Serious consequences

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.


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