Although Hui Hon staff had revealed their modus operandi, the two Hui Hon ex-directors>who had masterminded the scam were loud in their denials. Mr Leung said, “ Between May 1997 and January 1998, before the Yuen Chau Kok works commenced, the site agent had already worked for the ex-directors of Hui Hon in another company which was named “Hui Hon” in English but had a different Chinese name (惠漢). His job was to supervise the foundation works at the Central and Wanchai Pumping Station and Screening Plants. The site agenthad also been involved in the short piling scam of the above-mentioned site.”
“After being sentenced”, Mr Leung recalls, “the site agent told us through his lawyer that he was willing to testify against the two Hui Hon ex-directors concerning the Yuen Chau Kok case. To us, it was crucial that the two main culprits be brought to book. Now, thanks to this unexpected turn of events, we could make our proposal to the Department of Justice.”
The exact testimony of each different witness was crucial to the prosecution’s case. Mr Leung says, “We took the view that when the assistant engineer who had only just graduated started work on the Yuen Chau Kok site, the piling works were already close to completion. With only a few weeks of work experience, he had merely executed his superior’s instructions without knowing much about what was going on. We hence proposed to the Department of Justice that he be exempted from prosecution and take the stand as a tainted witness.”
Similarly, the site foreman and the assistant engineer who had been transferred away from the Yuen Chau Kok site also became tainted witnesses, and testified in the case against the “Hui Hon Trio”.
| Witnesses | Testimony |
|---|---|
| Site foreman and assistant engineer |
|
| Assistant engineer |
|
| Site foreman and newly employed assistant engineer |
|
The case was heard in the High Court. In sentencing, the judge pointed out that the conspiracy to defraud engaged in by the two ex-directors of Hui Hon had caused HA to lose a huge amount of public funds. He said that the cover-up of substandard piles by the defendants was detrimental to the construction works and endangered the public. Further, deterrent sentences had to be handed down because, given the limited land resources in Hong Kong, members of the public could well invest their life savings in housing.
In the end, the two ex-directors of Hui Hon were convicted of one count of conspiracy to defraud and sentenced to 12 years in jail. They appealed and their sentences were reduced by two years.
| Sentences relating to the Yuen Chau Kok short piling case | Final sentences | |
|---|---|---|
| An ex-director of Hui Hon | 12 years’ imprisonment | 14 years’ imprisonment (reduced by two years on appeal)4 |
| Another ex-director of Hui Hon | 12 years’ imprisonment | This sentence was reduced by two years on appeal |
| Site agent | 42 months’ imprisonment | Five years’ imprisonment 5 |
4 He had been sentenced to four years’ imprisonment in the Central and Wanchai pumping station short piling case, of which two years ran concurrently with his sentence in the Yuen Chau Kok case.
5 Twenty-one months of his sentence in the Yuen Chau Kok case ran concurrently with his 39 months’ sentence in the Central and Wanchai pumping station short piling case.
Nine HD staff members failed to perform their duties at the Yuen Chau Kok site. During the construction period, three HD site officers turned a blind eye to the non-compliance of foundation works. They approved the works without checking properly and failed to report progress to the project engineer. Disciplinary action was taken against them by the Civil Service Bureau. The other six staff members were transferred to other posts.
Zen Pacific had dishonestly subcontracted works to Hui Hon, which was not an approved contractor on the HA list, and they had not stationed a representative on site to supervise the construction works. When Zen Pacific took over the project from Hui Hon, they continued to employ the same Hui Hon staff team to manage the project, thus further covering up their malpractice.
HA took punitive action against Zen Pacific, including permanently delisting Zen Pacific from its list of approved contractors for constructing large diameter bored piles and demolition, and prohibiting a Zen Pacific sister company from undertaking any works for HA for two years.
From 2000 to late 2003 HA lodged claims for damages of $605 million from Zen Pacific through arbitration. After proceedings lasting four years, HA finally reached a settlement with Zen Pacific whereby Zen Pacific had to pay $80 million to HA by instalments before the end of 2004. Arbitration was a complicated process, and the final bill for the legal, expert witness and other fees mounted up to nearly $40 million. This was well below the amount of public money that had been lost, but professional accountants hired by HA stated that the compensation settled upon exceeded Zen Pacific’s net assets. Both the “Hui Hon Trio” and Zen Pacific had learnt very costly lessons.