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Opening remarks by Chairman of Independent Review Committee for the Prevention and Handling of Potential Conflicts of Interests
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The following is issued on behalf of the Secretariat of the Independent Review Committee for the Prevention and Handling of Potential Conflicts of Interests:

     The Independent Review Committee for the Prevention and Handling of Potential Conflicts of Interests conducted a press conference today (May 31) to announce the results of the review and its recommendations. Following is the opening remarks by the Chairman, Mr Andrew Li Kwok-nang, at the press conference:

     Thank you for coming to this press conference.

     The Independent Review Committee for the Prevention and Handling of Potential Conflicts of Interests (the Committee) commenced its work in early March. We have now completed our work and we submitted our Report to the Administration this morning. The Committee is conscious of the widespread public interest in the outcome of our review. We are therefore releasing our Report today.

     The Committee's terms of reference are to review the existing regulatory frameworks and procedures for the prevention and handling of conflicts of interests concerning the Chief Executive (CE), the Non-Official Members of the Executive Council (ExCo) and Officials under the Political Appointment System (PAOs), and to make recommendations to improve them.

     Over the past three months, the Committee examined the present system. We drew reference from the civil service system. We also looked into the practices in various local public institutions and bodies and in various overseas jurisdictions. We considered the invaluable views submitted by organisations and individuals during the public consultation.

     We are deeply conscious that a clean public service is a core value of our society. The public has the highest expectations that holders of high public offices would observe the highest standards of conduct. This was strongly reaffirmed through the media and during the public consultation.

     The IRC was guided by the following considerations in its review:

(a) Leaders should lead by example. The system applicable to the highest public officials should be at least as stringent as that applicable to those they lead.

(b) The system must command public confidence.

(c) The system must have an appropriate degree of transparency.

(d) The system must take into account legitimate privacy concerns of individuals.

(e) The system must not be unduly burdensome for the efficient conduct of government business.

     The existing civil service system, having been improved from time to time in the light of experience, has stood the test of time and commands public confidence. The Committee considered that the civil service system is a good system. Indeed, it has been widely regarded as setting the gold standard by the community. Accordingly, we have taken full account of the civil service system in our review.

     The Committee put forward 36 recommendations. Many of them concern the CE. And this is the area in which the public is most concerned. Our key recommendations include the following:

(1)     At present, PAOs and civil servants are subject to the strict regime under section 3 of the Prevention of Bribery Ordinance (POBO). Under this regime, acceptance of advantages by them without the CE's permission is a criminal offence. When the Administration amended the POBO in 2008, it decided that section 3 should not be applied to the CE. The present position is that the CE decides for himself on acceptance of advantages and is not subject to any checks and balances. The Committee considered that this is a fundamental defect of the present system, and as a result, the present system is totally inappropriate. The CE should not be above the law which applies to PAOs and civil servants.

(2)     The Committee recommended that legislation should be enacted so that the acceptance of any advantage by the CE requires permission of a statutory Independent Committee. That Committee should consist of three members appointed jointly by the Chief Justice of the Court of Final Appeal and the President of the Legislative Council. Members of the Independent Committee should be permanent residents of the HKSAR and persons of high standing in the community. The process of appointment of that Committee and the process of that Committee giving permission for the acceptance of advantages should not be politicised.

(3)     On the assumption that our recommendations would be implemented, acceptance of advantages by the CE would be subject to a regulatory regime which is essentially the same as that for PAOs and civil servants. The CE would commit a criminal offence if he accepts any advantage without the permission of the Independent Committee. For prescribed officers (including PAOs and civil servants), the CE has given general permission to them to accept certain advantages within specified monetary limits in specified circumstances. Such general permission is set out in the Acceptance of Advantages (Chief Executive's Permission) Notice. Similarly, the Independent Committee may give general permission for the CE to accept advantages under specified circumstances and within specified monetary limits. Where acceptance of any advantage by the CE is not covered by any general permission, he needs to apply to the Independent Committee for special permission.

