Hong Kong: Prosecutors have arrested two individuals amid allegations of a sophisticated fraud involving the government’s bottled water contract, potentially defrauding authorities of close to US$7 million.
Contract and Red Flags
- In June, a company known as Xin Ding Xin (XDX) secured a contract to supply 1.88 million bottles of water to government offices — the first time such a contract had been awarded to a mainland Chinese brand.
- Authorities say XDX submitted false documentation during the bidding process, falsely claiming to have a sourcing agreement with a mainland supplier. That supplier later denied any business ties with XDX.
Arrests and Seizures
- On 17 August, police arrested a 61-year-old male director and his 57-year-old female partner/shareholder, seizing approximately 2,600 bottles of water from a Yuen Long warehouse, alongside relevant documents and electronic devices.
- Other sources note a considerably larger seizure of about 26,000 bottles believed to be from the same batch, suggesting the operation may have been far more extensive.
Government Response and Investigations
- The Government Logistics Department has terminated the contract with Xin Ding Xin, as well as three related chemical supply contracts linked to the company’s owner.
- Christopher Hui, Secretary for Financial Services and the Treasury, convened an urgent meeting on 17 August and formed a task force to oversee the issue. He has also ordered remedial measures and invited the Audit Commission to review the tendering process.
- Despite the contract being terminated, payments for water already delivered remain unsettled, according to police.
Outstanding Questions
- A mainland Chinese individual, potentially tied to the procurement process, is still at large. Police have not disclosed details on this person due to operational sensitivities.
- Government officials and the public have raised concerns over how such discrepancies went unnoticed during the tender evaluation. The Audit Commission review is intended to help restore confidence and tighten oversight in future procurements.
