minefield all its own. Let’s not forget the East Rail Line cross-harbour extension to link up Sha Tin and Central was the subject of an official inquiry chaired by former non-permanent judge of the Court of Final Appeal Michael Hartmann to investigate questionable engineering. I am surely not the only person to remember that he also chaired the expert panel investigating the delay in the construction of the cross-border express rail link. Clearly, Hong Kong is no stranger to problems in the construction sector. These cases resonate with me because I was recruited to the ICAC’s operations department soon after it was formed in 1974: my first posting was to a team devoted to cleaning up the old Public Works Department. In those early days, corruption in the police force captured headlines because it was pervasive and visible. After all, if the very people responsible for upholding the law were the ones most blatantly breaching it, what chance would any community have? But what we found in the public works sector was no less shocking, and equally appalling. Virtually every major public works project involved a substantial amount of corruption. The chief engineer supervising a project would often receive a percentage of the contract sum. Junior supervisory staff could expect to receive a brown envelope each month containing cash equal to their official salary. We estimated that corrupt payments added around 20 per cent to the cost of projects, and more in some cases. The extra cost was, of course, borne by the taxpayer. Corruption on this scale has many drawbacks, most obviously that it pushes up the cost to the public because every contractor included the spending on bribes in his tender price. But there could also be consequences for quality and especially safety. Once you have paid the supervisor to look the other way, there is nothing to deter the contractor from shaving other costs as well. The specification might call for 30 steel piles each 40m in length, but who would object if there were only 20 and they were shorter? And who would know once the whole site had been covered with concrete? Such shoddy work could go undiscovered unless a major safety issue arose later that warranted an investigation. Even then, the cost of remedial works might be less than the sum saved, albeit there would be a loss of quality. Once malpractice on such a scale – whether or not it is facilitated by corruption – comes to hold sway over an industry, there are other pernicious effects. Gradually, the bad contractors will drive out the good ones, who will find it increasingly difficult to compete. Engineers preparing designs might also be tempted to compensate by overspecifying. For example, if 10 reinforcement bars would do the job, and 12 would provide an adequate margin of safety, it might be necessary to require 15 so that when the inevitable shrinkage occurs, there would still be enough. It is essential that Hong Kong does not allow its construction sector to be captured by bad elements. Another area of activity to hit the headlines recently was official procurement procedures. The Government Logistics Department, which includes a supplies purchasing unit, has partially cancelled a contract for the supply of drinking water to government offices and two people have been arrested. I was pleasantly surprised to learn our civil servants drink so much water. The Audit Commission is now conducting an investigation. This case also resonates with me as many years ago, as an officer in the ICAC’s corruption prevention department, I conducted studies designed to assist what was then the Government Supplies Department in devising and operating clean purchasing procedures. Such studies by themselves cannot prevent or eliminate opportunities for corruption. But what they can do is provide management information systems that make it easier to detect (and therefore deter) corrupt practices. To be effective, those supervising the systems must make full and diligent use of the safeguarding mechanisms. There will always be individuals tempted to fiddle the system. Vigilance is the only effective prevention.

Hong Kong can’t let its construction sector be captured by bad actors

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Corruption or not, once malpractice takes hold, good contractors will be driven out, with serious consequences for public costs and safety

Corruption or not, once malpractice takes hold, good contractors will be driven out, with serious consequences for public costs and safety