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Sunday, Jun 20, 2021

Hong Kong mask supplier sued over HK$100 million paid to import face covering

Hong Kong mask supplier sued over HK$100 million paid to import face covering

Authorities in March 2020 hired the supplier to procure 32 million masks from Japan, but some face coverings it received were not made there.
The Hong Kong government has sued a local mask supplier to win back nearly HK$100 million paid for 32 million surgical face coverings after finding not all of them were from Japan as required under the deal.

The director of government logistics last Friday lodged the claim against Global Party and its director Lau Kwan-ming in the High Court, claiming the signed contracts were based on “fraudulent or innocent misrepresentation”.

Court documents released on Monday did not provide details, except to list the four contracts concerned, totalling HK$97,748,970 (US$12.6 million).

In a statement issued last September, a spokesman for the Government Logistics Department, which is responsible for procurement, revealed it had hired the supplier in March 2020 to procure 32 million masks from Japan.

The products were said to be in line with the prevailing market price and compliant with the American Society for Testing and Materials F2100 Level 2 standard.

The department received various documents from the supplier, which included product information, testing reports and letters from manufacturers as proof of compliance with the relevant standards and place of origin.

The masks were delivered in batches, with 50 pieces per paper box or plastic bag, each printed with the name of the manufacturer and place of origin: Japan. But the department later learned some masks were not made there. The contract was immediately rescinded and the remaining payment withheld, a spokesman said.

The government is now seeking a refund of the HK$97.75 million already paid, plus damages, with interest.

It is also seeking a court declaration that the director of government logistics has rescinded the contracts in its letter on August 31, 2020.

The case has been referred to the Customs and Excise Department for follow-up.

Two company directors were arrested last September and released on bail pending further investigation. Preliminary investigation showed most of the masks were not manufactured in Japan, as declared on the packaging. None of the masks concerned have been distributed to government departments for use.

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