Government 'sanitizes' LegCo Cyber Report
7 February 2005
Back on 24-Oct-04, we reported that the three Cyberport companies wholly-owned by the Government had failed to publish any accounts since they were incorporated in December 1999. Since then, Webb-site.com has been quietly battling with the Government to obtain this information, and we can now reveal to you the result. After three rounds of delays, the Government has admitted that it "sanitized" the financial information it recently gave to LegCo and the public. We can also reveal that the Ombudsman has criticised the Government's shabby handling of our request and forced the Government to issue us an apology.
We do not know what "dirt" the Government removed to sanitize these accounts. The whole experience says a lot about the deficiencies of a non-statutory code on access to information, about the shabby way the Government operates it, and about the future way it may hide information on the controversial Cultureport project, by tying itself into "confidentiality provisions" with the developer at the same time as claiming that there is no collusion.
The Code on Access to Information
On 25-Oct-04, the day after our article, we filed an official request with the Office of the Government Chief Information Officer (OGCIO) under the Code on Access to Information (Code). This is a non-legally-binding, heavily diluted version of what is becoming accepted practiced in democratic countries - both the US and UK have a Freedom of Information law, as do 57 other countries. As readers will be aware, Hong Kong does not have a democratically elected Government, but nevertheless, aspires to be "Asia's World City" so we thought it was worth giving the system the benefit of the doubt by attempting to obtain a relatively simple set of documents under the Code. As you will see, our trust was wrongly placed.
What we asked for is the directors' report and audited financial statements for each accounting period since incorporation of each of the following companies:
- Hong Kong Cyberport Development Holdings Limited
- Hong Kong Cyberport Management Company Limited
- Hong Kong Cyberport (Ancillary Development) Company Limited
We know that these documents exist, because they are required by the Companies Ordinance. They should hardly be state secrets - there is no national security or foreign policy implication to these documents, nor is there any privacy ordinance implication, as they relate to companies, not individuals. It's not like asking for immigration records or personal tax returns,
Fully 21 days later (the target response time under Rule 1.16 of the Code), on 15-Nov-04, OGCIO replied:
"As the Administration is preparing a comprehensive progress report on the Cyberport project for submission to the Information Technology and Broadcasting Panel of the Legislative Council in January 2005, and the report would provide, among other things, relevant information on the financial status of the Cyberport Companies, disclosure of the requested information to the public at this point in time would be premature. Thus we regret that the requested documents could not be made available to you at this time."
We replied the same day, and pointed out that the grounds for rejection were wrong. Under the heading "Information which may be refused" in the Code, Rule 2.17 on "Premature Requests" states:
"Information which will soon be published, or whose disclosure would be premature in relation to a planned announcement or publication."
"This provision may be used to protect information which will be published by the department within 60 days after the request is made." (emphasis added)
Even if you accept that publication of accounts which date back 4 years and should have been published years ago could in some way be "premature", it is clear that 60 days from our application would be 24-Dec-04, which was before the intended January briefing to LegCo. We also questioned whether the "relevant information on the financial status" to be given to LegCo would amount to the full accounts we were seeking. Paragraph 2.17.2 of the Guide states in relation to the "Premature Requests" exemption that:
"The restriction is however a temporary one since the record containing the information will be a public document once it is published/announced." (emphasis added)
So the claimed exemption would only apply if the Government intended to publish the full accounts, within 60 days of our original request. At this point, we exercised our right under Rule 1.26 of the Code to lodge a complaint with the Ombudsman.
Another full 21 days went by, the target response time under the Code, not a day less. Do you get the feeling that the Government was trying to drag this one out? In their response, the Government claimed that the paragraphs we quoted were not binding, just a guideline. We responded the same day, pointing out that the spirit of the Code was being violated, and quoted from paragraph (v) of the Introduction to the Guide, which states:
"The approach to release of information under the Code should be positive; that is to say, departments should work on the basis that information requested will be released unless there is good reason to withhold disclosure under the provisions of Part 2 of the Code." (their emphasis)
We also questioned why the Guide would say "60 days" rather than "about 60 days" if it was intended to allow flexibility, and what was the intended maximum on the definition of "soon" in the Code - a year, perhaps? We regarded it as unreasonable to interpret the Code in this way.
