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177. Thecutive Director has also informed me that the overriding aim in the Trade Development Council's promotion activities is to provide an impetus to those traders in need of help. The Council will have succeeded if traders are able to develop and expand on their own once they have established useful contacts and buyers through the Council. He considers that the long-term goals in the overall interest of Hong Kong are not always in line with the priority of the private individual. The Council's task and objectives in drawing up its promotion programme, and all its other services, must balance the needs of Hong Kong as a whole, the needs of individual manufacturers and the need to allocate limited resources to maximum advantage. Whilst I acknowledge the objectives as stated by the Executive Director in drawing up the Trade Development Council's promotion programme I feel there is room for improvement in its selection and evaluation procedures.
178. My review of selected items from the office expenditure budget which forms 20% of the Trade Development Council's overall budget has indicated weaknesses in the system of internal control and a lack of an adequate monitoring procedure over levels of expenditure. According to the Council's own instructions, Council staff of manager status may entertain visitors or local residents connected with the Council's activities, provided that the guests do not include an undue proportion of colleagues or personal friends. Claims for reimbursement should indicate the purpose of the entertainment. In 1984 the prescribed rates per person for entertainment were not to exceed $60, $120 and $160 for cocktail reception, lunch and dinner respectively.
179. My review has revealed three instances where functions were held exclusively for staff of the Trade Development Council and in two of these the cost per head was more than double the rates prescribed for official guests. The rates were often ignored when providing entertainment to official guests and some claims were unsubstantiated by details of the purpose of the entertainment. I have also noticed that overseas-based staff who were in receipt of daily boarding allowances whilst making duty visits to Hong Kong were entertained at the Council's expense. In an internal exercise conducted in 1982 the Council found that during the period from January to June 1982, 23 out of 27 staff were entertained whilst receiving daily boarding allowances and that one officer had received 60 free meals through official entertainment, in addition to the 150 meals for which he received a boarding allowance. No remedial action was apparently taken on conclusion of the exercise. In response to my findings, the Executive Director of the Council has informed me that more clear-cut guidelines on entertainment expenses have been issued and all staff of the Council must abide by these rules.
180. A further instance of lack of cost-consciousness was the Trade Development Council's expenditure on facsimiles for the transmission of information throughout its network of local and overseas offices. Although the Council's instructions stipulate that only urgent requirements should be transmitted by means of facsimile, the audit review indicated that 20% of the facsimiles could have been transmitted by cheaper means without affecting operational efficiency. The contents of some of the messages transmitted were unrelated to the activities of the Council and included newspaper cartoons, office lampoons, newspaper cuttings relating to out-of-date events and a favourite recipe. The Executive Director of the Council has informed me that rules for the use of facsimile have been drawn up to make sure that only essential messages are transmitted through this facility.
181. In the light of my findings, I have suggested to the Secretary for Trade and Industry that the funding arrangements for the Trade Development Council should be re-examined. The earmarking of a particular source of the general revenue to finance a particular activity is at variance with sound principles of financial management, which entail the identification of objectives, the setting of performance measures, the allocation of resources to meet those objectives and the evaluation of performance. As indicated by the Working Committee on Export Promotion Organization twenty years ago, the practice of other exporting countries in financing export promotion from public funds was to assess, industry by industry, the amount needed to supplement promotional activities by the private sector and the Government's decision on the importance of export promotion relative to the provision of other public sector services. Although due to the lack of detailed information at that time the Working Committee was of the view that Hong Kong could not adopt such an approach, it appears that no review has since been carried out to see whether the problems then encountered were surmountable.
182. The Secretary for Trade and Industry has not directly addressed me on the issue of the funding arrangements for the Trade Development Council, but with regard to my other findings he has advised me that he does not see a role for the Government to monitor the detailed operations of the Council. He believes that it was not the intention of the Legislature that he should have this role. He contends that unlike other vote controllers he cannot be expected to remain at all times fully responsible for the proper disbursement of funds provided to the Council. Indeed, he sees his role vis-à-vis the Council as more akin to the relationship between a Government Secretariat branch and an independent department where full accountability for funds disbursed rests with the latter.
183. Head 186 - Transport Department. Subhead 104. Light and power. The Airport Tunnel, completed in 1982, uses an average of 350 000 units of electricity a month. At the time of opening, the Commissioner for Transport applied for the electricity supply company's more advantageous bulk tariff rates which were available to any consumer using a minimum of 20 000 units a month. Although the electrical, mechanical and surveillance services contract specified that the electrical installations in the Airport Tunnel should be in accordance with the electricity supply company's rules, it was found that the Airport Tunnel did not qualify for bulk tariff rates under the rules because the contractor had failed to install a power factor correction capacitor. There then followed a long contractual dispute in which the contractor at first denied responsibility for installing the required equipment but subsequently agreed to install it in
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