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April 10th, 2012:

£54m claim turns up the heat over authority’s incinerator

A LOCAL authority has launched a £54m lawsuit over a troubled waste plant that was once hailed as a model for the whole of the UK.

Neath Port Talbot Council has issued a High Court writ against two dormant companies in the Currie & Brown Group, which offered technical advice over the project at Crymlyn Burrows, near Neath. It is one of the largest sums ever claimed in litigation relating to the construction industry.

Soon after the £32m plant opened in 2002, neighbouring residents complained of odours coming from it. It was temporarily shut down for environmental breaches in 2003, and later damaged by fire.

The defendants in the action are Currie & Brown Project Management and Currie & Brown Consulting, both of which are dormant companies.

Currie & Brown Project Management produced a technical due diligence report on the project for investors in 2000. Currie & Brown Consulting was appointed technical adviser to the investors in 2000 and the division was also appointed technical adviser to the council in 2002.

The case is scheduled for April 2009 and will be tried in Bristol by a High Court judge.

Will Watson, corporate director for the environment at Neath Port Talbot council, said: “The council is seeking damages following the failure of the materials recycling and energy centre to achieve anything like its contracted performance levels, particularly in terms of diverting waste from landfill, recycling and the production of compost.”

A spokeswoman for Currie & Brown confirmed the two companies in the group were facing a £54m claim from the council.

“The matter is in the hands of our insurers,” she said. “We do not wish to comment further.”

In May it emerged that Neath Port Talbot Council was suing neighbouring Bridgend Council for around £5m in connection with problems relating to the plant, which is officially described as Crymlyn Burrows Materials Recovery and Energy Centre.

Domestic rubbish from both council areas is disposed of at the plant, which processes material for recycling and incinerates other waste.

It is understood that during legal arguments between the two local authorities, Neath Port Talbot threatened to ban Bridgend from sending waste to the plant.

The Crymlyn Burrows waste processing plant has been controversial since before it opened in 2002.

Residents opposed it on health grounds, claiming there was no truly safe limit for the dioxins emitted by the incinerator. Dioxins are associated with birth defects, heart disease, infertility, respiratory problems and cancers.

But local authorities, who point out the incinerator has to comply with emission standards, saw it as a way to reduce the amount of waste sent to landfill in advance of targets set by the European Commission in 2010.

From the outset the plant processed around 150,000 tonnes of domestic refuse a year from Neath Port Talbot and Bridgend.

The plant was built and initially run by Portuguese operator HLC, but in 2005 Neath Port Talbot Council pulled the plug on HLC Neath Port Talbot after the firm went into administration.

Neath Port Talbot Council took over running the plant and in 2006 it was reported losses totalling more than £67m could accrue over 25 years unless a new operating partner was found. A legal tug-of-war ensued between the council and HLC’s creditor, the Royal Bank of Scotland, which was seeking to recoup some of its £40m debt with the plant’s assets. The dispute was settled out of court in November 2006, putting the plant firmly in the hands of Neath Port Talbot Council.

Early last year, Neath Port Talbot and Bridgend councils said they were planning to award a new 25-year contract for operating the facility.

In late April the two authorities issued a joint statement, saying: “Bridgend and Neath Port Talbot councils are in discussions concerning a contractual matter related to waste disposal arrangements and both are hopeful that an early resolution will be possible. At this stage, neither council is prepared to make any further comment.”

Read More

June 2011 Last updated at 08:01 GMT

Neath waste plant reopens after closure

Crymlyn Burrows Materials Recovery and Energy Centre

The Crymlyn Burrows waste incinerator opened in 2002

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A waste incinerator which was voluntarily shut down after breaching its limit for emissions has reopened.

Environment Agency Wales has agreed that the council-owned plant at Crymlyn Burrows in Neath Port Talbot can restart its combustion unit.

It closed in December 2010 after air samples showed it had failed five out of 10 dioxin emissions tests.

