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Worthy Railway Still Accountable

In the last issue of this journal I discussed my work as the Chairman of the Public Accounts Committee. In this issue, I would like to illustrate that my role as the top watchdog of public finance does not stop there.

I recently wrote an article about the controversial Western Corridor Railway (WCR) Project which appeared in both the South China Morning Post and the Hong Kong Economic Journal on 13 June 1996. The underlying reasons and arguments of this article won massive support from the media and the Legislative Council. This article and my subsequent follow-up efforts have quite clearly enhanced transparency and led to closer scrutiny of this hugely expensive project (which has an estimated price tag of HK$90 billion!) by LegCo.

The WCR is a worthy infrastructure project which will bring significant economic and transportation benefits to Hong Kong. It must be built without delay and in an economic manner, providing good value for money.

On the other hand, to finance this project requires a commitment of more than half of Hong Kong's hard earned fiscal reserves. While engineers have naturally taken a very keen interest in this project, I think accountants are also well placed to offer their expert knowledge in the financial management and public governance of this huge investment. I have therefore wasted no time as your LegCo representative to make known my views.

Until my article hit the press, LegCo's knowledge of the WCR project was extremely limited. Despite the fact that the Administration has been quietly working with the Kowloon-Canton Railway Corporation (KCRC) on the project for more than two years, few details of the project have been publicly revealed.

The public did not know, for example, that the KCRC has already expended, with questionable legal authority, some HK$433 million on consultants and other costs. The public did not know that contractors for more than HK$750 million worth of further consultancy contracts have already been selected. The public did not know that the Government intended to spend another HK$45 million on consultancy fees without even making adequate plans for the necessary land resumption. The public did not know that the project will almost certainly be delayed despite bold promises of a completion date in the year 2001. The public did not know that the KCRC plans to borrow another HK$3 billion at the end of this year with the intention of sinking further development costs into the WCR project before the administration has even given the green light for the project to go ahead.

In my article I strongly argued that the WCR project has financial implications that must be faced immediately. I made the following assertions:

  1. The public has the right to know what is going on; while hundreds of millions of dollars of public funds are being siphoned off through the KCRC into consultancy fees, the Administration owes the public, through LegCo, a clear explanation.
  2. LegCo should regain the legislative control over public finance if the Administration fails to give a clear account on the project; this could be done by an amendment to the Kowloon-Canton Railway Corporation Ordinance.
  3. The huge investment must benefit local expertise and not consultants from overseas on an almost exclusive basis and it is particularly important that the Administration gain and retain the experience and technological know-how necessary to manage major infrastructure projects in the future.
  4. If the Administration and the KCRC choose to ignore these calls, LegCo should demand a full investigation by either:
    1. demanding that the Governor to invoke s 15 of the Audit Ordinance to ask the Director of Audit to audit the entire affair and report on the case to the Public Accounts Committee, or
    2. setting-up its own select committee and to summon officials from the Government and the KCRC to openly explain their decisions at public hearings.
  5. The Administration, as a matter of urgency, must take a stance in regard to the financial feasibility of the project before sinking further millions of public funds into consultancy fees for detailed technical designs;
  6. The Administration must take up direct responsibility to co-ordinate the project, borrowing expertise from the KCRC if necessary, in order not to duplicate efforts and waste valuable time in the decision-making process.

The KCRC project is a classic case demonstrating that a timely response in bringing the Administration under audit supervision can save time and substantial costs. It can also enhance in the minds of the public, as in this case, the role of professional accountants in the scrutiny of public finance.

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