Sessional_Paper_1907 — Page 280

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185 (20)

Contracts and

contractors.

171. The contracts for the supply of labour and stores and for the perform- ance of work such as the scavenging of the Colony, the removal of nightsoil, &c., have, year after year, been obtained by one or other of a small ring of men who have acted in collusion with the inspectors, clerks and foremen of the Sanitary Department, and outsiders, if they have ever succeeded in obtaining a contract, have found themselves compelled either to pay regular bribes to the inspectors, who supervised the work, or to sub-let part of the contract at a higher figure to a member of the fing.

172. One, SAM Iv, is the moving spirit of the ring. This man began his connection with the Board as a scavenging coolie.

173. Either directly or indirectly, at one time or another, he has held the conservancy contract, the scavenging contract, the contracts for watering the streets, for lime washing houses, for work at plague cemetery, and for supplying labour. This year he has an interest in nearly all the contracts either direct or indirect in his own name or under an assumed name.

174.

He is the contractor for labour and the watering of the streets, the manager and principal partner in the firm which holds the conservancy and scavenging contracts for Kowloon, the contractor for cemetery work has sub-let his contract to SAM IU, so has the scavenging contractor for Victoria, and whilst he is a shareholder in the firm which does the conservancy of the city and has taken over part of the work from the firm on a lease, he supplies dustbins and undertakes the lime washing of houses and the covering of ground surfaces with

concrete.

175. SAM lu holds a practical monopoly of most of the work connected with the Sanitary Department; no one else seems able to completely satisfy the Sanitary Inspectors. Others have attempted to get a share of the work and have done it just as well and as cheaply as Sam Iu, but constant complaints on the part of the inspectors, prosecutions and heavy fines, have effectively crushed competition.

176. The firm MAN HING, which since 1901 has held the contract for sundry stores, was not entirely owned by AU SUI SHANG, by whom it was managed, but by a syndicate in which Lo MAN KAI, the first Chinese clerk in the Sanitary Board, had a large interest.

177. The letting of contracts by sealed tender, theoretically the most satisfactory method, has not in practice proved satisfactory. All the evidence we have received points to this. that in spite of all precautions, information which is regarded as confidential, leaks out. Tenders are still confined to the old ring, the members of which, to provide a semblance of competition, send in tenders under various names at figures somewhat higher than of their bonâ fide tenders.

178. In the case of contracts, but especially in those of the scavenging and conservancy, the heads of the Sanitary Department have relied too much on the inspectors and foremen, and have placed the contractors entirely in their power. The natural result has been that contractors have recognised it was to their in- terest to stand well with the inspectors, because they found that in matters of dispute, the inspector's word was invariably taken, without further enquiry. They consequently struck a bargain with the inspectors and clerks of the Department, and together with them have succeeded in hoodwinking the executive officers.

We recomend that :-

179.

(a.)

All tenders should be numbered, initialled and stamped by the Colonial Secretary's Office and sent to the Sanitary Board in a sealed envelope marked "confidential," to be opened in the presence of the Board.

(b.) Before the Sanitary Board recommends a tender for acceptance, the tender should be referred to a select Committee to enquire into the identity and occupation of the tenderers and their proposed security.