Hong Kong government calls off talks with pro-democracy protesters

Hong Kong student protesters said Friday they are determined to maintain their campaign for full democracy, undaunted by the city government's decision the day before to call off planned talks aimed at defusing a political crisis in which tens of thousands have taken to the streets calling for free elections and the resignation of its Beijing-backed leader Leung Chun-ying.

The government's decision to call off the talks scheduled for Friday came as democratic lawmakers separately demanded that anti-graft officers investigate a secret $6.4 million business payout allegedly made to Leung while in office.

Several hundred protesters were camped in the heart of the financial center early on Friday, with many expecting crowds to swell later on Friday and over the weekend in response to the government's stand.

"For sure it will be jam packed with people later today in Admiralty after people get off work and students finish school," said Joshua Wong, 17, who heads the group Scholarism that represents secondary school pupils.

"Students' call for an expansion of an uncooperative movement has shaken the trust of the basis of our talks and it will be impossible to have a constructive dialogue," Chief Secretary Carrie Lam said on the eve of the planned dialogue.

She blamed the pullout on students' interpretation of universal suffrage, which she said was not in accordance with the Asian financial center's mini-constitution, the Basic Law. Leung's deputy also cited what she described as the protesters’ illegal occupation of parts of the city earlier this month and their fresh calls for people to rally.

Student leaders accused the government of using petty excuses to derail the talks. They called for more people to occupy the streets, after numbers fell significantly following mass rallies in which police fired tear gas at the crowds.

"When university students are willing to sacrifice their lives for democracy and fight against the ruling powers, you must realize how sick and oppressive the government must be to force students to make this decision," Alex Chow, leader of the Hong Kong Federation of Students, told Reuters after the government called off the talks.

Hours earlier, Hong Kong's Justice Department handed prosecutors an investigation into the business payout to Leung, the semi-autonomous city's chief executive, by an Australian engineering company.

Part of the brief includes "considering and deciding whether prosecution action is warranted" against the chief executive.

Leung has refused to stand down in recent weeks despite protesters' calls for Beijing to allow Hong Kong residents to elect the leader of their choice, which democracy activists say is part of the special arrangement under which the former British colony was transferred to Chinese control in 1997. The pro-democracy camp is demanding open elections for chief executive in 2017, while the mainland Chinese government insists on screening the candidates first so voters could onle choose among hand-picked options.

The campaign against Leung has extended from the streets to the city's legislative chambers, where democrats have threatened to veto major decisions and potentially cause policy paralysis.

Australia's Fairfax Media reported this week that an engineering firm, UGL, paid Leung a total of $6.4 million in 2012 and 2013 in relation to its acquisition of DTZ Holdings, a property consultancy that employed Leung as its Asia-Pacific director before he took office in July 2012.

Leung's office has denied any wrongdoing. DTZ officials were not immediately available for comment, and UGL said it was under no obligation to disclose information about the agreement.

As part of the contract Leung signed with UGL in December 2011, he agreed to promote the "UGL Group and the DTZ Group as UGL may reasonably require, including but not limited to acting as a referee and adviser from time to time," according to a document seen by Reuters.

Leung's office issued a statement saying such assistance would only be provided in the event that he failed to be elected Hong Kong leader and if the assistance would not create any conflict of interest.

"After CY Leung became CE [chief executive], he should have terminated the contract, because as a CE, it was impossible for him to continue accepting huge payment to help promote UGL or DTZ," Democratic Party chief executive Lam Cheuk-ting said in a letter addressed to the Independent Commission Against Corruption (ICAC) and seen by Reuters.

"Since CY Leung honored the agreement and accepted the payment, how could he not declare to the Executive Council?" said Lam, who is a former anti-graft agency official.

The ICAC said it does not comment on individual cases.

UGL said the agreement was simply a non-compete arrangement to ensure that Leung would not move to a competitor, set up or promote any business in competition with DTZ or poach any people from DTZ.

Emily Lau, head of the Democratic Party, told Reuters that the party would try to form a select committee to investigate and possibly impeach Leung, although the formation of such a group would have to be backed by the entire 70-seat legislature and there was no guarantee that would happen, given the pro-Beijing majority.

Reuters