Hong Kong’s West Kowloon Cultural District Authority Terminates M+ Museum Contract With Hsin Chong Construction

*Last updated September 18, 2018. 

On August 17, Hong Kong’s West Kowloon Cultural District Authority (WKCDA) announced in a statement that the building contract with Hsin Chong Construction (HCC) for M+ Museum had been terminated.

According to WKCDA, the HKD 5.9 billion (USD 751.6 million) contract was terminated “due to the insolvency of HCC, which has been caused by the severe financial troubles facing its parent company, Hsin Chong Group Holdings Limited (HCG).” The company has been known to be facing financial troubles since late 2016, including failure to repay USD 300 million in bonds, which were due earlier this year in May. HCC, as a guarantor of its parent company’s bonds, is in default for this debt and faces the danger of defaulting on another set of bonds worth USD 150 million, due in 2019.

In a statement released on August 21, HCG responded to the termination and the explanation cited by the WKCDA, claiming that the insolvency of HCC had not been proven, and that the termination was invalid.

Construction on the M+ Museum, which is dedicated to “Hong Kong visual culture of the 20th and 21st centuries,” began in 2015 and was slated to open in 2019, but this was pushed back to 2020 due to delays on the site, which the WKCDA now alleges is a result of “the poor management performance of HCC.”

The WKCDA is facing controversy for its handling of the matter. HCG criticized the WKCDA for the lack of prior notice in its press statement, and accused the Authority of gaining unauthorized access to HCC’s server on the M+ project site in West Kowloon. Further, Hong Kong lawmakers have questioned the WKCDA’s direct remuneration—amounting to HKD 1.5 billion (USD 191 million)—of subcontractors in the period from February 2017 to June 2018 after HCC had been late on numerous payments.

With regards to the latter, lawmaker Edward Lau, chairman of the Joint Subcommittee to Monitor the Implementation of the West Kowloon Cultural District Project, labeled the payment method “inappropriate” as it creates confusion as to which party, the Hong Kong government or the contractor, should be held accountable if problems over workers’ wages arise. WKCDA states that the decision to pay subcontractors directly in lieu of HCC was in the interests of “moving the M+ construction project forward.” 

On September 7, three weeks after HCC’s termination, the WKCDA appointed Gammon Construction Limited, co-owned by conglomerate Jardine Matheson and the Balfour Beatty group, to oversee the completion of M+ Museum as its new management contractor.

Despite the ongoing conflicts between the WKCDA and HCC, Duncan Pescod, chief executive officer of the WKCDA, believes M+ Museum can still open in 2020 as planned, as the building is already 60 percent complete.

Christie Wong is an editorial intern of ArtAsiaPacific.

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