In his debut as the newly-appointed Director of Audit, David Sun finally flexed his auditing muscles by opening up a Pandora's box of irregularities and malpractices by private hospitals, as well as to point out some serious derelictions of duty by staff of several government departments. He didn't disappoint us at all. In fact, thanks to the Audit Commission's report, it dawns on us why it has been so difficult for the government to locate prime sites for development, and why the fees at private hospitals are so ridiculously-high. Perhaps, the most important of all, it becomes clear the loophole that provides a short cut for property developers to obtain cheap land easily under the guise of public use.

Among the many irregularities exposed by the damning report, the most outrageous is undoubtedly the abuse of land resources by private hospitals, especially the infamous case of Union Hospital in Sha Tin. We all know the government grants land on favorable terms for private hospitals. As such, a 1.922-hectare plot was granted in 1982 to a hospital enterprise for building a private hospital for just HK$60 million. Then the land ownership changed hands twice, to the operator of the Union Hospital, namely Henderson Land, in 1994. However, from 1986 to 2000, the former owner followed by the present operator had persistently applied to have the land use changed to residential use, but the applications were repeatedly rejected by the government. The hospital was not officially opened until 1994 with only 400 beds, one-third short of the number required as a pre-condition for the land grant, and this was after a lapse of 12 years.

The principal controversy is that the hospital used only half the site, under the pretext that there was a shortage of demand for hospital beds. In other words, nearly half of the remaining land was left vacant for almost 20 years until the hospital was given approval by the Town Planning Board in May 2000 to change the land use. Eventually, after paying a HK$600 million premium for the land-use change, the other half of the site was used for construction of luxury residences, Hill Paramount, that fetched HK$3.5 billion for the developer without its having to go through a tendering process.

There are no doubt a lot of questions popping up in our minds. What leaves me scratching my head is the question why did the government endorse the change in land use, when it was estimated at that time the district was still short of about 800 hospital beds. What is more intriguing is the fact that up to April 2000, a month before the approval, the Department of Health had consistently opposed the proposed change, but then all of a sudden the green light was given by the Town Planning Board. Did the department restate its objection to the board? What precipitated the change of heart by the Town Planning Board?

One cannot help but suspect that the operator intended to turn the land acquired for hospital development into a lucrative property project right from the beginning, by taking advantage of the loopholes in the regulations governing private hospitals. It seems that applying for land grants for public use is a short cut for developers to get prime sites cheaply, without going through a competitive and expensive tendering process. Ironically, because of surging demand from mainlanders, the operator has asked the government for more land to expand the hospital.

This raises the paramount question of what has the Department of Health done to fulfill its role of overseeing private hospitals. As the licensing authority, the department is supposed to monitor hospitals to ensure they meet all the licensing requirements. How come it could allow that entire site to remain vacant for 12 years, without addressing concerns to the operators in question? If the department had really cared about the hospital's operation, it should have at least given a warning to the operator or impose penalties. All these anomalies explain how property hegemony was formed in the city with the authorities acting as accomplices rather than as regulators. Union Hospital once denied the accusation that it was colluding with the government, saying the HK$600 million premium paid for the land-use change totally reflected the market price at that time. Without a bidding process, on what basis did the Lands Department believe this was the right price that reflected the market rate?

What is unnerving is that this kind of malpractice is not isolated, but only the tip of the iceberg, since other private hospitals were also found to have abused land use to varying degrees. Those abuses included turning mandatory low-priced beds for the needy into expensive first and second-class bedrooms and allocating surplus funds to other uses, at complete variance to government policy stipulated in 1981. The LegCo needs to dig out the full picture of all these anomalies while a newly-founded steering committee should tighten the regulatory regime over private hospitals.

The author is a current affairs commentator.

(HK Edition 11/23/2012 page3)