Chief Executive Leung Chun-ying has reportedly proposed to “help” a developer to rezone plots of land at Discovery Bay to facilitate the planning process, raising questions of conflict of interest due to the developer’s close ties to Leung.

Local media outlet HK01’s report, citing sources with knowledge in the government, claims that Leung had suggested during a high-level meeting to rezone certain pieces of land at Discovery Bay in order to facilitate the development application by HKR International (HKRI), the developer of Discovery Bay.

According to the report, Leung said in the meeting that the government “could actually consider helping them [HKRI] rezone the land.” The proposal was not actualised because some officials objected on the grounds that Leung’s suggestions did not comply with planning regulations.

HKRI’s applications to the Town Planning Board develop two plots of land in Discovery Bay. Photo: Town Planning Board.

Leung also proposed to raise Discovery Bay’s plot ratio – which would allow for more housing units to be built – on the basis that there is a golf course in the area.

The chief executive did not respond directly on Tuesday to the allegations that he had interfered in Discovery Bay’s planning process. Instead, he said that it is “normal practice” for the government to study how to develop new land and increase the density of development on land that has already been developed, “whether on Lantau Island or elsewhere.”

“Many Hongkongers, especially youth, cannot afford down payments and mortgages because of the high housing prices,” said Leung. “This is abnormal.”

Leung Chun-ying. Photo: RTHK screenshot.

Allegations ‘believable’

HK01’s report is consistent with Apple Daily’s report in July last year, which cited a government document showing that Leung had instructed a district planning office under the Planning Department to follow up on two suggestions by HKRI.

The suggestions – raising the overall development density of Discovery Bay and rezoning more land for residential use – could yield an estimated return of HK$14.7 billion for HKRI, according to Apple Daily’s report.

At the time, the Planning Department admitted that it had discussed the proposal with HKRI, but declined to disclose the details.

Discovery Bay District Councillor Amy Yung Wing-sheung told HKFP that she found the news reports “quite believable,” since the Town Planning Board consulted the public on the development of two plots at Discovery Bay this year, a fact that is consistent with Apple Daily’s 2015 report.

Nim Shue Wan Service Area, which HKRI proposed as a development site. Photo: Apple Daily.

Conflict of interest

The chief executive’s connection with HKRI was publicised in a 2014 report by Australian outlet Fairfax Media, which stated that Leung had sought over HK$50 million in compensation from Australian firm UGL following the sale of the property company DTZ.

Leung headed DTZ’s operations in the Asia Pacific region just prior to his bid for the chief executive post in 2012. It was also revealed that Leung held shares in DTZ Japan at the time, which were since transferred to a trust.

According to Apple Daily, HKRI is a longtime customer of DTZ Japan, raising suspicion that there was a conflict of interest in Leung’s interference in Discovery Bay’s planning process.

HK01’s report on Monday cited sources with knowledge in the government. They said that such interference is common in recent years, with Leung directly leading multiple inter-departmental working groups on 2o to 30 development projects. But Leung’s alleged interference in Discovery Bay’s planning process is more controversial because of DTZ Japan’s connections with HKRI.

Civic Party lawmaker Alan Leong (left) and Discovery Bay District Councilor Amy Yung. Photo: Wikicommons; Amy Yung, via Facebook.

‘Clarification from CY Leung needed’

Pro-democracy Civic Party lawmaker Alan Leong Kah-kit told HKFP that although the allegations had not been substantiated, the news reports would “at least lead people to associate [Leung’s involvement] with possible conflict of interest.”

“To be fair to CY Leung, we need to know the entire story to make a judgment,” the lawmaker said. “However, on the face of it… Leung’s remarks are inappropriate, so he should clarify the matters.”

Leong said his party will continue to push for an investigation into Leung’s alleged conflict of interest involving UGL and DTZ Japan.

Yung, the local councillor of Discovery Bay, said that she would be using her accounting expertise to investigate whether Leung had a direct conflict of interest in the controversy.

In July last year, Apple Daily reported that HKRI’s two proposals involved rezoning two plots of land in Discovery Bay – a slope west of 4 Parkvale Drive and Nim Shue Wan service area – to create a housing project of 1,000 flats. The land amounted to a total of around 63,700 square feet.

The Town Planning Board consulted Discovery Bay residents on the development of the same plots earlier this year.

Another proposal was to raise the development density by 50 per cent, which would give the company an extra 9.42 million square feet of residential floor space. The proposal was later revised to reduce the floor space to around 980,000 square feet, which could be worth HK$14.7 billion based on local prices of HK$15,000 per square foot.

Update: The Office of the Chief Executive told HKFP it had no further comment. 

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Ellie Ng

Ellie Ng has written for Foreign Policy, the Daily Telegraph, Global Voices Online and others.