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HK leader under pressure to explain Australian windfall

Update: October, 16/2014 - 11:20

HONG KONG – Hong Kong's leader faces a "huge integrity problem", opposition politicians said on Thursday as they called on him to explain why he kept large payments from an Australian company secret.

Leung Chun-ying, who is already facing down mass pro-democracy protests that have paralysed parts of the financial hub for more than a week, has yet to comment publicly on the affair.

But his office has said he was under no legal obligation to declare the earnings. The revelation comes as Chinese president Xi Jinping launches a widespread anti-graft crackdown and austerity drive targeting party officials on the mainland.

Australia's Fairfax Media reported Wednesday that Leung received two payments totaling HK$50 million (US$6.5 million) from Australian engineering company UGL while in office.

The payments relate to a deal struck in December 2011 – months before Leung took office, but a week after he announced his candidacy – during UGL's purchase of insolvent property services firm DTZ, where Leung was a director and chairman of its regional operations.

UGL said it would pay Leung over the next two years not to compete with them, and the contract signed by him showed he agreed to act as an "adviser from time to time" for the Australian engineering firm, Fairfax reported.

Opposition lawmakers on Thursday expressed their dismay that Leung, who became the city's chief executive in July 2012, did not declare the payments to the Hong Kong public.

"It boils down to a huge integrity problem," pro-democracy lawmaker Claudia Mo said. "Can you imagine Obama being a consultant of some company while being a political leader?"

Another lawmaker, Cyd Ho urged Hong Kong's parliament to investigate the payments and called on Leung to explain himself publicly.

"He should have cut himself off all business affiliations. This time it's a very serious case. A statement cannot explain away all the queries from the public," she said.

'Disastrous for Hong Kong'

Lawmaker Albert Ho also said Leung's failure to declare the earnings undermined Hong Kongers' trust in their leader.

"He is the leader of our government. If he has such an integrity issue and he doesn't act honestly... how could he win trust from the public?" he said.

"If he continues to stay in office it's disastrous for Hong Kong," he added

All three lawmakers stopped short of calling for Leung's impeachment, saying he should be given time to explain himself first. But Mo added: "The word impeachment is now looming in the air."

In a statement to the media, Leung's office defended the deal, saying it was "a confidential commercial arrangement and a standard business practice."

"Mr Leung has not provided any service to UGL after signing the above agreement," the statement said, adding "there is no requirement under our current systems of declaration for Mr Leung to declare the above."

The office said Leung would only have advised UGL had he lost the election to be chief executive.

In a separate statement, UGL said the agreement was a standard confidential business deal and that the payments were staggered "to ensure... non-compete and non-poach obligations were met."

Leung, a self-made property consultant before taking office, already faces a major crisis of governance.

He has had consistently low approval ratings and his nickname among pro-democracy protesters is "689", a reference to the number of votes he received from the 1,200 member strong, predominantly committee that selected him.

Hong Kong's population, in contrast, is around 7 million.

The latest poll carried out in mid-September showed he had a support rating of 43.2 per cent, according to a Hong Kong University survey, broadly in line with ratings throughout his tenure.

The revelation of his earnings comes ahead of crunch talks set for Friday afternoon between student leaders and Leung's deputy Carrie Lam over protester demands that the former British colony be granted full democracy.

Under plans unveiled by China in August, Hong Kongers will be able to vote for Leung's successor in 2017, but only two to three candidates approved by a nomination committee will be allowed to stand.

The proposal sparked mass protests, with tens of thousands taking to the streets calling for Leung's resignation and for Beijing to rescind their voting plan. — AFP

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