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HK developer loses fight to stop execs testifying

A major Hong Kong property developer lost a legal battle on Thursday to prevent two top executives from testifying about a land deal that sparked public anger and accusations of favoritism for big business.

world Updated: Sep 24, 2009 13:39 IST

A major Hong Kong property developer lost a legal battle on Thursday to prevent two top executives from testifying about a land deal that sparked public anger and accusations of favoritism for big business.

Executives from New World Development Co. filed a law suit last month challenging the power of Hong Kong's legislative committees to summon witnesses.

A committee of the legislature had summoned the executives to testify in its probe of a land deal involving New World and a top housing official who joined the developer after leaving his government post.

New World lawyers argued the committee had no right to call the executives and that such coercive power was limited to the legislature as a whole under the city's constitution. On Thursday, a judge ruled against New World, saying the committee was in fact empowered to summon witnesses. "Its proceedings are every bit as parliamentary as the legislature as a whole," Judge Andrew Cheung wrote. Lawmakers were reviewing the decision and would decide whether to call the executives, Henry Cheng and Stewart Leung, both New World directors.

New World said it was deciding whether to appeal Thursday's decision.

The former housing official, Leung Chin-man, was accused of giving favorable treatment to New World while he was in office during the government's sale of an abandoned housing complex to a consortium that included New World.

The complex went for $111 million_ nearly $49 million below the government's initial offer.

Leung testified in July this year that he suggested the government take the lower offer in December 2003 because the housing market was depressed at the time.

News of the deal caused a public backlash, and Leung quit his job at New World after several weeks.