REPORT OF THE

PUBLIC ACCOUNTS COMMITTEE

ON

THE REPORTS OF THE DIRECTOR OF AUDIT

ON

THE ACCOUNTS OF THE GOVERNMENT OF

THE HONG KONG SPECIAL ADMINISTRATIVE REGION

FOR THE YEAR ENDED

31 MARCH 2004

AND THE RESULTS OF

VALUE FOR MONEY AUDITS (Report No. 43)




February 2005

P.A.C. Report No. 43



CONTENTS
Page

I.Introduction

1The Establishment of the Committee1

2 - 3Membership of the Committee1

II.Procedure

1The Committee's Procedure2 - 3

2 - 3The Committee's Report3

4The Government's Response3

III.Report of the Public Accounts Committee on Report No. 40 of the Director of Audit on the Results of Value for Money Audits and Supplemental Report of the Public Accounts Committee on Report No. 39 of the Director of Audit on the Results of Value for Money Audits [P.A.C. Report No. 40]

1Laying of the Report4

2 - 4The Government Minute4

IV.Supplemental Report of the Public Accounts Committee on Report No. 40 of the Director of Audit on the Results of Value for Money Audits [P.A.C. Report No. 40A]

1Laying of the Report5

2 - 8The Government Minute5 - 22

V.Report of the Public Accounts Committee on the Reports of the Director of Audit on the Accounts of the Government of the Hong Kong Special Administrative Region for the year ended 31 March 2003 and the Results of Value for Money Audits (Report No. 41) [P.A.C. Report No. 41]

1Laying of the Report23

2 - 48The Government Minute23 - 51

VI.Committee Proceedings

1Consideration of the Director of Audit's Report52

2Meetings52

3 - 4Arrangement of the Report52

5Acknowledgements52

VII.Observations of the Public Accounts Committee on the Report of the Director of Audit on the Accounts of the Government of the Hong Kong Special Administrative Region for the year ended 31 March 2004 53

VIII.Chapter

1.Control and monitoring of District Council expenses and related activities54 - 68

2.Government subsidies to the English Schools Foundation69 - 87

3.Corporate governance and Headquarters administration of the English Schools Foundation88 - 125

4.School administration of the English Schools Foundation126 - 153

5.Grant of land at Discovery Bay and Yi Long Wan154 - 201

SIGNATURES OF THE CHAIRMAN, DEPUTY CHAIRMAN AND MEMBERS OF THE COMMITTEE202

CHAPTERS IN THE DIRECTOR OF AUDIT'S REPORT NO. 43 DEALT WITH IN THE PUBLIC ACCOUNTS COMMITTEE'S REPORT203

APPENDIX 1Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region204 - 205

APPENDIX 2Paper presented to the Provisional Legislative Council by the Chairman of the Public Accounts Committee at the meeting on 11 February 1998 on Scope of Government Audit in the Hong Kong Special Administrative Region - 'Value for Money Audits'

206 - 208

Appendix relating to Part III: "Report of the Public Accounts Committee on Report No. 40 of the Director of Audit on the Results of Value for Money Audits and Supplemental Report of the Public Accounts Committee on Report No. 39 of the Director of Audit on the Results of Value for Money Audits[P.A.C. Report No. 40]"

APPENDIX 3Letter of 26 November 2004 from the Secretary General of the Legislative Council Secretariat209 - 210

Appendices relating to Part VI: "Committee Proceedings"

APPENDIX 4Witnesses who appeared before the Committee211 - 212

APPENDIX 5Introductory remarks by the Chairman of the Public Accounts Committee, Dr Hon Philip WONG Yu-hong, GBS, at the first public hearing of the Committee on Wednesday, 8 December 2004213 - 214

Appendices relating to Chapter 1: "Control and monitoring of District Council expenses and related activities"

APPENDIX 6Table on the percentages of non-taxable income in the total income of District Council Members and Legislative Council Members provided by the Inland Revenue Department215

APPENDIX 7Letter of 28 December 2004 from the Commissioner of Inland Revenue216

APPENDIX 8Letter of 31 December 2004 from the Director of Home Affairs217 - 225

Appendices relating to Chapter 2: "Government subsidies to the English Schools Foundation"

APPENDIX 9Opening statement made by the Secretary for Education and Manpower at the public hearing on 11 January 2005226 - 229

APPENDIX 10Opening statement made by the Chairman of the English Schools Foundation at the public hearing on 11 January 2005230 - 231

APPENDIX 11Letter of 28 December 2004 from the Acting Secretary and Chief Executive of the English Schools Foundation232 - 234

APPENDIX 12Extract from the minutes of the English Schools Foundation meeting on 14 December 2000235 - 237

