Appointment system breeds collusion

SCMP Saturday June 7 2008

Prepare for worse ahead with the new junior ministerial positions. Far from being a constitutional advance, this is an extension of the colonial system of appointment of people willing to back the government in return for influence, prestige or commercial advantage. Instead of entrepreneurial businessmen, grass-roots organisers or independent professionals, here is a crop of individuals who appear to have been picked as facilitators rather than for their administrative skills, drive or originality.

To call them politicians is wrong. Only a few have been actively involved in politics. Successful politicians in open societies must appeal to electorates. In closed systems like China, competition within the ruling party is fierce. But the Hong Kong politics as envisaged by Chief Executive Donald Tsang Yam-kuen is neither. It is a throwback to the days when Hong Kong was supposedly apolitical and the colonial government co-opted enough of the elite to present an appearance of local representation.

The appointment system may have had some purpose when British officials needed the support of local dignitaries. But it should have scant role in today's Hong Kong. Yet the unofficial members of the Executive Council continue to be simultaneously policymakers, representatives of commercial groups and appointees to supposedly private entities which are, in fact, government-controlled. Conflicts of interest are inherent.

The rumpus at Hong Kong Exchanges and Clearing with the resignation of David Webb has drawn new attention to the incestuous links between government and quasi-business figures. It is a pity that Mr Webb, apparently out of frustration, resigned from a job to which he had been elected.

HKEx chairman Ronald Arculli and non-executive directors Laura Cha Shih May-lung and Marvin Cheung Kin-tung are all Exco members appointed to the exchanges board by the government. Whether or not the Executive Council had knowledge of the purchase of HKEx shares by the Exchange Fund, a series of potential or actual conflicts of interest exists when individuals wear so many hats.

Mr Arculli is well liked, but his rise had more to do with his ability to advance sectoral interests rather than the public interest. There are few major policy decisions which do not affect the property and finance sectors. He came to prominence as the Legislative Council representative, from 1988 to 2000, of the richest and most powerful sectoral lobby group in Hong Kong - real estate and construction.

From Legco, he went to the chairmanship of one monopoly, the Hong Kong Jockey Club, and then in 2006 to another, HKEx, by which time he was also on Exco. His connections with the property sector remain very close, being on the boards of HKR International (along with Mrs Cha), Hang Lung Properties, two Cheung-Kong-related companies and the Sino Group.

The government may have had a case for controlling the HKEx in the aftermath of the 1987 collapse. But, after listing in 2000, it should have been divorced from government control. Instead, the government moved in the opposite direction, buying shares which enable it to further increase the dominance on the board of its appointed trustees. This is one of several advances made by the bureaucracy and its attendant minions into the realm of commerce.

Mr Arculli, together with fellow Exco member Anthony Cheung Bing-leung, is also on the board of one of the other government-controlled corporations - the Hong Kong Mortgage Corporation - an example of the Monetary Authority's empire-building in an economy that is supposed to be a shining example of private-sector financial expertise. The corporation was created to provide extra credit to help bolster apartment and land prices. Collusion does not need an agenda or meeting place. It just needs an appointment system.

 

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