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GLOSSARY Branch Kowloon West Branch of the Democratic Party

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GLOSSARY Branch Kowloon West Branch of the Democratic Party GLOSSARY Branch Kowloon West Branch of the Democratic Party of Hong Kong Central Committee Central Committee of The Democratic Party of Hong Kong Company Target Link Limited, limited liability company incorporated under the Hong Kong Companies Ordinance Chan Ka Wai Member of the Central Committee (2000-2004) Member of the Executive Committee (2000-2004) Chairman of the Branch (1996-2000) Committee member of the Branch (2000 onwards) Director of the Company District Councillor District Board Member/District Councillor Executive Committee Executive Committee of the Central Committee LegCo Legislative Council of Hong Kong Stanley Ng Stanley Ng Wing Fai, Former Urban Councillor (1995-1999) 1 Former elected District Councillor ( 1994-1999) Chairman of the Branch (2000-2004) Director and shareholder of the Company James To James To Kun Sun, Legislative Councillor and Candidate in 2004 Legislative Council Election for Kowloon West Constituency District Councillor (YTM _ 1999 to date ) Member of the Central Committee (1997 and 2000- 2004 ) Director and shareholder of the Company Panel Selwyn Mar ( Convener ) Gladys Li Szeto Wah Party The Democratic Party of Hong Kong Premises/Property Flat C, 1/F, 134-134A Lai Chi Kok Road, Kowloon YTM Yau Tsim Mong 2 ACKNOWLEDGMENTS The Panel would like to express its gratitude to Dr. Law Chi-Kwong, Mr. Lee Chik-yuet and Mr. Lai Hok-lim, all of whom provided the Panel with background information and documentary material gathered in anticipation of the setting-up of the Panel and prior to its establishment and to Ms. Peggy Ha, Ms. Chan Wai Yin Ms. Genevieve Ku and Ms. Chiley Wan for their unfailing assistance. Had it not been for their contributions, it would have been impossible to complete this task in the time estimated. The Panel also wishes to express its appreciation to those who have attended the interviews. 3 REPORT OF THE PANEL Background leading to the establishment of the Panel 1. The Panel was set up by the Party after press reports appeared during the campaign for the LegCo Elections in August 2004 alleging that James To, a LegCo member, a member of the Party and a candidate for the Kowloon West Constituency, had on his election to LegCo in 1998 failed to declare his interest in the Company to the LegCo Secretariat and had abused his position during the period June 1998 to July 2001 as a member of LegCo by claiming as reimbursable expenses rentals paid for use of the Premises owned by the Company which in turn was owned by him and Stanley Ng. 2. It was also alleged that the rental reimbursed to him was above the market rental and that the rentals received by the Company were used towards paying the mortgage on the Premises. At a press conference held in response to such allegations, it was reported that James To had claimed that he did not declare the interest in the Company because he held the interest in trust for the Party. 4 3. A document was reported to have been produced by James To purporting to be a declaration of trust of one share in the Company signed by him and a similar document signed by Stanley Ng. Essentially, the allegations were that James To was benefiting himself or the Party by using public funds to pay off the mortgage when the rentals reimbursed were above market rent. Initially, the Central Committee requested the Panel to look into these allegations and report on the facts. The Panel 4. The majority of Panel members are non-Party members. Its members are: Ms Gladys Li, S.C. (Non-Party member) Past Chairman of the Bar Association Mr. Selwyn Mar (Non-Party member) Past President of the Hong Kong Institute of Certified Public Accountants Mr. Szeto Wah A senior member of the Party and former Legislative Councillor Terms of Reference of the Panel 5. At its 1 st meeting held on October 18, 2004, Selwyn Mar was duly elected as the Convener. The terms of 5 reference accepted by the Panel with the approval of representatives from the Party are: (1) To examine the James To/Target Link Limited incident including the acquisition and rental issues of the property in issue and to identify the lessons to learn. (2) To identify and recommend policies and procedures in dealing with the renting of premises using public resources that would promote best practice in this area. The Panel has been asked to submit a report to the Central Committee of the Party which it now does. Proceedings of the Panel 6. The Panel has been provided with much documentary material. A list of the more relevant material is at Appendix 1. 