Hong Kong’s chief auditor should stick to accounting and steer clear of security

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Hong Kong’s chief auditor should stick to accounting and steer clear of security
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Regular readers will recall that a couple of months ago I complained that the director of audit had devoted the resources of his department to some nit-picking criticisms of the Chinese University of Hong Kong (CUHK).

I thought there was a danger that this might look like a contribution to the general barrage of abuse from government-friendly quarters which had led to the departure of the university’s vice chancellor.

Audit Commission. File photo: Candice Chau/HKFP.

However it appears from the director’s annual report that this is not what is going on at all. What is going on is a violation not of the separation of powers but of an even older principle: the division of labour.

Director of Audit Nelson Lam is not a career civil servant. Before he was appointed to his present post by the then-chief executive Carrie Lam in 2022 he was an accountant, his political experience limited to membership of the usual sort of consultative bodies and six months on the Legislative Council.

This may explain why he apparently supposes that senior civil servants are free to devote themselves to whatever work they think might be important and interesting, regardless of whether this is their appointed function, or whether it may in fact be someone else’s.

Hong Kong Director of Audit Nelson Lam. File photo: Hong Kong Audit Commission, via Facebook.
Hong Kong Director of Audit Nelson Lam. File photo: Hong Kong Audit Commission, via Facebook.

Lam devoted a quarter of his annual report to his efforts to improve the protection of national security, including his farcical foray into the CUHK. He is reported as complaining, in a newspaper interview, that “government departments and other public organisations either failed to prioritise the national security law or did not fully comply with the government’s requirements.”

“These departments and organisations are at risk of violating the law,” he said.

It seems I am not the only scribe who thought that Lam’s self-appointment as a sort of national security Witchfinder-General was straying a bit off-piste, as it were. Why, he was asked at the inevitable press conference, was his department no longer keeping its traditional focus on an audited body’s proper and effective use of money?

His reply deserved quoting in full: “Efficiency and effectiveness refers to whether the audited body abided by the law or not. If they have failed to do so that means they are doing a poor job. If they have broken the law, that would also involve money,” Lam said.

National security law
A national security law advertisement in an MTR station. File photo: GovHK.

Which of course is rubbish. It is perfectly possible to impair national security without involving money. Effective spending of money is not the same thing as abiding by the law. And ineffective spending may be perfectly legal.

Contrariwise there are many things which will eventually involve money if left unchecked, which we do not expect auditors to explore. If the drains in the Central Government Offices are blocked it will eventually cost money; we do not on that account expect the director of audit to explore the official sewers.

There are already elaborate mechanisms in place to ensure that government departments and public bodies give appropriate attention to national security and obey the relevant laws. We have national security police, our shy guardians from over the boundary, the Secretaries for Security and Justice, and so on.

Lam’s formulation that departments and organisations are “at risk” of breaking the law tells us, and should tell him, that he should be leaving law enforcement to police and lawyers who will have a better idea of whether the risk is real or imagined.

government headquarters cgo central offices
Hong Kong government headquarters. File photo: GovHK.

The flip side of the director of audit developing a new national security hobby is that it will reduce the resources devoted to his proper function, which is ensuring that government spending is honest and effective.

Nobody else has the knowledge, experience and powers to do this job properly. Amateur observers have no right to extract answers from recalcitrant departments, and potential whistleblowers in the civil service may well be restrained by the thought that whistleblowing is rarely a good career move.

Lam’s innovation in this area is the idea that “not everything has to be audited at once,” so any new policy will be given a few years before it is audited. By which time, surely, it will be too late to do anything about it?

An unintended light on the new approach was shone by Lam’s concluding remark that “the Audit Commission is not trying to pick on the government’s mistake, but trying to step up the government’s accountability and service quality.”

Well perhaps it would be a good idea if someone in the government was trying to “pick on the government’s mistake,” because critics from outside it are “at risk” of breaking the law, as Lam might put it.

West Kowloon Cultural District promenade July 1 Handover anniversary
People on the promenade of the West Kowloon Cultural District on July 1, 2023. Photo: Irene Chan/HKFP.

And some errors become evident long before a few years have passed. The West Kowloon Cultural District, for example, is tottering towards bankruptcy because its two big museums operate at a loss, as museums generally do, and no arrangement has yet been made to plug the resulting financial gap.

There is talk of an MTR-like solution, in which the cultural district will go into the business of developing expensive flats. This raises an interesting question. Allowing rail companies to develop the land over and around their stations is justified as allowing the rail operator to share in the extra wealth that it generates when it opens a station. Whether this is an acceptable way of financing a cultural district is perhaps a different matter.

Then if Lam is not too busy he might look at the Guangzhou–Shenzhen–Hong Kong Express Rail Link. It seems most of the travellers on this wonderful innovation are only going to and from stations in nearby Shenzhen, for which purpose a high-speed rail link is inappropriate and ludicrously expensive.

No doubt readers will be able to think of other items which are more worthy of Lam’s sleuthing skills than the CUHK bookshop. Directors of audit have traditionally had a high degree of freedom to pursue whatever issue attracts their attention.

But freedom, as we are so often reminded these days, has limits.


Type of Story: Opinion

Advocates for ideas and draws conclusions based on the interpretation of facts and data.

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