APPENDIX 13Letter of 16 March 2000 from the Chief Executive of the English Schools Foundation238 - 239

APPENDIX 14Letter of 13 April 2000 from the Secretary for Education and Manpower240 - 241

APPENDIX 15Letter of 15 January 2001 from the Chief Executive of the English Schools Foundation242 - 243

APPENDIX 16Reply of 17 January 2005 from the former Chairman of the English Schools Foundation244 - 246

APPENDIX 17Letter of 24 January 2005 from the Secretary for Education and Manpower247 - 249

APPENDIX 18Submission of 10 December 2004 from the English Schools Foundation250 - 271

Appendices relating to Chapter 3: "Corporate governance and Headquarters administration of the English Schools Foundation"

APPENDIX 19Opening statement made by the Secretary for Education and Manpower at the public hearing on 10 December 2004272 - 274

APPENDIX 20Opening statement made by the Secretary for Education and Manpower at the public hearing on 10 January 2005275 - 278

APPENDIX 21Letter of 8 January 2005 from the Secretary for Education and Manpower279 - 282

APPENDIX 22Reply of 7 January 2005 from the former Chairman of the English Schools Foundation283 - 285

APPENDIX 23Letter of 4 January 2005 from the Acting Secretary and Chief Executive of the English Schools Foundation286 - 293

APPENDIX 24Letter of 7 January 2005 from the Director of Audit294 - 296

APPENDIX 25Letter of 11 January 2005 from the Secretary for Education and Manpower297 - 298

APPENDIX 26Letter of 10 December 2004 from the Acting Secretary and Chief Executive of the English Schools Foundation299 - 303

APPENDIX 27Letter of 18 January 2005 from the Acting Secretary and Chief Executive of the English Schools Foundation304

APPENDIX 28Letter of 10 January 2005 from the Acting Secretary and Chief Executive of the English Schools Foundation305 - 334

APPENDIX 29Facsimile message of 11 January 2005 from the Acting Secretary and Chief Executive of the English Schools Foundation335 - 336

APPENDIX 30Letter of 18 January 2005 from the Secretary for Education and Manpower337 - 339

APPENDIX 31Letter of 21 January 2005 from the Director of Audit340 - 343

Appendices relating to Chapter 4: "School administration of the English Schools Foundation"

APPENDIX 32Opening statement made by the Secretary for Education and Manpower at the public hearing on 10 December 2004344

APPENDIX 33Opening statement made by the Chairman of the English Schools Foundation at the public hearing on 10 December 2004345

APPENDIX 34Letter of 1 February 2005 from the Acting Secretary and Chief Executive of the English Schools Foundation346 - 347

APPENDIX 35Letter of 20 December 2004 from the Acting Secretary and Chief Executive of the English Schools Foundation348 - 352

APPENDIX 36Letter of 4 January 2005 from the Acting Secretary and Chief Executive of the English Schools Foundation353

APPENDIX 37Letter of 23 December 2004 from the Acting Secretary and Chief Executive of the English Schools Foundation354 - 355

Appendices relating to Chapter 5: "Grant of land at Discovery Bay and Yi Long Wan"

APPENDIX 38Letter of 11 December 2004 from the Secretary for Housing, Planning and Lands356 - 361

APPENDIX 39Letter of 8 January 2005 from the Acting Director of Lands362 - 377

APPENDIX 40Letter of 10 January 2005 from the Secretary for Housing, Planning and Lands378 - 395

APPENDIX 41Memo of 3 March 1983 from the Registrar General (Land Officer) to the Government Land Agent (Disposal)396

APPENDIX 42Land Policy Meeting Paper LPM 3/87397 - 402

APPENDIX 43Minutes of the Land Policy meeting held on 25 May 1987403 - 404

APPENDIX 44Letter of 1 February 2005 from the Director of Audit405 - 408

APPENDIX 45Letter of 25 January 2005 from the Director of Lands409 - 410

APPENDIX 46Letter of 16 February 2005 from the Director of Lands411 - 419

APPENDIX 47Letter of 8 January 2005 from the Acting Director of Lands420 - 430

APPENDIX 48Letter of 24 January 2005 from the Director of Lands431 - 434

APPENDIX 49Letter of 5 January 2005 from Hon Sir David Akers-Jones, GBM, JP435 - 456

APPENDIX 50Opening statement made by Hon Sir David Akers-Jones, GBM, JP at the public hearing on 12 January 2005457 - 461

APPENDIX 51File minute of 17 October 1985 from the Secretary for Lands and Works to the Chief Secretary462

APPENDIX 52Letter of 10 January 2005 from the Director of Audit463 - 464