Aug. 6 (Bloomberg) -- Hong Kong’s five-week old government was rocked by its third controversy involving senior officials, as Secretary for Development Paul Chan acknowledged he knew about the sub-renting of a unit owned by a company in which he was a director.
A property bought by Harvest Charm Development Ltd. had been sub-divided when it was purchased in 1994, the development secretary said in a statement on the government website. He said in a previous statement that he had “no knowledge” about suspected unauthorized alterations at the site now.
Chan’s statement comes after his predecessor resigned amid allegations of abusing a government allowance and new Chief Executive Leung Chun-ying acknowledged there were unauthorized building structures at his home. Leung said when he campaigned for office in March that he would address building safety issues associated with sub-divided units.
Chan said he and his wife will exit Hong Kong’s real estate market to “allay public concerns” and only buy property in the city for personal use.
Leung, 57, pledged before he was installed as chief executive to raise the income of the poorest and boost Hong Kong’s housing supply.
Property prices in Hong Kong have surged more than 80 percent since 2009, Centaline Property Agency data show. The city is the world’s most expensive place to live, according to Savills Plc.
Hong Kong has the widest wealth gap in Asia, and the average gross household income of the poorest 10 percent of the population fell to HK$2,170 ($280) per month in 2011 from HK$2,590 in 2001, according to a June 18 census report.
Chan took over from predecessor Mak Chai-kwong as development secretary on July 30, after Mak resigned on July 12 following allegations reported in the Apply Daily that he abused his government housing allowances.
The Independent Commission Against Corruption released a statement on the same day saying that they had arrested a secretary of a government bureau on charges of violating bribery laws over housing allowances.
Leung’s election as chief executive was unsuccessfully challenged in court by two lawmakers, after it was discovered that there were unauthorized building additions at his house, including a trellis, a gate that provided access to the road and a cover over a parking space.
More than 110,000 protesters took to the streets in an annual march on the day Leung took office to show their disapproval, according estimates by a pollster from the University of Hong Kong.
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