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
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.