As it happens, the Government managed to get a report in to LegCo on 23-Dec-04, which by an amazing coincidence is 59 days after our information request, and with only half a day to spare before the Christmas eve shutdown. We'll deal with the content of that report at another time, because although we find it full of misleading information, it requires detailed examination beyond the scope of this article. However, the report to LegCo failed to include the documents we had requested, and only included "extracts" from the consolidated accounts of the holding company. After some Christmas cheer, on 29-Dec-04 we repeated our request that the full accounts be delivered without further delay.
Another delay, a different excuse
Guess what - another full 21 days went by, the target response time under the Code, which Government seems to take quite literally - a target to be achieved but not beaten. Finally, on 19-Jan-05, the Government came up with a completely new excuse for not giving us the accounts. Perhaps they were hoping we would have accepted the first excuse, which by now was void, but they should know Webb-site.com better than that! Referring to the accounting extracts in the LegCo report, OGCIO replied to us:
"[The extracts] have been prepared to ensure public information of the financial situation of the Cyberport project without breaching the duty of confidentiality of the companies concerned to the other contracting parties under various commercial agreements. Given our confidentiality obligations, we are not able to disclose further accounts than what we have already provided to the Legislature."
In response to the Ombudsman, OGCIO further commented:
"OGCIO had taken into account legal advice that the directors' report and accounts of the three Cyberport companies contained certain commercially sensitive information and that the companies were bound by the confidentiality provisions in various agreements not to disclose such information. As a result, Government could not disclose the companies' accounts in full to the public, including LegCo and you....OGCIO had provided to LegCo sanitized accounts without the commercially sensitive information." (emphasis added)
Hmmm, "sanitize" - as in "make clean" - what dirt were they removing here?
Ombudsman criticises Government
In response to our complaint, the Ombudsman wrote to us on 21-Jan-05. Click here to read the letter. In relation to OGCIO's original "Premature Requests" excuse of intending to publish our requested documents within 60 days, the Ombudsman backed us on this point. He wrote:
"You were correct in asserting that OGCIO could not use that provision to reject your request."
That's one small blow for freedom. However, the Ombudsman then backed the Government's use of the "commercial confidentiality" excuse which falls under paragraph 2.16 of the Code, although it is not clear from the letter what steps, if any, the Ombudsman took to verify that the information withheld was actually commercially sensitive, or whether it was reasonable to have included "confidentiality provisions in various agreements" in the first place, having regard to the transparency one would expect from Government. The Ombudsman then turned his sights on Government and wrote:
"OGCIO knew it was not able to disclose directors' report and audited financial statements in full, even to ITB Panel [of LegCo]. We consider that OGCIO should have explained to you from the outset that its refusal of your request was on grounds of commercial confidentiality under paragraph 2.16 of the Code."
"As early as 15 November 2004, you had already queried OGCIO whether the Report would contain information you requested. At that time, OGCIO should have been aware that the Report would only be a sanitized version of the accounts. Again, OGCIO did not explain this in its reply of 6 December 2004."
In its conclusions, the Ombudsman criticised the behaviour of the Government and wrote:
"While OGCIO had valid reasons for refusing your request under the Code, its replies had not been at all clear or helpful. In this light, OGCIO's handling of your request did not comply with the spirit of the Code, which calls for an open and positive attitude.
The Ombudsman, therefore, considers that OGCIO should extend an apology to you. It should also promptly and clearly explain the reasons for not accepting requests for information in the future."
This is quite a damning conclusion, and makes us wonder just how often anyone has attempted to use the Code, given the shabby way in which OGCIO handled our request. Was this the first time they had received a request, or do they always behave this way? They appeared to be unaware of the way in which replies should be handled, and there seems to be a closed and negative attitude to handling of requests, along the lines of "take as long as possible, and if you can find a reason not to provide information, then don't provide it". As instructed by the Ombudsman, we received an apology from OGCIO dated 25-Jan-05, but we doubt if this will change the underlying culture.
