Hong Kong Chief Executive CY Leung has been under fire from democracy protestors in Hong Kong, but now the former head of Asia for real estate service firm DTZ is taking even more heat for allegedly negotiating a personal windfall out of DTZ’s bankruptcy sale in 2011.
According to an investigation unveiled today in The Sydney Morning Herald, while DTZ’s other shareholders were wiped out when the 200-year-old property advisory was put into administration and immediately sold to UGL in December 2011, Leung secretly collected GBP 4 million ($6.5 million) in payments.
The former chairman of DTZ Asia Pacific, who was by then a member of China’s National Standing Committee of the Chinese People’s Political Consultative Conference, also was able to receive a guarantee from the Australian engineering firm for payment of an outstanding bonus worth $2.43 million from then-insolvent DTZ.
Negotiating a Side Deal Out of DTZ’s Bankruptcy
In addition to his executive role with DTZ, Leung was formerly the largest shareholder in the company, which had merged with his successful Hong Kong operation in 1999. As part of the 2011 deal which put DTZ into administration before its sale to UGL, all other shareholders were wiped out and creditor Royal Bank of Scotland received repayment of GBP 77.5 million of DTZ’s GBP 106 million in debt to the Scottish bank.
At the time that the sale of DTZ to UGL was negotiated in 2011, Leung was a director of DTZ, and still the chairman of its Asia Pacific operations. Leung was instrumental in growing DTZ’s large network of offices and clients in China before he became engaged in politics full time.
Chief Executive Received Secret Payments While in Office
The Herald states that Leung received his compensation in two installments in 2012 and 2013, after he took office as Hong Kong’s chief executive. The payments that the businessman-turned-politician brought home were equal to more than five percent of the total purchase price by UGL.
UGL sold DTZ for $1.1 billion to a consortium of TPG Capital, PAG Asia Capital and the Ontario Teachers’ Pension Plan in June this year after struggling to make the real estate consultancy a profitable business.
Protest Talks Stall as Leung Investigated
Hong Kong officially called off talks with street protestors today that had been calling for Leung’s removal for weeks.
According to an account in the South China Morning Post, Hong Kong’s Justice Department today submitted to prosecutors an investigation of UGL’s payouts to Leung in relation to the 2011 acquisition.
The street protests that have rocked Hong Kong for weeks have included students refashioning a city bus into a jumbo-sized mock coffin for the city’s chief executive. The bus was emblazoned with the tagline “To hell,” reflecting the protestors dissatisfaction with the Beijing-picked city boss.