updated 5:00 GMT 10.10.14
HK calls off protest talks, defends $6M deal
By Hilary Whiteman, CNN
Pro-democracy protesters remain scattered at the protest site in Admiralty on Thursday, October 9. The government canceled talks that day after protest leaders urged supporters to keep up the occupation. Demonstrators are angry at China's decision to allow only Beijing-vetted candidates to run in the city's elections for chief executive in 2017.
Taxi drivers attend a small demonstration calling for protesters to stop blocking roads through the city on October 9.
A woman drinks a soda as she walks past a barricade erected by pro-democracy demonstrators in Hong Kong on October 9.
A pro-democracy protester sleeps on a street in the occupied area surrounding the government complex in Hong Kong on Wednesday, October 8.
A pro-democracy protester reads a newspaper in Hong Kong's Mong Kok district on Tuesday, October 7, as a police officer stands nearby.
Protesters walk up an empty street inside the protest site near Hong Kong's government complex on October 7.
Joshua Wong, a 17-year-old student protest leader, is interviewed at the protest site near government headquarters on Monday, October 6.
A man walks to work as pro-democracy demonstrators sleep on the road in the occupied areas surrounding the government complex in Hong Kong on October 6.
A ray of sunlight bathes sleeping protesters as they occupy a major highway in Hong Kong on October 6. Protesters say Beijing has gone back on its pledge to allow universal suffrage in Hong Kong, which was promised "a high degree of autonomy" when it was handed back to China by Britain in 1997.
People take an escalator to work as protesters sleep on October 6.
The statue "Umbrella Man," by the Hong Kong artist known as Milk, stands at a pro-democracy protest site in the Admiralty district on October 6.
People walk to work on a main road in the occupied areas of Hong Kong on October 6.
Police officers remove barriers outside government offices in Hong Kong on Sunday, October 5.
Student protesters carry a barrier to block a street leading to the protest site on October 5.
Pro-democracy demonstrators occupy the streets near government headquarters on October 5.
Pro-democracy demonstrators surround police October 5 in the Mong Kok district of Hong Kong.
A pro-democracy protester holds on to a barrier as he and others defend a barricade from attacks by rival protest groups in the Mong Kok district on Saturday, October 4.
Pro-democracy student protesters pin a man to the ground after an assault during a scuffle with local residents in Mong Kok on October 4.
Pro-democracy protesters raise their arms in a sign of nonviolence as they protect a barricade from rival protest groups in the Mong Kok district on October 4.
A pro-Beijing activist holds up blue ribbons for anti-Occupy Central protestors to collect as pro-government speeches are made in the Kowloon district of Hong Kong on October 4.
A man sits in front of a barricade built by pro-democracy protesters on October 4 in the Kowloon district.
Thousands of pro-democracy activists attend a rally on the streets near government headquarters on October 4 in Hong Kong.
A group of men in masks fight with a man who tried to stop them from removing barricades from a pro-democracy protest area in the Causeway Bay district of Hong Kong on Friday, October 3.
Police raise hands against protesters as an ambulance tries to leave the compound of the chief executive office in Hong Kong on October 3.
A protester tries to negotiate with angry residents trying to remove barricades blocking streets in Hong Kong's Causeway Bay on October 3. Large crowds opposed to the pro-democracy movement gathered to clear the area.
Pro-democracy demonstrators protect a barricade from "anti-Occupy" crowds in Hong Kong on October 3.
A man shouts at a pro-democracy demonstrator on October 3.
Police try to pry a man from a fence guarded by pro-democracy demonstrators on October 3.
Pro-democracy demonstrators sleep on the street outside a government complex in Hong Kong on Thursday, October 2.
As the sun rises, a protester reads during a sit-in blocking the entrance to the chief executive's office on October 2.
Yellow ribbons, a symbol of the protests in Hong Kong, are tied to a fence as police and security officers stand guard at the government headquarters on October 2.
Protesters confront police outside the government complex in Hong Kong on October 2.
Protesters camp out in a street in Hong Kong on Wednesday, October 1.
Founder of the student pro-democracy group Scholarism, Joshua Wong, center, stands in silent protest with supporters at the flag-raising ceremony at Golden Bauhinia Square in Hong Kong on October 1.
Hong Kong's Chief Executive C.Y. Leung attends a flag raising ceremony to mark the 65th anniversary of the founding of Communist China on October 1.
A pro-democracy activist shouts slogans on a street near the government headquarters on Wednesday, October 1.
Hong Kong police stand guard outside the flag-raising ceremony October 1.
Pro-democracy demonstrators gather for a third night in Hong Kong on Tuesday, September 30.