One thing is clear from the episode - the Code is just a fig leaf to claim to the world that Asia's World City has freedom of information, when in fact the Government willingly signs agreements with "confidentiality provisions" thereby tying its hands and claims "commercially sensitive information" comes ahead of the public's right to know.
What happens with Government, stays with Government
Back in 2001, the Standing Committee on Company Law Reform proposed that in a consultation paper (page 80) that private limited companies should file copies of their annual directors' reports and financial statements with the Companies Registry for public inspection. This was shot down by vested interests, and it is now apparent that the Government would also have been opposed to such a measure as it would have been obliged to publish the Cyberport accounts, amongst others.
Collusion and "Sanitized" accounts
The excuse of "commercial sensitivity" obviously poses more questions than it answers. What "commercial agreements" are we talking about here? Are we talking about the agreement with Pacific Century Group, now PCCW, reached without tender, to develop the Cyberport? Or is there another party involved that has not been revealed to LegCo or the public? What could possibly be sensitive about this? It seems unlikely that we are talking about tenancy agreements, since these would not normally be individually disclosed in financial statements; only the aggregate rental income would appear.
"We are resolutely against "collusion between business and the Government" and will strictly enforce our monitoring systems to eliminate any "transfer of benefits"".
This provided an irresistible hook for renewed debate about what collusion he was referring to, and of course, renewed investigation by legislators of how the Government came to award the Cyberport project on a 23 hectare site of prime island seafront to the son of a long-time friend and former business partner of the Chief Executive, without tender.
In light of the "sanitized" accounts and the Government's insistence that it will not release the full accounts of the Cyberport companies, we can only speculate on what is in them. We urge Legislators to set up a Select Committee into the Cyberport affair, in order to legally compel the Government to divulge the full accounts and all other documentation related to the Cyberport. One of the "monitoring systems" that the Chief Executive was talking about ought to be the public's monitoring of Government through the Code on Access to Information. Clearly that voluntary code is not working, and a law is required. If the Government is serious about collusion with business, or preventing it, then they should co-operate with the Select Committee and put forward a proper Freedom of Information law to allow public monitoring of future deals.
In an newspaper opinion piece last week, legislator Margaret Ng, for the legal sector, called on Government to enact a law on the Freedom of Information. We strongly support this call. If we can't have Government accountability through the ballot box, then at least give us transparency in Government dealings. It's a necessary component of an open and fair society.
As we have pointed out before, the Government has found itself able to publish the annual reports of other companies it owns, including the Hong Kong Science and Technology Parks Corporation, the Post Office, the KCRC, the Trade Development Council, and the Legal Aid Services Council.
What is it about the Cyberport accounts that they do not want LegCo and the public to see?
Given the secrecy surrounding the Cyberport, and the way the Government claims to have bound itself into confidentiality obligations by contract, the public has good reason to wonder whether Government will do the same thing with the so-called West Kowloon Cultural Development, or Cultureport (yes, it is by the harbour, like our windowless Cultural Centre in Tsimshatsui). Perhaps, 5-10 years from now, you will be hearing that the accounts of the single developer, and the accounts of the cultural facilities, cannot be divulged due to commercial sensitivity - they won't want the public to know just what a huge profit the developer has extracted from the 40 hectare site in return for a few more museums and performing venues to subsidise some of the arts.
Even if you agree that in a free market, the Government should subsidise certain sections of our creative economy with taxpayers' money (which we do not), this is an incredibly inefficient way to do it. The Government should parcel up West Kowloon into normal sized chunks, install the basic infrastructure such as access roads to ensure co-ordinated development, determine what waterfront areas should be set aside for public enjoyment, and then auction the development sites to the highest bidders in the normal way, including a staggered auction schedule to prevent hitting the market with up to 40 hectares in one go. If legislators agree that a site on the headland for a subsidised cultural facility should be set aside and funded from the public purse, then so be it, but that should be a separate matter.
© Webb-site.com, 2005