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Anonymous Tip Leaks Secret Leung Payments

FILE - Hong Kong's Chief Executive Leung Chun-ying speaks during a news conference in Hong Kong.
FILE - Hong Kong's Chief Executive Leung Chun-ying speaks during a news conference in Hong Kong.

A journalist who contributed to a report revealing how Hong Kong leader Leung Chun-ying received secret payments from an Australian company says the story began from an anonymous tip his team received last Sunday.

In the report published on Wednesday, a three-man investigative team with Australia's Fairfax Media group said Leung received undisclosed payments worth $6.5 million from Australian engineering firm UGL in the two years since he took office. The article said the findings were based on a leaked contract between Leung and UGL, signed months before he became chief executive.

Surprising discovery

One of the authors, John Garnaut, an Asia-Pacific editor with the Sydney Morning Herald and Melbourne's The Age, told VOA his team received the document "out of the blue" from an anonymous source last Sunday.

Garnaut declined to speculate who supplied a copy of the contract. But he said the timing of the leak was notable, coming eight days into an unprecedented civil disobedience campaign by pro-democracy activists who have paralyzed major Hong Kong streets and demanded Leung's resignation.

"Any information damaging to Leung was hugely newsworthy. I’m not going to argue with that," Garnaut said.

The chief executive’s office sent a statement to Fairfax Media, insisting there is nothing illegal about the payments under Hong Kong law, and he was not legally required to disclose them.

The statement said the payments related only to Leung’s past work, not for any future service.

UGL released a statement Thursday also defending the contract with Leung, saying it was a normal business arrangement when UGL purchased subsidiaries of DTZ Holdings, Leung’s former company.

Under the deal, Leung agreed to act as a business advisor to UGL from December 2011, when the Australian company bought DTZ, a British property services firm. He had been a senior executive of the insolvent firm until he resigned ​ten days before the UGL takeover.

Leung announced his candidacy for Hong Kong chief executive November 27, 2011. The leaked document shows that he agreed to receive the payments from UGL five days later, on December 2.

Checking the facts

Garnaut described the challenge that he and his colleagues faced in trying to get Leung's office to verify the authenticity of the contract.

"As you can imagine, we had to escalate our questions until we got some pretty fiery legal letters from his office, acknowledging receipt [of those questions] and threatening to take us to court if we publish anything," he said. "In that process, we confirmed that he did receive the payments."

The Fairfax Media report said UGL made the payments in two installments in 2012 and 2013, after Leung became Hong Kong's top official in July 2012.

Garnaut said UGL was relatively more receptive to his team's investigation.

"It soon became apparent to them that we were serious and to their credit, they got their lawyers to comb over everything the company did [in relation to Leung]," he said. "In the end, they were pretty open in explaining how this deal was pulled together."

Political fallout

Hong Kong pro-democracy lawmakers reacted with outrage to the revelations late Wednesday, with some accusing Leung Chun-ying of a breach of trust and others warning they will seek his impeachment.

Princeton University international affairs professor Martin Flaherty said the leaking of the document appears to be designed to put further pressure on Leung.

"One wonders whether that is the beginning of a face-saving way to have Leung step down or be ushered out, not as an immediate response to the students [who have led calls for his resignation], but as a way to indirectly accede to that demand," Flaherty said.

New York University law professor Jerome Cohen, a specialist in China's legal system, said investigating the circumstances of Leung's secret payments may take time.

"But, this also would be a wonderful excuse for getting rid of the chief executive at a time when [his superiors in] Beijing are emphasizing a nationwide need to combat corruption," Cohen said.

Last week, the chief executive refused calls from the protesters to step down. In a statement to reporters, he said he must continue working to secure legislative approval for reforms aimed at giving all Hong Kong citizens their first-ever chance to vote for their leader in a 2017 election.

But pro-democracy activists in Hong Kong have rejected Beijing's August 31 ruling that candidates running for chief executive in the 2017 election must first be approved by a largely pro-Beijing nominating committee.

Pan-democratic lawmakers have vowed to use their veto power to block the passage of any Leung-backed reforms that conform to the Beijing rules.

How will Leung proceed?

Garnaut said the Hong Kong leader is caught between the opposing views of two "completely different" masters.

"One of them is Beijing, which cares primarily about loyalty, and operates in an old, revolutionary fashion which is all about patronage, secrets and underhanded money dealings," Garnaut said.

At the same time, he said, "Leung also has to face the Hong Kong people, who are a pluralistic, democratic society that demands open representation and wants politicians to answer questions."

Garnaut said every time Leung chooses to satisfy Beijing, he hurts his standing with the Hong Kong public.

"So I think this really is a story about Hong Kong's contradictions, and how they are only going to get bigger and bigger over time," he said.

Jim Stevenson and Sarah Williams contributed to this report.

Listen to Michael Lipin's interview with Sydney Morning Herald editor John Garnaut: