Following is a statement by the Financial Secretary, Mr Antony Leung, today (July 5) on property transactions conducted by the Chief Executive of the Hong Kong Monetary Authority, Mr Joseph Yam:
"Questions have been raised in the past few weeks about certain property transactions conducted by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority. In view of these questions, I have carefully examined a detailed and documented account of all of Mr Yam's past property transactions in Hong Kong, prepared for me by Mr Yam. I have also sought and received advice and further information from the Department of Justice and Lands Department to help me in the consideration of this matter. In the specific case of the penthouse in Celeste Court, information was sought and received from the developer concerning the method of sale.
Having reviewed the above information, I have found no evidence to suggest any conflict of interest by Mr Yam in any of these transactions. Nor do I see any reason to believe that Mr Yam has breached any law or regulation. On the pricing of Mr Yam's property transactions, having considered carefully all the information provided to me, I have no evidence that any of the purchase prices paid by Mr Yam were outside the reasonable market price range at the relevant time of the transactions.
With specific regard to the acquisition of the penthouse in Celeste Court, I have been advised by the developer that around the time of Mr Yam's purchase, the market outlook was uncertain, particularly in the sector of higher value properties. The company adopted a flexible approach to the marketing of such properties and was open to approaches by all interested parties for the purchase of the properties, irrespective of their employment status. As in any commercial transaction, the company was prepared, in the normal course of business, to negotiate terms with interested parties. The company confirmed that the marketing strategy was adopted not only for the penthouse flats in Celeste Court but also for higher value properties in its other developments and that the sale of the penthouse flat to Mr Yam was in line with the above strategy, regardless of the fact that he was a civil servant.
In view of the particular public concern over the transaction relating to this property, I have also sought and obtained advice on similar property transactions during the relevant period for reference. Such information reveals that the property market was subdued in late 1990 and early 1991 when Mr Yam agreed to buy that penthouse and agreed the price determination methodology with the developer, whereas the market had improved by mid 1992 when other penthouse flats in the same development were sold to other buyers. It is therefore inappropriate to directly compare the prices of the different penthouse flats. In fact, a comparison of the price of comparable units sold in early 1991 has shown that the purchase price paid by Mr Yam was not lower than the fair market value at that time.
However, it is possible that the manner in which some of the other transactions were structured by Mr Yam may be subject to misinterpretation. I have discussed this possibility with Mr Yam. In response, he has sent me a note addressing a number of issues and outlining certain actions he intends to take. With his consent, this note is attached to this statement. I support these actions, which are entirely voluntary on Mr Yam's part, and which will go beyond the requirement applicable to the generality of the staff of the HKMA.
I have also reviewed the confidential declarations made by Mr Yam to the Financial Secretary over the years. My conclusion is that Mr Yam has covered in these declarations all his property transactions as detailed in his public statement dated 14 June. In the spirit of transparency, Mr Yam has voluntarily undertaken to enhance the level of information on all his investments in his future declarations to the Financial Secretary (as detailed in his attached note) and to increase the content of his record of financial interests available for public inspection, which I also support."
Note to the Financial Secretary from Mr Joseph Yam
In the light of recent public interest in my personal property transactions, I have earlier given you a detailed and documented account of all my past property transactions in Hong Kong. I understand that you are examining it and are seeking further advice from the relevant Government departments in order to help you assess the propriety of these transactions. In the meantime, I would like to address four issues of relevance to your examination and to outline the actions I intend to take in three of them.
The first issue concerns the penthouse in Celeste Court. I have explained in detail, in the materials supplied to you, the price determination methodology agreed with the developer on 28 November 1990; the fact that, to the best of my knowledge and belief, the approach I made to the developer was open to everybody; and the fact that the actual price of the flat could not be determined, in accordance with the agreed price determination methodology, until the precise area and design became available in 1992. On the question of stamp duty, subsequently raised after I issued my public statement, I have further sought legal advice, which has pointed out that the arrangement involved no contravention of the provisions in Section 29B of the Stamp Duty Ordinance. I therefore do not think that there is further action that I can or should take. Nevertheless, to distance myself further from any decision relating to investment property, including the leasing of property owned by me, I will place the management of the leasing of the penthouse in Celeste Court in a discretionary trust.
The second issue concerns the use of a discretionary trust for organising property investments. I understand that in the context of the transactions relating to the flats at Grand Panorama, there have been questions raised. After careful consideration, I am of the opinion that this practice is appropriate so as to ensure that I am not involved in investment decisions to buy, hold, lease and sell property. And I have, in my statement on financial interests for public inspection and my confidential declarations to the Financial Secretary, disclosed this arrangement and the underlying assets held. I do not see any fundamental problem in these arrangements. Subject to your views, I do not therefore propose to make any change to this practice. But I will, as before, ensure that, should such a discretionary trust be used again in future, the confidential declarations to the Financial Secretary include the details of the assets held in that trust as if the assets were held directly under my name.
The third issue concerns the holding structure of my current residence at South Bay Towers. I referred to this in my public statement of 14 June 2001. The structure is also effective in minimising stamp duty for the transaction (through buying the entire shares of the company holding the flat rather than buying the flat itself); and facilitating future tax planning, given the choice, as old age approaches, of either instructing the trustees to transfer the shares of the company to my family members and incurring stamp duty or letting my surviving family members incur the applicable estate duty. These tax minimising arrangements are undoubtedly legal and widely practised. However, taking into account the public expectation that a person holding senior public office should not only be beyond reproach, but should also be seen to be beyond reproach in personal transactions, I realise that they could be misinterpreted, and may be considered by some to be inappropriate for the Monetary Authority. To address this, I will, as soon as practicable, arrange for the company holding the flat to be wound up and for the flat to be held directly under my name.
The fourth issue concerns declaration arrangements. I have covered all my property holdings in my confidential declarations to the Financial Secretary. For future declarations, I will continue to observe stringent standards in reporting all my personal financial transactions to the Financial Secretary, and will enhance the level of relevant information provided, using the level of detail required of the HKMA staff as the minimum standard. Furthermore, in line with the HKMA's efforts to achieve greater transparency, I will also increase the content of my record of financial interests available for public inspection to ensure that disclosure is beyond that required under standard Government practice.
(Joseph Yam )
22 June 2001
End/Thursday, July 5, 2001