Crossed Signals

For a long time now I have been resisting the urge to write about the travails of the MTR Corporation Limited because I didn’t want to be seen kicking an organisation when it was down. But after nine months of the columnist’s equivalent of biting my tongue I can stand it no longer. I simply have to put pen to paper on the saga of the botched signalling system upgrade.

The fiasco – no other word does justice for what happened – of the test run of the new signalling system last week resulted in two trains colliding. Not only did the new system fail the test, all the back-up systems specifically designed to ensure there could never be a collision also failed. Fortunately at the last moment one of the drivers saw what was happening and applied the brakes. This reduced the impact or more serious damage and injury might have been caused. So much for the superiority of Artificial Intelligence.

The chaotic scenes, in the following two days, as thousands of commuters struggled to get to and from work using the truncated service were an embarrassment to Hong Kong.

If this had been a one-off incident, most people would probably have just shrugged and moved on. But it was merely the latest in a long string of serious episodes. The extensive delays and cost overruns that affected each of the four completed network expansion projects – South Island Line, Western extension of Island Line, Whampoa extension of the Kwun Tong line, and the Hong Kong link to the national High Speed Rail system – are a matter of public record. And the fifth project – the Shatin to Central Link – is in a class by itself for incompetence. At time of writing, we not only do not know when or if the line will ever open, we don’t even know how much of the work already done at two of the stations we might need to demolish and do again.

I’ll be frank here: I try to follow the news about how many enquiries are ongoing into these various scandals, and who is doing them and when they are due to report, but there are just so many I’ve completely lost track. And now, inevitably, there will be another one.

A particularly worrying aspect of the fallout from earlier problems is the suggestion – so far unsubstantiated – that some of the MTRC staff under training were allowed to graduate and obtain qualifications rather too easily. If evidence to substantiate this ever emerges, it would put an end to our aspirations to be a regional rail training academy at least for a very long time.

When things go wrong on this scale, there can be only one conclusion: there is a major crisis of governance. This extent of rot, after all, must start at the top. The MTRC began as a statutory body but is now a private company listed on the stock exchange (though still a public body). We say “private” but the government owns over 75% of the shares. The truth is the corporation is neither fish nor fowl. We need to sort this confusion out. There have been calls for the government to buy back the shares previously listed, but a better plan would be to sell off most of the balance of the government holdings so that it became a minority shareholder.

The dual personality disorder at the organisational level carries over onto the board of directors. The chairman – currently Frederick Ma Si-Hang, a former minister --is appointed by the government, which as majority shareholder also holds great sway over appointment of other directors. In addition to four civil servants on the board, three of the independent directors are retired civil servants.

How independent is such a board likely to be in practice? When the government asked the corporation to undertake five major engineering projects at the same time, and declined to set an order of priorities, how likely was such a board to demur?

Given the plague of scandals, both Ma and CEO Lincoln Leong Kwok-Kuen are to be replaced. In a less forgiving society, Ma would surely have been stood in front of a firing squad. Instead when he first submitted his resignation last year he was offered a new multi-year contract which he was sensitive enough to decline. Perhaps government thinking at the time was he would be able to clean the stables on his way out the door by taking responsibility for all the troubles up until then. But that was before the signal saga brought a new load of manure onto the corporation’s head.

There are reports that behind the scenes the corporation and the signalling contractor brought in to upgrade the system are pointing fingers at each other over who should take responsibility. But at the end of the day, who chose that contractor despite the same company using the same software having had similar problems in Singapore two years ago? And given those circumstances, who was closely monitoring the contractor’s preparation work this time round?

If you ask the man in the street, he will tell you the MTR is a railway company. But if you ask a financial reporter, he is more likely to tell you that the MTR is a property company with a small railway operation on the side. The truth is somewhere in the middle.

Because of the way our system developed, with property developments on top of stations, profits of which helped finance the railway itself, the MTR has been a major property developer and now owns and manages extensive commercial and residential estates. It also has a thriving off shore consulting business advising railways outside the SAR. Has the company lost its focus?

The time has surely come for a major overall review of the MTR: its status, ownership, governance, objectives. Now if only we had a minister for transport….