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HK bans contractor in short piles scandal

ZEN PACIFIC Civil Contractors, one of Hong Kong's leading construction firms, has been banned from future foundations and demolition contracts by the local housing authority.

The move follows a piling scandal at one of Zen Pacific's public housing sites, where only four of the 36 bored piles used to support two partially built 41storey towers were found to be constructed to the correct depth.

The housing authority is suing Zen Pacific for the £20M cost of demolishing and rebuilding the two towers, plus additional damages that could push the final bill to nearly £80M. It has banned Ngo Kee Construction, an associate company of Zen Pacific, from bidding for housing work until a legal settlement has been reached. The row also cost the housing authority chairwoman Rosanna Wong her job following a confrontation with local legislators.

Zen Pacific will still be free to bid for main construction work, although in the present climate it is unlikely that the contractor would be invited to tender.

Other public works organisations, including the Works Bureau, which oversees the government's infrastructure programme and the Kowloon-Canton Railway Corporation, are awaiting the outcome of the piling wrangle before deciding whether to take further action.

A Works Bureau spokesman said no decision had been taken on whether to stop Zen Pacific from tendering for work put out by its seven departments, including highways, water supplies, territory development and drainage.

'We're waiting to see what happens, ' he said.

Zen Pacific failed to win the £312M Penny's Bay reclamation contract despite submitting the lowest tender with partner Dredging International. Instead, the deal was awarded to Hong Kong Construction with HAM Dredging.

Zen Pacific had claimed that it was the victim of fraudulent activities at the housing site in Sha Tin new town. But an independent report by John Strickland, former chief executive of the HSBC banking group, said Zen Pacific encouraged subcontractor Hui Hon Contractors to bid for the piling project under the Zen Pacific name.

Zen was also aware of Hui Hon's financial problems several months before Zen eventually took over management control of the job.

Currently, Zen Pacific is working in joint venture on five contracts - together worth £625M - on the West Rail scheme. But it has yet to be shortlisted for the KCRC's £2.1bn package of followon work covering three extensions on the East Rail system.

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