Hong Kong's Boss, CY Leung, Linked To $7 Million Payout From Australian Company

Hong Kong Chief Executive Leung Chun-yingREUTERS/Bobby YipHong Kong Chief Executive CY Leung (R) greets a guest at a reception following a flag raising ceremony in Hong Kong October 1, 2014, celebrating the 65th anniversary of China National Day.

Hong Kong’s chief executive CY Leung is struggling in the PR department at the moment and an exclusive in Fairfax Media today won’t make things any easier for Beijing’s man in the fragrant harbour.

For a fortnight he’s been facing calls to resign from protesters who took to the city’s streets to over what they see as Beijing tightening its grip over democracy in the city in the lead up to the 2017 elections.

The protests seem to be coming to a head, with the stark choice of a government crackdown or back down to resolve the issue. The two sides are supposed to be sitting down to negotiate a resolution.

But today’s Fairfax Media story about CY Leung receiving a AU$7 million payout from an Australian company won’t help his authority.

The deal dates from December 2011, four months before he became Hong Kong’s chief executive, and involves engineering company UGL, which bought a struggling company, DTZ, which CY Leung was a director of. The payment represented around 5% of the purchase price .

It all happened as he prepared to stand for election. Leung announced he’d resign from DTZ a few days before announcing his political intentions, then signed off on the deal two days before stepping down and the insolvent company went into administration, leaving unsecured creditors without payment.

UGL says CY Leung’s payment was essentially a non-compete fee, but he says in a statement that the money was for past services rendered.

In its statement to Fairfax, UGL says the deal “was entered into solely to ensure CY Leung did not move to a competitor or set up or promote any business in competition with DTZ, or poach any people from DTZ, and hence to ensure the business retained its value after the UGL acquisition”.

But the company says it didn’t include a clause to void the deal if Leung was elected because “media coverage suggested that other candidates were favoured to be elected, so the possibility of CY Leung securing office was not the focus of UGL’s negotiations”.

Critically, the first payment was made 9 months after Leung was elected Hong Kong’s leader and one of the questions being raised now is why it was not disclosed once he was in office.

DTZ’s administrator, Ernst and Young, and it’s former chairman, Tim Melville Ross, have both told Fairfax they were unaware of the deal.

It comes on top of revelations that his daughter, Chai Yan Leung, leads a highly fashionable lifestyle of conspicuous consumption and doesn’t mind poking her detractors in the eye about it via social media.

You can read more about this latest twist in the battle for control of Hong Kong via Fairfax’s story here.

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