Location : Yuen Chau Kok Home Ownership Scheme (HOS) Site - Sha Tin Area 14B
(All amounts are in HK$)
Tendering and Subcontracting
17 October 1997 - The Housing Department (HD) is the executive arm of the Hong Kong Housing Authority (HA). HD invited tenders for piling works on the Yuen Chau Kok site from contractors on HA list of approved contractors. Twenty-seven companies submitted tenders.
28 November 1997 - The company finally awarded the contract was Zen Pacific Civil Contractors Ltd ("Zen Pacific"). They had submitted the lowest bid-$63M. The works involved building the piling foundation for five HOS buildings.
10 February 1998 - The contract came into effect on 10 February 1998; however, Zen Pacific subcontracted the piling works to another company, Hui Hon Contractors Ltd ("Hui Hon"). Zen Pacific would be responsible for procurement of materials, collecting 3 percent of their purchase cost and 4 percent of the contract price as administrative charges. The piling works for two of the buildings commenced immediately.
Covering Up
April 1998 - Progress was slow; although Hui Hon later acquired a more suitable and powerful rig, the Bauer BG 40, a shortage of spare parts for this machine meant the temporary casings, which are used to support the soil on the walls inside pile shafts, could still not be driven right down to the very bottom of each shaft. Lacking such support, the soil on the wall inside the shafts kept collapsing.
May - July 1998 - To speed up the work, two of Hui Hon's then directors instructed workers to use a synthetic soil stabilizer, Super Mud, instead of driving the temporary casings down to bedrock. No approval was obtained from HD for this change of method. The use of Super Mud did nothing to improve the engineering outcomes. Barely a month later, Hui Hon ran into financial difficulties, and could no longer afford to use Super Mud.
August - September 1998 - A number of Hui Hon site staff had in fact already warned their directors that substandard work was going on.. Instead of heeding these warnings, the directors planned a series of deceptive acts in order to conceal a host of related irregularities. In early September, Hui Hon reported that they had completed the piling works for two of the HOS blocks.
23 September 1998 - Since Hui Hon would not be able to complete the foundation works for the remaining three buildings on time, Zen Pacific took the upcoming works over, but continued to employ the same Hui On site staff for the project.
December 1998 - Zen Pacific reported to HD on 19 December that all the foundation works under the contract had been completed. Three days later, another contractor started to build the superstructure. Zen Pacific was paid the total amount of $57M for the foundation works1.
Short Piling Exposed
27 July 1999 - Hui Hon was liquidated in July 1999 and ceased operation in January 2000.
September 1999 - Around this time, a number of scams related to substandard construction works came to light, and the public became alarmed. HA decided to inspect the settlement condition of all the buildings in their projects.
8 December 1999 - The abnormal settlement condition of two HOS buildings in Yuen Chau Kok turned out to be particularly serious. HD therefore appointed an expert to conduct an independent inquiry. This confirmed that the settlement of these two blocks was caused by short piling and was indeed severe.
23 December 1999 - HD lodged a complaint with the ICAC on suspicion of corruption. Each of the two buildings had by now been constructed to a height of 33rd and 34th floors respectively.
6 January 2000 - Zen Pacific also lodged a complaint with the ICAC, alleging that corruption was involved in these works.
8-9 January 2000 - ICAC swiftly mobilized 80 investigators to execute 21 search warrants and arrested eight people during two days of intensive operations on 8 and 9 January.
9 January 2000 - HA announced that they would suspend the construction of all superstructures for the two affected buildings.
16 March 2000 - For safety reasons, HA decided to demolish the two affected buildings. This took until June 2001.
8 January 2001 - The two ex-directors and a site agent of Hui Hon were charged with dishonestly defrauding HA from April to December 1998.
11 October 2001 - The site agent pleaded guilty and was sentenced to three and a half years' jail.
3 September 2002 - Two ex-directors of Hui Hon were convicted and sentenced to 12 years' jail. They lodged an appeal and their sentences were subsequently reduced by two years.
November 2003 - HA lodged a claim against Zen Pacific for losses amounting to $605 million. These included the costs of demolishing the two buildings and the compensation paid to the superstructure contractor. After four years of arbitration lasting from 2000 to 2003, at legal costs of around $40 million, HA reached an agreement with Zen Pacific that Zen Pacific would pay compensation of $80 million.

1In view of the fact that the Project Quantity Surveyor( for valuation and certification) had verified that Zen Pacific was not entitled to the last payment claimed, and hence Zen Pacific was only paid on ten occasions for the foundation works.



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