The latest tests have found the emissions are now within the standards of the site’s environmental permit.

The plant, which opened in 2002, processes household waste for recycling and incineration from Neath Port Talbot and Bridgend.

It is operated by Neath Port Talbot (Recycling) Ltd – a wholly-owned subsidiary of the council

Breaches were not ever at levels to cause health problems.

The EA work gave the go-ahead after operators completed an agreed programme of work to resolve dioxin emissions.

This has included extensive refurbishment and cleaning of the plant and equipment used to control pollution.

In the future operators will use an enhanced programme to monitor emissions and ensure standards are maintained.

Incinerator will meet the world’s most stringent green operating standards

SCMP – 10 April 2012

I refer to the article by Edwin Lau Che-feng, of Friends of the Earth (“Costly incinerator will be a waste of money”, April 2).

Based on the most recent studies, the estimated cost of building the first phase of integrated waste management facilities on an artificial island near Shek Kwu Chau is HK$14.96 billion in money- of-the-day prices, or HK$11.38 billion in September 2011 prices. The figure of HK$4 billion quoted in the article was a very preliminary estimate based on the information gathered around 2002-3, in the absence of detailed studies. As with other infrastructure projects, the actual cost estimation could only be made on the basis of the findings in the engineering studies and environmental impact assessment. Construction and material prices increased significantly from 2002 to 2011. Another cost factor is the stringent environmental requirements for achieving high environmental performance. The facilities will meet the most stringent international standards. Additional measures will also be incorporated to further reduce the impacts.

The estimated capital cost of building the facilities at Tsang Tsui is about HK$9 billion in September 2011 prices. The difference in the capital cost between the two sites is $2.4 billion (September 2011 prices) and relates to the costs of, for example, reclamation works, berths and breakwaters and submarine cables. With a capital cost of about HK$9 billion, the cost of building integrated waste management facilities near Shek Kwu Chau is comparable to that of other plants in Europe, such as the one in Amsterdam, that process about 2,400 tonnes per day (a fifth less than the one near Shek Kwu Chau).

The artificial island near Shek Kwu Chau is chosen because it would ensure a more balanced spatial distribution of waste facilities given that there is already a sludge treatment facility of 2,000 tonnes per day under construction in Tsang Tsui; it is closer to the Island East, Island West and West Kowloon refuse transfer stations; it is located in the downwind side of the prevailing wind; and it has the potential to enhance synergies with neighbouring islands. Like other advanced economies, the modern waste-to-energy plant under the integrated facilities can significantly reduce the waste volume and carbon dioxide emissions and is an indispensable part of the government’s multi-pronged strategy to tackle the imminent waste problem.

The Environmental Protection Department is committed to working with the community to reduce and recycle waste, while taking forward the integrated waste management facilities and other waste projects for Hong Kong.

Elvis W. K. Au, assistant director of environmental protection

Use of slag in public flats to cut carbon emissions


Housing Authority will save money and lower pollution output by 3,700 tonnes of gas a year

Joyce Ng 
Apr 10, 2012

Hong Kong’s annual carbon emissions will be cut by 3,700 tonnes, thanks to an environmentally friendly initiative of the Housing Authority.

The authority says it will save money and reduce its use of cement by mixing it with slag, a cheap by-product of steelmaking, in its annual construction of 15,000 flats.

The building material, known as granulated blast-furnace slag, is made by pulverising slag. The process produces 90 per cent less carbon than making cement.

The measure is one of the solutions identified in a carbon audit exercise the authority conducted for its upcoming public rental housing projects.

The saving of 3,700 tonnes of emissions is equivalent to the carbon dioxide intake of 16,000 trees.

“Our public rental homes house about 30 per cent of the city’s population. It is important to create a green living environment and have a greener housebuilding process,” said Ada Fung Yin-suen, deputy director of housing.

The cement industry accounts for 5 per cent of global carbon dioxide emissions.