7. The Panel has held 8 sessions and has interviewed 13 persons whom the Panel considered could give relevant information to enable the Panel to ascertain the facts and also to reach its conclusions. All such persons attended on a voluntary basis as the Panel has no 6 coercive powers and the Party while encouraging its members to cooperate likewise had no rule which could be invoked to require cooperation. All interviews were recorded on mini-disc. A full list of those interviewed is at Appendix 2. 8. James To, Stanley Ng and Chan Ka Wai were invited to attend for interviews but declined to attend. In the case of James To and Stanley Ng, the Panel wrote specifically giving them the opportunity of being accompanied by a lawyer so that each could be advised whether or not he should answer any particular question posed by the Panel. Stanley Ng and Chan Ka Wai both wrote to the Panel declining to attend on legal advice. While the Panel was preparing the report, James To then indicated that as it appeared the Panel desired to meet him, he could attend at a date mutually convenient but might decline to answer a question on legal advice. Given the stage that the investigation had reached, the Panel decided not to take up this offer but to make available the draft report to him for his comment which 7 the Panel has done. The Panel has also extended this courtesy to Stanley Ng. The Panel had intended to ask these gentlemen to explain certain transactions and certain events as reported in the media and as revealed by the material before the Panel. Their failure to submit to interview has made it impossible for the Panel to carry out in full its terms of reference or to investigate fully matters which have been the subject of media interest. The Panel's findings and conclusions in this report must be read bearing in mind that the Panel has not had the benefit of hearing full explanations from them. It is however right to acknowledge that some documents were provided to the Panel by or on behalf of the Company and that the provision or release of these documents must have been with the consent of its directors and shareholders. 8 The Panel subsequently received short statements from James To and Stanley Ng. In his statement, James To states that he at no time benefited from the Company's rental income, the Company did not provide directors with any remuneration nor did the Company distribute any of its profit to shareholders at any time. Stanley Ng similarly states that he never received any money/profit /dividend from the Company directly or indirectly. The Panel has received comments from Stanley Ng and James To on the draft Report and the Panel has noted their comments. The Panel does not consider it necessary to make any changes to the Report arising out of their comments. 9. The Panel, those present to provide administrative support and those present to give evidence were requested to treat all matters discussed and documents submitted with confidentiality. 9 The Panel wishes to draw to the attention of the Central Committee and the Party that those who provided evidence to the Panel voluntarily may reasonably object to their evidence and material provided by them being published without their consent. There may be other legal issues surrounding the publication of this report. This is a matter for the Party to address. The Panel otherwise has no objection to publication of this report. 10. The Panel was authorised by the Party to engage a surveyor or surveyors to provide a valuation or valuations of market rental of the Premises at the Party's expense. The Panel therefore commissioned Sallmanns and Chesterton Petty to provide a report giving their opinion of the market rent for the Premises as at January 1, 2000. The date was selected by the Panel as being the date at which the total reimbursement claimed by those renting the Premises as District and Legislative Councillors was at its highest. The Panel considered it to be unnecessary to obtain valuations of the market rent as at various dates. The 10 reports of Sallmanns and Chesterton Petty respectively dated March 9, 2005 and March 14, 2005 are attached herewith as Appendices 3 and 4. FINDINGS RELATING TO TARGET LINK LIMITED AND THE PURCHASE OF THE PROPERTY 11. The Company was incorporated on 19 March 1997. Its authorised share capital was $10,000.00 divided into 10,000 shares of $1.00 each. 2 subscriber shares were issued; one to Victon Secretary Limited and one to Victon Management Limited. According to its Register of Directors, James To, Stanley Ng and Chan Ka Wai were appointed as directors on 2 May 1997. 12. On 12 May 1997, the Company entered into a Sale and Purchase Agreement for the purchase of the Property for a total consideration of $1,048,000.00 ( the Agreement ).
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