Harbour Fest - AmCham's $75m advance

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  1. #1

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    Harbour Fest - AmCham's $75m advance

    Looks like this could go on for another 4 years

    From the linkable Standard:

    AmCham's $75m advance
    Paris Lord

    The government gave the American Chamber of Commerce HK$75 million before it signed a contract with the Harbour Fest organiser, documents seen by The Standard reveal.

    AmCham was also given custodial rights to the festival for five years, according to the contract, which was signed more than a month after the event was announced and without consultation of the Legislative Council.

    Last night InvestHK director general Mike Rowse said: ``There's not lots of nasties hidden away here. I know the media love this story, but it's really been out in the open.''

    Legislator Emily Lau of the Frontier said she was shocked to learn the event could be held for five years.

    ``I say forget it ... I wouldn't want taxpayers' money to be spent like that.''

    The 21-page agreement between the government and AmCham was signed on October 10 - the day they withdrew the contract to the headline act, the Rolling Stones. Four days later, the British rock icons announced that their managers were holding a deposit from AmCham, had signed the contract and would play at Tamar on November 7 and 9.

    The document, which was on the letterhead of the government's investment promotion arm InvestHK, was sent to Legco's financial affairs panel on October 25 and was signed by Rowse.

    On page two, the government said it agreed to ``underwrite the shortfall between the organising expenses for and the revenue generated from'' the festival.

    That amount, called in the contract a ``sponsorship fee'', was set at a ceiling of HK$100 million.

    The money was paid into an account operated by Red Canvas Ltd, a company ``wholly-owned by members of AmCham,'' the document said.

    ``HK$25 million was paid to AmCham upon execution of the first [memorandum of understanding] on 31 July, and a further HK$25 million on each of 29 August and 3 October,'' it said on page seven.

    Rowse told The Standard the amount given was now HK$100 million. ``The sponsorship agreed is HK$100 million, and that's an absolute ceiling, but if they do better than they anticipated when they presented the case in the first place, then we pay less, so effectively it's a kind of underwriting,'' he said.

    Should AmCham sell more than its estimated 50 per cent of seats to all shows, it would give some of that money back. Asked why AmCham had the festival rights for five years, Rowse said: ``Because it's their idea.''

    The contract stipulates that the government will review its financial commitment after this year's festival.

    Rowse said when the Legco finance committee approved the HK$1 billion Relaunch Hong Kong fund in late May, it was informed that HK$200 million would be spent on ``mega'' sporting and cultural events.

    Harbour Fest began on October 17 and concludes on November 9.

    Lau and medical constituency member Lo Wing-lok last week said the government did not give it adequate details about how the HK$200 million would be spent.

    Rowse said there were no specific details given ``because nobody knew at that time what the details were.''

    The public demanded the government do something quickly about the empty hotels and high unemployment.

    ``So, [legislators] voted the HK$1 billion and we then went around and did a lot of things very quickly,'' Rowse said. ``And the result is there at a macro level for everyone to see - ... the tourist numbers are up, the retail sales figures are up, unemployment's on the way down.''

    Page 16 of the document outlines an ``indicative budget'' using estimates dated September 22.

    Among the estimated expenditures are HK$85.8 million for artists' fees, HK$30.4 million for operations and HK$6.6 million for television production. The estimated revenue included HK$52.5 million from ticket sales if 50 per cent were sold, HK$3.1 million in sponsorship and HK$1.6 million from television rights. The estimated shortfall as at September 22 was HK$77.1 million.

    http://www.thestandard.com.hk/thesta...897&intcatid=1


  2. #2

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    And how much longer is Mr Rowse going to last as head of InvestHK??


  3. #3

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    It was such a relief to learn that the Standard is still around. For quite a few months their old site hkstandard was periodically unavailable or up for sale
    Steve Vines take on HF

    http://www.thestandard.com.hk/thesta...m?articleid=87


  4. #4

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    Angry

    I smell a rat..........a pretty stinky one too!


  5. #5

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    And the latest revelation:

    AmCham pair own Fest firm
    Staff reporter

    The company designated by the American Chamber of Commerce to run the Harbour Fest is owned by its chairman, Jim Thompson, and his wife, a company search shows.

    The pair are listed as sole directors and only members of Red Canvas Ltd, described in the contract between AmCham and the government as a ``special purpose vehicle'' or SPV to convene the festival.

    Legislators expressed outrage, with one calling for a probe by the Independent Commission Against Corruption (ICAC) to see if any conflict of interest was involved.

    The latest revelation came as the government said it had paid the full HK$100 million sponsorship promised to indemnify AmCham for losses from the troubled festival. Earlier, it said three advances totalling HK$75 million had been made.

    The company search revealed that the directors of Red Canvas were James Edward Thompson and Sally Anne Barrington Thompson.

    The contract described Red Canvas as a special purpose vehicle of AmCham ``wholly owned by members of AmCham''. Neither AmCham nor the government had revealed who the members were.

    The contract reads: ``AmCham may conduct the business of managing, organising, operating, implementing, promoting and marketing the 2003 Festival through Red Canvas Limited'' and that ``AmCham (or the SPV as the case may be) shall be entitled to any revenues in relation to such rights''.

    Legislators questioned why the Thompsons' company had been designated, just months before Jim Thompson is due to retire. Thompson has said he will retire by the end of the year.

    An annual return filed by the company on May 31 this year lists authorised share capital as HK$10,000 and total paid-up shares as HK$20. It is not clear when the company was set up.

    The Standard disclosed yesterday that the government had given AmCham custodial rights to the festival for five years.

    Legislator Fred Li said the revelation that Red Canvas was owned by Thompson and his wife raised queries whether conflict of interest was involved. He said the Independent Commission Against Corruption should be called in to investigate.

    Legislator and Frontier convenor Emily Lau called on the government and AmCham to make public all accounts as soon as possible. ``The disorganisation of the Harbour Fest has already damaged Hong Kong's reputation. The contract states that AmCham has the responsibility to maintain's Hong Kong's image. The government must make sure that the contract is being honoured.''

    Democrat James To said AmCham should make clear whether the directors were receiving any salaries and whether the production costs were comparable with market levels.

    Government sources agreed there was ``reasonable doubt'' as to why the Thompsons were sole directors of the company. They added that InvestHK, which signed the contract with AmCham on behalf of the government, should be responsible for overseeing the accounts.

    No one from AmCham was available for comment last night. A government spokesman said last night ``in response to press inquiries'' that the fourth and final payment of HK$25 million had been paid to AmCham under the Harbour Fest contract.

    29 October 2003 / 02:30 AM