The slag will come from two suppliers in Guangdong and costs 5 per cent less than cement.

The initiative will help save HK$600,000, according to Fung.

The authority will use slag in building public rental housing estates in Anderson Road, East Kowloon, and Hung Shui Kiu, Yuen Long.

The slag was used in infrastructure projects such as the Tsing Ma Bridge, but it is new to residential construction in the city.

Joseph Mak Yiu-wing, chief structural engineer of the Housing Department, said he hoped private developers would follow suit.

Separately, the department has completed a carbon audit exercise for 12 future projects in Kai Tak, Sheung Shui, Ngau Tau Kok, Sha Tin and Yuen Long.

The audit identified room for lowering carbon emissions by installing lighting systems powered by wind and solar power, among other measures.

Exclusive: Hong Kong probes $2.5 million payment in Kwok case: source

Exclusive: Hong Kong probes $2.5 million payment in Kwok case: source

Description: Former Hong Kong Chief Secretary Rafael Hui (L) leaves the Independent Commission Against Corruption (ICAC) headquarters in Hong Kong April 10, 2012. REUTERS/Stringer

Former Hong Kong Chief Secretary Rafael Hui (L) leaves the Independent Commission Against Corruption (ICAC) headquarters in Hong Kong April 10, 2012.

Credit: Reuters/Stringer

By David Lague

HONG KONG | Tue Apr 24, 2012 8:04am EDT

HONG KONG (Reuters) – Hong Kong’s anti-graft agency is looking into payments totaling more than U.S. $2.5 million to a former top public servant as part of the city’s corruption investigation involving two billionaire brothers who run Asia’s largest property developer.

According to a source with knowledge of the investigation, the Independent Commission Against Corruption (ICAC) is investigating payments to Hong Kong’s former chief secretary, Rafael Hui. The payments are linked to Sun Hung Kai Properties (0016.HK), the powerful conglomerate run by Raymond and Thomas Kwok.

Hui and the Kwok brothers were arrested on suspicion of corruption on March 29 and released on bail without charges being filed. The three men, friends since childhood through Macau family connections, have been ordered to report back to ICAC headquarters later next month, when they are expected to extend their bail agreement, the source said.

Details of the investigation have not been disclosed. The payments cited by the Reuters source reveal for the first time precise information on Hui’s role in the investigation of the Kwoks, who rank among Asia’s richest families.

It is not clear whether the payments came from Sun Hung Kai Properties, one of its subsidiaries, or from the Kwok brothers themselves. Details on what else the ICAC is investigating are also unclear.

The Kwok brothers have denied any wrongdoing. The ICAC declined to comment while the investigation continues. Sun Hung Kai also declined to comment.

Several attempts at reaching Hui, including calls to former associates, were unsuccessful.

The ICAC arrested Sun Hung Kai Properties Executive Director Thomas Chan and four other people who are yet to be identified in March as part of the same investigation into allegations of bribery and misconduct in public office. They were also released on bail.

The arrests sent a shock through Hong Kong’s business community, a small, close-knit group of tycoon-led families that control much of the city’s business operations and hold heavy political influence. The case is the biggest investigation the ICAC has undertaken since its formation in 1974.

According to the source, Hui received a series of payments before and after his time in office worth more than $2.5 million. These payments are among several key transactions that are part of the investigation, the source said.


For Hui, 64, the ICAC probe threatens to tarnish a public service career in which he rose to become the deputy to Hong Kong’s outgoing chief executive, Donald Tsang.

Hui stood down as chief secretary in 2007 at the end of Tsang’s first term. He then spent two years on the Executive Council, an advisory body to the chief executive.

After his arrest, Hui resigned as an independent, non-executive director of pan-Asian insurer AIA Group (1299.HK). Prior to the investigation, he sold his 50 per cent share in an investment company, RH & Lang Ltd., which is registered in the British Virgin Islands, the South China Morning Post reported. Local media reports said Hui also sold off racehorses.

