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LCQ20: The "PMQ" project

Following is a question by the Hon Leung Kwok-hung and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (June 11):

Question:

PMQ is a revitalisation project implemented at the former Police Married Quarters on Hollywood Road.  To implement this project, the Musketeers Education and Culture Charitable Foundation Limited ("the Musketeers Foundation"), which has been selected to conserve this heritage site, has established the PMQ Management Company Limited ("the Management Company"), which is responsible for the daily operation of PMQ.  Recently, quite a number of tenants of PMQ have relayed to me that the project has been mismanaged, and that the operations of the two aforesaid companies lack transparency and external monitoring, resulting in rectifications of the management problems of PMQ pending for a long time.  In this connection, will the Government inform this Council:

(1) whether the Government deployed any staff to communicate with the tenants of PMQ in the past six months in order to understand and monitor the progress and implementation of the project; if it did, of the dates and times of such meetings, the government departments to which such staff belong, as well as the number of tenants attending such meetings; if not, the reasons for that;

(2) whether it knows if the Musketeers Foundation and the Management Company awarded all outsourced service contracts of PMQ through open tender; if they did, whether the Government monitored the relevant tendering processes, and of the number of local newspapers in which the tender notices were published; if not, the reasons for that, and the measures put in place by the two companies to ensure high transparency of the procedures for selecting outsourced service contractors; whether it knows if any of the persons-in-charge or shareholders of the outsourced service contractors have interests related to the executives of the two companies or their family members; if there are such persons-in-charge or shareholders, of their number, and the measures put in place by the two companies to prevent any transfer of benefits in the selection processes;

(3) given that the Management Company is required to submit to the Government annually mid-year progress reports (including financial reports and cash-flow statements) and year-end reports (including annual audited financial statements), as well as the final evaluation report (including the final audited accounts) upon expiry of the project tenancy agreement, whether the Government will make public or brief Members of this Council on such reports; if it will, when such reports will be made public and the way in which the briefing will be conducted; if not, of the reasons for that;

(4) whether it has tightly monitored the PMQ project in accordance with the relevant guidelines made by the Independent Commission Against Corruption, so as to prevent any transfer of benefits or cases of non-compliance; if it has, of the details; if not, the reasons for that;

(5) given that the Management Company is a charitable institution exempt from tax under section 88 of the Inland Revenue Ordinance (Cap. 112), whether the Government knows if any government officer is a member of the management committee of the company; if there are such officers, of their ranks in the Government; if not, the reasons for that; whether the Government will propose to the Management Company the appointment of no less than two representatives of the tenants of PMQ to the management committee of the company for effective monitoring; if it will, when it will do so; if not, of the reasons for that; and

(6) given that the Advisory Committee on Revitalisation of Historic Buildings is responsible for assisting in the assessment of applications under the Revitalising Historic Buildings Through Partnership Scheme, and monitoring the subsequent operation of the successful applicant, whether the Government will appoint no less than two Members of this Council and no less than two representatives of the tenants of PMQ to be members of that Committee, so that Members of this Council and tenants of PMQ can more effectively monitor the implementation of the PMQ project and relay public opinions to the Committee; if it will, when it will do so; if not, of the reasons for that?

Reply:

President,

As regards the questions raised by Hon Leung Kwok-hung, the replies are as follows:

(1) and (3) Since the commissioning of "PMQ", the Government has been closely monitoring its operation. Following the idea of sustainable implementation of revitalisation projects for historic buildings, the "PMQ" project will be operated on a self-financing and self-sustainable basis in which the site and the premises will be managed, operated and maintained at its own expenses.  The Musketeers Foundation has set up a special purpose company named "PMQ Management Company Limited" (PMQ Ltd), which has acquired charitable status under Section 88 of the Inland Revenue Ordinance (Cap. 112), to be responsible for the implementation of the project and the day-to-day operation of the historic buildings after revitalisation, including the leasing of studio and other units.

The Development Bureau (DEVB) and the Commerce and Economic Development Bureau (CEDB) are responsible for monitoring the "PMQ" project. To monitor the business performance of the project during the operation phase, PMQ Ltd shall submit to the Government progress report (including financial reports and cash-flow statements) and the annual report (including the annual audited financial statements) at mid-year and year-end respectively, and the final evaluation report (including the final audited accounts) upon expiry of the project tenancy agreement.  Both the annual and final evaluation reports should include audited accounts and auditor's reports for the Government to examine the financial position of the project.  If PMQ Ltd fails to submit reports or if the submitted reports containing insufficient, incomplete or false information, the Government may terminate the project tenancy agreement. The Government shall provide the latest information of the "PMQ" project to the "Advisory Committee on Revitalisation of Historic Buildings" (ACRHB) on a regular basis and obtain the ACRHB's views to ensure that the objectives of the project are met. The Government will also arrange site visits on a regular basis to advise on the management and operation of "PMQ".

(2) According to the requirements in the tenancy agreement signed between the Government and PMQ Ltd, PMQ Ltd needs to conduct tender and procurement exercises in accordance with the guidelines set out in the tenancy agreement and on a fair and competitive basis to achieve value for money and forestall any conflict of interest.

PMQ Ltd advised that it had strictly enforced the declaration of conflict of interest mechanism in conducting tender exercises.  There has not been any conflict of interest.

(4) The Government had arranged PMQ Ltd to attend a seminar organised by the Independent Commission Against Corruption (ICAC) for them to understand the relevant guidelines of the ICAC.  PMQ Ltd advised that it had strictly enforced its internal control measures since its establishment to prevent any breaches of laws and regulations.

(5) As described above, following the idea of sustainable implementation of revitalisation projects for historic buildings, the "PMQ" project will be operated on a self-financing and self-sustainable basis in which the site and the premises will be managed, operated and maintained at its own expenses.  The Musketeers Foundation has set up a special purpose company named PMQ Ltd, which has acquired charitable status under Section 88 of the Inland Revenue Ordinance (Cap. 112), to be responsible for the implementation of the project and the day-to-day operation of the site after revitalisation, including the leasing of studio and other units. The above ordinance does not require Government officials to be members of its management committee.

Moreover, the Government and the ACRHB are jointly responsible for monitoring the business performance of the "PMQ" project during the operation phase in accordance with the established mechanism. PMQ Ltd shall submit to the Government progress report and annual report at mid-year and year-end respectively. The latter should include audited accounts and auditor's report for the Government to examine the financial position of the project. Besides, CEDB has representative sitting in the meetings of the Event and Programme Committee of PMQ Ltd as an observer for monitoring purpose.

(6) The ACRHB, comprising mainly non-officials in the fields of historical research, architecture, surveying, social enterprise, finance, etc. is set up to provide advice on the revitalisation of historic buildings.  In particular, it will assist in assessing applications under the Revitalising Historic Buildings Through Partnership Scheme and monitor the subsequent operation of the successful applicants.  The Government will identify suitable members for appointment to the ACRHB in the light of their professional background and experience.

Ends/Wednesday, June 11, 2014
Issued at HKT 14:30

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