Water-scandal suspects had deal with different factory, Hong Kong police say

Hong Kong police have confirmed that a third-party factory in Dongguan, Guangdong province, was commissioned by two fraud suspects to produce bottled water supplied to some government offices in a growing procurement scandal, but said the plant held the relevant licences required by mainland Chinese authorities.

The controversy came to light over the weekend when the Government Logistics Department announced that it had “partially terminated” a HK$52.9 million (US$6.8 million) three-year contract with Xin Ding Xin Trade to supply bottled water to offices on Hong Kong Island and some outlying islands because it doubted whether the firm was capable of fulfilling the agreement.

A married couple were subsequently arrested for allegedly defrauding the government and are suspected of breaching the Trade Descriptions Ordinance by providing false information about the product manufacturer.

The government said on Wednesday night that it had terminated all other contracts with Xin Ding Xin. They included a chemical supply contract awarded by the Drainage Services Department and a data entry services deal with the Fire Services Department, valued at more than HK$6 million and HK$5 million, respectively.

The departments would continue to follow up on the contracts, it said. Law enforcement agencies would be informed if any illegal activities were identified in the contracts, it added.

The government also revealed that Xin Ding Xin had paid a deposit of around HK$1 million under the terms of the water supply contract. It added that it was entitled to deduct from the deposit to compensate for losses incurred as a result of the termination.