CONTRACTOR KIER has sold 50% of its Hong Kong subsidiary to local firm Wai Kee Holdings in a deal thought to be worth about £7M.
Wai Kee owns disgraced contractor Zen Pacific Contractors, which is banned from bidding for government contracts after a piling scandal two years ago.
It is understood that Wai Kee has bought the stake in Kier (Hong Kong) to gain access to projects Zen Pacific has been banned from bidding for.
Wai Kee bought its 50% stake in Kier, using the profits Zen Pacific earned on its five KCRC West Rail contracts, to maintain its access to category C government contracts - those worth more than HK$300M (£26.3M) - after the Zen Pacific ban.
The purchase has caused consternation within the Works Bureau, which oversees Hong Kong's public works programme, because government officials knew nothing about the sale.
Senior officials said they had been left in the dark about the deal despite assurances to NCE by a Kier director that clients, including Works Bureau, had been told.
'To the best of my knowledge the deal has been completed and we have advised our clients and staff, ' said Kier main board director John Dodds.
But Works Bureau principal assistant secretary, professional services Helius Ng said: 'Up to now, neither Wai Kee, Zen or Kier has informed us of anything. The companies should have informed us and sought our approval.'
Ng's professional services unit is responsible for monitoring contractors and vetting tenders before they are submitted to the Works Bureau's central tender board.
He said the Works Bureau had written to the companies demanding an explanation.
Among the key issues to be clarified is whether the Wai KeeKier deal involves any change in the board of directors or a financial restructuring.
Highways Department major works project manager Robert Lloyd confirmed Ng's comments.
'Highways Department has not been informed formally of the sale/buy-in. At present Kier is in Group C in the Works Bureau's contractors lists. We have, at the moment, no reason to believe that the change in structure will affect Kier's tendering opportunities since Kier is a separate legal entity. We need details of the sale/buy-in before commenting further.'
Kowloon Canton Railway Corporation (KCRC) said it had been informed about the deal.
Kier is working with Zen Pacific on KCRC's Mei Foo West Rail station.
Industry insiders believe Kier initially wanted to sell its entire shareholding in Kier (Hong Kong) because the subsidiary is mainly a civil engineering contractor.
For more on Works Bureau tender rules go to www. wb. gov. hk