(4)     Under this regime, permission from the Independent Committee is required for the CE to accept any advantage, including gifts, hotel accommodation, any purchase or rental of premises at an undervalue, or any travel, whether on a commercial airline, private jet or private yacht. We also recommended that the current CE Register of Gifts open to the public should be expanded to cover not only gifts received in official capacity of an estimated value of over $400 as at present, but also to include advantages accepted with the special permission of the Independent Committee, indicating their estimated values.

(5)     As to acceptance of entertainment (that is, lunches, dinners and any accompanying performances), PAOs and civil servants are not subject to any statutory regulation but are subject to administrative guidelines. We consider that this arrangement is understandable. It would be impracticable to impose an approving mechanism for the acceptance of lunches and dinners. We recommended that the CE, as with PAOs and civil servants, should have the duty to follow the administrative guidelines on the acceptance of entertainment. For the CE and PAOs, these are contained in the Code for Officials under the Political Appointment System (the PAO Code).

     (i) According to the PAO Code strengthened as recommended in our Report, the CE, in deciding whether to accept entertainment, must consider whether having regard to matters such as its lavish or excessive nature, the relationship with his host, and the character or reputation of his host or known attendees, attendance by the CE is likely, among other matters, to lead to a conflict of interest, or to lead to embarrassment or to bring the CE or the Government into disrepute, bearing in mind public perception.

     (ii) The Committee considered that, as our highest political leader, the CE should set a good example for PAOs and civil servants and should exercise great vigilance in deciding on the acceptance of entertainment. It is appropriate for the CE to follow the maxim "If in doubt, don't".

(6)     On declaration of interests, there are at present two separate declaration systems for ExCo Members and PAOs, both of which are similar to that in the civil service. The CE has chosen to voluntarily observe the ExCo declaration system, including making an annual declaration of investments and also ad hoc declarations of interests in relation to ExCo business. The Committee considered that observance of the ExCo declaration system should not be a matter of voluntary choice by the incumbent holder of the office of the CE. We recommended that, to give the public greater reassurance and confidence, the Administration should make observance of the entire ExCo declaration system by the CE a matter of government policy.

(7)     The current CE has also chosen to observe voluntarily the PAO Code. By the same token, we recommended that observance of the PAO Code by the CE should be made a matter of government policy. This would put them in the same position as PAOs led by him. This would give the public greater confidence in the system.

     The regulatory regime applicable to PAOs is largely consistent with that for civil servants. The Committee put forward a number of recommendations including strengthening the guidelines in the PAO Code for the acceptance of advantages and those for the acceptance of entertainment, adopting and publishing guidelines for handling of conflict of interest questions concerning PAOs and also guidelines for considering applications from PAOs for special permissions to accept advantages. These guidelines should be at least as stringent as those applicable to the civil service. The Committee also recommended that, for transparency, where any PAO has withdrawn from the decision-making process in relation to any matter due to conflict of interest, this fact should be stated as and when the decision concerning that matter is publicly announced by the Administration.

     Regarding ExCo, there is in place a system to regulate declaration of interest and conflict of interest concerning ExCo Members. The ExCo declaration requirements are reviewed and revised from time to time in the light of experience. The Committee considered that the transparency of the ExCo declaration system should be enhanced. Without compromising the confidentiality of ExCo deliberations, the CE in Council should publish a document setting out the system it has adopted for dealing with conflict of interest. It should also publish annual statistics of the number of occasions on which one or more Members withdrew from its decision-making process due to conflict of interest.

     I must strongly emphasise that the system is more important than the individual. A good system is essential. It is necessary for commanding public confidence in a clean public service and for upholding the dignity and the honour of our highest public offices. The Committee put forward its recommendations after a thorough study of the present system and taking into account the considerations referred to above. We believe that our recommendations would improve the present system and restore public confidence in the system. We hope that the Administration will consider our Report carefully and implement our recommendations as soon as practicable, including the enactment of the relevant legislation.

     Thank you.

Ends/Thursday, May 31, 2012
Issued at HKT 16:30

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