Hui, an opera fanatic, has been under a harsh spotlight before.

In 2005, he declined to move into the colonial mansion on Victoria Peak reserved for the chief secretary, opting to stay instead in his modern, 5,000-square-foot apartment. The luxury flat overlooking the Happy Valley racecourse that he and his wife call home is in the Leighton Hill complex, a Sun Hung Kai development. That prompted criticism at the time that Hui would be conflicted in his public role on any matters related to the Kwoks. On taking office, Hui pledged to pay HK$160,000 ($20,600) per month in rent to remain in the apartment.

As chief secretary, Hui’s connections with Sun Hung Kai came under public scrutiny after he took on the role of overseeing Hong Kong’s billion-dollar West Kowloon cultural district, a project on which the company had bid.

Hui, whose nickname is “King Strategist”, provided both political and business advice to Sun Hung Kai over the years, a boon for a developer in a city where the government controls the land supply. He was also trusted by the Kwoks’ mother, according to sources close to the family.

“He’s a very smart guy with many tricks, with a great grasp of details and flexibility,” said James To, a democratic lawmaker, who has dealt regularly with Hui over 20 years of public service.

Hui is a member of the Chinese People’s Political Consultative Conference, the top-level advisory body to the Chinese government.


Upon completion of its investigation, the ICAC will send the evidence to Hong Kong’s justice department, which then decides if it will prosecute. The ICAC was set up in 1974 when crime and police corruption were rampant in the then British colony. The agency has investigated top police and government officials and construction executives.

But in the last few years, critics complain the commission has failed to successfully prosecute any high-level cases involving Hong Kong’s rich and powerful, or the burgeoning new class of mainland Chinese entrepreneurs.

The Kwoks and Hui are part of a tiny elite who dominate business and politics in the city of 7 million, which returned to Chinese rule in 1997. All three belong to the 1,200-member committee that selected Hong Kong’s next leader on March 25.

The Kwok brothers have built Sun Hung Kai, which they inherited from their father, into the world’s second-largest real estate developer. Their office tower portfolio includes the city’s two tallest buildings, the International Finance Center and the International Commerce Center. The property developer is the beating heart of a conglomerate that is deeply embedded in Hong Kong life, with stakes in the bus, phone and trash systems of Asia’s financial capital.

Sun Hung Kai’s stock has fallen 15.5 percent since the arrests, but that still leaves it with a market capitalization of $31.6 billion.

Forbes estimates the Kwok brothers’ fortune at $18.3 billion, according to figures in March just before they were arrested. For Hong Kong’s fabulously rich tycoon families, that puts them No. 2 behind Li Ka-shing, who is also Asia’s richest person.

Such wealth caught the eye of a notorious gangster, Cheung Tze-keung, known as “Big Spender”, who kidnapped Walter Kwok in 1997 and held him for six days in a wooden crate before his family paid a ransom, reportedly HK$600 million ($77 million). Cheung was executed a year later by firing squad in mainland China.

The incident left Walter badly shaken, sources and media reports say, but he returned to run the company until being forced from the helm in 2008. In a writ seeking to prevent his removal, Walter said his brothers, Raymond and Thomas, believed he had bipolar affective disorder — which Walter denies — and could not fulfill his duties.

The younger brothers also objected to a long-term friendship between Walter and a lawyer, Ida Tong, who they felt was exerting undue influence at the company, according to two other sources close to the family. Tong could not be reached for comment.

The embarrassing public tussle for Sun Hung Kai Properties forced the family’s octogenarian matriarch, Kwong Siu-hing, to intervene and assume the chairman’s role herself until last December, when Thomas and Raymond took on the joint role.

Walter has not been arrested, and his spokeswoman has declined to comment to Reuters.

(Additional reporting by Alex Frew McMillan and James Pomfret; Edting by Michael Flaherty and Bill Tarrant)