Protesters sing songs and wave their cell phones in the air after a massive thunderstorm passed over the Hong Kong Government Complex on September 30.
Protesters take part in a rally on a street outside the Hong Kong Government Complex on September 30.
Student activists rest on a road in Hong Kong on September 30, near the government headquarters where pro-democracy activists have gathered.
A pro-democracy demonstrator guards a bus covered with messages of support in Hong Kong on September 30.
Protesters sleep on the streets outside the Hong Kong Government Complex at sunrise on September 30.
Protesters hold up their cell phones in a display of solidarity during a protest outside the Legislative Council headquarters in Hong Kong on Monday, September 29.
Protesters put on goggles and wrap themselves in plastic on September 29 after hearing a rumor that police were coming with tear gas.
Police officers stand off with protesters next to the Hong Kong police headquarters on September 29.
A man helps protesters use a makeshift ladder to climb over concrete street barricades on September 29.
Riot police fire tear gas on student protesters occupying streets around government buildings in Hong Kong on September 29.
Police officers rest after protests on September 29.
Pro-democracy protesters argue with a man, left, who opposes the occupation of Nathan Road in Hong Kong on September 29.
Pro-democracy protesters sit in a road as they face off with local police on September 29.
Pro-democracy protesters rest around empty buses as they block Nathan Road in Hong Kong on September 29. Multiple bus routes have been suspended or diverted.
Police walk down a stairwell as demonstrators gather outside government buildings in Hong Kong on September 29.
Stacks of umbrellas are ready for protesters to use as shields against pepper spray on September 29.
Protesters turn the Chinese flag upside-down on September 29 outside a commercial building near the main Occupy Central protest area in Hong Kong.
Protesters occupy a main road in the Central district of Hong Kong after riot police used tear gas against them on Sunday, September 28.
Demonstrators disperse as tear gas is fired during a protest on September 28. There is an "optimal amount of police officers dispersed" around the scene, a Hong Kong police representative said.
Police use pepper spray and tear gas against demonstrators September 28. The protests, which have seen thousands of students in their teens and 20s take to the streets, swelled in size over the weekend.
Riot police clash with protesters on September 28.
Police and protesters clash during a tense standoff with thousands of student demonstrators, recently joined by the like-minded Occupy Central movement, on September 28.
Benny Tai, center, founder of the Occupy Central movement, raises a fist after announcing the group would join the students during a demonstration outside government headquarters in Hong Kong on September 28.
Pro-democracy activist and former legislator Martin Lee wears goggles and a mask to protect against pepper spray on September 28.
A pro-democracy activist shouts at police officers behind a fence with yellow ribbons on September 28.
A sign for the Hong Kong central government offices has been crossed out with red tape by democracy activists on September 28.
Pro-democracy protesters gather near government headquarters on September 29.
Protesters gather during a demonstration outside the headquarters of the Legislative Counsel on September 28 as calls for Beijing to grant the city universal suffrage grow louder and more fractious.
Protesters tie up barricades on September 28 during a demonstration outside the headquarters of the Legislative Council in Hong Kong.
An injured protester is tended to after clashing with riot police outside Hong Kong government complex on Saturday, September 27.
Riot police use pepper spray on pro-democracy activists who forced their way into the Hong Kong government headquarters during a demonstration on September 27.
People watch from on high as pro-democracy demonstrators are surrounded by police after storming a courtyard outside Hong Kong's legislative headquarters on Friday, September 26.
Students march to Government House in Hong Kong on Thursday, September 25.
<
hide caption
>
Hong Kong (CNN) - Hong Kong's government has called off talks with pro-democracy protesters, as political rivals repeated calls for leader C.Y. Leung to resign -- this time over claims that he accepted multi-million dollar private payments while in office.
The government negotiator, Hong Kong Chief Secretary Carrie Lam announced the cancellation of talks Thursday, hours after protest leaders encouraged supporters to keep up their occupation of city streets.
"We cannot accept the linkage of dialog with occupying activities," Lam said, prompting protest groups to announce the official start of a "non-cooperation" movement, and new calls for supporters to pack the main protest site "beyond its capacity" on Friday night.
Earlier on Thursday, political rivals rounded onLeung after a report by Australia's Fairfax Media that he received $6.4 million ($HK50 million) in undisclosed payouts from Australian engineering group UGL while in office.
According to the report, Leung signed the contract in December 2011, entitling him to payouts from UGL, which had recently bought the assets of Leung's employer, troubled British property agent DTZ.
Months after the deal was signed, Hong Kong's 1,200-member Election Committee appointed Leung as chief executive of the Special Administrative Region of China. Two payments of $3 million (HK$25 million) were allegedly made in 2012 and 2013, during the time Leung was in office.
