Nostalgia


One reason the latest scandals over railway construction came as such a shock is that they are eerily reminiscent of another era which most in our community probably thought we had put behind us.

Back in the early 1970s, corner cutting in the construction industry – and the corruption that facilitated it – was rampant. As soon as the Independent Commission Against Corruption was set up in early 1974, the stories came tumbling out: how public projects could be deliberately “over-engineered” to provide an extra safety cushion, so that skimping on materials and workmanship standards would not endanger the finished product too much, and would also provide a margin to cover corrupt payments to works inspectors. Contractors made their profits, site supervisory staff got their bribes, the only victims were the taxpayers who paid over the odds for the roads and other public facilities being constructed. Similar problems afflicted the private sector.

Judging from the recent reports of shenanigans in building works at To Kwa Wan and Hung Hom stations, ultra lax supervision is back in vogue, the only question being whether this is being facilitated by corruption or “merely” lackadaisical supervision and management. It says something about the seriousness of the situation that given the choice we would probably prefer the latter, but there is no comfort in that.

One particularly disturbing aspect of the recent revelations is the claim – not convincingly rebutted so far – that cheating was going on in the training and certification of MTRC site supervisory staff. When corporate culture has reached such a nadir, the time has come for radical remedial action. Failure to root out such practices imperils the very existence of the organisation.

Responsibility for the present state of affairs must rest with the corporation’s boss. But exactly who is that? Is it the senior management led by chief executive officer Lincoln Leung Kwok Kuen? Certainly as the person in charge of day to day operations he cannot escape a share of the blame. But Leung reports to a board of directors chaired by former minister Frederick Ma Si Hang. To what extent should they be accountable?

Above the company itself there is yet another layer of management. The government after all is the majority shareholder with 80 per cent of the equity, and as such controls appointments to the board of directors including the chairman. Two ministers and two serving civil servants are on the board and a further three retired civil servants are independent non executive directors. Should we be looking at secretaries for transport and chief executives?

Actually if we stand back from the current mess and look at the situation from a macro perspective, one probable contributory cause of the recent problems is requiring the corporation to undertake five major construction projects all at the same time. Each of the four internal ones – Island Line western extension, South Island line, Whampoa extension, Shatin-Central Link – had its justification, but they surely deserved different priority in strictly transport terms. However it would have been difficult for the government to explain to the residents affected why their line had lower priority than the others. That probably explains why our leaders seem to have chickened out and declined to rank them, passing the buck neatly to the corporation with instructions to implement them all at the same time. When this situation was overlayed with the political imperative to undertake the High Speed Rail link so as to plug into the national network – probably the least urgent in narrow transport terms -- the management buckled under the strain. Supervisory resources were spread too thin, with the consequences we see before us today.

Given the chain of command outlined above, and the time frame of the key decisions – or decisions not to decide -- how likely was it that Leung or any of his predecessors would tell Ma (or any of his), who would in turn have to tell ministers and chief executives -- that it could not all be done in the timescale required?

What next? The government is naturally giving priority to the safety issue and has set up a commission of inquiry under a senior judge to get to the bottom of what happened and make sure proper remedial action is taken. It is hard to quarrel with this approach. If the terms of reference were set too broadly the inquiry would take too long. On the other hand, if they are set too narrowly – restricting the scope to just Hung Hom station as has been mooted – then the equally serious To Kwa Wan alleged flaws would not be covered. And it is difficult to see how any inquiry would not spread into the whole question of MTRC supervision and the related training and certification.

But in the longer term it is important to get to grips with the chain of command issue. The government should be seeking to gradually reduce its shareholding so that it no longer has majority control. Perhaps a start could be made by disposing of a further 20 per cent of the shares within the term of the current chief executive. A further 20 per cent could go in the next term. Then we could move towards a board much less susceptible to government strong-arming, and a management that reported to a more independent board.

In disposing of these 20 per cent tranches, could we also bring the public closer to the corporation? Sell half of the shares each time on the open market with the other half being allocated free of charge to registered voters? Then when there is a future modest fare rise, we won’t just hear from the free lunch brigade. Their voices will be matched by the 3.8 million shareholders wanting to know about their dividends. The debate that follows will be much more even handed.


 
Mike Rowse
email: mike@rowse.com.hk