Hong Kong authorities have arrested five more people for alleged construction fraud and bid-rigging related to two building maintenance projects, after 20 were earlier detained over another six projects, with law enforcement officials saying all suspects belonged to the same syndicate.
In a joint operation on August 21 and 22, the Independent Commission Against Corruption (ICAC) and the antitrust watchdog Competition Commission arrested five individuals on bribery-related charges tied to residential building maintenance projects totalling HK$140 million (US$18 million).
“After four months of in-depth investigation and analysis into evidence collected, we have uncovered the same syndicate’s involvement in alleged corruption and bid-rigging activities in other residential estates and maintenance projects,” Bill Ng Siu-kei, principal investigator of the ICAC, said.
Ng was referring to a similar joint operation by the two agencies in April, during which 20 suspects were arrested over fraud and bid-rigging in relation to the same type of projects.
The latest five arrestees comprised two members of incorporated owners’ committees, two middlemen and a contractor.
Investigators searched some 20 premises with court warrants, including offices of multiple project contractors, consultancies and residences of the five arrested individuals. The ICAC also met 22 other individuals during the investigation.
Ng said the largest bribe uncovered in last week’s operation amounted to HK$1 million, and both projects were residential estates on Hong Kong Island.
“Both housing estates had core members of the syndicate offering benefits to members of incorporated owners’ committees via middlemen, in a bid to ensure two construction firms controlled by the syndicate won two contracts totalling HK$140 million,” Ng said.
Bid-rigging is a process where a group of construction contractors conspire not to compete with one another, with some contractors deliberately pricing themselves out with high bids or pulling out unexpectedly to ensure a predetermined firm wins the contract. The resulting contract yields a higher price, which collaborators then split.
But both the anti-corruption body and the Competition Commission declined to reveal the amount of additional costs imposed on owners of the two residential estates, citing confidentiality for an ongoing investigation.
Felix Au Wai-leok, the commission’s head of investigations, said his organisation had uncovered 38 allegedly rigged projects involving six industrial buildings and 32 residential buildings and estates across Hong Kong Island, Kowloon and New Territories linked to this syndicate.
The total value of the projects exceeded HK$1 billion, with the largest contract totalling HK$260 million, Au revealed.
“After the joint operation in April, the Competition Commission has analysed the evidence it seized, which revealed more companies involved, and more projects allegedly showing signs of bid-rigging. Therefore, the commission decided to expand its scope of investigation,” he explained.
Au added the companies who were part of the syndicate would exchange or coordinate tender prices directly or through a middleman, with some contractors submitting unreasonably high tenders to ensure the agreed firm would win the bid.
Ng of the ICAC said the 20 suspects arrested in April had been charged and their trials were ongoing.
