LCQ3: System for declaration of interests of Executive Council

     Following is a question by the Hon Ronny Tong and a reply by the Chief Secretary for Administration, Mrs Carrie Lam, in the Legislative Council today (June 5):


     On the 17th of last month, the Hong Kong Mercantile Exchange Limited (HKMEx) decided to surrender its authorisation to provide automated trading services because its revenues had fallen short of expenditure. It has been reported that the major shareholder of HKMEx admitted that he was in debt due to his investments on HKMEx. Since that major shareholder was a Member of the Executive Council (ExCo) who has resigned recently, will the Government inform this Council:

(a) whether the existing system of declaration of interests by ExCo Members requires them to declare their personal debts and the debts of the companies they own; if so, of the details; if not, the reasons for that; whether the authorities will review the declaration system, so as to avoid the borrowing activities or debts of an ExCo Member or the companies he owns causing a conflict of interests with the public office as an ExCo Member, or the problem of the confidential information of ExCo being leaked;

(b) whether the integrity checking of candidates for appointment as ExCo Members includes the assessment of the stability of their financial situations; if it does not, of the reasons for that; if so, how it ensures that ExCo Members declare changes in their financial situations during their terms of office; and

(c) whether there were any candidates for appointment as ExCo Members in the past five years who had failed in the integrity checking because of their personal debts or the debts of the companies they owned and were eventually not appointed; if so, of the details; whether the Government will revoke the appointment of an ExCo Member who is heavily in debt; if it will, of the details; if not, the reasons for that?



     Before addressing Hon Ronny Tong's question, I would like to explain the system for declaration of interests of the Executive Council (ExCo).

     The ExCo has put in place a rigorous and well-established system for declaration of interests. The declaration system mainly comprises two parts. The first part is regular declarations. On first appointment and annually thereafter, each ExCo Member should declare their personal interests by completing the "Annual Declaration of Registrable Interests of Members of the Executive Council". Registrable interests include the following:

(i) remunerated directorships in any public or private company;

(ii) remunerated employments, offices, trades, profession, and so on;

(iii) if the interests in the above two items include provision to clients of personal services which arise out of or relate in any manner to Members' position as ExCo Members, the names of clients;

(iv) land and property owned by Members in or outside Hong Kong, including those which are held in the name of Members' spouses, children or other persons or companies but are actually owned by Members; or those which are not owned by Members but in which Members have a beneficial interest;

(v) names of companies or bodies in which Members have, either themselves or with or on behalf of their spouses or children, a beneficial interest in shareholdings of a nominal value greater than 1 per cent of the issued share capital; and

(vi) membership of boards, committees or other organisations.

     Declared interests of each ExCo Member will be uploaded to the ExCo website for public inspection. ExCo Members are required to notify the Clerk to the ExCo of changes to any of their declared interests.

     In addition, on first appointment and annually thereafter, ExCo Members should declare to the Chief Executive on a confidential basis and in greater detail their financial interests, including shareholdings (irrespective of the amount) in companies as well as futures and options contracts, held by themselves or jointly with their spouses, children or other close relatives. Any changes to their financial interests as well as any currency transactions involving the Hong Kong Dollar amounting to more than HK$200,000 should be reported to the Clerk to the ExCo within two trading days after their occurrence.

     ExCo Members should declare within 14 days the acceptance by them or their spouses of any financial sponsorship, sponsored overseas visits, or gifts worth HK$2,000 or more in relation to their ExCo membership, by completing the "Declaration of Acceptance of Sponsorships and Gifts". The declarations are also uploaded to the ExCo website for public inspection.

     The second part of the declaration system is declarations in respect of individual items discussed by the ExCo. It is the personal responsibility of ExCo Members to examine whether they have an interest in any item discussed by the ExCo and declare it before the ExCo discussion. Based on the interest declared, the Chief Executive will assess whether ExCo Members concerned may have a potential or real conflict of interests in the item considered by the ExCo. The Chief Executive will decide whether Members concerned should participate in or withdraw from the discussion of that item. If the Chief Executive decides that the ExCo Member concerned should so withdraw, the relevant ExCo memorandum and minutes will be withheld from him. Details of the Member's declaration and withdrawal will be recorded in the minutes.

     As regards the three parts of the question, my reply is as follows:

(a) Under the present system, the interests required to be regularly declared do not include the personal debts of ExCo Members and the debts of the companies they own. However, for declarations in respect of individual items, since the nature and extent of the debts and liabilities of an ExCo Member, and his or her role as a creditor may give rise to a potential conflict of interest in relation to a specific matter being considered, based on the premise that ExCo Members are always under a duty to avoid any conflict of interest, the Member concerned should disclose his debts and liabilities etc to the Chief Executive so that a decision can be made on the appropriate course of actions to handle the conflict. The issue of handling the debts and liabilities of ExCo Members had been examined by the Independent Review Committee for the Prevention and Handling of Potential Conflicts of Interests (IRC), chaired by the former Chief Justice of the Court of Final Appeal, the Honourable Andrew Li Kwok-nang. Taking into account that ExCo Members are already required to disclose their debts and liabilities to the Chief Executive on an ad hoc basis under the present system and bearing in mind privacy concerns, the IRC did not consider it necessary to include the additional requirement to declare debts and liabilities in the regular declarations of investments and interests of ExCo Members. The aforementioned review was completed in mid-2012. The Government considers the present system for declaration of interest in respect of ExCo Members a rigorous and effective system. There is no plan at present to revise the said system or initiate another review.

(b) & (c) As to parts (b) and (c) of the question, we fully understand that members of the public have set a high standard for and have high expectation on the conduct of ExCo Members. As such, Non-Official ExCo Members, like the Principal Officials, would be required to undergo and pass the extended integrity checking before taking up the appointment. The effectiveness of the integrity checking system depends on the trust and co-operation of all parties concerned. To ensure the effectiveness and integrity of the system, we cannot disclose further details of the checking.

     Thank you, President.

Ends/Wednesday, June 5, 2013
Issued at HKT 13:50