In a statement on Thursday, both UGL and Leung's office defended the contract, calling it a "standard non-poach, non-compete arrangement." Payments were staggered over a two-year period to ensure Leung complied with both obligations, UGL said.
UGL said at the time the company "specifically did not want Mr Leung working with a competitor nor establishing or assisting in the establishment of a business competing directly with DTZ."
It added that media reports referring to "secret payments" were "baseless and misleading." "UGL was under no obligation, legal or otherwise, to disclose the agreement," it said. UGL said its bank, the Royal Bank of Scotland, was aware of the payments, and the total DTZ sale price was reduced to reflect them.
Claims "outrageous"
However, Leung's rivals in the Legislative Council described the claims as "alarming" and called for Leung to make a "full and frank disclosure."
"I don't think the Hong Kong people or our constitution would allow the chief executive, which is the head of the executive authorities, to have another job and to have an agreement to help a company -- this is outrageous," said Emily Lau, Chair of Hong Kong's Democratic Party.
Lau said members of the Legislative Council, Hong Kong's governing body, would seek to launch an investigation into the payments. But she acknowledged that a majority vote would be needed to approve a formal investigation -- and that the pro-Beijing majority, which backs Leung, would be unlikely to vote in its favor.
The Neo-Democrat Party said it had filed a complaint over the payments with the Independent Commission Against Corruption (ICAC), with the request that it be investigated.
However, Leung's allies, including pro-Beijing legislator, Starry Lee, who is a member of the Executive Council, said she didn't consider the payments to be a conflict of interest.
"Up to now, I think it is a normal business dealing and it has been confirmed by some of the business people," she said.
Pressure intensifies
Leung had already been under pressure to resign from pro-democracy protesters who for the last two weeks have blocked access to the city's business district, demanding a greater say in how Hong Kong's leader is chosen.
Pro-democracy campaigner, former Democrat Party leader and council member, Albert Ho said the group was in the "final stages" of preparing documents to impeach Leung for the way he had handled protests -- and it was too early to talk about impeaching him on the matter of the payments.
He called on the chief executive to explain the agreement, though he added: "I can hardly see how an explanation can be satisfactory, but he's entitled to answer, he's entitled to be heard."
READ: Who's who of Hong Kong protest
Why was the deal struck?
The contract came about during UGL's purchase of DTZ's assets in December 2011. The property group had been struggling and in early November Leung and his fellow DTZ directors decided to call in administrators, according to Fairfax.
Leung resigned on November 24, and the sale went through in early December for $125 million (HK$970 million), UGL said in a statement on Thursday.
As founder of DTZ's North Asia business, Leung was considered crucial to the company, something that UGL chief executive Richard Leupen made clear in an interview with theSouth China Morning Post in September 2012.
"CY's history of having set this company up will always be with DTZ. He's been an important part of the history of the company and has been an important part for us in buying the company," Leupen was reported to have said.
Leung's office said Thursday that without the contract UGL would not have proceeded with the deal.
READ: Hong Kong police: The end of trust?
"No services provided"
The Hong Kong Information Services Department confirmed on Thursday that under the contract Leung would "provide assistance in the promotion of the UGL Group and the DTZ Group as UGL may reasonably required, including but not limited to acting as a referee and adviser from time to time."
However it said in a statement "such assistance will ONLY be provided in the event that Mr Leung failed to be elected as Chief Executive, and providing that such assistance will not create any conflict of interest."
It added: "Mr Leung has not provided any service to UGL after signing the above agreement."
The department added that the contract was a "resignation agreement" which covered scenarios if Leung did not win the election.
It repeated UGL's statement to Fairfax that at the time the contract was agreed, media coverage suggested that "other candidates were favoured to be elected."
In the months before the March 2012 election, Beijing-backed former top civil servant Henry Tang Ying-yen was considered to be the likely choice of the Election Committee.
But after what was described as a "calamitous campaign," Chinese allegiances were said to have shifted in the final weeks to Leung.
A spokesman for China's Ministry of Foreign Affairs declined to comment on the controversy on Thursday.
Leung's political opponents say answers are needed from a chief executive who has already lost the trust of the people.
"Hong Kong is dealing with this pro-democracy protests and people taking over the streets, the last thing we need is to have another big controversy surrounding the chief executive himself," the Democrat Party's Lau said.
CNN's Elizabeth Joseph, Anjali Tsui, Wilfred Chan and Chieu Luu contributed to this report.
http://edition.cnn.com/2014/10/09/world/asia/hong-kong-protest-leung-payment/index.html?c=&page=0
